Calendar No. 333

105TH CONGRESS

2D SESSION S. 1889

A BILL

To reduce tobacco use by children and others

States, and local communities.strategy that involves the private sector, schools,strong public health prevention and educationuse cessation programs, and implementing aoversight, expanding the availability of tobaccolimitations, assuring appropriate tobacco industryucts, the imposition of advertising and marketingthrough an increase in the cost of tobacco prodAPRIL 1, 1998

Read the second time and placed on the calendar
II

Calendar No. 333

105TH CONGRESS

2D SESSION S. 1889

To reduce tobacco use by children and others through an increase in the

cost of tobacco products, the imposition of advertising and marketing

limitations, assuring appropriate tobacco industry oversight, expanding

the availability of tobacco use cessation programs, and implementing

a strong public health prevention and education strategy that involves

the private sector, schools, States, and local communities.

IN THE SENATE OF THE UNITED STATES

MARCH 31, 1998

Mr. HARKIN (for himself, Mr. CHAFEE, and Mr. GRAHAM) introduced the

following bill; which was read the first time

APRIL 1, 1998

Read the second time and placed on the calendar

A BILL

To reduce tobacco use by children and others through an

increase in the cost of tobacco products, the imposition

of advertising and marketing limitations, assuring appropriate tobacco industry oversight, expanding the availability of tobacco use cessation programs, and implementing a strong public health prevention and education

strategy that involves the private sector, schools, States,

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Kids Deserve Freedom From Tobacco Act of 1998’’ or

6 the ‘‘KIDS Act’’.

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

8 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

Sec. 3. Purpose.

Sec. 4. Scope and effect.

Sec. 5. Definitions.

TITLE I—INCENTIVES TO REDUCE YOUTH TOBACCO USE

Subtitle A—National Tobacco Trust Fund

Sec. 101. Establishment.

Sec. 102. Payments by tobacco product manufacturers.

Sec. 103. Enforcement.

Subtitle B—Payments to States

Sec. 111. Payments to States.

Sec. 112. State bonus payments.

Subtitle C—Annual Youth Tobacco Use Reductions

Sec. 131. Purpose.

Sec. 132. Child tobacco use surveys.

Sec. 133. Reduction in underage tobacco product usage.

Sec. 134. Noncompliance.

Sec. 135. Enforcement.

TITLE II—REGULATION OF THE TOBACCO INDUSTRY

Subtitle A—Food and Drug Administration Jurisdiction and General

Authority

Sec. 201. Statement of general authority.

Sec. 202. Nonapplicability to other drugs or devices.

Sec. 203. Conforming amendments to confirm jurisdiction.

Sec. 204. General rule.

Sec. 205. Safety and efficacy standard and recall authority.

Subtitle B—Regulation of Tobacco Products
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Sec. 211. Performance standards.

Sec. 212. Application of Federal Food, Drug, and Cosmetic Act to tobacco

products.

‘‘SUBCHAPTER F—TOBACCO PRODUCT DEVELOPMENT, MANUFACTURING, AND ACCESS RESTRICTIONS, LICENSING, AND ANTISMUGGLING

‘‘PART A—TOBACCO PRODUCT DEVELOPMENT, MANUFACTURING, AND

ACCESS RESTRICTIONS

‘‘Sec. 570. Promulgation of regulations.

‘‘Sec. 571. Mail-order sales.

‘‘Sec. 572. Tobacco product warnings and packaging.

‘‘Sec. 573. General responsibilities of manufacturers, distributors and retailers.

‘‘Sec. 574. Disclosure and reporting of tobacco and nontobacco ingredients

and constituents.

‘‘Sec. 575. Reduced risk products.

‘‘Sec. 576. Access to company information.

‘‘Sec. 577. Oversight of tobacco product manufacturing.

‘‘Sec. 578. Preservation of State and local authority.

‘‘Sec. 579. General responsibilities of manufacturers, distributors and retailers.

Sec. 213. Funding.

Sec. 214. Repeals.

Subtitle C—Manufacturer and Product Seller Licensing and Anti-Smuggling

Sec. 221. Definitions.

Sec. 222. Minimal Federal licensing and registration program.

Sec. 223. Licensing and retailer registration.

Sec. 224. Unlawful acts.

Sec. 225. Penalties and compromise of liability.

Sec. 226. General administrative provisions.

Sec. 227. Funding.

Sec. 228. Transitional rules.

Sec. 229. Rules and regulations.

Sec. 230. Severability.

Sec. 231. Effect on State or local law.

Sec. 232. Amendment to Contraband Cigarette Trafficking Act.

Subtitle D—Penalties

Sec. 241. Penalties.

Sec. 242. Application of penalties with respect to violations of certain licensing

provisions.

TITLE III—PUBLIC HEALTH INITIATIVES

Subtitle A—State-Federal Anti-Tobacco Partnership

CHAPTER 1—SCHOOL- AND COMMUNITY-BASED PROGRAMS

Sec. 301. School- and community-based programs.

Sec. 302. National event sponsorship program.

CHAPTER 2—COUNTER-ADVERTISING PROGRAMS
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Sec. 311. Federal-State counter-advertising programs.

CHAPTER 3—NATIONAL CESSATION PROGRAM

Sec. 321. National tobacco cessation program.

Sec. 322. Reports, data, and audits.

Subtitle B—Health Research Program

CHAPTER 1—NATIONAL FUND FOR HEALTH RESEARCH

Sec. 331. Establishment of National Fund for Health Research.

CHAPTER 2—TOBACCO PREVENTION RESEARCH

Sec. 335. National Tobacco Research Task Force.

Sec. 336. Research activities.

Sec. 337. Tobacco prevention database and evaluation.

Subtitle C—Miscellaneous Provisions

Sec. 341. Limitation on administrative costs.

Sec. 342. Withholding.

Sec. 343. Nondiscrimination.

Sec. 344. International tobacco control.

TITLE IV—LIABILITY PROVISIONS AND CONSENT DECREES

Sec. 400. Dismissal of and limitations on civil actions.

Subtitle A—Liability Provisions

Sec. 401. National victims’ compensation fund.

Sec. 402. Rule of construction.

Sec. 403. Attorney’s fees and expenses.

Sec. 404. Public disclosure of tobacco industry documents.

Subtitle B—Consent Decrees

Sec. 411. Consent decrees.

TITLE V—TOBACCO FARM FAMILY AND COMMUNITY ASSISTANCE

TRUST FUND

Sec. 501. Tobacco farm family and community assistance trust fund.

TITLE VI—REDUCING EXPOSURE TO ENVIRONMENTAL TOBACCO

SMOKE

Sec. 601. Education and outreach.

Sec. 602. Involuntary exposure to environmental tobacco smoke.

Sec. 603. Coverage of Congressional buildings.

TITLE VII—MISCELLANEOUS PROVISIONS

Sec. 701. Whistleblower protections.

Sec. 702. Prohibition on use of funds to facilitate the exportation or promotion

of tobacco.

Sec. 703. Provisions relating to Native Americans.

Sec. 704. Preservation of State and local authority.
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1 SEC. 2. FINDINGS.

2 Congress makes the following findings:

3 (1) Tobacco products are the foremost prevent4 able health problem facing America today. More

5 than 400,000 individuals die each year as a result

6 of tobacco induced illnesses and conditions.

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

8 children is a pediatric disease of epic and worsening

9 proportions that results in new generations of to10 bacco-dependent children and adults.

11 (3) Virtually all new users of tobacco products

12 are under legal age. Every day, 3,000 young people

13 become regular smokers. Of these children, 1,000

14 will die prematurely from a tobacco-related disease.

15 (4) Tobacco products are inherently dangerous

16 and cause cancer, heart disease, and other serious

17 adverse health effects.

18 (5) Tobacco advertising and marketing is often

19 deceptive and misleading and contributes signifi20 cantly to the use of nicotine-containing tobacco prod21 ucts by children.

22 (6) Because past efforts to restrict the advertis23 ing and marketing of tobacco products have failed to

24 effectively curb tobacco use by children, new, more

25 comprehensive restrictions on the sale, promotion,

26 and distribution of such products are needed.
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1 (7) Federal and State governments have lacked

2 the resources to adequately address the public health

3 and societal problems caused by the use of tobacco

4 products.

5 (8) Federal and State public health officials,

6 the public health community, Congress, and the pub7 lic at large recognize that the tobacco industry

8 should be subject to ongoing oversight.

9 (9) Under Article 1, section 8 of the Constitu10 tion, Congress is vested with the responsibility for

11 regulating interstate commerce.

12 (10) The sale, distribution, marketing, advertis13 ing and use of tobacco products are activities in and

14 substantially affecting interstate commerce. Such

15 products are sold, marketed, advertised, and distrib16 uted in interstate commerce on a nationwide basis,

17 and have a substantial effect on the Nation’s econ18 omy.

19 (11) The sale, distribution, marketing, advertis20 ing, and use of such products substantially affect

21 interstate commerce through the health care and

22 other costs attributable to the use of tobacco prod23 ucts.

24 (12) Civil actions against tobacco product man25 ufacturers and others are pending in Federal and
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1 State courts arising from the sale, distribution, mar2 keting, advertising, and use of tobacco products.

3 Among these actions are cases brought by the attor4 neys general of more than 40 States, certain cities

5 and counties, the Commonwealth of Puerto Rico,

6 and other parties seeking to recover monies ex7 pended to treat tobacco-related diseases and for the

8 protection of minors and consumers, as well as pen9 alties and other relief for violations of antitrust,

10 health, consumer protection, and other laws.

11 (13) Civil actions have been filed throughout

12 the United States against tobacco product manufac13 turers and their distributors, trade associations, law

14 firms and consultants on behalf of individuals or

15 classes of individuals claiming to be dependent upon

16 and injured by tobacco products.

17 (14) It is in the public interest for Congress to

18 adopt comprehensive public health legislation be19 cause of tobacco’s unique position in the Nation’s

20 history and economy; the need to prevent the sale,

21 distribution, marketing, and advertising of tobacco

22 products to persons below legal age; and the need to

23 educate the public, especially young people, regard24 ing the health effects of using tobacco products.
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1 (15) The public interest requires a timely, fair,

2 equitable, and consistent result that will serve the

3 public interest by—

4 (A) providing that a portion of the costs of

5 treatment for diseases and adverse health ef6 fects associated with the use of tobacco prod7 ucts is borne by the manufacturers of these

8 products; and

9 (B) restricting throughout the Nation the

10 sale, distribution, marketing, and advertising of

11 tobacco products only to persons of legal age.

12 (16) The benefits to the Nation of enacting

13 Federal legislation to accomplish these goals would

14 be significant in human and economic terms.

15 (17) The Food and Drug Administration has

16 found that reducing the use of tobacco by minors by

17 50 percent would prevent well over 60,000 pre18 mature deaths, and that the monetary value of its

19 regulations on tobacco will save up to

20 $43,000,000,000 each year in reduced medical costs,

21 improved productivity, and the avoidance of pre22 mature deaths.

23 (18) The Nation’s major tobacco product manu24 facturers have pledged in an agreement reached with

25 several State attorneys general that such manufac-
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1 turers will comply fully with increased Federal regu2 lation, substantial industry payments, and focus in3 tense efforts on dramatic reductions in youth access

4 and underage usage of tobacco products. Further,

5 the industry has agreed to pay significant penalties

6 for failure to meet targets for the reduction of youth

7 use. In addition, the industry has actively sought

8 passage of tobacco settlement legislation by Con9 gress.

10 (19) As new restrictions on the sale of tobacco

11 products are enacted, greater controls on the dis12 tribution of tobacco products will be needed to en13 sure that the new restriction are not evaded.

14 (20) It is in the public interest for Congress to

15 adopt legislation to address the public health crisis

16 created by the actions of the tobacco industry.

17 SEC. 3. PURPOSE.

18 It is the purpose of this Act to—

19 (1) dramatically reduce the use of tobacco prod20 ucts, especially among children;

21 (2) assist individuals who are currently addicted

22 to tobacco products in overcoming that addiction;

23 (3) affirm the authority of the Food and Drug

24 Administration to regulate the manufacture, market25 ing, distribution, and sale of tobacco products under
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1 the Food, Drug and Cosmetic Act (21 U.S.C. 321

2 et seq.);

3 (4) require that the tobacco industry fund both

4 Federal and State oversight of the tobacco industry

5 from on-going payments by tobacco product manu6 facturers;

7 (5) require tobacco product manufacturers to

8 provide ongoing funding to be used for an aggressive

9 Federal, State, and local enforcement program and

10 for a nationwide retail licensing system to prevent

11 minors from obtaining tobacco products, while ex12 pressly permitting and providing incentives to the

13 States to adopt additional measures that further re14 duce the products’ use;

15 (6) impose severe financial surcharges on to16 bacco product manufacturers if they do not substan17 tially reduce tobacco use by children;

18 (7) authorize the Food and Drug Administra19 tion to set national standards controlling the manu20 facture of tobacco products and the identity, public

21 disclosure, and amount of ingredients used in such

22 products;

23 (8) provide new and flexible enforcement au24 thority to ensure that the tobacco industry makes ef-
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1 forts to develop and introduce tobacco products that

2 are less harmful;

3 (9) ensure that the public is better informed by

4 requiring that manufacturers of tobacco products

5 disclose all research which has not previously been

6 made available, as well as all research generated in

7 the future relating to the health and dependency ef8 fects or safety of tobacco products;

9 (10) require tobacco product manufacturers to

10 provide funding for a variety of public health initia11 tives;

12 (11) establish enhanced protections against en13 vironmental tobacco smoke while also permitting

14 State and local governments to enact additional and

15 more stringent standards;

16 (12) authorize and fund from payments by to17 bacco manufacturers a continuing national counter18 advertising and tobacco control campaign which

19 seeks to educate and discourage the public from be20 ginning or continuing to use tobacco products;

21 (13) establish a mechanism to compensate the

22 States in the settlement of their various claims

23 against tobacco product manufacturers;
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1 (14) authorize and fund from payments by to2 bacco product manufacturers a nationwide program

3 of smoking cessation;

4 (15) establish and fund from payments by to5 bacco product manufacturers a Victims’ Compensa6 tion Fund; and

7 (16) continue to permit the sale of tobacco

8 products to adults in conjunction with measures to

9 ensure that they are not sold or accessible to under10 age purchasers.

11 SEC. 4. SCOPE AND EFFECT.

12 (a) INTENDED EFFECT.—This Act is not intended by

13 Congress to—

14 (1) establish a precedent with regard to any

15 other industry, situation, circumstance, or legal ac16 tion;

17 (2) be construed to provide civil or criminal im18 munity; or

19 (3) except as provided in this Act, affect any

20 action pending in Federal or State court, or any

21 agreement, consent decree, or contract of any kind.

22 (b) TAXATION.—Notwithstanding any other provision

23 of law, this Act (and the amendments made by this Act)

24 shall not affect any authority of the Secretary of the

25 Treasury (including any authority assigned to the Bureau
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1 of Alcohol, Tobacco and Firearms) or of State or local gov2 ernments with regard to the taxation of tobacco or tobacco

3 products.

4 (c) FEDERAL TRADE COMMISSION AUTHORITY.—Ex5 cept as expressly provided in this Act, nothing in this Act

6 (or the amendments made by this Act) shall be construed

7 to reduce any authority of the Federal Trade Commission

8 over tobacco or tobacco products.

9 (d) AGRICULTURAL ACTIVITIES.—Except as other10 wise provided in this Act, nothing in this Act shall be con11 strued to reduce any authority under existing law of the

12 Secretary of Agriculture regarding the growing, cultiva13 tion or curing of raw tobacco.

14 SEC. 5. DEFINITIONS.

15 In this Act:

16 (1) BRAND.—The term ‘‘brand’’ means a vari17 ety of a tobacco product distinguished by the tobacco

18 used, tar content, nicotine content, flavoring used,

19 size, filtration, or packaging.

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

21 of tobacco wrapped in leaf tobacco or in any sub22 stance containing tobacco (other than any roll of to23 bacco which is a cigarette or cigarillo within the

24 meaning of paragraph (3) or (5)).
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1 (3) CIGARETTE.—The term ‘‘cigarette’’ means

2 any product that contains nicotine, is intended to be

3 burned under ordinary conditions of use, and con4 sists of—

5 (A) any roll of tobacco wrapped in paper

6 or in any substance not containing tobacco; or

7 (B) any roll of tobacco wrapped in any

8 substance containing tobacco which, because of

9 its appearance, the type of tobacco used in the

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

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

12 cigarette described in subparagraph (A).

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

14 tobacco’’ means any product that consists of loose

15 tobacco that contains or delivers nicotine and is in16 tended for use by consumers in a cigarette. Unless

17 otherwise stated, the requirements of this Act for

18 cigarettes shall also apply to cigarette tobacco.

19 (5) CIGARILLOS.—The term ‘‘cigarillos’’ means

20 any roll of tobacco wrapped in leaf tobacco or any

21 substance containing tobacco (other than any roll of

22 tobacco which is a cigarette within the meaning of

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

24 not more than 3 pounds.
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1 (6) DISTRIBUTOR.—The term ‘‘distributor’’

2 means any person who furthers the distribution of

3 tobacco products, whether domestic or imported, at

4 any point from the original place of manufacture to

5 the person who sells or distributes the product to in6 dividuals for personal consumption. Such term shall

7 not include common carriers.

8 (7) LITTLE CIGAR.—The term ‘‘little cigar’’

9 means any roll of tobacco wrapped in leaf tobacco or

10 any substance containing tobacco (other than any

11 roll of tobacco which is a cigarette within the mean12 ing of paragraph(3)) and as to which 1,000 units

13 weigh not more than 3 pounds.

14 (8) MANUFACTURER.—The term ‘‘manufac15 turer’’ means any person, including any repacker or

16 relabeler, who manufacturers, fabricates, assembles,

17 processes, packs, or labels a tobacco product. Any

18 successor or assign of a manufacturer, as well as

19 any person affiliated with the manufacturer, shall

20 have all of the manufacturer’s responsibilities and li21 abilities as set forth in this Act.

22 (9) NICOTINE.—The term ‘‘nicotine’’ means the

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

24 pyrrolidinyl)pyridine or C10H14N2, including any salt

25 or complex of nicotine.
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1 (10) PACKAGE.—The term ‘‘package’’ means

2 the innermost sealed container, irrespective of the

3 material from which such container is made, in

4 which a tobacco product is placed by the manufac5 turer and in which such tobacco product is offered

6 for sale to a member of the general public.

7 (11) PERSON.—The term ‘‘person’’ means a

8 firm, partnership, association, corporation, legal rep9 resentative, trustee, receiver or any other legally rec10 ognized entity, including an individual.

11 (12) PIPE TOBACCO.—The term ‘‘pipe tobacco’’

12 means any loose tobacco that, because of its appear13 ance, type, packaging, or labeling, is likely to be of14 fered to, or purchased by, consumers as a tobacco

15 product to be smoked in a pipe.

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

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

18 purchase or otherwise obtain tobacco products for

19 personal consumption.

20 (14) RETAILER.—The term ‘‘retailer’’ means

21 any person who sells or distributes tobacco products

22 at retail, or who operates a facility where vending

23 machines or self-service displays are permitted under

24 this Act.
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1 (15) ROLL-YOUR-OWN TOBACCO.—The term

2 ‘‘roll-your-own tobacco’’ means any tobacco which,

3 because of its appearance, type, packaging, or label4 ing, is suitable for use and likely to be offered to,

5 or purchased by, consumers as tobacco for making

6 cigarettes.

7 (16) SALE.—The term ‘‘sale’’ includes the sell8 ing, providing samples of, or otherwise making to9 bacco products available for personal consumption in

10 any place within the scope of this Act.

11 (17) SECRETARY.—The term ‘‘Secretary’’

12 means the Secretary of Health and Human Services.

13 (18) SMOKELESS TOBACCO.—The term ‘‘smoke14 less tobacco’’ means any product that consists of

15 cut, ground, powdered or leaf tobacco that contains

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

17 or nasal cavity.

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

19 several States, the District of Columbia, the Com20 monwealth of Puerto Rico, Guam, the Virgin Is21 lands, American Samoa, the Northern Mariana Is22 lands, and any other territory or possession of the

23 United States. Such term includes any political divi24 sion of any State.
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1 (20) TOBACCO.—The term ‘tobacco’ means to2 bacco in its unmanufactured form.

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

4 product’’ means cigarettes, cigarette tobacco, smoke5 less tobacco, little cigars, roll-your-own products, ci6 gars, cigarillos, pipe tobacco, roll-your-own products,

7 and any other product made or derived from tobacco

8 intended for human consumption.

9 TITLE I—INCENTIVES TO

10 REDUCE YOUTH TOBACCO USE

11 Subtitle A—National Tobacco Trust

12 Fund

13 SEC. 101. ESTABLISHMENT.

14 (a) ESTABLISHMENT AND TRUSTEES.—

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

16 Treasury of the United States a trust fund to be

17 known as the ‘‘National Tobacco Trust Fund’’ (re18 ferred to in this Act as the ‘‘Trust Fund’’), consist19 ing of such amounts as may be appropriated or cred20 ited to the Trust Fund.

21 (2) TRUSTEES.—The trustees of the Trust

22 Fund shall be the Secretary of the Treasury, the

23 Secretary of Health and Human Services, and the

24 Attorney General.
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1 (b) TRANSFERS.—There are hereby appropriated and

2 transferred to the Trust Fund an amount equal to the—

3 (1) amounts received under the annual assess4 ments made under section 102;

5 (2) amounts paid as fines or penalties, includ6 ing interest thereon, under section 103; and

7 (3) amounts repaid or recovered under subtitle

8 B, including interest thereon.

9 (c) REPAYABLE ADVANCES.—

10 (1) AUTHORIZATION.—There are authorized to

11 be appropriated to the Trust Fund, as repayable ad12 vances, such sums as may from time to time be nec13 essary to make the expenditures described in sub14 section (d).

15 (2) REPAYMENT WITH INTEREST.—Repayable

16 advances made to the Trust Fund shall be repaid,

17 and interest on such 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 for such purposes.

21 (3) RATE OF INTEREST.—Interest on advances

22 made pursuant to this subsection shall be at a rate

23 determined by the Secretary of the Treasury (as of

24 the close of the calendar month preceding the month

25 in which the advance is made) to be equal to the
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1 current average market yield on outstanding market2 able obligations of the United States with remaining

3 period to maturity comparable to the anticipated pe4 riod during which the advance will be outstanding.

5 (d) EXPENDITURES FROM TRUST FUND.—

6 (1) APPROPRIATIONS.—

7 (A) IN GENERAL.—Amounts in the Na8 tional Tobacco Trust Fund shall be appro9 priated by the Committee on Appropriations of

10 the House of Representatives and the Commit11 tee on Appropriations of the Senate exclusively

12 for the purposes authorized in this Act.

13 Amounts appropriated for each program au14 thorized under this Act shall be determined by

15 the percentages contained in the tables in para16 graph (2).

17 (B) PERMISSIBLE TRANSFERS.—Notwith18 standing subparagraph (A), the Committees re19 ferred to in such subparagraph may transfer

20 funds among the programs authorized under

21 this Act if the Committee reports and state22 ment of managers that accompany any such ap23 propriations Act provide an explanation of any

24 such transfers, except that no transfers shall be

25 made under this subparagraph—
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1 (i) to the National Institutes of

2 Health;

3 (ii) for purposes of making payments

4 under section 111;

5 (iii) from the National Victim’s Com6 pensation Fund; or

7 (iv) from the amounts available for

8 States under section 111(b)(1).

9 (2) EXPENDITURE TABLES.—For purposes of

10 paragraph (1), amounts shall be made available in

11 each fiscal year as follows:

12 (A) STATE REIMBURSEMENT; FOOD AND

13 DRUG ADMINISTRATION.—

STATE SHARE

(Percentage of amount in Trust

Fund for fiscal year involved)

Fiscal Year Base Payment

Block

Grant

Bonus

Pool

1999 35.0 35.0 0.00

2000 10.0 10.0 0.00

2001 9.0 9.0 0.00

2002 10.0 10.0 2.67

2003 13.0 13.0 2.67

2004 13.0 13.0 2.67

2005 16.0 16.0 2.67

2006 16.0 16.0 2.67

2007 16.0 16.0 2.67

2008 16.0 16.0 2.67

2009 16.0 16.0 2.67

2010 16.0 16.0 2.67

2011 16.0 16.0 2.67

2012 16.0 16.0 2.67

2013 16.0 16.0 2.67

2014 16.0 16.0 2.67

2015–2024 16.0 16.0 2.67

14 (B) PUBLIC HEALTH PROGRAMS.—
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PUBLIC HEALTH

(Percentage of amount in Trust Fund for fiscal year involved)

Fiscal Year Smoking

Cessation

Counteradvertising

CommunityBased

Prevention

SchoolBased

Prevention

Event

Sponsorship

Youth

Database

1999 1.3333 2.6667 2.6667 1.3333 0.0 2.6667

2000 6.6667 4.0000 3.8333 1.1667 0.5 1.1667

2001 5.3333 3.2000 3.4667 1.0667 0.4 0.9333

2002 5.3333 2.6667 3.3333 1.0667 0.4 0.9333

2003 5.3333 2.9333 4.2667 1.2000 0.4 0.9333

2004 5.3333 2.9333 5.0667 1.3333 0.4 0.9333

2005 5.3333 2.9333 5.0667 1.4667 0.4 0.9333

2006 8.0000 2.6667 5.0667 1.4667 0.4 0.9333

2007 8.0000 2.6667 5.0667 1.4667 0.4 0.9333

2008 8.0000 2.6667 5.0667 1.4667 0.4 0.9333

2009 8.0000 2.6667 5.0667 1.4667 0.4 0.9333

2010 8.0000 2.6667 5.0667 1.6000 0.0 0.9333

2011 8.0000 2.6667 5.0667 1.6000 0.0 0.9333

2012 8.0000 2.6667 5.0667 1.6000 0.0 0.9333

2013 8.0000 2.6667 5.0667 1.6000 0.0 0.9333

2014 8.0000 2.6667 5.0667 1.6000 0.0 0.9333

2015–2024 8.0000 2.9333 5.3333 1.6000 0.0 0.9333

1 (C) RESEARCH.—

RESEARCH/FDA

(Percentage of amount in Trust Fund for

fiscal year involved)

Fiscal Year Health Research

Tobacco Prevention FDA

1999 2.67 0.0 2.667

2000 21.5 4.0 2.0

2001 17.2 3.2 1.6

2002 17.2 3.2 1.6

2003 17.2 3.2 1.6

2004 17.2 3.2 1.6

2005 17.2 3.2 1.6

2006 17.2 3.2 1.6

2007 17.2 3.2 1.6

2008 17.2 3.2 1.6

2009 17.2 3.2 1.6

2010 17.2 3.2 1.6

2011 17.2 3.2 1.6

2012 17.2 3.2 1.6

2013 17.2 3.2 1.6

2014 17.2 3.2 1.6

2015–2024 17.2 3.2 1.6

2 (D) MISCELLANEOUS PROGRAMS AND AC3 TIVITIES.—
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MISCELLANEOUS

(Percentage of amount in Trust Fund for fiscal year involved)

Fiscal Year Agriculture

Victims’

CompensationETS Native

Americans

International

Education

AntiSmuggling

1999 0.0000 0.000 0.0000 0.3333 0.3333 1.3333

2000 4.5000 26.665 1.3333 1.3333 0.6667 0.6667

2001 21.0667 21.332 1.0667 1.0667 0.5333 0.5333

2002 17.0667 21.332 1.0667 1.0667 0.5333 0.5333

2003 9.7333 21.332 1.0667 1.0667 0.5333 0.5333

2004 8.8000 21.332 1.0667 1.0667 0.5333 0.5333

2005 2.6667 21.332 1.0667 1.0667 0.5333 0.5333

2006 0.2667 21.332 1.0667 1.0667 0.5333 0.5333

2007 0.2667 21.332 1.0667 1.0667 0.5333 0.5333

2008 0.2667 21.332 1.0667 1.0667 0.5333 0.5333

2009 0.2667 21.332 1.0667 1.0667 0.5333 0.5333

2010 0.5333 21.332 1.0667 1.0667 0.5333 0.5333

2011 0.5333 21.332 1.0667 1.0667 0.5333 0.5333

2012 0.5333 21.332 1.0667 1.0667 0.5333 0.5333

2013 0.5333 21.332 1.0667 1.0667 0.5333 0.5333

2014 0.5333 21.332 1.0667 1.0667 0.5333 0.5333

2015–2024 0.0000 21.332 1.0667 1.0667 0.5333 0.5333

1 (3) BUDGETARY IMPACT.—Amounts appro2 priated under paragraph (1) and outlays flowing

3 from such appropriations shall not be taken into ac4 count for purposes of any budget enforcement proce5 dures under the Congressional Budget of 1974 and

6 the Balanced Budget and Emergency Deficit Control

7 Act of 1985.

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

9 respect to the tables in paragraph (2)—

10 (A) the term ‘‘base payment’’ as used in

11 the table under subparagraph (A) means the

12 amounts for payments to States under section

13 111(b)(1);

14 (B) the term ‘‘block grant’’ as used in the

15 table under subparagraph (A) means the
24

•S 1889 PCS

1 amount for payments to States under section

2 111(b)(2);

3 (C) the term ‘‘bonus pool’’ as used in the

4 table under subparagraph (A) means the

5 amounts for payments to States under section

6 112;

7 (D) the term ‘‘smoking cessation’’ as used

8 in the table under subparagraph (B) means the

9 amounts to carry out section 321;

10 (E) the term ‘‘counter-advertising’’ as used

11 in the table under subparagraph (B) means the

12 amounts to carry out section 311;

13 (F) the term ‘‘community-based preven14 tion’’ as used in the table under subparagraph

15 (B) means the amounts to carry out section

16 301;

17 (G) the term ‘‘school-based prevention’’ as

18 used in the table under subparagraph (B)

19 means the amounts to carry out section 301;

20 (H) the term ‘‘event sponsorship’’ as used

21 in the table under subparagraph (B) means the

22 amounts to carry out section 302;

23 (I) the term ‘‘youth database’’ as used in

24 the table under subparagraph (B) means the

25 amounts to carry out section 337;
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•S 1889 PCS

1 (J) the term ‘‘biomedical research’’ as used

2 in the table under subparagraph (C) means the

3 amounts to carry out section 331;

4 (K) the term ‘‘applied research’’ as used in

5 the table under subparagraph (C) means the

6 amounts to carry out section 336;

7 (L) the term ‘‘FDA’’ as used in the table

8 under subparagraph (C) means the amounts for

9 the Food and Drug Administration to carry out

10 title II (and the amendments made by such

11 title);

12 (M) the term ‘‘agriculture’’ as used in the

13 table under subparagraph (D) means the

14 amounts to carry out title V;

15 (N) the term ‘‘victims’ compensation’’ as

16 used in the table under subparagraph (D)

17 means the amounts to carry out section 401;

18 (O) the term ‘‘ETS’’ as used in the table

19 under subparagraph (D) means the amounts to

20 carry out title VI;

21 (P) the term ‘‘Native Americans’’ as used

22 in the table under subparagraph (D) means the

23 amounts to carry out section 703;

24 (Q) the term ‘‘international education’’ as

25 used in the table under subparagraph (D)
26

•S 1889 PCS

1 means the amounts to carry out section 344;

2 and

3 (R) the term ‘‘anti-smuggling’’ as used in

4 the table under subparagraph (D) means the

5 amounts to carry out section 226.

6 (e) PROHIBITION ON TREATMENT AS OVERPAY7 MENT.—

8 (1) IN GENERAL.—Section 1903(d)(3) of the

9 Social Security Act (42 U.S.C. 1396b(d)(3)) is

10 amended—

11 (A) by inserting ‘‘(A)’’ before ‘‘The’’; and

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

13 ‘‘(B) Subparagraph (A) and paragraph (2)(B) shall

14 not apply to any amount recovered or paid to a State as

15 part of a settlement or judgment reached in litigation initi16 ated or pursued by a State against one or more manufac17 turers of tobacco products, as defined in section 5702(d)

18 of the Internal Revenue Code of 1986.’’.

19 (2) EFFECTIVE DATE.—The amendment made

20 by subsection (a) applies to amounts recovered or

21 paid to a State before, on, or after the date of enact22 ment of this Act.

23 (f) BUDGETARY EFFECT.—

24 (1) IN GENERAL.—The Director of the Office of

25 Management and Budget shall annually determine
27

•S 1889 PCS

1 whether the payments made under section 102 have

2 resulted in a decrease in the amount of revenues col3 lected under the excise tax provisions of chapter 52

4 of the Internal Revenue Code of 1986.

5 (2) NOTICE.—The Director shall notify the

6 trustees in any year in which the Director deter7 mines that a shortfall described in paragraph (1) ex8 ists. Upon such a notification, the trustees shall

9 transfer from the Trust Fund to the General Fund

10 of the Treasury an amount necessary to make up

11 such shortfall.

12 (g) INCREASE IN AMOUNTS.—The amounts described

13 in the tables under subsection (d)(2) shall be adjusted by

14 the Trustees to account for any adjustments made under

15 section 102(b) relating to inflationary adjustments or sec16 tion 102(e)(1) relating to the deductibility of payments by

17 manufacturers.

18 SEC. 102. PAYMENTS BY TOBACCO PRODUCT MANUFACTUR19 ERS.

20 (a) PAYMENTS.—

21 (1) INITIAL PAYMENT.—Not later than 90 days

22 after the date of enactment of this Act, each manu23 facturer shall pay to the Trust Fund an amount

24 that bears the same ratio to $10,000,000,000 as the

25 tobacco product market share of the manufacturer
28

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1 bears to the tobacco market share of all tobacco

2 manufacturers for the year preceding the year in

3 which the determination is being made.

4 (2) SUBSEQUENT PAYMENT.—Not later than

5 October 1, 1999, each manufacturer shall pay to the

6 Trust Fund an amount that bears the same ratio to

7 $20,000,000,000 as the tobacco product market

8 share of the manufacturer bears to the tobacco mar9 ket share of all tobacco manufacturers for the year

10 preceding the year in which the determination is

11 being made.

12 (3) ANNUAL PAYMENTS AND COLLECTION.—

13 Not later than October 1, 2000, and each October

14 1 thereafter, each manufacturer shall pay to the

15 Trust Fund an amount that bears the same ratio to

16 $25,000,000,000 as the tobacco product market

17 share of the manufacturer bears to the tobacco mar18 ket share of all tobacco manufacturers for the year

19 preceding the year in which the determination is

20 being made.

21 (4) PAYMENTS APPLICABLE TO CIGARS.—Prior

22 to the date of the completion of the first annual per23 formance survey under section 132(a), the Secretary

24 shall not consider the manufacture of cigars for pur-
29

•S 1889 PCS

1 poses of determining the amount that a manufac2 turer shall be assessed under this subsection.

3 (5) NO REQUIREMENT FOR PAYMENT.—The

4 Secretary shall not require that a manufacturer

5 make a payment under this subsection for any to6 bacco product for any fiscal year if the Secretary de7 termines that the tobacco product involved as manu8 factured by the manufacturer is used by less than

9 0.5 percent of the total number of children deter10 mined to have used any tobacco product as manufac11 tured by all manufacturers for the year involved.

12 (6) APPLICATION TO CERTAIN MANUFACTUR13 ERS.—The provisions of this subsection shall apply

14 to a manufacturer that begins manufacturing to15 bacco products after the date of enactment of this

16 Act, except that if such a manufacturer fails to

17 make payments as provided for in this subsection,

18 such manufacturer shall pay to the Trust Fund an

19 amount equal to 150 percent of the amount that

20 such manufacturer would have paid under this sub21 section.

22 (7) NONAPPLICATION TO CERTAIN MANUFAC23 TURERS.—

24 (A) EXEMPTION.—A manufacturer de25 scribed in subparagraph (B) shall be exempt
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•S 1889 PCS

1 from the requirements of this section relating

2 to—

3 (i) the payment of an initial payment

4 under subsection (a)(1); and

5 (ii) the payment of an amount equal

6 to 40 percent of the annual assessments

7 under this section otherwise applicable to

8 such manufacturer.

9 (B) MANUFACTURER.—A manufacturer

10 described in this subparagraph is a manufac11 turer that—

12 (i) has resolved tobacco-related civil

13 actions with more than 25 States prior to

14 January 1, 1998 through written settle15 ment agreements signed by the attorneys

16 general of such States; and

17 (ii) not later than December 31,

18 1998, provides to all other States the op19 portunity to enter into written settlement

20 agreements that are substantially similar

21 to the agreements described in clause (i)

22 and provides such other States with the

23 most favorable annual payment terms pro24 vided in the settlement agreements de25 scribed in clause (i).
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1 (C) LIMITATION.—The provisions of sub2 paragraph (A)(ii) shall apply only to assess3 ments on cigarettes to the extent that such

4 cigarettes constitute less than 3 percent of all

5 cigarettes manufactured and distributed for

6 consumers in any year.

7 (b) INFLATION ADJUSTMENT.—

8 (1) IN GENERAL.—Except with respect to the

9 amount relating to the National Victims’ Compensa10 tion Fund under section 401 as described in the

11 table under section 101(d)(2), the amount described

12 in subsection (a)(3) shall be increased by 3 percent

13 each year, or adjusted each year to reflect the in14 crease in the Consumer Price Index for all urban

15 consumers (as published by the Bureau of Labor

16 Statistics) from the year previous to the year for

17 which the adjustment is being applied, whichever is

18 greater.

19 (2) NATIONAL VICTIMS’ COMPENSATION

20 FUND.—The amount described in subsection (a)(3)

21 relating to the National Victims’ Compensation

22 Fund under section 401 as described in the table

23 under section 101(d)(2), shall be increased by 3 per24 cent each year, or adjusted each year to reflect the

25 increase in the Medical Consumer Price Index (as
32

•S 1889 PCS

1 published by the Bureau of Labor Statistics) from

2 the year previous to the year for which the adjust3 ment is being applied, whichever is greater.

4 (c) REQUIRED PASS THROUGH.—The trustees shall

5 certify that, with respect to an assessment paid by a man6 ufacturer under this section under paragraphs (1) and (2)

7 of subsection (a), the manufacturer shall increase the price

8 of its tobacco products so as to reflect the amount of the

9 assessment, but in no case shall such increase be less

10 than—

11 (1) in the case of cigarettes, $1.00 with respect

12 to the assessment under subsection (a)(2), and an

13 additional $.50 cents with respect to the assessment

14 under subsection (a)(3); and

15 (2) in the case of other tobacco products, an

16 amount comparable to the amount of the increase

17 under paragraph (1).

18 (d) FAILURE TO MAKE PAYMENT.—Upon a deter19 mination that a manufacturer has failed to pay an assess20 ment as required under this section—

21 (1) the provisions of subtitle A of title IV shall

22 not apply with respect to such manufacturer;

23 (2) the Secretary shall impose penalties on the

24 manufacturer as provided for under section 103; and
33

•S 1889 PCS

1 (3) in full within 90 days of the date on which

2 such payment is due, the Secretary shall revoke the

3 tobacco license of such manufacturer under section

4 222 until such time as such assessment is fully paid.

5 (e) NO TAX BENEFIT.—

6 (1) IN GENERAL.—With respect to a payment

7 under subsection (a), an amount equal to 25 percent

8 of such payment shall not be considered to be an or9 dinary and necessary expense in carrying on a trade

10 or business for purposes of the Internal Revenue

11 Code of 1986 and shall not be tax deductible.

12 (2) LOOK-BACK PENALTIES.—The payment of

13 penalties under subtitle B shall not be considered to

14 be an ordinary and necessary expense in carrying on

15 a trade or business for purposes of the Internal Rev16 enue Code of 1986 and shall not be deductible.

17 (f) EFFECT OF BANKRUPTCY.—Section 507(a)(8) of

18 title 11, United States Code, is amended—

19 (1) in subparagraph (F)(iii), by striking ‘‘or’’ at

20 the end;

21 (2) in subparagraph (G), by striking the period

22 and inserting ‘‘; or’’; and

23 (3) by adding at the end the following:

24 ‘‘(H) a payment, an assessment, or a pen25 alty to be paid into the National Tobacco Trust
34

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1 Fund under section 102 (or any other section)

2 of the KIDS Act.’’.

3 SEC. 103. ENFORCEMENT.

4 (a) IN GENERAL.—The Secretary of the Treasury, in

5 consultation with the Secretary of Health and Human

6 Services, shall enforce the provisions of section 102 with

7 respect to the manufacturer that fails to pay any amount

8 assessed under section 102.

9 (b) AMOUNT OF PENALTY.—The amount of the pen10 alty imposed by subsection (a) on any failure with respect

11 to a manufacturer shall be established by the Secretary

12 of the Treasury for each day during the noncompliance

13 period, except that no such penalty shall be less than the

14 greater of—

15 (1) $100,000 plus interest; or

16 (2) an amount equal to 2 percent of the amount

17 of the annual payment involved with respect to the

18 manufacturer.

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

20 section, the term ‘‘noncompliance period’’ means, with re21 spect to any failure to pay an assessment under section

22 102, the period—

23 (1) beginning on the due date for such pay24 ment; and
35

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

2 is paid in full.

3 (d) FINANCIAL OBLIGATIONS NOT DISCHARGE4 ABLE.—No financial responsibility or liability of any per5 son under this Act shall be extinguished, reduced, or modi6 fied as the result of any proceeding in bankruptcy by or

7 on behalf of a person or the person’s successor or assign.

8 Subtitle B—Payments to States

9 SEC. 111. PAYMENTS TO STATES.

10 (a) PAYMENTS.—

11 (1) IN GENERAL.—There are authorized to be

12 appropriated amounts provided for under section

13 101(d)(2)(A) in each fiscal year to provide funds to

14 each State to reimburse such State for amounts ex15 pended by the State for the treatment of individuals

16 with tobacco-related illnesses or conditions.

17 (2) AMOUNT.—From the amount made avail18 able under section 101(d)(2)(A) for any fiscal year,

19 each State shall receive the applicable percentage of

20 such amount in accordance with the following table:

State Applicable Percentage

Alabama ................................................................. 1.400

Alaska .................................................................... 0.400

Arizona .................................................................. 1.334

Arkansas ................................................................ 0.800

California ............................................................... 9.696

Colorado ................................................................ 1.204

Connecticut ............................................................ 1.612

Delaware ................................................................ 0.400

District of Columbia .............................................. 0.600

Florida ................................................................... 4.977

Georgia .................................................................. 2.174
36

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Hawaii ................................................................... 0.600

Idaho ..................................................................... 0.400

Illinois .................................................................... 4.241

Indiana .................................................................. 1.780

Iowa ....................................................................... 0.802

Kansas ................................................................... 0.800

Kentucky ............................................................... 1.575

Louisiana ............................................................... 1.734

Maine ..................................................................... 0.800

Maryland ............................................................... 2.065

Massachusetts ........................................................ 3.571

Michigan ................................................................ 3.917

Minnesota .............................................................. 2.138

Mississippi ............................................................. 0.800

Missouri ................................................................. 1.930

Montana ................................................................ 0.400

Nebraska ............................................................... 0.600

Nevada ................................................................... 0.600

New Hampshire ..................................................... 0.600

New Jersey ............................................................ 3.193

New Mexico ........................................................... 0.600

New York ............................................................... 10.899

North Carolina ...................................................... 2.143

North Dakota ........................................................ 0.400

Ohio ....................................................................... 4.463

Oklahoma .............................................................. 0.943

Oregon ................................................................... 1.076

Pennsylvania .......................................................... 5.202

Rhode Island ......................................................... 0.800

South Carolina ...................................................... 0.961

South Dakota ........................................................ 0.400

Tennessee .............................................................. 2.230

Texas ..................................................................... 4.905

Utah ...................................................................... 0.400

Vermont ................................................................. 0.400

Virginia .................................................................. 1.827

Washington ............................................................ 1.823

West Virginia ......................................................... 0.818

Wisconsin ............................................................... 1.919

Wyoming ................................................................ 0.200

American Samoa ................................................... 0.009

N. Mariana Islands ............................................... 0.002

Guam ..................................................................... 0.007

U.S. Virgin Islands ................................................ 0.005

Puerto Rico ........................................................... 0.428

1 (b) USE OF FUNDS.—

2 (1) DISCRETIONARY AMOUNTS.—A State may

3 use not to exceed 50 percent of the amount received
37

•S 1889 PCS

1 under this section in a fiscal year for any activities

2 determined appropriate by the State.

3 (2) MANDATORY EXPENDITURES.—A State

4 shall use not less than 50 percent of the amount re5 ceived under this section in a fiscal year

6 (A) to carry out additional activities or

7 provide additional services under—

8 (i) subject to subsection (d), the State

9 program under title XIX of the Social Se10 curity Act (42 U.S.C. 1396 et seq.);

11 (ii) the State program under title XXI

12 of the Social Security Act (42 U.S.C.

13 1397aa et seq.);

14 (iii) the State program under the ma15 ternal and child health services block grant

16 under title V of the Social Security Act (42

17 U.S.C. 701 et seq.);

18 (iv) the community health center pro19 gram under section 330 of the Public

20 Health Service Act (42 U.S.C. 254b);

21 (v) programs administered within the

22 State under the authority of the Substance

23 Abuse and Mental Health Services Admin24 istration;
38

•S 1889 PCS

1 (vi) the State program under the pre2 ventive health services block grant under

3 part A of title XIX of the Public Health

4 Service Act (42 U.S.C. 300w et seq.);

5 (vii) the State program for temporary

6 assistance to needy families funded under

7 part A of title IV of the Social Security

8 (42 U.S.C. 601 et seq.);

9 (viii) federally funded child welfare

10 and abuse programs;

11 (ix) federally funded child care pro12 grams operating in the State;

13 (x) programs to aid disabled children;

14 (xi) the State program under section

15 17 of the Child Nutrition Act of 1966 (42

16 U.S.C. 1786 et seq.);

17 (xii) federally funded child abuse pro18 grams;

19 (xiii) the Head Start Act (42 U.S.C.

20 9831 et seq.);

21 (xiv) the even start family literacy

22 program carried out under part B of title

23 I of the Elementary and Secondary Edu24 cation Act of 1965 (20 U.S.C. 6361 et

25 seq.);
39

•S 1889 PCS

1 (xv) the State program under part B

2 of the Individuals With Disabilities Edu3 cation Act (20 U.S.C. 1411 et seq.);

4 (xvi) the State program under the so5 cial services block grant under title XX of

6 Social Security Act (42 U.S.C. 1397 et

7 seq.);

8 (xvii) the State program under the

9 Community Services Block Grant Act (42

10 U.S.C. 9901 et seq.);

11 (xviii) the State program under the

12 Food Stamp Act of 1977 (7 U.S.C. 2011

13 et seq.);

14 (xix) the State program under Low15 Income Home Energy Assistance Act of

16 1981 (42 U.S.C. 8621 et seq.); and

17 (xx) federally funded programs pro18 viding assistance for general public edu19 cation from kindergarten through 12th

20 grade; and

21 (B) to carry out any other anti-tobacco or

22 health activities determined appropriate by the

23 Secretary.

24 (c) SUPPLEMENT NOT SUPPLANT.—Amounts re25 ferred to in subsection (b)(2) shall be used to supplement
40

•S 1889 PCS

1 and not supplant other Federal, State and local funds pro2 vided for any of the programs described in subparagraphs

3 (A) and (B) of such subsection. Amounts provided to the

4 State under any of the provisions of law referred to in

5 such subparagraph shall not be reduced solely as a result

6 of the availability of funds under this section.

7 (d) NO INCLUSION OF FUNDS FOR PURPOSES OF

8 MEDICAID MATCH.—Amounts received under this section

9 and expended by a State under a program described in

10 subsection (b) may not be used for purposes of claiming

11 a State expenditure under title XIX (42 U.S.C. 1396 et

12 seq.) including expenditures for which an enhanced FMAP

13 is made under the fourth sentence of section 1905(b) of

14 such Act.

15 SEC. 112. STATE BONUS PAYMENTS.

16 (a) IN GENERAL.—The Secretary shall make a grant

17 pursuant to this section to each State for each year for

18 which the State is a high performing State.

19 (b) AMOUNT OF GRANT.—

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

21 the Secretary shall determine the amount of the

22 grant payable under this section to a high perform23 ing State for a year, which shall be based on the

24 score assigned to the State under subsection (d) for
41

•S 1889 PCS

1 the fiscal year that immediately precedes the year

2 for which the bonus is being given.

3 (2) LIMITATION.—The amount payable to a

4 State under this section for a year shall not exceed

5 10 percent of the amount made available for pur6 poses of this section under the table under section

7 101(d)(2).

8 (c) FORMULA FOR MEASURING STATE PERFORM9 ANCE.—Not later than 1 year after the date of the enact10 ment of this Act, the Secretary shall develop a formula

11 for measuring State performance in achieving the under12 age reduction goals described in section 133(b) with re13 spect to the State in the year involved. Such formula shall

14 include the development and utilization of State-specific

15 underage use baselines and targets under a standardized

16 methodology developed by the Centers for Disease Control

17 and Prevention.

18 (d) SCORING OF STATE PERFORMANCE; SETTING OF

19 PERFORMANCE THRESHOLDS.—For each year, the Sec20 retary shall use the formula developed under subsection

21 (c) to assign a score to each eligible State for the fiscal

22 year that immediately precedes the year for which the eli23 gibility for the bonus is being determined.

24 (e) HIGH PERFORMING STATE.—The term ‘‘high

25 performing State’’ means, with respect to a year, a State
42

•S 1889 PCS

1 whose score assigned pursuant to subsection (d) for the

2 year immediately preceding the year for which eligibility

3 for the bonus is being determined equals or exceeds the

4 performance threshold prescribed under such subsection

5 for such preceding year.

6 (f) AMOUNT OF AWARDS.—In determining the

7 amount of an award under this section for any year for

8 a high performing State, the Secretary shall award 20 per9 cent of the funds available for such fiscal year to States

10 that have adopted any or all of the following policies to

11 help meet their annual youth reduction targets:

12 (1) Further increasing the price of cigarettes

13 and other tobacco products.

14 (2) Exceeding Federal minors’ access restric15 tions (including penalties for employees who sell to

16 minors, penalties for minors who purchase, and in17 creasing the legal purchase age).

18 (3) Increased State investments in anti-tobacco

19 programs (including counter-advertising, school and

20 community-based activities, and event sponsorship).

21 (4) Enactment of more stringent policies to re22 duce or eliminate exposures to environmental to23 bacco smoke (including bars, restaurants, bowling

24 alleys, bingo parlors, public transportation, public

25 arenas and stadia).
43

•S 1889 PCS

1 (5) Other activities or actions that the Sec2 retary may deem appropriate.

3 (g) FUNDING.—The Secretary shall use amounts

4 made available for each fiscal year under section

5 101(d)(2)(A) to carry out this section. Amounts remaining

6 available under this section at the end of the fiscal year

7 involved shall be used in subsequent fiscal years to carry

8 out this section.

9 Subtitle C—Annual Youth Tobacco

10 Use Reductions

11 SEC. 131. PURPOSE.

12 It is the purpose of this subtitle to achieve reductions

13 in the proportion of underage consumers of tobacco prod14 ucts through the imposition of financial deterrents relating

15 to the use of tobacco products if certain underage tobacco16 use reduction targets are not met.

17 SEC. 132. CHILD TOBACCO USE SURVEYS.

18 (a) ANNUAL PERFORMANCE SURVEY.—Not later

19 than October 1, 1999, and annually thereafter, the Sec20 retary shall conduct a survey to determine—

21 (1) the percentage of all young individuals who

22 used a type of tobacco product within the 30-day pe23 riod prior to the conduct of the survey; and

24 (2) the percentage of young individuals who

25 identify each brand of each type of tobacco product
44

•S 1889 PCS

1 as the usual brand smoked or used within such 30-

2 day period.

3 (b) YOUNG INDIVIDUALS.—For the purposes of this

4 subtitle, the term ‘‘young individuals’’ means individuals

5 who are under 18 years of age.

6 (c) BASELINE LEVEL.—

7 (1) IN GENERAL.—For the purposes of this

8 subtitle, the term ‘‘baseline level’’ means, with re9 spect to each type of tobacco product, the percentage

10 of young individuals determined to have used such

11 tobacco products in the annual performance survey

12 described in subsection (a) completed by October 1,

13 1999.

14 (2) MANUFACTURER’S BASELINE LEVEL.—For

15 the purposes of this subtitle, the term ‘‘manufactur16 er’s baseline level’’ means, with respect to each type

17 of tobacco product, the percentage of young individ18 uals determined to have identified a brand of each

19 such tobacco product of such manufacturer as the

20 usual brand smoked or used in the annual perform21 ance survey described in subsection (a) completed by

22 October 1, 1999.

23 (3) USE OF CERTAIN DATA OR METHODOL24 OGY.—
45

•S 1889 PCS

1 (A) IN GENERAL.—For purposes of deter2 mining the percentages under paragraphs (1)

3 and (2), the Secretary may use the data col4 lected through national surveys of young indi5 viduals. Such surveys shall—

6 (i) be based on a nationally represent7 ative sample of at least 20,000 completed

8 interviews of young individuals;

9 (ii) be on a household-based in person

10 survey;

11 (iii) measure the use of tobacco prod12 uct within the past 30 days;

13 (iv) identify the usual brand of each

14 type of tobacco product used within the

15 past 30 days; and

16 (v) calculate the actual percentage re17 ductions in underage the use of a type of

18 tobacco product (or, in the case of the

19 manufacturer-specific surcharge, the use of

20 a type of tobacco product of a manufac21 turer) based on the point estimates from

22 the annual performance survey.

23 For purposes of clause (iv), point estimates

24 shall be deemed acceptable for measuring com25 pliance with percent reduction targets and for
46

•S 1889 PCS

1 calculating surcharges if the precision of esti2 mates of the proportion of young individuals re3 porting the use of a type of tobacco product (or,

4 in the case of the manufacturer-specific sur5 charge, the use of a type of tobacco product of

6 a manufacturer) for the purpose of measuring

7 compliance with percentage reduction targets

8 and calculating surcharges without regard to

9 the 95 percent confidence interval around such

10 point estimates if the precision of estimates of

11 the percentage of young individuals reporting

12 use of a type of tobacco product (or, in the case

13 of the manufacturer-specific surcharge, the use

14 of a type of tobacco product of a manufacturer)

15 is such that the 95 percent confidence interval

16 around such point estimates is no more than

17 plus or minus 1 percent.

18 (B) CONCLUSIVE ACCURATENESS.—A sur19 vey using the methodology described in sub20 paragraph (A) shall be deemed conclusively

21 proper, correct and accurate for purposes of

22 this Act. The Secretary may, by notice and

23 comment rulemaking, subsequently adopt a dif24 ferent survey methodology.
47

•S 1889 PCS

1 (C) FINAL DETERMINATION.—The deter2 mination of the Secretary as to the amount and

3 allocation of the surcharge under this subtitle

4 shall be final and the manufacturer shall pay

5 such surcharge within 30 days of the date on

6 which the manufacturer is assessed. Such pay7 ment shall be retained by the Secretary pending

8 final judicial review of what, if any, change in

9 the surcharge is appropriate.

10 (D) REVIEW.—The amount of any sur11 charge paid under this subtitle shall be subject

12 to judicial review by the United States Court of

13 Appeals for the District of Columbia Circuit,

14 based on the arbitrary and capricious standard

15 of section 706 of title 5, United States Code.

16 Notwithstanding any other provision of law, no

17 court shall have the authority to stay any sur18 charge payment due to the Secretary under this

19 subtitle pending judicial review until the Sec20 retary has made or failed to make a compliance

21 determination, as described under this subtitle,

22 that has adversely affected the person seeking

23 the review.

24 (E) NONAPPLICABILITY.—Chapter 35 of

25 title 44, United States Code, shall not apply to
48

•S 1889 PCS

1 information required for the purposes of carry2 ing out this subsection.

3 (F) AMENDMENT TO PUBLIC HEALTH

4 SERVICE ACT.—Section 308(d) of the Public

5 Health Service Act (42 U.S.C. 242m(d)) is

6 amended—

7 (i) by inserting after ‘‘or 307’’ the fol8 lowing: ‘‘, or a survey conducted under sec9 tion 132 of the KIDS Act,’’; and

10 (ii) by inserting after ‘‘or 306’’ the

11 following: ‘‘, or in the course of a survey

12 conducted under section 132 of the KIDS

13 Act,’’.

14 (d) ADMINISTRATION.—

15 (1) TECHNICAL ADJUSTMENTS.—The Secretary

16 may make technical changes in the manner in which

17 the surveys are conducted under this section to re18 flect improved methodology so long as adjustments

19 are made to ensure that the results of the surveys

20 are comparable from year to year.

21 (2) PARTICIPATION IN SURVEY.—Notwithstand22 ing any other provision of law, the Secretary may

23 conduct a survey under this section involving minors

24 if the results of such survey with respect to such mi25 nors are kept confidential and not disclosed.
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•S 1889 PCS

1 (e) TOBACCO PRODUCT.—For the purposes of this

2 subtitle, cigarettes, cigars, little cigars, smokeless tobacco,

3 and roll-your-own tobacco shall each be considered as a

4 separate type of tobacco product.

5 SEC. 133. REDUCTION IN UNDERAGE TOBACCO PRODUCT

6 USAGE.

7 (a) ANNUAL DETERMINATION.—The Secretary shall

8 annually determine, based on the annual performance sur9 veys under section 132, whether the required percentage

10 reductions in underage use of tobacco products (as de11 scribed in subsection (b)) for a year have been achieved

12 for the year involved. Such determination shall be based

13 on the average annual percentage prevalence of the use

14 of tobacco products by young individuals (as determined

15 using the annual surveys conducted by the Secretary

16 under section 132) for the year involved as compared to

17 the baseline level.

18 (b) REQUIRED PERCENTAGE REDUCTION IN UNDER19 AGE USE OF TOBACCO PRODUCTS.—For purposes of this

20 section, the required percentage reduction from the base21 line level in the percentage of underage use of tobacco

22 products with respect to each tobacco product shall be as

23 follows:

24 (1) With respect to calendar year 2000, at least

25 15 percent.
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•S 1889 PCS

1 (2) With respect to calendar year 2001, at least

2 20 percent.

3 (3) With respect to calendar year 2002, at least

4 25 percent.

5 (4) With respect to calendar year 2003, at least

6 30 percent.

7 (5) With respect to calendar year 2004, at least

8 40 percent.

9 (6) With respect to calendar year 2005, at least

10 50 percent.

11 (7) With respect to calendar year 2006, at least

12 55 percent.

13 (8) With respect to calendar year 2007, at least

14 60 percent.

15 (9) With respect to calendar year 2008, and

16 each subsequent calendar year, at least 65 percent.

17 (c) REQUIRED REDUCTION FOR MANUFACTURERS.—

18 With respect to the average percentage prevalence of the

19 use of each manufacturer’s brands of tobacco products by

20 young individuals (as determined on the basis of the an21 nual performance surveys conducted by the Secretary

22 under section 132) for a year—

23 (1) each manufacturer which manufactured a

24 brand or brands of tobacco product on or before the

25 date of the enactment of this Act shall reduce the
51

•S 1889 PCS

1 percentage of young individuals who use such manu2 facturer’s brand or brands as their usual brand in

3 accordance with the percentage reductions described

4 under subsection (b); and

5 (2) each manufacturer which manufactures a

6 new brand or brands of tobacco products (a brand

7 of tobacco product that was not manufactured prior

8 to the date of enactment of this Act) after the date

9 of the enactment of this Act shall ensure that the

10 percentage prevalence of young individuals who use

11 such manufacturer’s brand or brands as their usual

12 brand is equal to or less than the de minimis level

13 described in section 134(b).

14 SEC. 134. NONCOMPLIANCE.

15 (a) INDUSTRY-WIDE PENALTY.—

16 (1) IN GENERAL.—If, with respect to a year,

17 the Secretary determines that the required percent18 age reduction in underage use of a tobacco product

19 has not been achieved as required under section

20 133(b), the Secretary shall impose an industry-wide

21 penalty on the manufacturers of such product in an

22 amount that is equal to the product of—

23 (A) the amount applicable under para24 graph (2) for each unit of the tobacco product

25 involved that is sold for consumer use by such
52

•S 1889 PCS

1 manufacturers in the year following the year in

2 which the noncompliance occurs; and

3 (B) the number of percentage points by

4 which the required percentage reduction in un5 derage use of tobacco products under section

6 133(b) for the year exceeds the actual reduction

7 in the use of such products for the year (as de8 termined under subsection (c)).

9 (2) APPLICABLE AMOUNT.—The amount appli10 cable for purposes of paragraph (1)(A) for a year

11 shall equal—

12 (A) for the first 10 percentage points by

13 which the required percentage reduction in un14 derage use of tobacco products under section

15 133(b) for the year exceeds the actual reduction

16 in the use of such products for the year (as de17 termined under subsection (c)), $.01 cent for

18 each such excess percentage point;

19 (B) for each percentage point in excess of

20 11 and less than 21 by which the required per21 centage reduction in underage use of tobacco

22 products under section 133(b) for the year ex23 ceeds the actual reduction in the use of such

24 products for the year (as determined under sub-
53

•S 1889 PCS

1 section (c)), $.02 cents for each such excess

2 percentage point; and

3 (C) for each percentage point in excess of

4 20 by which the required percentage reduction

5 in underage use of tobacco products under sec6 tion 133(b) for the year exceeds the actual re7 duction in the use of such products for the year

8 (as determined under subsection (c)), $.03

9 cents for each such excess percentage point.

10 (3) INCREASED PENALTY FOR CONSECUTIVE

11 FAILURES.—If the Secretary determines that the re12 quired percentage reduction in underage use of a

13 type of tobacco product has not been achieved as re14 quired under section 133(b) in 3 or more consecutive

15 years, the amount described in paragraph (2) shall

16 be increased by a factor of 2.

17 (4) DE MINIMIS RULE.—The Secretary shall

18 not impose a penalty on a manufacturer under para19 graph (1) with respect to a type of tobacco product

20 if the Secretary determines that the percentage of

21 young individuals using such tobacco product (as de22 termined using the annual surveys conducted by the

23 Secretary under section 132) is less than 0.5 percent

24 of the total number of young individuals determined

25 to have used tobacco products in the year involved.
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•S 1889 PCS

1 (5) PAYMENT.—An industry-wide penalty im2 posed under this subsection for a tobacco product

3 shall be paid by each manufacturer based on each

4 such manufacturers market share for the type of to5 bacco product involved.

6 (b) MANUFACTURER-SPECIFIC PENALTY.—

7 (1) IN GENERAL.—With respect to each manu8 facturer for a year, if the Secretary determines that

9 the required percentage reduction in underage use of

10 a type of tobacco product has not been achieved by

11 such manufacturer as required under section 134,

12 the Secretary shall impose a penalty on the tobacco

13 products of such type of such manufacturer in an

14 amount that is equal to the product of—

15 (A) the amount applicable under para16 graph (2) for each unit of the tobacco product

17 involved that is sold for consumer use by such

18 manufacturer in the year following the year in

19 which the noncompliance occurs; and

20 (B) the number of percentage points by

21 which the required percentage reduction in un22 derage use of the type of tobacco product of

23 such manufacturer under section 133(b) for the

24 year exceeds the actual reduction in the use of
55

•S 1889 PCS

1 such product of such manufacturer for the year

2 (as determined under subsection (c)).

3 (2) APPLICABLE AMOUNT.—The amount appli4 cable for purposes of paragraph (1)(A) for a year

5 shall equal—

6 (A) for the first 10 percentage points by

7 which the required percentage reduction in un8 derage use of tobacco products under section

9 133(b) for the year exceeds the actual reduction

10 in the use of such products for the year (as de11 termined under subsection (c)), $.01 cent for

12 each such excess percentage point;

13 (B) for each percentage point in excess of

14 11 and less than 21 by which the required per15 centage reduction in underage use of tobacco

16 products under section 133(b) for the year ex17 ceeds the actual reduction in the use of such

18 products for the year (as determined under sub19 section (c)), $.02 cents for each such excess

20 percentage point; and

21 (C) for each percentage point in excess of

22 20 by which the required percentage reduction

23 in underage use of tobacco products under sec24 tion 133(b) for the year exceeds the actual re25 duction in the use of such products for the year
56

•S 1889 PCS

1 (as determined under subsection (c)), $.03

2 cents for each such excess percentage point.

3 (3) INCREASED PENALTY FOR CONSECUTIVE

4 FAILURES.—If the Secretary determines that a par5 ticular manufacturer has failed to meet the required

6 percentage reduction in underage use of a type of to7 bacco product (under section 133(b)) by at least 30

8 percentage points for a period of at least 3 consecu9 tive years, the amount applicable under paragraph

10 (2) shall be, for each percentage point in excess of

11 30 by which the required percentage reduction in

12 underage use of tobacco products exceeds the actual

13 reduction in the use of such products for the year

14 (as determined under subsection (c)), $.06 cents for

15 each such excess percentage point.

16 (4) DE MINIMIS RULE.—The Secretary shall

17 not impose a penalty on a manufacturer under this

18 subsection for a type of tobacco product for a year

19 if the Secretary determines that the percentage of

20 young individuals identifying a brand of such to21 bacco product of such manufacturer as the usual

22 brand smoked or used for such year (as determined

23 using the annual surveys conducted by the Secretary

24 under section 132) is less than 0.5 percent of the
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•S 1889 PCS

1 total number of young individuals determined to

2 have used such tobacco products in such year.

3 (5) PAYMENT.—Penalties under this section

4 shall be paid within 30 days of the date on which

5 an assessment is made by the Secretary.

6 (c) ACTUAL PERCENTAGE REDUCTION IN UNDERAGE

7 USE OF TOBACCO PRODUCTS.—For purposes of this sec8 tion, the term ‘‘actual percentage reduction in underage

9 use of tobacco products’’ means, with respect to a type

10 of tobacco product involved for a year, the percentage re11 duction, as determined by the Secretary using the annual

12 performance surveys under section 132, in the use of such

13 tobacco product by young individuals as compared to the

14 baseline for such tobacco product under section 132(c).

15 (d) PROCEDURES.—In assessing penalties under this

16 section, the Secretary may apply such statistical methods,

17 including sampling, as may be appropriate to increase the

18 accuracy of the estimates from the annual performance

19 survey. In determining the industry-wide and manufac20 turer-specific penalties under this section, the Secretary

21 shall determine what confidence interval to use from the

22 survey information made available from the annual per23 formance survey under section 132.

24 (e) ADJUSTMENTS.—If for any calendar year the Sec25 retary determines that the average annual percentage
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•S 1889 PCS

1 prevalence of the use of tobacco products by young individ2 uals (as determined using the annual surveys conducted

3 by the Secretary under section 132) for the year involved

4 is greater than the baseline level for such products (as

5 determined under section 132(b)), the amount determined

6 under subsections (a)(1) and (b)(1) shall be adjusted to

7 reflect the—

8 (1) the percentage point amount applicable

9 under section 133(b); and

10 (2) the percentage increase in the average an11 nual percentage prevalence of the use of the tobacco

12 products involved by individuals who are under 18

13 years of age for the year (as determined under sec14 tion 132) compared to the baseline level for such

15 products (as determined under section 132(b)).

16 (f) PENALTIES NONDEDUCTIBLE.—The payment of

17 penalties under this subtitle shall not be considered to be

18 an ordinary and necessary expense in carrying on a trade

19 or business for purposes of the Internal Revenue Code of

20 1986 and shall not be deductible.

21 (g) USE OF AMOUNTS.—With respect to amounts

22 paid by manufacturers under this section or section 135,

23 the Secretary shall use such amounts as follows:
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•S 1889 PCS

(1) 1 1 ⁄3 of such amounts shall be used for smok2 ing cessation programs under chapter 2 of subtitle

3 B of title III.

(2) 1 4 ⁄3 of such amounts shall be used for com5 munity and school-based prevention programs under

6 subtitle A, and counter advertising under chapter 1

7 of subtitle B, of title III.

(3) 1 8 ⁄3 of such amounts shall be used for bio9 medical and applied research under subtitle C of

10 title III.

11 (h) JUDICIAL REVIEW.—A manufacturer of tobacco

12 products may seek judicial review of any action under this

13 subtitle only after the assessment involved has been paid

14 by the manufacturer to the Department of the Treasury

15 and only in the United States District Court for the Dis16 trict of Columbia.

17 (i) LIMITATION ON PENALTIES FOR NONCOMPLI18 ANCE.—With respect to penalties applicable for a year

19 under this section, the sum of the penalties imposed shall

20 not exceed $10,000,000,000 per year, increased by the in21 crease in the Consumer Price Index for the year involved.

22 In complying with this subsection, the Secretary shall

23 apply penalties under subsection (b) prior to the applica24 tion of penalties under subsection (a).
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1 SEC. 135. ENFORCEMENT.

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

3 initial penalty on the failure of any manufacturer to make

4 any payment required under this subtitle within 30 days

5 after the date on which such payment is due.

6 (b) AMOUNT OF PENALTY.—The amount of the pen7 alty imposed by subsection (a) on any failure with respect

8 to a manufacturer shall be the greater of $100,000 or an

9 amount equal to 2 percent of the penalty owed under sec10 tion 134 for each day during the noncompliance period.

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

12 section, the term ‘‘noncompliance period’’ means, with re13 spect to any failure to make the surcharge payment re14 quired under this subtitle, the period—

15 (1) beginning on the due date for such pay16 ment; and

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

18 is paid in full.

19 (d) LIMITATIONS.—No penalty shall be imposed by

20 subsection (a) on any failure to make a surcharge payment

21 under this subtitle during any period for which it is estab22 lished to the satisfaction of the Secretary that none of the

23 persons responsible for such failure knew or, exercising

24 reasonable diligence, would have known, that such failure

25 existed.
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1 TITLE II—REGULATION OF THE

2 TOBACCO INDUSTRY

3 Subtitle A—Food and Drug Admin4 istration Jurisdiction and Gen5 eral Authority

6 SEC. 201. STATEMENT OF GENERAL AUTHORITY.

7 The regulations promulgated by the Secretary in the

8 rule dated August 28, 1996 (Vol. 61, No. 168 C.F.R.),

9 adding part 897 to title 21, Code of Federal Regulations,

10 shall be deemed to have been lawfully promulgated under

11 the Food, Drug and Cosmetic Act as amended by this

12 title. Such regulations shall apply to all tobacco products.

13 SEC. 202. NONAPPLICABILITY TO OTHER DRUGS OR DE14 VICES.

15 Nothing in this Act, or an amendment made by this

16 title, shall be construed to affect the regulation of drugs

17 and devices that are not tobacco products by the Secretary

18 under the Federal Food, Drug and Cosmetic Act.

19 SEC. 203. CONFORMING AMENDMENTS TO CONFIRM JURIS20 DICTION.

21 (a) DEFINITIONS.—

22 (1) DRUG.—Section 201(g)(1) of the Federal

23 Food, Drug, and Cosmetic Act (21 U.S.C. 321

24 (g)(1)) is amended by striking ‘‘and (D)’’ and in25 serting ‘‘(D) nicotine in tobacco products, and (E)’’.
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•S 1889 PCS

1 (2) DEVICE.—Section 201(h) of the Federal

2 Food, Drug, and Cosmetic Act (21 U.S.C. 321(h))

3 is amended—

4 (A) in paragraph (2), by striking ‘‘or’’ at

5 the end;

6 (B) in paragraph (3), by striking ‘‘and’’ at

7 the end and inserting ‘‘or’’; and

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

9 following:

10 ‘‘(4) nicotine-containing tobacco products, and’’.

11 (3) ADDITIONAL DEFINITIONS.—Section 201 of

12 the Federal Food, Drug and Cosmetic Act (21

13 U.S.C. 321) is amended by adding at the end the

14 following:

15 ‘‘(kk) The term ‘cigarette’ means any product that

16 contains nicotine, is intended to be burned under ordinary

17 conditions of use, and consists of—

18 ‘‘(1) any roll of tobacco wrapped in paper or in

19 any substance not containing tobacco; or

20 ‘‘(2) any roll of tobacco wrapped in any sub21 stance containing tobacco which, because of its ap22 pearance, the type of tobacco used in the filler, or

23 its packaging and labeling, is likely to be offered to,

24 or purchased by, consumers as a cigarette described

25 in paragraph (1).
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•S 1889 PCS

1 ‘‘(ll) The term ‘cigarette tobacco’ means any product

2 that consists of loose tobacco that contains or delivers nic3 otine and is intended for use by consumers in a cigarette.

4 Unless otherwise stated, the requirements for cigarettes

5 shall also apply to cigarette tobacco.

6 ‘‘(mm) The term ‘cigar’ means any roll of tobacco

7 wrapped in leaf tobacco or in any substance containing

8 tobacco (other than any roll of tobacco that is a cigarette

9 or little cigar with the meaning of paragraph (kk) or (oo).

10 ‘‘(nn) The term ‘distributor’ with respect to a tobacco

11 product means any person who furthers the distribution

12 of cigarette or smokeless tobacco, whether domestic or im13 ported, at any point from the original place of manufac14 ture to the person who sells or distributes the product to

15 individuals for personal consumption. Common carriers

16 shall not be considered distributors for purposes of this

17 Act.

18 ‘‘(oo) The term ‘little cigar’ means any roll of tobacco

19 wrapped in leaf tobacco or any substance containing to20 bacco (other than any roll of tobacco which is a cigarette)

21 and as to which 1,000 units weigh not more than 3

22 pounds.

23 ‘‘(pp) The term ‘manufacturer’ means any person, in24 cluding any repacker or relabeler, who manufactures, fab25 ricates, assembles, processes, packs, or labels a tobacco
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•S 1889 PCS

1 product. Any successor or assign of a manufacturer, as

2 well as any person affiliated with the manufacturer, shall

3 have all of the manufacturer’s responsibilities and liabil4 ities under this Act.

5 ‘‘(qq) The term ‘nicotine’ means the chemical sub6 stance named 3-(1-Methyl-2-pyrrolidinyl)pyridine or

7 C10H14N2, including any salt or complex of nicotine.

8 ‘‘(rr) The term ‘package’ means the innermost sealed

9 contained, irrespective of the material from which such

10 container is made, in which a tobacco product is placed

11 by the manufacturer and in which such tobacco product

12 is offered for sale to a member of the general public.

13 ‘‘(ss) The term ‘person’ means a firm, partnership,

14 association, corporation, legal representative, trustee, re15 ceiver or any other legally recognized entity.

16 ‘‘(tt) The term ‘pipe tobacco’ means any loose tobacco

17 that, because of its appearance, type, packaging, or label18 ing is likely to be offered to or purchased by, consumers

19 as a tobacco product to be smoked in a pipe.

20 ‘‘(uu) The term ‘point-of-sale’ means any location at

21 which a consumer can purchase or otherwise obtain to22 bacco products for personal consumption.

23 ‘‘(vv) The term ‘retailer’ means any person who sells

24 tobacco products to individuals for personal consumption
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•S 1889 PCS

1 or who operates a facility where vending machines or self2 service displays are permitted under this Act.

3 ‘‘(ww) The term ‘roll-your-own’ means any tobacco

4 which, because of its appearance, type, packaging, or la5 beling, is suitable for use and likely to be offered to, or

6 purchased by, consumers as tobacco for making cigarettes.

7 ‘‘(xx) The term ‘smokeless tobacco’ means any prod8 uct that consists of cut, ground, powdered or leaf tobacco

9 that contains nicotine and that is intended to be placed

10 in the oral or nasal cavity.

11 ‘‘(yy) The term ‘tobacco product’ means any product

12 made of or derived from tobacco leaf for human consump13 tion, including, but not limited to, cigarettes, cigarillos,

14 cigarette tobacco, cigars, little cigars, pipe tobacco, smoke15 less tobacco, and roll-your-own tobacco.’’.

16 (4) COMBINATION OF PRODUCTS.—Section

17 503(g) of the Federal Food, Drug, and Cosmetic Act

18 (21 U.S.C. 353(g)) is amended by inserting ‘‘(in19 cluding any tobacco product)’’ after ‘‘products’’ the

20 first place that such appears.

21 (b) PROHIBITED ACTS.—Section 301 of the Federal

22 Food, Drug, and Cosmetic Act (21 U.S.C. 331) is amend23 ed by adding at the end the following:
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1 ‘‘(x) The manufacture, labeling, distribution, adver2 tising and sale of any adulterated or misbranded tobacco

3 product in violation of—

4 ‘‘(1) regulations issued under this Act; or

5 ‘‘(2) the KIDS Act, or regulations issued under

6 such Act.’’.

7 (c) ADULTERATED DRUGS AND DEVICES.—

8 (1) IN GENERAL.—Section 501 of the Federal

9 Food, Drug, and Cosmetic Act (21 U.S.C. 351) is

10 amended by adding at the end the following:

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

12 with the provisions of subchapter D of this chapter or the

13 KIDS Act.’’.

14 (2) MISBRANDING.—Section 502(q) of the Fed15 eral Food, Drug, and Cosmetic Act (21 U.S.C.

16 352(q)) is amended—

17 (A) by striking ‘‘or (2)’’ and inserting in

18 lieu thereof ‘‘(2)’’; and

19 (B) by inserting before the period the fol20 lowing: ‘‘, or (3) in the case of a tobacco prod21 uct, it is sold, distributed, advertised, labeled,

22 or used in violation of this Act or the KIDS

23 Act, or regulations prescribed under such

24 Acts’’.
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•S 1889 PCS

1 (d) RESTRICTED DEVICE.—Section 520(e) of the

2 Federal Food, Drug, and Cosmetic Act (21 U.S.C.

3 360j(e)) is amended—

4 (1) in paragraph (1), by striking ‘‘or use—’’

5 and inserting ‘‘or use, including restrictions on the

6 access to, and the advertising and promotion of, to7 bacco products—’’; and

8 (2) by adding at the end the following:

9 ‘‘(3) Tobacco products are a restricted device under

10 this paragraph.’’.

11 (e) REGULATORY AUTHORITY.—Section 503(g) (21

12 U.S.C. 353(g)) is amended by adding at the end the fol13 lowing:

14 ‘‘(5) The Secretary may regulate any tobacco product

15 as a drug, device, or both, and may designate the office

16 of the Administration that shall be responsible for regulat17 ing such products.’’.

18 SEC. 204. GENERAL RULE.

19 Section 513(a)(1)(B) of the Federal Food, Drug and

20 Cosmetic Act (21 U.S.C. 360c(a)(1)(B)) is amended by

21 adding at the end the following: ‘‘The sale of tobacco prod22 ucts to adults that comply with performance standards es23 tablished for these products under section 514 and other

24 provisions of this Act and any regulations prescribed
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•S 1889 PCS

1 under this Act shall not be prohibited by the Secretary,

2 notwithstanding sections 502(j), 516, and 518.’’.

3 SEC. 205. SAFETY AND EFFICACY STANDARD AND RECALL

4 AUTHORITY.

5 (a) SAFETY AND EFFICACY STANDARD.—Section

6 513(a) (21 U.S.C. 360c(a)) is amended—

7 (1) in paragraph (1)(B), by inserting after the

8 first sentence the following: ‘‘For a device which is

9 a tobacco product, the assurance in the previous sen10 tence need not be found if the Secretary finds that

11 special controls achieve the best public health re12 sult.’’; and

13 (2) in paragraph (2)—

14 (A) by redesignating subparagraphs (A),

15 (B) and (C) as clauses (i), (ii) and (iii), respec16 tively;

17 (B) by striking ‘‘(2) For’’ and inserting

18 ‘‘(2)(A) For’’; and

19 (C) by adding at the end the following:

20 ‘‘(B) For purposes of paragraph (1)(B), subsections

21 (c)(2)(C), (d)(2)(B), (e)(2)(A), (f)(3)(B)(i), and

22 (f)(3)(C)(i), and sections 514, 519(a), 520(e), and 520(f),

23 the safety and effectiveness of a device that is a tobacco

24 product need not be found if the Secretary finds that the

25 action to be taken under any such provision would achieve
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•S 1889 PCS

1 the best public health result. The finding as to whether

2 the best public health result has been achieved shall be

3 determined with respect to the risks and benefits to the

4 population as a whole, including users and non-users of

5 the tobacco product, and taking into account—

6 ‘‘(i) the increased or decreased likelihood that

7 existing consumers of tobacco products will stop

8 using such products; and

9 ‘‘(ii) the increased or decreased likelihood that

10 those who do not use tobacco products will start

11 using such products.’’.

12 (b) RECALL AUTHORITY.—Section 518(e)(1) (21

13 U.S.C. 360h(e)(1)) is amended by inserting after ‘‘adverse

14 health consequences or death,’’ the following: ‘‘and for to15 bacco products that the best public health result would

16 be achieved,’’.

17 Subtitle B—Regulation of Tobacco

18 Products

19 SEC. 211. PERFORMANCE STANDARDS.

20 Section 514(a) of the Federal Food, Drug, and Cos21 metic Act (21 U.S.C. 60d(a)) is amended—

22 (1) in paragraph (2), by striking ‘‘device’’ and

23 inserting ‘‘nontobacco product device’’;

24 (2) by redesignating paragraphs (3) and (4) as

25 paragraphs (6) and (7), respectively; and
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•S 1889 PCS

1 (3) by inserting after paragraph (2) the follow2 ing:

3 ‘‘(3) The Secretary may adopt a performance stand4 ard under section 514(a)(2) for a tobacco product regard5 less of whether the product has been classified under sec6 tion 513. Such standard may—

7 ‘‘(A) include provisions to achieve the best pub8 lic health result;

9 ‘‘(B) where necessary to achieve the best public

10 health result, include—

11 ‘‘(i) provisions respecting the construction,

12 components, constituents, ingredients, and

13 properties of the tobacco product device, includ14 ing the reduction or elimination (or both) of

15 nicotine and the other components, ingredients,

16 and constituents of the tobacco product, its

17 components and its by-products, based upon the

18 best available technology;

19 ‘‘(ii) provisions for the testing (on a sam20 ple basis or, if necessary, on an individual

21 basis) of the tobacco product device or, if it is

22 determined that no other more practicable

23 means are available to the Secretary to assure

24 the conformity of the tobacco product device to

25 such standard, provisions for the testing (on a
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•S 1889 PCS

1 sample basis or, if necessary, on an individual

2 basis) by the Secretary or by another person at

3 the direction of the Secretary;

4 ‘‘(iii) provisions for the measurement of

5 the performance characteristics of the tobacco

6 product device;

7 ‘‘(iv) provisions requiring that the results

8 of each test or of certain tests of the tobacco

9 product device required to be made under

10 clause (ii) demonstrate that the tobacco product

11 device is in conformity with the portions of the

12 standard for which the test or tests were re13 quired; and

14 ‘‘(v) a provision that the sale and distribu15 tion of the tobacco product device be restricted

16 but only to the extent that the sale and dis17 tribution of a tobacco product device may other18 wise be restricted under this Act; and

19 ‘‘(C) where appropriate, require the use and

20 prescribe the form and content of labeling for the

21 use of the tobacco product device.

22 ‘‘(4) Not later than 1 year after the date of enact23 ment of this paragraph, the Secretary (acting through the

24 Commissioner of Food and Drugs) shall establish a Sci25 entific Advisory Committee to evaluate whether a level or
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•S 1889 PCS

1 range of levels exists at which nicotine yields do not

2 produce drug-dependence. The Advisory Committee shall

3 also review any other safety, dependence or health issue

4 assigned to it by the Secretary. The Secretary need not

5 promulgate regulations to establish the Committee.’’.

6 SEC. 212. APPLICATION OF FEDERAL FOOD, DRUG, AND

7 COSMETIC ACT TO TOBACCO PRODUCTS.

8 (a) TOBACCO PRODUCTS REGULATION.—Chapter V

9 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.

10 351 et seq.) is amended by adding at the end the follow11 ing:

12 ‘‘SUBCHAPTER F—TOBACCO PRODUCT DEVEL13 OPMENT, MANUFACTURING, AND ACCESS

14 RESTRICTIONS, LICENSING, AND ANTI15 SMUGGLING

16 ‘‘PART A—TOBACCO PRODUCT DEVELOPMENT,

17 MANUFACTURING, AND ACCESS RESTRICTIONS

18 ‘‘SEC. 570. PROMULGATION OF REGULATIONS.

19 ‘‘Any regulations necessary to implement this sub20 chapter shall be promulgated not later than 12 months

21 after the date of enactment of this subchapter using notice

22 and comment rulemaking (in accordance with chapter 5

23 of title 5, United States Code). Such regulations may be

24 revised thereafter as determined necessary by the Sec25 retary.
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1 ‘‘SEC. 571. MAIL-ORDER SALES.

2 ‘‘(a) IN GENERAL.—Not later than 2 years after the

3 date of enactment of this subchapter, the Secretary shall

4 review and determine whether persons under the age of

5 18 years are obtaining tobacco products by means of the

6 mail.

7 ‘‘(b) RESTRICTIONS.—Based solely upon the review

8 conducted under subsection (a), the Secretary may take

9 regulatory and administrative action to restrict or elimi10 nate mail order sales of tobacco products.

11 ‘‘SEC. 572. TOBACCO PRODUCT WARNINGS AND PACKAG12 ING.

13 ‘‘(a) CIGARETTE WARNINGS.—

14 ‘‘(1) IN GENERAL.—

15 ‘‘(A) PACKAGING.—It shall be unlawful for

16 any person to manufacture, package, or import

17 for sale or distribution any cigarettes the pack18 age of which fails to bear, in accordance with

19 the requirements of this subsection, one of the

20 following labels:

21 ‘‘WARNING: Cigarettes Are Addictive.

22 ‘‘WARNING: Tobacco Smoke Can Harm

23 Your Children.

24 ‘‘WARNING: Cigarettes Cause Fatal Lung

25 Disease.

26 ‘‘WARNING: Cigarettes Cause Cancer.
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•S 1889 PCS

1 ‘‘WARNING: Cigarettes Cause Strokes

2 And Heart Disease.

3 ‘‘WARNING: Smoking During Pregnancy

4 Can Harm Your Baby.

5 ‘‘WARNING: Smoking Can Kill You.

6 ‘‘WARNING: Tobacco Smoke Causes

7 Fatal Lung Disease In Nonsmokers.

8 ‘‘WARNING: Quitting Smoking Now

9 Greatly Reduces Serious Risks To Your

10 Health.

11 ‘‘(B) ADVERTISING.—It shall be unlawful

12 for any manufacturer, importer, distributor or

13 retailer of cigarettes to advertise or cause to be

14 advertised any cigarette unless the advertising

15 bears, in accordance with the requirements of

16 this subsection, one of the following labels:

17 ‘‘WARNING: Cigarettes Are Addictive.

18 ‘‘WARNING: Tobacco Smoke Can Harm

19 Your Children.

20 ‘‘WARNING: Cigarettes Cause Fatal Lung

21 Disease.

22 ‘‘WARNING: Cigarettes Cause Cancer.

23 ‘‘WARNING: Cigarettes Cause Strokes

24 And Heart Disease.
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•S 1889 PCS

1 ‘‘WARNING: Smoking During Pregnancy

2 Can Harm Your Baby.

3 ‘‘WARNING: Smoking Can Kill You.

4 ‘‘WARNING: Tobacco Smoke Causes

5 Fatal Lung Disease In Nonsmokers.

6 ‘‘WARNING: Quitting Smoking Now

7 Greatly Reduces Serious Risks To Your

8 Health.

9 ‘‘(C) ADDITIONAL WARNINGS.—Beginning

10 on the date that is 18 months after the date of

11 enactment of this subchapter, the Secretary

12 may substitute for, or require warnings in addi13 tion to, those otherwise required under subpara14 graphs (A) and (B) if the Secretary determines

15 that such warnings would be more effective in

16 deterring the use of cigarettes.

17 ‘‘(2) REQUIREMENTS FOR LABELING.—

18 ‘‘(A) LOCATION.—Each label statement re19 quired by subparagraph (A) of paragraph (1)

20 shall be located on the upper portion of the

21 front and rear panels of the cigarette package

22 (or carton) directly on the package underneath

23 the cellophane or other clear wrapping and oc24 cupy not less than 25 percent of such panels.
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•S 1889 PCS

1 ‘‘(B) TYPE AND COLOR.—With respect to

2 each label statement required by subparagraph

3 (A) of paragraph (1), the phrase ‘WARNING’

4 shall appear in capital letters and the label

5 statement shall be printed in 17 point type with

6 adjustments as determined appropriate by the

7 Secretary to reflect the length of the required

8 statement. All the letters in the label shall ap9 pear in conspicuous and legible type, in contrast

10 by typography, layout, or color with all other

11 printed material on the package, and be printed

12 in an alternating black-on-white and white-on13 black format as determined appropriate by the

14 Secretary.

15 ‘‘(C) EXCEPTION.—With respect to ciga16 rettes manufactured and distributed prior to

17 January 1, 2000, the provisions of subpara18 graph (A) shall not apply with respect to the

19 front panel in the case of a flip-top cigarette

20 package (offered for sale prior to or on June 1,

21 1997) where the front portion of the flip-top

22 does not comprise at least 25 percent of the

23 front panel. In the case of such a package, the

24 label statement required by subparagraph (A)
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•S 1889 PCS

1 of paragraph (1) shall occupy the entire front

2 portion of the flip-top.

3 ‘‘(3) REQUIREMENTS FOR ADVERTISING.—

4 ‘‘(A) LOCATION.—Each label statement re5 quired by subparagraph (B) of paragraph (1)

6 shall appear in a conspicuous and prominent

7 format and location at the top of each adver8 tisement within the trim area and shall occupy

9 not less than 20 percent of the area of the ad10 vertisement involved.

11 ‘‘(B) TYPE, COLOR AND FORMAT.—

12 ‘‘(i) TYPE.—With respect to each

13 label statement required by subparagraph

14 (B) of paragraph (1), the phrase ‘WARN15 ING’ shall appear in capital letters and the

16 label statement shall be printed in the fol17 lowing types:

18 ‘‘(I) With respect to whole page

19 advertisements on broadsheet news20 paper—45 point type.

21 ‘‘(II) With respect to half page

22 advertisements on broadsheet news23 paper—39 point type.
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1 ‘‘(III) With respect to whole page

2 advertisements on tabloid news3 paper—39 point type.

4 ‘‘(IV) With respect to half page

5 advertisements on tabloid news6 paper—27 point type.

7 ‘‘(V) With respect to DPS maga8 zine advertisements—31.5 point type.

9 ‘‘(VI) With respect to whole page

10 magazine advertisements—31.5 point

11 type.

12 ‘‘(VII) With respect to 28cm x 3

13 column advertisements—22.5 point

14 type.

15 ‘‘(VIII) With respect to 20cm x 2

16 column advertisements—15 point

17 type.

18 Within the 20 percent requirement de19 scribed in subparagraph (A), the Secretary

20 may revise the required type sizes if the

21 Secretary determines that such revisions

22 will enhance public health protections.

23 ‘‘(ii) COLOR.—All the letters in the

24 label under this subparagraph shall appear

25 in conspicuous and legible type, in contrast
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•S 1889 PCS

1 by typography, layout, or color with all

2 other printed material on the package, and

3 be printed in an alternating black-on-white

4 and white-on-black format as determined

5 appropriate by the Secretary.

6 ‘‘(iii) FORMAT.—The label statements

7 under subparagraph (B) of paragraph (1)

8 shall be black when the background is

9 white and white when the background is

10 black, and shall be in the point size re11 quired under this subparagraph. The label

12 statements shall be enclosed by a rectangu13 lar border that is the same color as the let14 ters of the statements and that is the

15 width of the first down stroke of the cap16 ital ‘W’ of the word ‘WARNING’ in the

17 label statements.

18 ‘‘(C) LANGUAGE REQUIREMENT.—The

19 label statements required under paragraph

20 (1)(B) shall be in English, except that—

21 ‘‘(i) in the case of an advertisement

22 that appears in a newspaper, magazine, pe23 riodical or other publication that is not in

24 English, such statements shall appear in
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•S 1889 PCS

1 the predominant language of the publica2 tion; or

3 ‘‘(ii) in the case of any other adver4 tisement that is not in English, such state5 ments shall appear in the same language

6 as that principally used in the advertise7 ment.

8 ‘‘(4) ROTATION OF LABEL STATEMENTS.—

9 ‘‘(A) LABELING.—The label statements

10 specified in subparagraph (A) of paragraph (1)

11 shall be randomly displayed in each 12 month

12 period, in as equal a number of times as is pos13 sible on each brand of the product and be ran14 domly distributed in all areas of the United

15 States in which such product is marketed in ac16 cordance with a plan submitted by the manu17 facturer, importer, distributor or retailer and

18 approved by the Secretary.

19 ‘‘(B) ADVERTISING.—The label statements

20 specified in subparagraph (B) of paragraph (1)

21 shall be rotated quarterly in alternating se22 quence in advertisements for each such brand

23 of cigarettes in accordance with a plan submit24 ted by the manufacturer, importer, distributor

25 or retailer and approved by the Secretary.
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•S 1889 PCS

1 ‘‘(C) APPROVAL OF PLANS.—The Sec2 retary shall review each plan submitted by a

3 manufacturer, importer, distributor or retailer

4 of cigarettes under this paragraph and approve

5 such plan if the plan will provide for the equal

6 distribution and display on packaging and the

7 rotation required in advertising under this para8 graph and if such plan assures that all of the

9 labels required under subparagraphs (A) and

10 (B) will be displayed by the manufacturer, im11 porter, distributor or retailer at the same time.

12 ‘‘(b) SMOKELESS TOBACCO PRODUCTS.—

13 ‘‘(1) IN GENERAL.—

14 ‘‘(A) PACKAGING.—It shall be unlawful for

15 any person to manufacture, package, or import

16 for sale or distribution any smokeless tobacco

17 product the package of which fails to bear, in

18 accordance with the requirements of this sub19 section, one of the following labels:

20 ‘‘WARNING: This Product Can Cause

21 Mouth Cancer.

22 ‘‘WARNING: This Product Can Kill You.

23 ‘‘WARNING: This Product Can Cause

24 Gum Disease And Tooth Loss.
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•S 1889 PCS

1 ‘‘WARNING: This Product Is Not A Safe

2 Alternative To Cigarettes.

3 ‘‘WARNING: This Product Contains Can4 cer-Causing Chemicals.

5 ‘‘WARNING: Smokeless Tobacco Is Ad6 dictive.

7 ‘‘(B) ADVERTISING.—It shall be unlawful

8 for any manufacturer, importer, distributor or

9 retailer of smokeless tobacco products to adver10 tise or cause to be advertised any smokeless to11 bacco product unless the advertising bears, in

12 accordance with the requirements of this sub13 section, one of the following labels:

14 ‘‘WARNING: This Product Can Cause

15 Mouth Cancer.

16 ‘‘WARNING: This Product Can Kill You.

17 ‘‘WARNING: This Product Can Cause

18 Gum Disease And Tooth Loss.

19 ‘‘WARNING: This Product Is Not A Safe

20 Alternative To Cigarettes.

21 ‘‘WARNING: This Product Contains Can22 cer-Causing Chemicals.

23 ‘‘WARNING: Smokeless Tobacco Is Ad24 dictive.
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•S 1889 PCS

1 ‘‘(C) ADDITIONAL WARNINGS.—Beginning

2 on the date that is 18 months after the date of

3 enactment of this subchapter, the Secretary

4 may substitute for, or require warnings in addi5 tion to, those otherwise required under subpara6 graphs (A) and (B) if the Secretary determines

7 that such warnings would be more effective in

8 deterring the use of smokeless tobacco products.

9 ‘‘(2) REQUIREMENTS FOR LABELING.—

10 ‘‘(A) LOCATION.—Each label statement re11 quired by subparagraph (A) of paragraph (1)

12 shall be located on the 2 most prominent dis13 play panels of the product and occupy not less

14 than 25 percent of such panels.

15 ‘‘(B) TYPE AND COLOR.—With respect to

16 each label statement required by subparagraph

17 (A) of paragraph (1), the phrase ‘WARNING’

18 shall appear in capital letters and the label

19 statement shall be printed in 17 point type with

20 adjustments as determined appropriate by the

21 Secretary to reflect the length of the required

22 statement and the size of the package. All the

23 letters in the label shall appear in conspicuous

24 and legible type in contrast by typography, lay25 out, or color with all other printed material on
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•S 1889 PCS

1 the package and be printed in an alternating

2 black-on-white and white-on-black format as de3 termined appropriate by the Secretary.

4 ‘‘(3) ADVERTISING AND ROTATION.—The provi5 sions of paragraph (3) and (4) of subsection (a)

6 shall apply to advertisements for smokeless tobacco

7 products and the rotation of the label statements re8 quired under paragraph (1)(A) on such products.

9 ‘‘(c) OTHER TOBACCO PRODUCTS.—The Secretary

10 shall prescribe such regulations as may be necessary to

11 establish warning labels for other tobacco product packag12 ing, labeling and advertising.

13 ‘‘(d) RULES OF CONSTRUCTION.—

14 ‘‘(1) IN GENERAL.—Nothing in this section

15 shall be construed to limit the ability of the Sec16 retary to change the text or layout of any of the

17 warning statements, or any of the labeling provi18 sions, under subsections (a) and (b) and other provi19 sions of this Act, if determined necessary by the Sec20 retary in order to make such statements or labels

21 larger, more prominent, more conspicuous, or more

22 effective.

23 ‘‘(2) UNFAIR ACTS.—Nothing in this section

24 (other than the requirements of subsections (a), (b)

25 and (c)) shall be construed to limit or restrict the
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•S 1889 PCS

1 authority of the Federal Trade Commission with re2 spect to unfair or deceptive acts or practices in the

3 advertising of tobacco products.

4 ‘‘(e) LIMITED PREEMPTION.—

5 ‘‘(1) STATE AND LOCAL ACTION.—No warning

6 label with respect to tobacco products, or any other

7 tobacco product for which warning labels have been

8 required under this section, other than the warning

9 labels required under this Act, shall be required by

10 any State or local statute or regulation to be in11 cluded on any package of a tobacco product.

12 ‘‘(2) EFFECT ON LIABILITY LAW.—Nothing in

13 this section shall relieve any person from liability at

14 common law or under State statutory law to any

15 other person.

16 ‘‘(f) VIOLATION OF SECTION.—Any tobacco product

17 that is in violation of this section shall be deemed to be

18 misbranded.

19 ‘‘SEC. 573. GENERAL RESPONSIBILITIES OF MANUFACTUR20 ERS, DISTRIBUTORS AND RETAILERS.

21 ‘‘Each manufacturer, distributor, and retailer shall

22 ensure that the tobacco products it manufactures, labels,

23 advertises, packages, distributes, sells, or otherwise holds

24 for sale comply with all applicable requirements of this

25 Act.
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1 ‘‘SEC. 574. DISCLOSURE AND REPORTING OF TOBACCO AND

2 NONTOBACCO INGREDIENTS AND CONSTITU3 ENTS.

4 ‘‘(a) DISCLOSURE OF ALL INGREDIENTS.—

5 ‘‘(1) IMMEDIATE AND ANNUAL DISCLOSURE.—

6 Not later than 30 days after the date of enactment

7 of this subchapter, and annually thereafter, each

8 manufacturer of a tobacco product shall submit to

9 the Secretary an ingredient list for each brand of to10 bacco product it manufactures that contains the in11 formation described in paragraph (2).

12 ‘‘(2) REQUIREMENTS.—The list described in

13 paragraph (1) shall, with respect to each brand or

14 variety of tobacco product of a manufacturer, in15 clude—

16 ‘‘(A) a list of all ingredients, constituents,

17 substances, and compounds that are found in or

18 added to the tobacco or tobacco product (in19 cluding the paper, filter, or packaging of the

20 product if applicable) in the manufacture of the

21 tobacco product, for each brand or variety of to22 bacco product so manufactured, including, if

23 determined necessary by the Secretary, any ma24 terial added to the tobacco used in the product

25 prior to harvesting;
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•S 1889 PCS

1 ‘‘(B) the quantity of the ingredients, con2 stituents, substances, and compounds that are

3 listed under subparagraph (A) in each brand or

4 variety of tobacco product;

5 ‘‘(C) the nicotine content of the product,

6 measured in milligrams of nicotine;

7 ‘‘(D) for each brand or variety of ciga8 rettes—

9 ‘‘(i) the filter ventilation percentage

10 (the level of air dilution in the cigarette as

11 provided by the ventilation holes in the fil12 ter, described as a percentage);

13 ‘‘(ii) the pH level of the smoke of the

14 cigarette; and

15 ‘‘(iii) the tar, unionized (free) nico16 tine, and carbon monoxide delivery level

17 and any other smoking conditions estab18 lished by the Secretary, reported in milli19 grams of tar, nicotine, and carbon mon20 oxide per cigarette;

21 ‘‘(E) for each brand or variety of smoke22 less tobacco products—

23 ‘‘(i) the pH level of the tobacco;
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•S 1889 PCS

1 ‘‘(ii) the moisture content of the to2 bacco expressed as a percentage of the

3 weight of the tobacco; and

4 ‘‘(iii) the nicotine content—

5 ‘‘(I) for each gram of the prod6 uct, measured in milligrams of nico7 tine;

8 ‘‘(II) expressed as a percentage

9 of the dry weight of the tobacco; and

10 ‘‘(III) with respect to unionized

11 (free) nicotine, expressed as a percent12 age per gram of the tobacco and ex13 pressed in milligrams per gram of the

14 tobacco; and

15 ‘‘(F) any other information determined ap16 propriate by the Secretary.

17 ‘‘(3) METHODS.—The Secretary shall have the

18 authority to promulgate regulations to establish the

19 methods to be used by manufacturers in making the

20 determinations required under paragraph (2).

21 ‘‘(4) OTHER TOBACCO PRODUCTS.—The Sec22 retary shall prescribe such regulations as may be

23 necessary to establish information disclosure proce24 dures for other tobacco products.

25 ‘‘(b) SAFETY ASSESSMENTS.—
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•S 1889 PCS

1 ‘‘(1) APPLICATION TO NEW INGREDIENTS.—

2 ‘‘(A) IN GENERAL.—Not later than 1 year

3 after the date of enactment of this subchapter,

4 and annually thereafter, each manufacturer

5 shall submit to the Secretary a safety assess6 ment for each new ingredient, constituent, sub7 stance, or compound that such manufacturer

8 desires to make a part of a tobacco product.

9 Such new ingredient, constituent, substance, or

10 compound shall not be included in a tobacco

11 product prior to approval by the Secretary of

12 such a safety assessment.

13 ‘‘(B) METHOD OF FILING.—A safety as14 sessment submitted under subparagraph (A)

15 shall be signed by an officer of the manufac16 turer who is acting on behalf of the manufac17 turer and who has the authority to bind the

18 manufacturer, and contain a statement that en19 sures that the information contained in the as20 sessment is true, complete and accurate.

21 ‘‘(C) DEFINITION OF NEW INGREDIENT.—

22 For purposes of subparagraph (A), the term

23 ‘new ingredient, constituent, substance, or com24 pound’ means an ingredient, constituent, sub25 stance, or compound listed under subsection
90

•S 1889 PCS

1 (a)(1) that was not used in the brand or variety

2 of tobacco product involved prior to January 1,

3 1998.

4 ‘‘(2) APPLICATION TO OTHER INGREDIENTS.—

5 With respect to the application of this section to in6 gredients, constituents substances, or compounds

7 listed under subsection (a) to which paragraph (1)

8 does not apply, all such ingredients, constituents,

9 substances, or compounds shall be reviewed through

10 the safety assessment process within the 5-year pe11 riod beginning on the date of enactment of this sub12 chapter. The Secretary shall develop a procedure for

13 the submission of safety assessments of such ingre14 dients, constituents, substances, or compounds that

15 staggers such safety assessments within the 5-year

16 period.

17 ‘‘(3) BASIS OF ASSESSMENT.—The safety as18 sessment of an ingredient, constituent, substance, or

19 compound described in paragraphs (1) and (2)

20 shall—

21 ‘‘(A) be based on the best scientific evi22 dence available at the time of the submission of

23 the assessment; and

24 ‘‘(B) demonstrate that there is a reason25 able certainty among experts qualified by sci-
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•S 1889 PCS

1 entific training and experience who are con2 sulted, that the ingredient, constituent, sub3 stance, or compound will not present any risk

4 to consumers or the public in the quantities

5 used under the intended conditions of use.

6 ‘‘(c) PROHIBITION.—

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

8 after the date of enactment of this subchapter, the

9 Secretary shall promulgate regulations to prohibit

10 the use of any ingredient, constituent, substance, or

11 compound in the tobacco product of a manufac12 turer—

13 ‘‘(A) if no safety assessment has been sub14 mitted by the manufacturer for the ingredient,

15 constituent, substance, or compound as other16 wise required under this section; or

17 ‘‘(B) if the Secretary finds that the manu18 facturer has failed to demonstrate the safety of

19 the ingredient, constituent, substance, or com20 pound that was the subject of the assessment

21 under paragraph (2).

22 ‘‘(2) REVIEW OF ASSESSMENTS.—

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

24 180 days after the receipt of a safety assess25 ment under subsection (b), the Secretary shall
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•S 1889 PCS

1 review the findings contained in such assess2 ment and approve or disapprove of the safety

3 of the ingredient, constituent, substance, or

4 compound that was the subject of the assess5 ment. The Secretary may, for good cause, ex6 tend the period for such review. The Secretary

7 shall provide notice to the manufacturer of an

8 action under this subparagraph.

9 ‘‘(B) INACTION BY SECRETARY.—If the

10 Secretary fails to act with respect to an assess11 ment of an existing ingredient, constituent, sub12 stance, or additive during the period referred to

13 in subparagraph (A), the manufacturer of the

14 tobacco product involved may continue to use

15 the ingredient, constituent, substance, or com16 pound involved until such time as the Secretary

17 makes a determination with respect to the as18 sessment.

19 ‘‘(d) RIGHT TO KNOW; FULL DISCLOSURE OF IN20 GREDIENTS TO THE PUBLIC.—

21 ‘‘(1) IN GENERAL.—Except as provided in para22 graph (3), a package of a tobacco product shall dis23 close all ingredients, constituents, substances, or

24 compounds contained in the product in accordance
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•S 1889 PCS

1 with regulations promulgated under section 701(a)

2 by the Secretary.

3 ‘‘(2) DISCLOSURE OF PERCENTAGE OF DOMES4 TIC AND FOREIGN TOBACCO.—The regulations re5 ferred to in paragraph (1) shall require that the

6 package of a tobacco product disclose, with respect

7 to the tobacco contained in the product—

8 ‘‘(A) the percentage that is domestic to9 bacco; and

10 ‘‘(B) the percentage that is foreign to11 bacco.

12 ‘‘(3) HEALTH DISCLOSURE.—Notwithstanding

13 section 301(j), the Secretary may require the public

14 disclosure of any ingredient, constituent, substance,

15 or compound contained in a tobacco product that re16 lates to a trade secret or other matter referred to in

17 section 1905 of title 18, United States Code, if the

18 Secretary determines that such disclosure will pro19 mote the public health.

20 ‘‘SEC. 575. REDUCED RISK PRODUCTS.

21 ‘‘(a) PROHIBITION.—

22 ‘‘(1) IN GENERAL.—No manufacturer, distribu23 tor or retailer of tobacco products may make any di24 rect or implied statement in advertising or on a

25 product package that could reasonably be inter-
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•S 1889 PCS

1 preted to state or imply a reduced health risk associ2 ated with a tobacco product unless the manufacturer

3 demonstrates to the Secretary, in such form as the

4 Secretary may require, that based on the best avail5 able scientific evidence the product significantly re6 duces the overall health risk to the public when com7 pared to other tobacco products.

8 ‘‘(2) SUBMISSION TO SECRETARY.—Prior to

9 making any statement described in paragraph (1), a

10 manufacturer, distributor or retailer shall submit

11 such statement to the Secretary, who shall review

12 such statement to ensure its accuracy and, in the

13 case of advertising, to prevent such statement from

14 increasing, or preventing the contraction of, the size

15 of the overall market for tobacco products.

16 ‘‘(b) DETERMINATION BY SECRETARY.—If the Sec17 retary determines that a statement described in subsection

18 (a)(2) is permissible because the tobacco product does

19 present a significantly reduced overall health risk to the

20 public, the Secretary may permit such statement to be

21 made.

22 ‘‘(c) DEVELOPMENT OR ACQUISITION OF REDUCED

23 RISK TECHNOLOGY.—

24 ‘‘(1) IN GENERAL.—Any manufacturer that de25 velops or acquires any technology that the manufac-
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•S 1889 PCS

1 turer reasonably believes will reduce the risk from

2 tobacco products shall notify the Secretary of the de3 velopment or acquisition of the technology. Such no4 tice shall be in such form and within such time as

5 the Secretary shall require.

6 ‘‘(2) CONFIDENTIALITY.—With respect to any

7 technology described in paragraph (1) that is in the

8 early stages of development (as determined by the

9 Secretary), the Secretary shall establish protections

10 to ensure the confidentiality of any proprietary in11 formation submitted to the Secretary under this sub12 section during such development.

13 ‘‘SEC. 576. ACCESS TO COMPANY INFORMATION.

14 ‘‘(a) COMPLIANCE PROCEDURES.—Each manufac15 turer of tobacco products shall establish procedures to en16 sure compliance with this Act.

17 ‘‘(b) REQUIREMENT.—In addition to any other dis18 closure obligations under this Act, the KIDS Act, or any

19 other law, each manufacturer of tobacco products shall,

20 not later than 90 days after the date of the enactment

21 of the KIDS Act and thereafter as required by the Sec22 retary, disclose to the Secretary all nonpublic information

23 and research in its possession or control relating to the

24 addiction or dependency, or the health or safety of tobacco

25 products, including (without limitation) all research relat-
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•S 1889 PCS

1 ing to processes to make tobacco products less hazardous

2 to consumers and the research and documents described

3 in subsection (c).

4 ‘‘(c) RESEARCH AND DOCUMENTS.—The documents

5 described in this section include any documents concerning

6 tobacco product research relating to—

7 ‘‘(1) nicotine, including—

8 ‘‘(A) the interaction between nicotine and

9 other components in tobacco products including

10 ingredients in the tobacco and smoke compo11 nents;

12 ‘‘(B) the role of nicotine in product design

13 and manufacture, including product charters,

14 and parameters in product development, the to15 bacco blend, filter technology, and paper;

16 ‘‘(C) the role of nicotine in tobacco leaf

17 purchasing;

18 ‘‘(D) reverse engineering activities involv19 ing nicotine (such as analyzing the products of

20 other companies);

21 ‘‘(E) an analysis of nicotine delivery; and

22 ‘‘(F) the biology, psychopharmacology and

23 any other health effects of nicotine;

24 ‘‘(2) other ingredients, including—
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•S 1889 PCS

1 ‘‘(A) the identification of ingredients in to2 bacco products and constituents in smoke, in3 cluding additives used in product components

4 such as paper, filter, and wrapper;

5 ‘‘(B) any research on the health effects of

6 ingredients; and

7 ‘‘(C) any research or other information ex8 plaining what happens to ingredients when they

9 are heated and burned;

10 ‘‘(3) less hazardous or safer products, including

11 any research or product development information on

12 activities involving reduced risk, less hazardous, low13 tar or reduced-tar, low-nicotine or reduced-nicotine

14 or nicotine-free products; and

15 ‘‘(4) tobacco product advertising, marketing

16 and promotion, including—

17 ‘‘(A) documents related to the design of

18 advertising campaigns, including the desired de19 mographics for individual products on the mar20 ket or being tested;

21 ‘‘(B) documents concerning the age of ini22 tiation of tobacco use, general tobacco use be23 havior, beginning smokers, pre-smokers, and

24 new smokers;
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•S 1889 PCS

1 ‘‘(C) documents concerning the effects of

2 advertising; and

3 ‘‘(D) documents concerning future market4 ing options or plans in light of the requirements

5 and regulations to be imposed under this sub6 chapter or the KIDS Act.

7 ‘‘(d) AUTHORITY OF SECRETARY.—With respect to

8 tobacco product manufacturers, the Secretary shall have

9 the same access to records and information and inspection

10 authority as is available with respect to manufacturers of

11 other medical devices.

12 ‘‘SEC. 577. OVERSIGHT OF TOBACCO PRODUCT MANUFAC13 TURING.

14 ‘‘The Secretary shall by regulation prescribe good

15 manufacturing practice standards for tobacco products.

16 Such regulations shall be modeled after good manufactur17 ing practice regulations for medical devices, food, and

18 other items under section 520(f). Such standards shall be

19 directed specifically toward tobacco products, and shall in20 clude—

21 ‘‘(1) a quality control system, to ensure that to22 bacco products comply with such standards;

23 ‘‘(2) a system for inspecting tobacco product

24 materials to ensure their compliance with such

25 standards;
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1 ‘‘(3) requirements for the proper handling of

2 finished tobacco products;

3 ‘‘(4) strict tolerances for pesticide chemical resi4 dues in or on tobacco or tobacco product commod5 ities in the possession of the manufacturer, except

6 that nothing in this paragraph shall be construed to

7 affect any authority of the Environmental Protection

8 Agency;

9 ‘‘(5) authority for officers or employees of the

10 Secretary to inspect any factory, warehouse, or other

11 establishment of any tobacco product manufacturer,

12 and to have access to records, files, papers, proc13 esses, controls and facilities related to tobacco prod14 uct manufacturing, in accordance with appropriate

15 authority and rules promulgated under this Act; and

16 ‘‘(6) a requirement that the tobacco product

17 manufacturer maintain such files and records as the

18 Secretary may specify, as well as that the manufac19 turer report to the Secretary such information as

20 the Secretary shall require, in accordance with sec21 tion 519.

22 ‘‘SEC. 578. PRESERVATION OF STATE AND LOCAL AUTHOR23 ITY.

24 ‘‘Notwithstanding section 521 and except as other25 wise provided for in section 572(e), nothing in this sub-
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1 chapter shall be construed as prohibiting a State or local2 ity from imposing requirements, prohibitions, penalties or

3 other measures to further the purposes of this subchapter

4 that are in addition to the requirements, prohibitions, or

5 penalties required under this subchapter. State and local

6 governments may impose additional tobacco product con7 trol measures to further restrict or limit the use of such

8 products.’’.

9 SEC. 213. FUNDING.

10 (a) AUTHORIZATION OF APPROPRIATIONS.—There

11 are authorized to be appropriated amounts provided under

12 section 101(d)(2)(C) to carry out this subtitle (and the

13 amendments made by this subtitle).

14 (b) TRIGGER.—No expenditures shall be made under

15 this subtitle (or the amendments made by this subtitle)

16 during any fiscal year in which the annual amount appro17 priated for the Food and Drug Administration is less than

18 the amount so appropriated for the prior fiscal year.

19 SEC. 214. REPEALS.

20 The following provisions of law shall be repealed:

21 (1) The Federal Cigarette Labeling and Adver22 tising Act (15 U.S.C. 1331 et seq.), except for sec23 tions 5(d) (1) and (2) and 6.
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1 (2) The Comprehensive Smokeless Tobacco

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

3 seq.), except for sections 3(f) and 8(a) and (b).

4 (3) The Comprehensive Smoking Education Act

5 of 1964 (Public law 98–474).

6 Subtitle C—Manufacturer and

7 Product Seller Licensing and

8 Anti-Smuggling

9 SEC. 221. DEFINITIONS.

10 In this subtitle:

11 (1) CONTRABAND TOBACCO PRODUCT.—The

12 term ‘‘contraband tobacco product’’ means any to13 bacco product that is manufactured, sold or offered

14 for sale, shipped, delivered, transferred, or possessed

15 in violation of this subtitle, chapter 52 of the Inter16 nal Revenue Code of 1986, or Chapter 114 of Title

17 18, United States Code, or any regulations issued

18 under any such provision.

19 (2) DEALER.—The term ‘‘dealer’’ means any

20 person lawfully engaged in the business of selling to21 bacco products.

22 (3) ENGAGED IN THE BUSINESS.—The term

23 ‘‘engaged in the business’’ means—

24 (A) as applied to a manufacturer of to25 bacco products, any person who devotes time,
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1 attention, and labor to manufacturing tobacco

2 products for sale or distribution;

3 (B) as applied to an importer of tobacco

4 products, any person who devotes time, atten5 tion, and labor to importing tobacco products

6 into the United States from a place outside of

7 the United States for sale or distribution;

8 (C) as applied to an exporter of tobacco

9 products, any person who devotes time, atten10 tion, and labor to exporting tobacco products

11 for sale or distribution outside of the United

12 States;

13 (D) as applied to a wholesaler in tobacco

14 products, any person who devotes time, atten15 tion, and labor to the sale or distribution of to16 bacco products at wholesale; and

17 (E) as applied to a retailer in tobacco

18 products, any person who devotes time, atten19 tion, and labor to the sale or distribution of to20 bacco products to consumers.

21 (4) EXPORTER.—The term ‘‘exporter’’ means

22 any person engaged in the business of exporting to23 bacco products from the United States for purposes

24 of sale or distribution. The term ‘‘licensed exporter’’
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1 means any such person licensed under the provisions

2 of this subtitle.

3 (5) IMPORTER.—The term ‘‘importer’’ means

4 any person engaged in the business of importing to5 bacco products into the United States for purposes

6 of sale or distribution. The term ‘‘licensed importer’’

7 means any such person licensed under the provisions

8 of this subtitle.

9 (6) INTENTIONALLY.—The term ‘‘intentionally’’

10 means doing an act, or omitting to do an act, delib11 erately, and not due to accident, inadvertence, or

12 mistake. An intentional act does not require that a

13 person knew that such person’s act constituted an

14 offense.

15 (7) MANUFACTURER.—The term ‘‘manufac16 turer’’ means any person engaged in the business of

17 manufacturing a tobacco product for purposes of

18 sale or distribution. The term ‘‘licensed manufac19 turer’’ means any such person licensed under the

20 provisions of this subtitle, except that such term

21 shall not include a person who produces cigars, ciga22 rettes, smokeless tobacco, or pipe tobacco solely for

23 his own personal consumption or use.
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1 (8) PERSON.—The term ‘‘person’’ includes any

2 individual, corporation, company, association, firm,

3 partnership, society, or joint stock company.

4 (9) SECRETARY.—The term ‘‘Secretary’’ means

5 the Secretary of the Treasury.

6 (10) UNITED STATES.—The term ‘‘United

7 States’’ means the several States, the District of Co8 lumbia, the Commonwealth of Puerto Rico, and the

9 possessions of the United States.

10 (11) WHOLESALER.—The term ‘‘wholesaler’’

11 means any person engaged in the business of pur12 chasing tobacco products for resale at wholesale, or

13 any person acting as an agent or broker for any per14 son engaged in the business of purchasing tobacco

15 products for resale at wholesale.

16 SEC. 222. MINIMAL FEDERAL LICENSING AND REGISTRA17 TION PROGRAM.

18 (a) ESTABLISHMENT.—The Secretary shall establish

19 a minimum Federal licensing and registration program

20 that provides for a comprehensive system to support State

21 efforts to collect State tobacco excise taxes and to prevent

22 tobacco contraband activities.

23 (b) FUNDING.—The Secretary shall use amounts

24 made available under section 101(d)(2)(D) to carry out

25 this section.
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1 SEC. 223. LICENSING AND RETAILER REGISTRATION.

2 (a) LICENSING.—

3 (1) REQUIREMENT.—No person shall engage in

4 the business as a manufacturer, importer, exporter,

5 or wholesaler of tobacco products until such person

6 has been licensed to do so by the Secretary.

7 (2) APPLICATION.—To be licensed under this

8 section, a manufacturer, importer, exporter or

9 wholesaler shall prepare and submit to the Secretary

10 an application at such time, in such manner and

11 containing such information as the Secretary deter12 mines necessary to determine the eligibility of the

13 applicant to be licensed under this section. The Sec14 retary may promulgate regulations to prescribe ap15 plication requirements under this paragraph.

16 (3) FEE.—Each applicant under paragraph (2)

17 shall pay an annual fee to the Secretary for obtain18 ing and maintaining a license under this section. A

19 separate license and fee shall be required for each

20 place in which the applicant is to do business. Fail21 ure to pay an annual fee will result in the automatic

22 termination of the license.

23 (4) ELIGIBILITY.—A person shall be entitled to

24 a license under this section unless the Secretary

25 finds—
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1 (A) that such person has been previously

2 convicted of a Federal crime relating to to3 bacco, including the taxation thereof;

4 (B) that such person has, during the 5-

5 year period prior to the date on which the ap6 plication is submitted, been convicted of any fel7 ony under Federal or State law; or

8 (C) that such person is, by virtue of that

9 person’s business experience, financial standing,

10 or trade connections, not likely to maintain

11 such operations in conformity with Federal law.

12 (5) ISSUANCE OF LICENSE.—Upon the filing of

13 a proper application under paragraph (2), the pay14 ment of the prescribed annual fee under paragraph

15 (3), and a finding by the Secretary that the person

16 is entitled to a license under paragraph (4), the Sec17 retary shall issue to the applicant the appropriate li18 cense and such license shall entitle the licensee to

19 engage in the business of manufacturing, importing,

20 exporting, or wholesaling in tobacco products as the

21 case may be, subject to the provisions of this subtitle

22 and other applicable provisions of law.

23 (6) DURATION.—A license issued under this

24 subtitle shall continue in effect until revoked, sus-
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1 pended, or annulled as provided for in this subtitle,

2 or until voluntarily surrendered, except that—

3 (A) if leased, sold, or otherwise trans4 ferred, the license shall be automatically termi5 nated; and

6 (B) if transferred by operation of law or if

7 actual or legal control of the licensee is ac8 quired, directly or indirectly, whether by stock9 ownership or in any other manner, by any per10 son, then such license shall be terminated after

11 30 days.

12 If within the 30-day period described in subpara13 graph (B), an application is made for a new license,

14 the outstanding license to which such subparagraph

15 applies shall continue in effect until such application

16 is finally acted upon by the Secretary.

17 (7) CONDITIONS.—All licenses issued under this

18 subtitle shall be conditioned upon compliance with

19 the provisions of this subtitle, all Federal laws relat20 ing to the taxation of tobacco products, chapter 114

21 of title 18, United States Code, the Jenkins Act (15

22 U.S.C. 375, et seq.) and any regulations issued pur23 suant to such provisions.

24 (b) RETAILER REGISTRATION.—
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1 (1) REQUIREMENT.—No person shall engage in

2 the business as a retailer of tobacco products until

3 such person has registered with the Secretary and

4 paid a fee for obtaining such registration. A sepa5 rate registration and fee shall be required for each

6 place in which the retailer is to do business. Such

7 fee shall be paid in such form, manner, and at such

8 time as the Secretary by regulation shall prescribe.

9 No fee shall be pro-rated if a retailer commences op10 erations any time after the first of the year.

11 (2) FORM AND CONTENT.—A registration under

12 this subsection shall be in such form and contain

13 such information as determined to be necessary by

14 the Secretary. The Secretary may promulgate regu15 lations to prescribe registration requirements under

16 this paragraph.

17 (3) DURATION.—

18 (A) IN GENERAL.—A registration issued

19 under this subsection shall continue in effect for

20 a period of 1 year from the date of issuance.

21 (B) LIMITATION.—A registration issued

22 under this subsection may not be leased, sold,

23 or transferred, by operation of law or otherwise.

24 Any registration issued under this subsection

25 shall terminate upon the lease, sale, or transfer,
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1 by operation of law, or otherwise, of such reg2 istration to another person.

3 (4) ISSUANCE OF REGISTRATION.—Upon the

4 filing of a proper registration and payment of the

5 prescribed fee under paragraph (1), the Secretary

6 shall register a qualified retailer that, subject to the

7 provisions of this subtitle and other applicable provi8 sions of law, shall entitle the retailer to engage in

9 the business as a retailer in tobacco products, unless

10 the Secretary finds that the person submitting a reg11 istration has previously had a registration under this

12 subtitle revoked.

13 (5) CONDITIONS.—A retailer registration under

14 this subtitle shall be conditioned upon compliance

15 with this subtitle, all Federal laws relating to the

16 taxation of tobacco products, chapter 114 of title 18,

17 United States Code, and any regulations issued pur18 suant to such provisions.

19 (c) PROCEDURES.—

20 (1) ANNULMENT.—The Secretary may, after

21 providing notice, annul any license or registration

22 issued under this subtitle if the Secretary finds that

23 the license or registration was procured through

24 fraud, misrepresentation, or concealment of material

25 fact. If the Secretary annuls a license or registration
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1 under this paragraph, the Secretary shall, upon a re2 quest by the aggrieved party, promptly hold a hear3 ing to review the annulment of such license or reg4 istration.

5 (2) DENIAL.—The Secretary may, after provid6 ing notice, deny any application for a license or re7 ject any registration submitted under this subtitle by

8 a person the Secretary has reason to believe is not

9 entitled to receive such license or registration. If the

10 Secretary denies an application for a license or re11 jects a registration, the Secretary shall, upon a re12 quest by the aggrieved party, promptly hold a hear13 ing to review the denial, revocation, or suspension of

14 such license or registration.

15 (3) REVOCATION OR SUSPENSION.—The Sec16 retary may, after providing notice, revoke, or sus17 pend any license or registration issued under this

18 subtitle if the Secretary finds the person holding the

19 license or registration has violated the conditions of

20 licensing or registration. If the Secretary revokes or

21 suspends a license or registration, the Secretary

22 shall, upon request by the aggrieved party, promptly

23 hold a hearing to review the revocation or suspen24 sion of such license or registration.
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1 (4) VIOLATION OF YOUTH ACCESS RESTRIC2 TIONS.—

3 (A) IN GENERAL.—Upon the issuance of a

4 final order by the Secretary of Health and

5 Human Services pursuant to the Federal Food,

6 Drug and Cosmetic Act (21 U.S.C. 321 et seq.)

7 that a registered retailer has violated section

8 520(e) of the Federal Food, Drug and Cosmetic

9 Act (21 U.S.C. 360j(e)), or the regulations

10 issued thereunder, and upon proper referral of

11 such final order to the Secretary, a registration

12 issued under this subtitle shall be automatically

13 suspended or revoked in accordance with the

14 final order of the Secretary of Health and

15 Human Services. Upon receipt of such order,

16 the Secretary shall, within 30 days, provide no17 tice to the registrant that the registration in18 volved is suspended or revoked.

19 (B) NONAPPLICATION OF CERTAIN PROVI20 SIONS.—The provisions of subsections (d) and

21 (e) shall not apply with respect to the revoca22 tion or suspension of any registration issued

23 under this subtitle resulting from a final order

24 from the Secretary of Health and Human Serv25 ices under subparagraph (A).
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1 (5) VIOLATION OF KIDS ACT PROVISIONS.—

2 Upon a certification by the Secretary of Health and

3 Human Services that a licensed or registered entity

4 under this section has violated a provision of this

5 Act (or an amendment made by this Act) the Sec6 retary of the Treasury may, after providing notice,

7 revoke, or suspend any license or registration. If the

8 Secretary revokes or suspends a license or registra9 tion, the Secretary shall, upon a request by the ag10 grieved party, promptly hold a hearing to review the

11 revocation, or suspension of such license or registra12 tion.

13 (d) PROCESS.—

14 (1) IN GENERAL.—Any person whose applica15 tion for a license is denied or application for reg16 istration is rejected, or any holder of a license or

17 registration that is revoked, suspended, or annulled

18 shall receive a written notice from the Secretary

19 stating specifically the grounds upon which the ap20 plication was denied or upon which the license or

21 registration was revoked, suspended, or annulled.

22 Notice of a revocation or suspension of a license or

23 registration shall be given to the holder of such li24 cense or registration prior to the effective date of

25 the revocation or suspension.
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1 (2) NOTICE.—Written notice of any denial of

2 application, rejection of registration, suspension, rev3 ocation, annulment, or other proceedings, shall be

4 served—

5 (A) in person by any officer or employee of

6 the Secretary authorized for such purpose; or

7 (B) by mailing the order certified mail, ad8 dressed to the applicant or respondent at the

9 last known address in the records of the Sec10 retary.

11 (e) APPEAL.—

12 (1) IN GENERAL.—An applicant, registrant, or

13 licensee may appeal any final order of the Secretary

14 denying an application for a license, rejecting a reg15 istration, or suspending, revoking, or annulling, a li16 cense or registration.

17 (2) FILING.—An aggrieved party may, at any

18 time within 60 days after the date on which a notice

19 of a final order described in paragraph (1) was re20 ceived, file a petition in the circuit court of appeals

21 of the United States within any circuit in which such

22 person resides or has as a principal place of busi23 ness, or in the United States Court of Appeals for

24 the District of Columbia, asking that the order of
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1 the Secretary be modified or set aside in whole or

2 in part.

3 (3) REQUIREMENT.—With respect to a filing

4 under paragraph (2), a copy of the petition shall be

5 transmitted by the clerk of the court to the Sec6 retary, or any officer designated by the Secretary for

7 that purpose, and thereupon the Secretary shall file

8 in the court the record upon which the order com9 plained of was entered, as provided for in section

10 2112 of title 28, United States Code.

11 (4) JURISDICTION.—Upon the filing of a peti12 tion with the court under this subsection, the court

13 shall have exclusive jurisdiction to affirm, modify, or

14 set aside such order, in whole or in part.

15 (5) PROCEDURE.—

16 (A) OBJECTION.—No objection to the

17 order of the Secretary shall be considered by

18 the court under this subsection unless such ob19 jection shall have been urged before the Sec20 retary or unless there were reasonable grounds

21 for failure to do so.

22 (B) FINDINGS.—The findings of the Sec23 retary as to the facts, if supported by substan24 tial evidence, shall be conclusive in any action

25 under this subsection.
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1 (C) ADDITIONAL EVIDENCE.—If any party

2 in an action under this subsection applies to the

3 court for leave to adduce additional evidence,

4 and demonstrated to the satisfaction of the

5 court that such additional evidence is material

6 and there were reasonable grounds for failure

7 to adduce such evidence on the proceeding be8 fore the Secretary, the court may order such

9 additional evidence to be taken before the Sec10 retary and to be adduced upon the hearing in

11 such manner and upon such terms and condi12 tions as the court may deem proper.

13 (D) MODIFICATION OF FINDINGS.—The

14 Secretary may modify findings to which this

15 subsection applies as to the facts by reason of

16 additional evidence taken under subparagraph

17 (C), and the Secretary shall file with the court

18 such new or modified findings, which, if sup19 ported by substantial evidence, shall be conclu20 sive. The recommendations of the Secretary, if

21 any, for the modification or setting aside of the

22 original order shall be conclusive.

23 (6) ORDER OF COURT.—The judgment or de24 cree of the court affirming, modifying, or setting

25 aside, in whole or in part, any order of the Secretary
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1 under this section shall be final, subject to review by

2 the Supreme Court of the United States upon certio3 rari or certification as provided for in section 1254

4 of title 28, United States Code.

5 (7) STAY.—The commencement of proceedings

6 under this subsection shall, unless specifically or7 dered by the court to the contrary, operate as a stay

8 of the Secretary’s order.

9 SEC. 224. UNLAWFUL ACTS.

10 (a) IN GENERAL.—It shall be unlawful for any per11 son—

12 (1) except a licensed manufacturer, licensed ex13 porter, licensed importer, or licensed wholesaler to

14 engage intentionally in the business of manufactur15 ing, exporting, importing or wholesaling any tobacco

16 product; or

17 (2) except a registered retailer to engage inten18 tionally in the business of selling or offering for sale

19 tobacco products at retail.

20 (b) SHIPMENT TO OTHER THAN LICENSED OR REG21 ISTERED ENTITY.—It shall be unlawful for any licensed

22 importer, licensed manufacturer, licensed wholesaler in23 tentionally to ship, transport, deliver or receive any to24 bacco products from or to any person other than a person

25 licensed or registered under this subtitle.
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1 (c) RETAILERS.—It shall be unlawful for any retailer

2 registered under this subtitle intentionally—

3 (1) to receive tobacco products from any person

4 other than a licensed manufacturer, licensed im5 porter, or licensed wholesaler; or

6 (2) to sell or offer for sale to any person in a

7 single transaction any tobacco products in quantities

8 of more than 50 packages, other than a direct re9 turn to a licensee for credit.

10 (d) EXPORTERS.—

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

12 licensed exporter intentionally—

13 (A) to ship, transport, sell or deliver for

14 sale any tobacco products to any person other

15 than a licensed manufacturer, licensed im16 porter, licensed wholesaler, or foreign pur17 chaser;

18 (B) to receive any tobacco products from

19 any person other than a licensed manufacturer,

20 licensed importer, or licensed wholesaler; or

21 (C) to ship, transport, sell, deliver or oth22 erwise transfer any tobacco product intended

23 for export unless the package containing the to24 bacco product is marked ‘‘FOR EXPORT

25 ONLY FROM THE UNITED STATES’’.
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1 (2) LIMITATION.—It shall be unlawful for any

2 person other than a licensed exporter intentionally to

3 ship, transport, receive or possess, for purposes of

4 resale, any tobacco product in packages marked

5 ‘‘FOR EXPORT ONLY FROM THE UNITED

6 STATES,’’ other than for direct return to the man7 ufacturer or exporter for re-packing or for re-expor8 tation.

9 (e) FALSE RECORDS.—It shall be unlawful for any

10 licensed manufacturer, licensed exporter, licensed im11 porter, licensed wholesaler, or retailer to make inten12 tionally any false entry in, to fail willfully to make appro13 priate entry in, or to fail willfully to maintain properly

14 any record or report that such person is required to keep

15 as required by this subtitle or the regulations promulgated

16 thereunder.

17 (f) CONTRABAND PRODUCTS.—It shall be unlawful

18 for any person intentionally to ship, transport, receive,

19 possess, sell, offer for sale, distribute, or purchase contra20 band tobacco products in or affecting interstate commerce.

21 SEC. 225. PENALTIES AND COMPROMISE OF LIABILITY.

22 (a) CRIMINAL PENALTIES.—Any person violating any

23 of the provisions of section 224 shall upon conviction be

24 fined as provided for in section 3571 of title 18, United
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1 States Code, imprisoned for not more than 5 years, or

2 both.

3 (b) CIVIL PENALTIES.—The Secretary may, in lieu

4 of referring violations of this section for criminal prosecu5 tion, impose a civil penalty of not more than $10,000 for

6 each offense.

7 (c) COMPROMISE OF LIABILITY.—The Secretary is

8 authorized, with respect to any violation of this subtitle

9 or any regulation issued thereunder, to compromise the

10 liability arising with respect to such violation upon pay11 ment of a sum for each offense prior to referral to the

12 Department of Justice for prosecution or defense. The At13 torney General may compromise any such case after refer14 ral to the Department of Justice for prosecution or de15 fense.

16 (d) FORFEITURE.—

17 (1) IN GENERAL.—The Secretary shall seize

18 and forfeit, in accordance with section 9703(o) of

19 title 31, United States Code, any conveyance, to20 bacco products, or monetary instrument (as defined

21 in section 5312 of title 31, United States Code) in22 volved in a violation of this subtitle or any property,

23 real or personal, which constitutes or is derived from

24 proceeds traceable to a violation of this subtitle.
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1 (2) SENTENCING.—The court, in imposing sen2 tence on a person convicted of violating this subtitle,

3 shall order that person to forfeit to the United

4 States any property described in paragraph (1) in5 volved in such violation. The seizure and forfeiture

6 of such property shall be governed by subsections

7 (b), (c) and (e) through (p) of section 853 of title

8 21, United States Code.

9 SEC. 226. GENERAL ADMINISTRATIVE PROVISIONS.

10 (a) RECORDS.—

11 (1) IN GENERAL.—Every manufacturer, im12 porter, wholesaler, or exporter shall maintain records

13 in such manner as the Secretary shall by regulation

14 prescribe.

15 (2) RETAILER.—Every retailer of tobacco prod16 ucts shall maintain records in a manner as the Sec17 retary shall by regulation prescribe, including

18 records of tobacco products received, and the person

19 from whom such tobacco products were received.

20 (3) REQUIREMENT.—The records required by

21 this subsection shall be maintained for a period of

22 not less than 5 years and the Secretary may, by giv23 ing written notice to the manufacturer, importer,

24 wholesaler, exporter, or retailer require the retention

25 for an additional period of not more than 2 years.
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1 (b) PRESERVATION AND INSPECTION OF RECORDS.—

2 Any records or documents required to be maintained

3 under subsection (a) or any regulations issued pursuant

4 thereto shall be preserved by the person required to keep

5 such records or documents available for inspection by the

6 Secretary during business hours.

7 (c) ENTRY OF PREMISES FOR INSPECTION.—The

8 Secretary may enter, during business hours, the premises

9 (including places of storage) of any manufacturer, im10 porter, wholesaler, exporter, or retailer for the purposes

11 of inspecting such premises and for the examination of

12 any required record or inventory of tobacco products kept

13 or stored by such person on the business premises.

14 (d) EXAMINATION AND SUMMONS.—

15 (1) IN GENERAL.—For the purpose of deter16 mining whether any manufacturer, importer, whole17 saler, exporter, retailer, or any other person is in

18 compliance with the provisions of this subtitle, the

19 Secretary is authorized, at all reasonable times, to

20 examine and copy any books, paper, records, or

21 other data that may be relevant or material to such

22 inquiry.

23 (2) SUMMONS.—In order to conduct an inspec24 tion, investigation, or maintain an enforcement ac25 tion under this section, the Secretary may summon
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1 any person having information on the compliance of

2 the provisions of this subtitle by any manufacturer,

3 importer, wholesaler, exporter, retailer, or any other

4 person to appear before the Secretary at a time and

5 place named in the summons and to give testimony

6 under oath or produce such books, papers, records,

7 or other data as may be relevant or material to such

8 inquiry.

9 (3) SERVICE.—A summons shall be served by

10 the Secretary, by an attested copy delivered in hand

11 to the person to whom it is directed, or left at such

12 person’s last place of business or abode. The certifi13 cate of service signed by the person serving the sum14 mons shall be evidence of the facts it states on the

15 hearing of an application for the enforcement of the

16 summons. When the summons requires the produc17 tion of books, papers, records, or other data, it shall

18 be sufficient if such books, papers, records, or other

19 data are described with reasonable certainty.

20 (4) JURISDICTION.—Any of the district courts

21 of the United States within the jurisdiction of which

22 such inquiry is carried on may, in case of contumacy

23 or refusal to obey a summons, issue to a person an

24 order requiring such person to appear before the

25 Secretary and give such testimony or produce such
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1 books, papers, records, or other data relating to the

2 inquiry. Any failure to obey such order of the court

3 may be punished by such court as a contempt there4 of.

5 (e) INDUSTRY COMPLIANCE PROGRAM.—The Sec6 retary shall prescribe regulations necessary to ensure each

7 licensee establishes and maintains a compliance program.

8 Such program shall be designed to ensure that retailers

9 comply with Federal laws and regulations relating to the

10 distribution of tobacco products to consumers.

11 (f) REPORTS TO THE SECRETARY.—

12 (1) IN GENERAL.—The Secretary is authorized

13 to require, in such manner and form as shall be pre14 scribed in regulations, such reports as are necessary

15 to carry out the powers and duties under this sub16 title including any reports deemed necessary to en17 sure the proper accounting of materials necessary to

18 manufacture tobacco products. Such reports will in19 clude detailed descriptions of licensee compliance

20 programs that have been developed by the licensees

21 to ensure that retailers comply with the Federal laws

22 and regulations relating to the distribution of to23 bacco products to consumers.

24 (2) REPORTS TO CONGRESS.—The Secretary

25 shall biennially prepare and submit to the appro-
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1 priate committees of Congress a report concerning

2 the activities of the Secretary under this subtitle.

3 (g) UTILIZATION OF OTHER GOVERNMENT AGEN4 CIES.—The Secretary may, with the consent of the depart5 ment or agency affected, utilize the services of any depart6 ment or other agency of the Federal Government to the

7 extent necessary to carry out the powers and duties under

8 this subtitle and authorize officers and employees thereof

9 to act as agents of the Secretary. The Secretary may pro10 vide funds to State and local enforcement entities to be

11 used to support training and technical assistance. Such

12 activities shall be coordinated with the Secretary of Health

13 and Human Services in the conduct of State-based en14 forcement of requirements relating to restriction on mi15 nors’ access to tobacco products.

16 (h) MARKINGS, BRANDING, IDENTIFICATION.—To17 bacco products shall be marked, branded, packaged, or

18 identified in such a manner as the Secretary shall by regu19 lation prescribe.

20 (i) PROCEEDS OF INVESTIGATIVE OPERATIONS.—

21 With respect to any undercover investigative operation of

22 the Bureau of Alcohol, Tobacco and Firearms (referred

23 to in this subtitle as ‘‘ATF’’) that is necessary for the

24 detection and prosecution of offenses against the United
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1 States under this subtitle, and notwithstanding any other

2 provision of law—

3 (1) amounts collected under section 227 and

4 the proceeds from such operation may be deposited

5 in banks or other financial institutions;

6 (2) the proceeds from such operation may be

7 used to offset necessary and reasonable expenses in8 curred in such operation;

9 (3) amounts collected under section 227 may be

10 used to purchase property, building, and other facili11 ties, and to lease space within the United States, the

12 District of Columbia, and the territories and posses13 sions of the United States, and to establish or ac14 quire proprietary corporations or business entities on

15 a commercial basis; and

16 (4) ATF shall comply with liquidation, deposit,

17 audit, and reporting provisions in sections 2081(b)

18 through (d) of title 19, United States Code, to the

19 extent applicable and not inconsistent with this sub20 section;

21 if, with respect to paragraphs (1), (2) and (3), the Direc22 tor has certified in writing that the actions authorized by

23 paragraphs (1), (2), and (3) are necessary for the conduct

24 of such operation.
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1 (j) AUTHORIZATION OF APPROPRIATIONS AND

2 TRACKING SYSTEM.—

3 (1) AUTHORIZATION OF APPROPRIATIONS.—

4 There are authorized to be appropriated amounts

5 provided under section 101(d)(2)(D) to enable the

6 Department of the Treasury to carry out activities

7 under this subtitle relating to—

8 (A) training of Federal, State, and foreign

9 tobacco administrators and enforcement offi10 cials;

11 (B) training for smuggling and diversion

12 interdiction;

13 (C) educational outreach for tobacco indus14 try members on the objectives of this Act and

15 the responsibilities of such individuals under

16 this Act;

17 (D) research by the Customs Services and

18 the Bureau relating to tracking technologies;

19 and

20 (E) other activities relating to the purposes

21 of this subtitle.

22 (2) TRACKING SYSTEM.—In establishing a con23 trolled commodity tracking system for tobacco prod24 ucts, the Secretary shall evaluate the deployment of

25 an innovative anti-diversion system that can be im-
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1 plemented at the manufacturing level to track prod2 ucts through the stream of commerce to the point of

3 retail sale.

4 SEC. 227. FUNDING.

5 (a) LICENSING AND REGISTRATION FEES.—The Sec6 retary may, in the Secretary’s sole discretion, set the li7 censing and registration fees required by this subtitle, in

8 such amounts as are necessary to recover the costs of ad9 ministering the provisions of this subtitle, including pre10 venting trafficking in contraband tobacco products.

11 (b) DISPOSITION OF FEES.—

12 (1) ACCOUNT.—Fees collected by the Secretary

13 under this subtitle shall be deposited in an account

14 within the Treasury of the United States that is spe15 cially designated for paying the costs associated with

16 the administration or enforcement of this subtitle or

17 any other Federal law relating to the unlawful traf18 ficking of tobacco products.

19 (2) PAYMENTS.—The Secretary is authorized

20 and directed to pay out of any funds in the account

21 referred to in paragraph (1) any expenses incurred

22 by the Federal Government in administering and en23 forcing this subtitle or any other Federal law relat24 ing to the unlawful trafficking in tobacco products

25 (including expenses incurred for the salaries and ex-
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1 penses of individuals employed to provide such serv2 ices).

3 (3) LIMITATION.—None of the funds deposited

4 into the account referred to in paragraph (1) shall

5 be made available for any purpose other than mak6 ing payments authorized under the preceding sen7 tence.

8 (c) SUPPLEMENT NOT SUPPLANT.—Amounts pro9 vided under this subtitle for the Department of the Treas10 ury shall be in addition to any other amounts appropriated

11 for such Department. Amounts otherwise appropriated for

12 such Department shall not be reduced below the amounts

13 so appropriated for fiscal year 1998, as a result of the

14 amounts made available under this subtitle.

15 SEC. 228. TRANSITIONAL RULES.

16 (a) MANUFACTURERS OR EXPORTERS.—Any manu17 facturer or export warehouse proprietor, who, on the date

18 of enactment of this Act, is a permittee under chapter 52

19 of the Internal Revenue Code of 1986, and who submits

20 an application pursuant to the provisions of this subtitle

21 not later than 90 days after the date of enactment of this

22 Act, may continue to engage in such business pending

23 final action on such application.

24 (b) IMPORTERS, EXPORTERS, WHOLESALERS AND

25 RETAILERS.—Any person engaged in the business of im-
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1 porting, exporting, wholesaling, or retailing tobacco prod2 ucts on the date of enactment of this Act, who submits

3 an application pursuant to the provisions of this subtitle

4 not later than 90 days after the date of enactment of this

5 Act, may continue to engage in such business pending

6 final action on such application.

7 SEC. 229. RULES AND REGULATIONS.

8 The Secretary shall prescribe rules and regulations

9 for the enforcement of this subtitle, including all rules and

10 regulations that are necessary to ensure the lawful dis11 tribution of tobacco products in interstate or foreign com12 merce.

13 SEC. 230. SEVERABILITY.

14 If any provision of this subtitle or the application

15 thereof to any person or circumstance is held invalid, the

16 validity of the remainder of this subtitle and of the appli17 cation of such provision to other persons and cir18 cumstances shall not be affected thereby.

19 SEC. 231. EFFECT ON STATE OR LOCAL LAW.

20 No provision of this subtitle shall be construed to oc21 cupy the field in which such provision operates to the ex22 clusion of the law of any State or political subdivision

23 thereof on the same subject matter, unless there is a direct

24 and positive conflict between such provision and the law
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1 of the State or political subdivision thereof so that the two

2 cannot be reconciled or consistently stand together.

3 SEC. 232. AMENDMENT TO CONTRABAND CIGARETTE TRAF4 FICKING ACT.

5 Chapter 114 of title 18, United States Code, is

6 amended—

7 (1) in section 2341—

8 (A) in paragraph (2)—

9 (i) by striking ‘‘60,000’’ and inserting

10 ‘‘30,000’’; and

11 (ii) by striking ‘‘if such State’’ and all

12 that follows through ‘‘payment of cigarette

13 taxes’’;

14 (B) in paragraph (4), by striking ‘‘and’’ at

15 the end;

16 (C) in paragraph (5), by striking the pe17 riod and inserting ‘‘; and’’; and

18 (D) by adding at the end the following:

19 ‘‘(6) the term ‘tobacco product’ means ciga20 rettes, cigarette tobacco, smokeless tobacco, little ci21 gars, roll-your-own products, cigars, cigarillos, pipe

22 tobacco, roll-your-own products, (as such terms are

23 defined in section 5 of the KIDS Act) and any other

24 product made or derived from tobacco intended for

25 human consumption.’’;
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1 (2) in section 2342(b), by striking ‘‘60,000’’

2 and inserting ‘‘30,000’’;

3 (3) in sections 2343, by striking ‘‘60,000’’ each

4 place that such term appears and inserting

5 ‘‘30,000’’.

6 (4) by striking ‘‘cigarette’’ each place that such

7 term appears, other than in paragraphs (1) and (6)

8 of section 2341, and inserting ‘‘tobacco product’’;

9 and

10 (5) by striking ‘‘cigarettes’’ each place that

11 such term appears and inserting ‘‘tobacco products’’.

12 Subtitle D—Penalties

13 SEC. 241. PENALTIES.

14 Section 307 of the Federal Food, Drug, and Cosmetic

15 Act (21 U.S.C. 335b) is amended by adding at the end

16 the following:

17 ‘‘(f) PENALTIES RELATING TO TOBACCO PROD18 UCTS.—

19 ‘‘(1) COMPLIANCE AND DISCLOSURE.—

20 ‘‘(A) IN GENERAL.—Any tobacco manufac21 turer, or employee or agent of any tobacco man22 ufacturer which violates this Act or the KIDS

23 Act shall be subject to a civil penalty of

24 $25,000 per day of violation. In addition, the

25 Secretary may require any such manufacturer
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1 to include in its advertising for the relevant to2 bacco product a statement of such violation.

3 ‘‘(B) DISCLOSURE.—Any tobacco product

4 manufacturer or employee or agent of any to5 bacco product manufacturer who fails to dis6 close to the Secretary research documents or in7 formation required to be disclosed by this Act

8 or the KIDS Act or any other provision of law

9 relating to the health effects or toxicity of to10 bacco products, nontobacco ingredients and to11 bacco product constituents shall be subject to a

12 civil penalty of not more than $10,000,000 for

13 each such violation. Such civil penalty shall be

14 in addition to any other criminal, civil or ad15 ministrative penalty prescribed by law.

16 ‘‘(2) CIVIL ACTIONS TO RECOVER PENALTIES.—

17 The Secretary may commence a civil action to assess

18 and recover any civil penalty under paragraph (1) in

19 the district court of the United States for the dis20 trict in which the violation is alleged to have oc21 curred or in which the defendant resides or has its

22 principal place of business. The court shall have ju23 risdiction to assess a civil penalty in such an action.

24 In determining the amount of any civil penalty to be
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1 assessed under this subsection, the court shall take

2 into account—

3 ‘‘(A) the gravity of the violation;

4 ‘‘(B) the economic benefit or savings (if

5 any) resulting from the violation;

6 ‘‘(C) the size of the violator’s business;

7 ‘‘(D) the violator’s history of compliance

8 with this Act;

9 ‘‘(E) action taken to remedy the violation;

10 ‘‘(F) the effect of the penalty on the viola11 tor’s ability to continue business operations;

12 and

13 ‘‘(G) such other matters as justice may re14 quire.

15 In any such action, subpoenas for witnesses who are

16 required to attend a district court in any district

17 may run into any other district.’’.

18 SEC. 242. APPLICATION OF PENALTIES WITH RESPECT TO

19 VIOLATIONS OF CERTAIN LICENSING PROVI20 SIONS.

21 (a) IN GENERAL.—A manufacturer, exporter, im22 porter, wholesaler or retailer who violates any provision

23 of this Act (or an amendment made by this Act) or regula24 tions issued thereunder with respect to tobacco products

25 shall, in addition to any applicable penalties otherwise pro-
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1 vided for in this Act (or amendments), be liable to an

2 order of the Secretary suspending or revoking a license

3 or registration issued pursuant to section 223(b). Such

4 revocation or suspension shall be adjudicated in accord5 ance with the procedures provided for in subsection 303(f)

6 (3)(A) and (4) of the Federal Food, Drug and Cosmetic

7 Act (21 U.S.C. 333(f)(3)(A) and (4)). If civil penalties

8 pursuant to such section 303(f)(1)(A) are being sought

9 for the same violation or violations, such violation will be

10 adjudicated in a single proceeding for purposes of such

11 subsection.

12 (b) NOTIFICATION.—Upon receiving a final order

13 issued by the Secretary suspending or revoking a license

14 or registration issued under section 223(c), the Secretary

15 of the Treasury shall notify the licensee or registrant that

16 such license or registration has been suspended or revoked

17 in accordance with this section.
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1 TITLE III—PUBLIC HEALTH

2 INITIATIVES

3 Subtitle A—State-Federal Anti4 Tobacco Partnership

5 CHAPTER 1—SCHOOL- AND COMMUNITY6 BASED PROGRAMS

7 SEC. 301. SCHOOL- AND COMMUNITY-BASED PROGRAMS.

8 (a) IN GENERAL.—The Secretary, acting through the

9 Centers for Disease Control and Prevention, shall estab10 lish a program to award cooperative agreements to States

11 to enable such States—

12 (1) to carry out school-based programs concern13 ing the dangers of using tobacco products using

14 methods that are effective and evidence-based; and

15 (2) to carry out community-based prevention

16 programs, including in predominantly minority com17 munities, using methods that are effective and evi18 dence-based.

19 (b) ELIGIBILITY.—To be eligible to receive funds

20 under this section a State shall prepare and submit to the

21 Secretary an application at such time, in such manner,

22 and containing such information as the Secretary may re23 quire, including a State plan (that is subject to approval

24 by the Secretary) that describes—
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1 (1) the types of programs that the State will

2 fund under the cooperative agreement; and

3 (2) the manner in which the State will monitor

4 the effectiveness of such programs.

5 (c) ALLOCATION OF FUNDS.—

6 (1) POPULATION-BASED DETERMINATION.—

7 From amounts made available under subsection (f)

8 for each fiscal year, the Secretary shall provide to a

9 State an amount that bears the same ratio to 60

10 percent of such available amounts as the population

11 of the State bears to the total population of all

12 States.

13 (2) ALLOCATION BASED ON NEEDS.—The Sec14 retary shall allocate 40 percent of the amount made

15 available under subsection (f) for a fiscal year to

16 States based on a formula to be determined by the

17 Secretary that takes into consideration the anti-to18 bacco needs of the State.

19 (d) USE OF FUNDS.—Amounts received by a State

20 under this section shall be used to—

21 (1) carry out school-based programs that are

22 focused on those regions of the State with high

23 smoking rates and targeted at populations which are

24 most at risk to start smoking;
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1 (2) carry out community-based prevention pro2 grams that are focused on those populations within

3 the community that are most at-risk to use tobacco

4 products or that have been targeted by tobacco ad5 vertising or marketing;

6 (3) carry out other activities determined appro7 priate by the Secretary; and

8 (4) assist local governmental entities within the

9 State to conduct appropriate anti-tobacco activities.

10 (e) ADDITIONAL REQUIREMENTS.—To be eligible to

11 receive funds under this section a State shall provide as12 surances to the Secretary that—

13 (1) the State will annually report to the Sec14 retary on the effectiveness of the educational ap15 proaches implemented by the State;

16 (2) adequate records will be maintained with re17 spect to such assistance;

18 (3) amounts provided to individuals or entities

19 will be subject to independent audit;

20 (4) the State will fully involve local public

21 health officials in the planning and implementation

22 of the program; and

23 (5) the State will coordinate activities under

24 this section with other Federal anti-tobacco pro25 grams.
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1 (f) AUTHORIZATION OF APPROPRIATIONS.—There

2 are authorized to be appropriated amounts provided under

3 section 101(d)(2)(B) for a fiscal year to carry out this

4 section.

5 (g) TRIGGER.—No expenditures shall be made under

6 this section during any fiscal year in which the annual

7 amount appropriated for the Centers for Disease Control

8 and Prevention is less than the amount so appropriated

9 for the prior fiscal year.

10 SEC. 302. NATIONAL EVENT SPONSORSHIP PROGRAM.

11 (a) ESTABLISHMENT.—The Secretary, acting

12 through the Centers for Disease Control and Prevention,

13 shall establish a program to be known as the ‘‘National

14 Event Sponsorship Program’’ under which the Secretary

15 may award grants to eligible entities or individuals for the

16 sponsorship of activities described in subsection (c).

17 (b) ELIGIBILITY.—To be eligible to receive a grant

18 under this section an entity or individual shall—

19 (1) prepare and submit to the Secretary an ap20 plication at such time, in such manner, and contain21 ing such information as the Secretary may require,

22 including—

23 (A) a description of the event, activity,

24 team, or entry for which the grant is to be pro25 vided;
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1 (B) documentation that the event, activity,

2 team, or entry involved was sponsored or other3 wise funded by a tobacco manufacturer or dis4 tributor prior to the date of the application; and

5 (C) a certification that the applicant is un6 able to secure funding for the event, activity,

7 team, or entry involved from sources other than

8 those described in paragraph (2);

9 (2) provide assurances that amounts received

10 under the grant will be used in accordance with sub11 section (d); and

12 (3) meet any other requirements determined ap13 propriate by the Secretary.

14 (c) PERMISSIBLE SPONSORSHIP ACTIVITIES.—

15 Events, activities, teams, or entries for which a grant may

16 be provided under this section include—

17 (1) an athletic, musical, artistic, or other social

18 or cultural event or activity that was sponsored in

19 whole or in part by a tobacco manufacturer or dis20 tributor prior to the date of enactment of this Act;

21 (2) the participation of a team that was spon22 sored in whole or in part by a tobacco manufacturer

23 or distributor prior to the date of enactment of this

24 Act, in an athletic event or activity; and
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1 (3) the payment of a portion or all of the entry

2 fees of, or other financial or technical support pro3 vided to, an individual or team by a tobacco manu4 facturer or distributor prior to the date of enactment

5 of this Act, for participation of the individual in an

6 athletic, musical, artistic, or other social or cultural

7 event.

8 (d) USE OF FUNDS.—Amounts received under a

9 grant under this section shall be used to—

10 (1)(A) pay the costs associated with the spon11 sorship of an event or activity described in sub12 section (c)(1);

13 (B) provide for the sponsorship of an individual

14 or team;

15 (C) pay the required entry fees associated with

16 the participation of an individual or team in an

17 event or activity described in subsection (c)(3);

18 (D) provide financial or technical support to an

19 individual or team in connection with the participa20 tion of that individual or team in an activity de21 scribed in subsection (c)(3); or

22 (E) for any other purposes determined appro23 priate by the Secretary; and
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1 (2) promote images or activities to discourage

2 individuals from using tobacco products or encour3 age individuals who use such products to quit.

4 (e) ALLOCATION OF UNEXPENDED FUNDS.—

5 Amounts available for purposes of carrying out this sec6 tion and remaining available at the end of the 10-year pe7 riod following the date of the establishment of the program

8 under this section, shall be used as follows:

9 (1) 50 percent of such amounts shall be used

10 to supplement amounts available for multi-media

11 campaigns under section 311;

12 (2) 25 percent of such amounts shall be used

13 to supplement amounts available for Federal or

14 State tobacco product enforcement purposes; and

15 (3) 25 percent of such amounts shall be used

16 to supplement amounts available for other commu17 nity-based programs under this subtitle.

18 (f) AUTHORIZATION OF APPROPRIATIONS.—There

19 are authorized to be appropriated amounts provided under

20 section 101(d)(2)(B) to carry out this section.

21 (g) SUNSET.—The program established under this

22 section shall terminate on the date that is 10-years after

23 the date of enactment of this Act.
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1 CHAPTER 2—COUNTER-ADVERTISING

2 PROGRAMS

3 SEC. 311. FEDERAL-STATE COUNTER-ADVERTISING PRO4 GRAMS.

5 (a) IN GENERAL.—The Secretary, acting through the

6 Centers for Disease Control and Prevention, shall carry

7 out programs to reduce tobacco usage through media8 based (such as counter-advertising campaigns) and

9 nonmedia-based education, prevention and cessation cam10 paigns designed to discourage the use of tobacco products

11 by individuals, to encourage those who use such products

12 to quit, and to educate the public about the hazards of

13 exposure to environmental tobacco smoke. Such programs

14 shall include national and local campaigns and shall target

15 those populations that have been targeted by tobacco in16 dustry advertising.

17 (b) ESTABLISHMENT OF BOARD.—

18 (1) IN GENERAL.—The Secretary shall establish

19 within the executive branch a board to be known as

20 the ‘‘Anti-Tobacco Public Education Board’’ (re21 ferred to in this section as the ‘‘Board’’) to enter

22 into contracts with or award grants to eligible enti23 ties for the development and dissemination of public

24 informational and educational campaigns and mes25 sages to reduce the use of tobacco products.
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1 (2) COMPOSITION.—The Board shall be com2 posed of—

3 (A) 7 non-Federal members to be ap4 pointed by the Secretary, of which—

5 (i) at least 3 such members shall be

6 individuals who are widely recognized by

7 the general public for cultural, educational,

8 behavioral science or medical achievement;

9 (ii) at least 2 of whom shall be indi10 viduals who hold positions of leadership in

11 major public health organizations; and

12 (iii) at least 2 of whom shall be indi13 viduals recognized as experts in the field of

14 advertising and marketing; and

15 (B) the Director of the Office on Smoking

16 and Health of the Centers for Disease Control

17 and Prevention who shall serve as an ex officio

18 member of the Board.

19 (3) TERMS AND VACANCIES.—The members of

20 the Board shall serve staggered terms as determined

21 appropriate at the time of appointment by the Sec22 retary. Any vacancy in the Board shall not affect its

23 powers, but shall be filled in the same manner as the

24 original appointment.
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1 (4) TRAVEL EXPENSES.—The members of the

2 Board shall be allowed travel expenses, including per

3 diem in lieu of subsistence, at rates authorized for

4 employees of agencies under subchapter I of chapter

5 57 of title 5, United States Code, while away from

6 their homes or regular places of business in the per7 formance of services for the Board.

8 (5) REMOVAL.—Members of the Board may

9 only be removed by a majority vote of the members

10 of the Board for neglect of duty or malfeasance in

11 office.

12 (6) DUTIES.—The Board may—

13 (A) enter into contracts with or award

14 grants to eligible entities to develop messages

15 and campaigns designed to reduce the use of to16 bacco products that are based on effective strat17 egies to affect behavioral changes in children

18 and other targeted populations; and

19 (B) enter into contracts with or award

20 grants to eligible entities to carry out public in21 formational and educational activities designed

22 to reduce the use of tobacco products.

23 (c) ELIGIBILITY.—To be eligible to receive funding

24 under this section an entity shall—

25 (1) be a—
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1 (A) public entity or a State health depart2 ment; or

3 (B) private or nonprofit private entity

4 that—

5 (i)(I) is not affiliated with a tobacco

6 product manufacturer or importer;

7 (II) has a demonstrated record of

8 working effectively to reduce tobacco prod9 uct use; or

10 (III) has expertise in conducting a

11 multi-media communications campaign;

12 and

13 (ii) has expertise in developing strate14 gies that affect behavioral changes in chil15 dren and other targeted populations;

16 (2) prepare and submit to the Board an appli17 cation at such time, in such manner, and containing

18 such information as the Board may require, includ19 ing a description of the activities to be conducted

20 using amounts received under the grant or contract;

21 (3) provide assurances that amounts received

22 under this section will be used in accordance with

23 subsection (c); and

24 (4) meet any other requirements determined ap25 propriate by the Board.
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1 (d) USE OF FUNDS.—An entity that receives funds

2 under this section shall use amounts provided under the

3 grant or contract to conduct multi-media public edu4 cational and social marketing campaigns that are designed

5 to discourage and de-glamorize the use of tobacco prod6 ucts, encourage those using such products to quit, and

7 educate the public about the hazards of exposure to envi8 ronmental tobacco smoke. Such amounts may be used to

9 design and implement such activities and to conduct re10 search concerning the effectiveness of such programs.

11 (e) NEEDS OF CERTAIN POPULATIONS.—In awarding

12 grants and contracts under this section, the Board shall

13 take into consideration the needs of particular popu14 lations.

15 (f) COORDINATION.—

16 (1) IN GENERAL.—The Secretary shall ensure

17 that programs and activities under this section are

18 coordinated with programs and activities carried out

19 under this title.

20 (2) OTHER FEDERAL ENTITIES.—The Board

21 may secure directly from any Federal department or

22 agency such information as the Board considers nec23 essary to carry out the provision of this section.

24 (g) ALLOCATION OF FUNDS.—Not to exceed—
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1 (1) 25 percent of the amount made available

2 under subsection (h) for each fiscal year shall be

3 provided to States for State and local media-based

4 and nonmedia-based education, prevention and ces5 sation campaigns;

6 (2) 20 percent of the amount made available

7 under subsection (h) for each fiscal year shall be

8 used specifically for the development of new mes9 sages and campaigns; and

10 (3) not less than 50 percent of the amount

11 made available under subsection (h) for each fiscal

12 year shall be used specifically to place media mes13 sages and carry out other dissemination activities

14 described in subsection (d).

15 (h) AUTHORIZATION OF APPROPRIATIONS.—There

16 are authorized to be appropriated amounts provided under

17 section 101(d)(2)(B) to carry out this section.

18 (i) TRIGGER.—No expenditures shall be made under

19 this section during any fiscal year in which the annual

20 amount appropriated for the Centers for Disease Control

21 and Prevention is less than the amount so appropriated

22 for the prior fiscal year.
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1 CHAPTER 3—NATIONAL CESSATION

2 PROGRAM

3 SEC. 321. NATIONAL TOBACCO CESSATION PROGRAM.

4 (a) ESTABLISHMENT.—There is established a pro5 gram to be known as the ‘‘National Tobacco Cessation

6 Program’’. The Secretary may award grants to, and enter

7 into contracts and cooperative agreements with, public and

8 private entities for the purpose of expanding the availabil9 ity and utilization of tobacco use cessation products and

10 services.

11 (b) USE OF FUNDS.—Amounts made available under

12 a grant, contract or cooperative agreement under sub13 section (a) shall be used for the planning, establishment,

14 or administration of tobacco use cessation programs ap15 proved in accordance with subsection (d).

16 (c) CESSATION PROGRAMS AND ACTIVITIES.—

17 (1) IN GENERAL.—

18 (A) REQUIREMENTS.—Programs receiving

19 assistance under this section shall provide a

20 range of cost-effective and evidence-based prod21 ucts and services that are—

22 (i) consistent with the most recent to23 bacco cessation guidelines issued by the

24 Agency for Health Care Policy and Re25 search; or
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1 (ii) approved as safe and effective for

2 cessation by the Food and Drug Adminis3 tration.

4 (B) ADDITIONAL GUIDELINES.—Using the

5 best available scientific information, the Sec6 retary shall promulgate such additional guide7 lines as are necessary to assure the quality, ac8 cessibility and cost effectiveness of products and

9 services receiving funds under this section.

10 (2) ACTIVITIES.—Except as provided in sub11 sections (d) and (e), amounts provided under this

12 section may be used for the following:

13 (A) Evidence-based cessation products and

14 activities described in the application for assist15 ance under this section, including—

16 (i) science-based programs designed to

17 assist individuals to quit their use of to18 bacco products;

19 (ii) training in cessation intervention

20 methods for health plans and health pro21 fessionals, including physicians, nurses,

22 dentists, health educators, public health

23 professionals, and other health care provid24 ers;
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1 (iii) programs to encourage health in2 surers and health plans to provide coverage

3 for evidence-based tobacco use cessation

4 interventions and therapies, except that the

5 use of any funds under this clause to offset

6 the cost of providing a smoking cessation

7 benefit may only be used on a temporary

8 demonstration basis;

9 (iv) programs to encourage employer10 based wellness programs to provide evi11 dence-based tobacco use cessation interven12 tions and therapies; and

13 (v) programs targeted toward minor14 ity and low-income individuals, individuals

15 residing in medically underserved areas,

16 and uninsured individuals.

17 (B) Planning, administration, and edu18 cational activities related to the activities de19 scribed in subparagraph (A).

20 (C) The monitoring and evaluation of ac21 tivities carried out under subparagraphs (A)

22 and (B), and reporting and disseminating re23 sulting information to health professionals and

24 the public.
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1 (D) Targeted pilot programs with evalua2 tion components to encourage innovation and

3 experimentation with new methodologies.

4 (3) ANALYSES AND EVALUATION.—

5 (A) IN GENERAL.—Not less than

6 $30,000,000 of the amount available in each

7 fiscal year to carry out this section shall be

8 made available to the Agency for Health Care

9 Policy and Research, acting in consultation with

10 the Centers for Disease Control and Prevention,

11 to support and conduct periodic analyses and

12 evaluations of effective interventions for smok13 ing cessation and appropriate strategies for dis14 seminating and implementing these services, in15 cluding—

16 (i) the regular updating of tobacco use

17 cessation guidelines;

18 (ii) the development and dissemina19 tion of special programs in tobacco ces20 sation intervention for national physician

21 and other health care provider speciality

22 societies as well as for national and re23 gional health plans;
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1 (iii) outcomes, effectiveness, cost-ef2 fectiveness and other health services re3 search on tobacco product cessation; and

4 (iv) the evaluation of the effectiveness

5 of such activities.

6 (B) RESEARCH.—In carrying subpara7 graph (A), the Centers for Disease Control and

8 Prevention, in coordination with the Agency for

9 Health Care Policy and Research, the Food and

10 Drug Administration and the National Insti11 tutes of Health, shall conduct research on—

12 (i) cultural, social, behavioral, neuro13 logical and psychological factors affecting

14 how individuals, including youth, success15 fully quit using tobacco products;

16 (ii) the effectiveness of drugs and de17 vices in assisting individuals to stop using

18 tobacco products, including differences

19 among populations based on race, gender

20 or age;

21 (iii) the effects of cessation meth22 odologies, including pharmacological prod23 ucts, on pregnant women; and

24 (iv) other research activities relating

25 to the cessation of tobacco products.
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1 (4) COORDINATION.—Tobacco use cessation ac2 tivities permitted under this subsection may be con3 ducted in coordination with other federally funded

4 programs, including—

5 (A) the special supplemental food program

6 under section 17 of the Child Nutrition Act of

7 1966 (42 U.S.C. 1786);

8 (B) the Maternal and Child Health Serv9 ices Block Grant program under title V of the

10 Social Security Act (42 U.S.C. 701 et seq.);

11 (C) the State Children’s Health Insurance

12 Program of the State under title XXI of the

13 Social Security Act (42 U.S.C. 13397aa et

14 seq.);

15 (D) the school lunch program under the

16 National School Lunch Act (42 U.S.C. 1751 et

17 seq.);

18 (E) an Indian Health Service Program;

19 (F) the community health center program

20 under section 330 of the Public Health Service

21 Act (42 U.S.C. 254b);

22 (G) State-initiated smoking cessation pro23 grams that include provisions for reimbursing

24 individuals for medications or therapeutic tech25 niques;
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1 (H) the substance abuse and mental health

2 services block grant program, and the preven3 tive health services block grant program, under

4 title XIX of the Public Health Service Act (42

5 U.S.C. 300w et seq.);

6 (I) the medicaid program under title XIX

7 of the Social Security Act (42 U.S.C. 1396 et

8 seq.); and

9 (J) programs administered by the Depart10 ment of Defense and the Department of Veter11 ans Affairs.

12 (5) TECHNICAL ASSISTANCE.—The Secretary

13 may provide technical assistance to entities receiving

14 assistance under this section in planning and operat15 ing activities to be carried out under this chapter.

16 (d) LIMITATION.—Payments made under this chap17 ter may not be used for—

18 (1) making cash payments to intended recipi19 ents of tobacco use cessation services;

20 (2) purchasing or improving land, purchasing,

21 constructing, or permanently improving (other than

22 minor remodeling) any building or other facility, or

23 purchasing major medical equipment;
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1 (3) satisfying any requirement for the expendi2 ture of non-Federal funds as a condition of the re3 ceipt of Federal funds; or

4 (4) providing financial assistance to any entity

5 other than a public or private entity.

6 (e) APPLICATION.—The Secretary may make pay7 ments under this section to an entity for a fiscal year only

8 if—

9 (1) the entity submits to the Secretary an appli10 cation for such payments;

11 (2) the application contains a plan that meets

12 the requirements proscribed by the Secretary;

13 (3) the application contains such assurances as

14 the Secretary may require regarding compliance with

15 the requirements of this chapter;

16 (4) the application is in such form and is sub17 mitted by such date as the Secretary may require;

18 and

19 (5) the applicant agrees to permit and cooper20 ate with Federal investigations, including audits, un21 dertaken in accordance with regulations promulgated

22 by the Secretary.

23 (f) FUNDING.—The Secretary shall use amounts

24 made available under section 101(d)(2)(B) for a fiscal

25 year to carry out this section.
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1 SEC. 322. REPORTS, DATA, AND AUDITS.

2 (a) DATA.—

3 (1) COLLECTION AND REPORTING.—A State

4 shall collect and report data for a fiscal year and

5 submit to the Secretary, not later than February 1

6 of the succeeding fiscal year, a report that—

7 (A) describes the purposes for which the

8 State expended payments made to the State

9 under section 321;

10 (B) describes the extent of progress made

11 by the State for purposes of such section;

12 (C) meets the conditions described in para13 graph (2); and

14 (D) contains such additional information

15 as determined necessary by the Secretary, and

16 which is submitted in such form, as the Sec17 retary may require.

18 (2) UNIFORM DATA SETS.—

19 (A) IN GENERAL.—The Secretary, in con20 sultation with the States, shall develop sets of

21 data for uniformly defining levels of youth and

22 adult use of tobacco products (referred to as

23 ‘uniform tobacco product use data items’). The

24 Secretary shall develop formats for the uniform

25 collecting and reporting of information on such

26 items.
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1 (B) LATER FISCAL YEARS.—In the case of

2 fiscal year 2000 and each subsequent fiscal

3 year, a condition under paragraph (1) for a

4 State is that the State will, in accordance with

5 the applicable format under subparagraph (A),

6 collect during such year, and include in the re7 port under paragraph (1), the necessary infor8 mation for each of the tobacco product use data

9 items.

10 (3) UNIFORM CRITERIA.—The Secretary, in

11 consultation with the States, shall establish criteria

12 for the uniform collection and reporting of data on

13 activities authorized in section 321 with respect to

14 which no uniform tobacco product use data items

15 under paragraph (2) exist.

16 (4) PUBLIC INSPECTION OF REPORTS.—A con17 dition under paragraph (1) for a fiscal year is that

18 the State involved will make copies of the report

19 submitted under such paragraph for the fiscal year

20 available for public inspection, and will upon request

21 provide a copy of the report to any individual for a

22 charge not exceeding the cost of providing the copy.

23 (b) AUDITS.—

24 (1) FISCAL CONTROL AND ACCOUNTING PROCE25 DURES.—Each State shall establish fiscal control
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1 and fund accounting procedures as may be necessary

2 to ensure the proper disbursal of and accounting for

3 Federal funds paid to the State under section 321

4 and funds transferred for use under this chapter.

5 (2) ANNUAL SUBMISSION.—Each State shall

6 annually audit its expenditures from payments re7 ceived under section 321. Such State audits shall be

8 conducted by an entity independent of any agency

9 administering a program funded under this chapter,

10 and, in so far as practical, in accordance with the

11 Comptroller General’s standards for auditing govern12 mental organizations, programs, activities, and func13 tions. Within 30 days following the date on which

14 each audit is completed, the chief executive officer of

15 the State shall transmit a copy of that audit to the

16 Secretary.

17 (3) REPAYMENTS.—Each State shall, after

18 being provided by the Secretary with adequate notice

19 and an opportunity for a hearing within the State,

20 repay to the United States amounts found not to

21 have been expended in accordance with the require22 ments of this chapter. If such repayment is not

23 made, the Secretary shall, after providing the State

24 with adequate notice and opportunity for a hearing

25 within the State, offset such amounts against the
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1 amount of any funding to which the State is or may

2 become entitled under this subtitle.

3 (4) AVAILABILITY.—The State shall make cop4 ies of the reports and audits required by this sub5 section available for public inspection within the

6 State.

7 (5) EVALUATION.—The Comptroller General of

8 the United States shall, from time to time, evaluate

9 the expenditures by the States of payments under

10 this chapter in order to ensure that expenditures are

11 consistent with the provisions of this chapter.

12 (6) REPORT BY SECRETARY.—Not later than

13 October 1, 2000, the Secretary shall prepare and

14 submit to the appropriate committees of Congress a

15 report concerning the activities of the States that

16 have received funds under this chapter and may in17 clude in the report any recommendations for appro18 priate changes in legislation.

19 (c) NONAPPLICATION OF CERTAIN PROVISIONS.—

20 Title XVII of the Omnibus Budget Reconciliation Act of

21 1981 shall not apply with respect to audits of funds allot22 ted under this chapter.
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1 Subtitle B—Health Research

2 Program

3 CHAPTER 1—NATIONAL FUND FOR

4 HEALTH RESEARCH

5 SEC. 331. ESTABLISHMENT OF NATIONAL FUND FOR

6 HEALTH RESEARCH.

7 (a) ESTABLISHMENT.—There is established within

8 the National Tobacco Trust Fund a fund, to be known

9 as the ‘‘National Fund for Health Research’’ (hereafter

10 in this section referred to as the ‘‘Fund’’), consisting of

11 such amounts as are transferred to the Fund under sub12 section (b) and any interest earned on investment of

13 amounts in the Fund.

14 (b) TRANSFERS TO FUND.—There are authorized to

15 be appropriated amounts provided under section

16 101(d)(2)(C) to carry out this section.

17 (c) OBLIGATIONS FROM FUND.—Appropriations

18 shall be made under this section to each member Institute

19 or Center of the National Institutes of Health in propor20 tion to the amount otherwise annually appropriated for

21 each such Institute or Center.

22 (d) SPENDING PRIORITIES.—The director of each

23 member Institute or Center of the National Institutes of

24 Health shall appropriately prioritize the use of funds made

25 available from the Fund for tobacco-related diseases and
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1 conditions, including those affecting women and minori2 ties.

3 CHAPTER 2—TOBACCO PREVENTION

4 RESEARCH

5 SEC. 335. NATIONAL TOBACCO RESEARCH TASK FORCE.

6 (a) ESTABLISHMENT.—The Secretary shall establish

7 a National Tobacco Research Task Force (referred to in

8 this subtitle as the ‘National Task Force’) to foster coordi9 nation among public health agencies, academic bodies, and

10 community groups that conduct or support tobacco-related

11 biomedical, clinical, behavioral, health services, public

12 health and community, and surveillance and epidemiology

13 research activities.

14 (b) COMPOSITION.—The National Task Force shall

15 be composed of—

16 (1) the Surgeon General;

17 (2) the Director of the Office of Smoking and

18 Health of the Centers for Disease Control and Pre19 vention;

20 (3) the Administrator of the Agency for Health

21 Care Policy and Research;

22 (4) the Director of the National Institutes of

23 Health;

24 (5) the Director of the Office of Minority

25 Health;
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1 (6) the Commissioner on Food and Drugs;

2 (7) the Administrator of the Environmental

3 Protection Agency;

4 (8) two representatives from non-governmental

5 public health or tobacco control organizations; and

6 (9) two representatives from State or local gov7 ernment public health agencies and offices.

8 A vacancy on the Task Force shall not effect its ability

9 to conduct business.

10 (c) CHAIR.—The National Task Force shall be

11 chaired by the Secretary or the designee of the Secretary.

12 (d) DUTIES.—The Task Force shall—

13 (1) in accordance with research agenda rec14 ommended under section 336, coordinate and advise

15 tobacco-related research activities among Federal

16 public health service agencies;

17 (2) collect and make available to States and

18 communities, through publication and other appro19 priate means, evidence-based tobacco-related re20 search results and recommendations as to the prac21 tical application of such results; and

22 (3) report on a biennial basis to the Secretary

23 and the Committee on Labor and Human Resources

24 of the Senate, and the Committee on Commerce of
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1 the House of Representatives on the current and

2 planned activities of participating Federal agencies.

3 SEC. 336. RESEARCH ACTIVITIES.

4 (a) IN GENERAL.—The Director of the Centers for

5 Disease Control and Prevention, in conjunction with the

6 National Tobacco Research Task Force, shall carry out

7 tobacco-related research, including research on—

8 (1) the relationship between the use of tobacco

9 products and cancer, cardiovascular diseases, lung

10 diseases and other diseases;

11 (2) the effects of tobacco products, ingredients

12 of tobacco products, and tobacco smoke on the

13 human body and methods of reducing any negative

14 effects, including the development of non-addictive,

15 reduced risk tobacco products;

16 (3) the addictive effects of nicotine and how

17 such effects differ with respect to different individ18 uals;

19 (4) the prevention of diseases and conditions

20 most associated with the use of tobacco products;

21 (5) differentials between brands of tobacco

22 products with respect to health effects or addiction;

23 (6) the relationship between the use of tobacco

24 products and cancer, particularly among minorities;
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1 (7) risk factors for tobacco use by children, in2 cluding respiratory illness related to exposure to en3 vironmental tobacco smoke;

4 (8) risks associated with environmental expo5 sure to tobacco smoke;

6 (9) effects of tobacco use by pregnant women;

7 and

8 (10) cultural, social, behavioral, neurological

9 and psychological reasons that individuals refrain

10 from using tobacco products, or continue using to11 bacco products.

12 (b) AUTHORIZATION OF APPROPRIATIONS.—There

13 are authorized to be appropriated amounts provided under

14 section 101(d)(2)(C) to carry out this section.

15 (c) TRIGGER.—No expenditures shall be made under

16 this section during any fiscal year in which the annual

17 amount appropriated for the Centers for Disease Control

18 and Prevention is less than the amount so appropriated

19 for the prior fiscal year.

20 SEC. 337. TOBACCO PREVENTION DATABASE AND EVALUA21 TION.

22 (a) DUTIES.—The Director of the Centers for Dis23 ease Control and Prevention, working in consultation with

24 National Task Force, shall carry out tobacco-related sur25 veillance and epidemiologic studies, including—
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1 (1) the use of youth surveillance systems to

2 monitor the use of all tobacco products by individ3 uals under the age of 18, including brands used to

4 enable determinations to be made of company-spe5 cific youth market share;

6 (2) the conduct of State-specific youth tobacco

7 use surveys to monitor trends in the use of tobacco

8 products in all States and the District of Columbia;

9 (3) the conduct of tobacco product surveillance

10 to monitor changes in the design, toxicity and bio11 logical affects of tobacco products;

12 (4) the conduct of social and policy monitoring

13 of the effects of legislative, policy and media pro14 grams on tobacco use;

15 (5) the conduct of environmental tobacco smoke

16 exposure monitoring, including biochemical monitor17 ing of such exposure;

18 (6) adult surveillance to track the adult use of

19 all tobacco products;

20 (7) the use of cancer registries to monitor the

21 effects of tobacco use and anti-tobacco programs on

22 cancer incidence;

23 (8) the use of State-based behavioral risk factor

24 surveillance to monitor health risk behaviors associ25 ated with tobacco use, including youth drug use; and
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1 (9) the use of State-based pregnancy risk as2 sessments to monitor the effects of tobacco use on

3 pregnancy outcomes.

4 (b) AUTHORIZATION OF APPROPRIATIONS.—There

5 are authorized to be appropriated amounts provided under

6 section 101(d)(2)(b) to carry out this section.

7 (c) TRIGGER.—No expenditures shall be made under

8 this section during any fiscal year in which the annual

9 amount appropriated for the Centers for Disease Control

10 and Prevention is less than the amount so appropriated

11 for the prior fiscal year.

12 Subtitle C—Miscellaneous

13 Provisions

14 SEC. 341. LIMITATION ON ADMINISTRATIVE COSTS.

15 (a) FEDERAL ADMINISTRATION.—The Secretary may

16 use not to exceed—

17 (1) 4 percent of the amount made available

18 under each program under this title in the first fis19 cal year for which amounts are made available; and

20 (2) 3 percent of the amount made available

21 under each program under this title in the 2nd and

22 each subsequent fiscal year for which amounts are

23 made available;
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1 for the administration (exclusive of scientific and pro2 grammatic technical assistance) of each such program

3 under this title.

4 (b) STATE ADMINISTRATION.—A State may use not

5 to exceed—

6 (1) 4 percent of the amount made available to

7 the State under any program under this title in the

8 first fiscal year for which amounts are made avail9 able; and

10 (2) 3 percent of the amount made available to

11 the State under any program under this title in the

12 2nd and each subsequent fiscal year for which

13 amounts are made available;

14 for the administration of each such program.

15 SEC. 342. WITHHOLDING.

16 (a) WITHHOLDING FOR MISUSE.—

17 (1) IN GENERAL.—The Secretary shall, after

18 adequate notice and opportunity for a hearing con19 ducted within the affected State, withhold funds

20 from any State which does not use amounts provided

21 under this title in accordance with the requirements

22 of this title or the certifications otherwise provided

23 by States under this title. The Secretary shall with24 hold such funds until the Secretary finds that the
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1 reason for the withholding has been removed and

2 there is reasonable assurance that it will not recur.

3 (2) INVESTIGATION.—The Secretary may not

4 institute proceedings to withhold funds under para5 graph (1) unless the Secretary has conducted an in6 vestigation concerning whether the State has used

7 its amounts provided under this title in accordance

8 with the requirements of this title or the certifi9 cations otherwise provided under this title. Investiga10 tions required by this paragraph shall be conducted

11 within the affected State by qualified investigators.

12 (3) RESPONSE TO COMPLAINTS.—The Secretary

13 shall respond in an expeditious manner to com14 plaints of a substantial or serious nature that a

15 State has failed to use funds in accordance with the

16 requirements of this title or the certifications other17 wise provided under this title.

18 (4) MINOR FAILURES.—The Secretary may not

19 withhold funds under paragraph (1) from a State

20 for a minor failure to comply with the requirements

21 of this title or certifications otherwise provided

22 under this title.

23 (b) INVESTIGATIONS.—

24 (1) BY SECRETARY.—The Secretary shall con25 duct in several States in each fiscal year investiga-
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1 tions of the use of funds received by the States

2 under this title in order to evaluate compliance with

3 the requirements of this title and certifications oth4 erwise provided under this title.

5 (2) BY COMPTROLLER GENERAL.—The Comp6 troller General of the United States may conduct in7 vestigations of the use of funds received under this

8 title by a State in order to insure compliance with

9 the requirements of this title and certifications oth10 erwise provided under this title.

11 (c) AVAILABILITY OF RECORDS.—Each State, and

12 each entity which has received funds from amounts pro13 vided under this title to a State, shall make appropriate

14 books, documents, papers, and records available to the

15 Secretary or the Comptroller General of the United States,

16 or any of their duly authorized representatives, for exam17 ination, copying, or mechanical reproduction on or off the

18 premises of the appropriate entity upon a reasonable re19 quest therefore.

20 (d) LIMITATION.—

21 (1) IN GENERAL.—In conducting any investiga22 tion in a State, the Secretary or the Comptroller

23 General of the United States may not make a re24 quest for any information not readily available to

25 such State or an entity which has received funds
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1 from amounts made available to the State under this

2 title or make an unreasonable request for informa3 tion to be compiled, collected, or transmitted in any

4 form not readily available.

5 (2) NONAPPLICATION TO JUDICIAL PROCEED6 INGS.—Paragraph (1) does not apply to the collec7 tion, compilation, or transmittal of data in the

8 course of a judicial proceeding.

9 SEC. 343. NONDISCRIMINATION.

10 (a) PROGRAMS AND ACTIVITIES.—

11 (1) IN GENERAL.—For the purpose of applying

12 the prohibitions against discrimination on the basis

13 of age under the Age Discrimination Act of 1975, on

14 the basis of handicap under section 504 of the Reha15 bilitation Act of 1973, on the basis of sex under title

16 IX of the Education Amendments of 1972, or on the

17 basis of race, color, or national origin under title VI

18 of the Civil Rights Act of 1964, programs and activi19 ties funded in whole or in part with funds made

20 available under this title are considered to be pro21 grams and activities receiving Federal financial as22 sistance.

23 (2) SEX OR RELIGION.—No person shall on the

24 ground of sex or religion be excluded from participa25 tion in, be denied the benefits of, or be subjected to
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1 discrimination under, any program or activity fund2 ed in whole or in part with funds made available

3 under this title.

4 (b) FAILURE TO COMPLY.—Whenever the Secretary

5 finds that a State, or an entity that has received a pay6 ment from a State under this title, has failed to comply

7 with a provision of law referred to in subsection (a)(1),

8 with subsection (a)(2), or with an applicable regulation

9 (including one prescribed to carry out subsection (a)(2)),

10 the Secretary shall notify the chief executive officer of the

11 State and shall request such officer to secure compliance.

12 If within a reasonable period of time, not to exceed 60

13 days, the chief executive officer fails or refuses to secure

14 compliance, the Secretary may—

15 (1) refer the matter to the Attorney General

16 with a recommendation that an appropriate civil ac17 tion be instituted;

18 (2) exercise the powers and functions provided

19 by title VI of the Civil Rights Act of 1964, the Age

20 Discrimination Act of 1975, or section 504 of the

21 Rehabilitation Act of 1973, as may be applicable; or

22 (3) take such other action as may be provided

23 by law.

24 (c) ACTION BY ATTORNEY GENERAL.—When a mat25 ter is referred to the Attorney General pursuant to sub-
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1 section (b)(1), or whenever he has reason to believe that

2 a State or an entity is engaged in a pattern or practice

3 in violation of a provision of law referred to in subsection

4 (a)(1) or in violation of subsection (a)(2), the Attorney

5 General may bring a civil action in any appropriate district

6 court of the United States for such relief as may be appro7 priate, including injunctive relief.

8 SEC. 344. INTERNATIONAL TOBACCO CONTROL.

9 (a) GOVERNMENTAL ACTIVITIES.—

10 (1) IN GENERAL.—The Secretary (in consulta11 tion with the Secretary of State and the Secretary

12 of the Treasury, and acting through the Director of

13 the Centers for Disease Control and Prevention (re14 ferred to in this section as the ‘‘Director’’)) shall

15 provide bilateral assistance to foreign countries, and

16 multilateral assistance to assist such countries in re17 ducing and preventing the use of tobacco in foreign

18 countries and in promoting tobacco use cessation.

19 Such assistance shall be focused on preventing the

20 use of tobacco products by minors.

21 (2) USE.—In carrying out paragraph (1), the

22 Secretary may provide funding and technical assist23 ance, in a manner that encourages program develop24 ment based on the cultural environment of the coun25 try involved, to—
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1 (A) strengthen the coordination of inter2 national tobacco product use prevention, reduc3 tion, and cessation data collection and analysis;

4 (B) assist countries to design, implement

5 and evaluate effective anti-tobacco strategies

6 that are based on evidence from successful pro7 grams used in the United States or other coun8 tries; or

9 (C) provide leadership in the global harmo10 nization of tobacco product use prevention, re11 duction, and cessation policies, particularly

12 those that control smuggling, prevent children

13 from using tobacco products and protect the

14 public from exposure to environmental tobacco

15 smoke.

16 (3) PARTNERSHIPS.—In providing multilateral

17 assistance under this subsection, the Director may

18 provide for the establishment of partnerships be19 tween entities and organization such as the World

20 Bank, the World Health Organization, the United

21 Nations International Children’s Emergency Fund,

22 and other similar organization, to create linkages to

23 advance tobacco control practices globally.

24 (4) ADMINISTRATION.—
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1 (A) APPLICATION.—To be eligible to re2 ceive assistance under this subsection, an entity

3 shall prepare and submit to the Director an ap4 plication at such time, in such manner and con5 taining such information as the Director may

6 require. The evaluation of such applications

7 shall be made based on selective and appro8 priate criteria determined appropriate by the

9 Director.

10 (B) TECHNICAL ASSISTANCE.—The Direc11 tor shall provide technical assistance and sci12 entific support in carrying out the activities de13 scribed in paragraph (1).

14 (5) AUTHORIZATION OF APPROPRIATIONS.—

15 There are authorized to be appropriated amounts

16 provided under section 101(d)(2)(D) to carry out

17 this section.

18 (b) NONGOVERNMENTAL ACTIVITIES.—

19 (1) PURPOSE.—The purpose of this subsection

20 is to establish the American Center on Global

21 Health and Tobacco (referred to in this subsection

22 as ‘‘ACT’’). ACT shall assist organizations in other

23 countries to reduce and prevent the use of tobacco.

24 Activities ACT supports shall include—
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1 (A) public education programs that inform

2 the public about the hazards of tobacco use and

3 of environmental tobacco smoke;

4 (B) mass media campaigns, including paid

5 counter-tobacco advertisements, to reverse the

6 image appeal of pro-tobacco messages, espe7 cially those that glamorize and ‘‘Westernize’’ to8 bacco use to young people; and

9 (C) education about the economic and soci10 etal costs of tobacco use, and effective tobacco

11 use prevention and cessation strategies that are

12 appropriate for the country involved.

13 (2) ESTABLISHMENT.—

14 (A) IN GENERAL.—There is hereby estab15 lished in the District of Columbia a private,

16 nonprofit corporation to be known as the Amer17 ican Center on Global Health and Tobacco.

18 ACT shall—

19 (i) not be an agency or establishment

20 of the United States; and

21 (ii) except as otherwise provided in

22 this section, be subject to, and have all the

23 powers conferred upon a nonprofit corpora24 tion by the District of Columbia Nonprofit
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1 Corporation Act (D.C. Code section 29-501

2 et seq.).

3 (B) RELATION TO UNITED STATES.—

4 Nothing in this subsection shall be construed as

5 making ACT an agency or establishment of the

6 United States, or as making the members of

7 ACT, or its employees, officers or employees of

8 the United States.

9 (C) RELATION TO NONGOVERNMENTAL OR10 GANIZATIONS.—ACT shall have a limited staff,

11 and, to the maximum extent practicable, utilize

12 the available experience and talents of non13 governmental organizations with specialized ex14 perience in health, behavioral sciences, edu15 cation, media, marketing and tobacco.

16 (D) INTERNATIONAL ADVISORY COUN17 CIL.—An International Advisory Council con18 sisting of representatives from key global, re19 gional, and national public health organizations,

20 and leading individual educators and health

21 professionals shall provide advisory assistance

22 to ACT.

23 (3) AUTHORIZATION OF APPROPRIATIONS.—

24 There are authorized to be appropriated an amount
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1 equal to 50 percent amounts provided under section

2 101(d)(2)(D) to carry out this section.

3 (4) REQUIREMENTS FOR ELIGIBILITY.—

4 (A) OVERSIGHT.—ACT and its grantees

5 shall be subject to the oversight and supervision

6 of Congress.

7 (B) COMPLIANCE.—

8 (i) FUNDING CONTINGENT ON COM9 PLIANCE.—Annual payments may be made

10 to ACT under this subsection only if ACT

11 complies with the requirements specified in

12 this subsection.

13 (ii) USE OF FUNDS.—ACT may only

14 fund programs for private sector or quasi15 governmental groups for programs which

16 are consistent with the purposes of this

17 subsection.

18 (C) SALARIES AND COMPENSATION.—Offi19 cers and employees of ACT may not receive any

20 salary or other compensation from any source

21 other than ACT for services performed for

22 ACT.

23 (D) STOCKS AND DIVIDENDS.—ACT shall

24 not issue any shares of stock or declare or pay

25 any dividends.
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1 (E) AUDITS.—

2 (i) PUBLIC ACCOUNTS.—The accounts

3 of ACT shall be audited annually in ac4 cordance with generally accepted auditing

5 standards.

6 (ii) COMPTROLLER GENERAL.—The

7 financial transactions of ACT for each fis8 cal year may be audited by the Comptroller

9 General, and a report of each such audit

10 submitted to Congress. A copy of each re11 port shall be furnished to the Secretary

12 and to ACT at the time the report is sub13 mitted to Congress.

14 (F) RECORDKEEPING.—ACT shall ensure

15 that each recipient of assistance from ACT

16 under this subsection keeps such records as

17 may be reasonably necessary to fully disclose

18 the amount and the disposition by such recipi19 ent of the proceeds of such assistance, the total

20 cost of the project or undertaking in connection

21 with which such assistance is given or used, and

22 the amount and nature of that portion of the

23 cost of the project or undertaking supplied by

24 other sources, and such other records as will fa25 cilitate an effective audit. ACT shall ensure
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1 that it, or any of its duly authorized representa2 tives, shall have access for the purpose of audit

3 and examination to any books, documents, pa4 pers, and records of each recipient of assistance

5 from ACT that are pertinent to assistance pro6 vided through ACT under this subsection.

7 TITLE IV—LIABILITY PROVI8 SIONS AND CONSENT DE9 CREES

10 SEC. 400. DISMISSAL OF AND LIMITATIONS ON CIVIL AC11 TIONS.

12 (a) STATE ATTORNEY GENERAL ACTIONS.—

13 (1) PENDING ACTIONS.—With respect to a

14 State, to be eligible to receive funds under section

15 111, the attorney general for such State shall resolve

16 any civil action seeking recovery for expenditures at17 tributable to the treatment of tobacco-related ill18 nesses and conditions that has been commenced by

19 the State against a manufacturer, distributor, or re20 tailer of a tobacco product and is pending on the

21 date of enactment of this Act.

22 (2) FUTURE ACTIONS BASED ON PRIOR CON23 DUCT.—With respect to a State, to be eligible to re24 ceive funds under section 111, the attorney general

25 for such State shall agree that the State will not
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1 commence a civil action after the date of enactment

2 of this Act that is based on the conduct of a partici3 pating manufacturer, distributor or retailer of a to4 bacco product that occurred prior to the date of en5 actment of this Act seeking recovery for expendi6 tures attributable to the treatment of tobacco in7 duced illnesses and conditions against such a manu8 facturer, distributor or retailer.

9 (b) STATE OPTION FOR ONE-TIME OPT OUT.—

10 (1) IN GENERAL.—The Secretary shall establish

11 procedures under which the attorney general of a

12 State may, not later than 1 year after the date of

13 enactment of this Act, elect not to resolve an action

14 described in subsection (a)(1) or not enter into an

15 agreement under subsection (a)(2). A State whose

16 attorney general that makes such an election shall

17 not be eligible to receive payments from the Trust

18 Fund under section 111. Procedures under this

19 paragraph shall permit such a State to make such

20 an election on a one-time basis.

21 (2) EXTENSION.—In the case of a State that

22 has secured a judgment against a manufacturer, dis23 tributor or retailer of a tobacco product in an action

24 described in subsection (a)(1) prior to or during the

25 period described in paragraph (1), and such judg-
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1 ment has been appealed by such manufacturer, dis2 tributor, or retailer, such period shall be extended

3 during the pendency of the appeal and for an addi4 tional period as determined appropriate by the Sec5 retary.

6 (3) APPLICATION TO CERTAIN STATES.—A

7 State that has resolved an action described in sub8 section (a)(1) with a manufacturer, distributor or re9 tailer of a tobacco product prior to the date of en10 actment of this Act may not make an election de11 scribed in paragraph (1) if, as part of the resolution

12 of such action, the State agreed that the enactment

13 of any national tobacco settlement legislation would

14 supersede the provisions of the resolution.

15 (c) RULES OF CONSTRUCTION.—

16 (1) POST ENACTMENT CLAIMS.—Nothing in

17 this title shall be construed to limit the ability of a

18 State to commence an action against a participating

19 manufacturer, distributor or retailer of a tobacco

20 product with respect to a claim that is based on the

21 conduct of such manufacturer, distributor or retailer

22 that occurred after the date of enactment of this

23 Act.

24 (2) NO LIMITATION ON INDIVIDUALS.—Nothing

25 in this section shall be construed to limit the right
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1 of an individual or group of individuals to commence

2 a civil action for past, present, or future conduct by

3 manufacturers, distributors or retailers of tobacco

4 products.

5 (d) DEFINITION.—As used in this section, the term

6 ‘‘participating manufacturer’’ means a manufacturer of

7 tobacco products that has entered into a consent decree

8 under section 411.

9 (e) OTHER ACTIONS.—Any civil action for claims

10 based on addiction to or dependence on a tobacco product

11 filed by the Castano Plaintiffs Legal Committee that is

12 pending against a manufacturer that has entered into a

13 consent decree under section 411, is preempted, termi14 nated, and settled in consideration for the establishment

15 of the National Tobacco Cessation Program described in

16 section 321.

17 Subtitle A—Liability Provisions

18 SEC. 401. NATIONAL VICTIMS’ COMPENSATION FUND.

19 (a) ESTABLISHMENT.—

20 (1) IN GENERAL.—The Secretary of the Treas21 ury, using amounts made available under section

22 101(d)(2)(D), shall establish a fund within the Na23 tional Tobacco Trust Fund to be known as the ‘‘Na24 tional Victims’ Compensation Fund’’ (referred to in

25 this section as the ‘‘Fund’’) to be used by the Attor-
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•S 1889 PCS

1 ney General solely for tobacco-related liability judg2 ments and settlements that are based on the conduct

3 of a manufacturer.

4 (2) BASE PAYMENT.—The Secretary of the

5 Treasury shall annually deposit into the Fund

6 amounts made available for such purposes under

7 section 101(d)(2)(D).

8 (3) CONTINGENCY RESERVE ACCOUNT.—

9 (A) IN GENERAL.—As part of the Fund,

10 the Secretary of the Treasury shall establish a

11 Contingency Reserve Account (referred to in

12 this section as the ‘Account’). The Secretary

13 shall deposit into the Account any amounts re14 maining in the Fund and unobligated at the

15 end of each fiscal year. Such Account shall be

16 established as an interest-bearing account.

17 (B) USE OF ACCOUNT.—Amounts con18 tained in the Account shall be used as provided

19 for in subsection (d)(2).

20 (C) PUBLIC HEALTH ACTIVITIES.—With

21 respect to any fiscal year, if amounts in the Ac22 count exceed $20,000,000,000, the Attorney

23 General, in consultation with the Secretary,

24 shall determine whether any such excess
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1 amounts should be transferred to the Secretary

2 for use under title III.

3 (b) USE OF FUND.—The Attorney General shall use

4 amounts in the Fund to pay the damages associated with

5 any judgments or settlements for tobacco-related civil ac6 tions that are based on the conduct of a manufacturer that

7 occurred prior to the date of enactment of this Act (includ8 ing actions under section 1964 of title 18, United States

9 Code).

10 (c) PROCEDURE.—

11 (1) APPLICATION.—Upon the settlement of a

12 tobacco-related civil action described in subsection

13 (b), or upon the entry of a judgment in such an ac14 tion, in a manner that provides for the payment of

15 amounts to compensate the plaintiff for damages

16 sustained as a result of a tobacco-related condition

17 or illness, the plaintiff shall submit to the Attorney

18 General an application for the payment of the

19 amount of such settlement or judgment from the

20 Fund.

21 (2) CERTIFICATION.—Not later than 90 days

22 after the date on which an application is submitted

23 under paragraph (1), the Attorney General shall de24 termine the validity of such application and any
185

•S 1889 PCS

1 amount for which the applicant is eligible under this

2 section.

3 (3) PAYMENT.—Not later than 30 days after

4 making a determination that an applicant under

5 paragraph (1) is eligible for a payment under this

6 section, the Attorney General shall make a lump

7 sum payment from the Fund to the applicant.

8 (4) SMALL CLAIMANTS.—The Attorney General

9 shall establish procedures to ensure that priority is

10 given under this section to the payment of claims of

11 individuals and small classes of claimants.

12 (d) LIABILITY FOR CLAIMS IN EXCESS OF AMOUNTS

13 IN FUND.—

14 (1) LIABILITY OF MANUFACTURERS.—

15 (A) IN GENERAL.—If, with respect to a fis16 cal year, the aggregate amount of all payments

17 to be made to eligible applicants under sub18 section (b) exceed the amount in the Fund for

19 such year, such excess amount shall, except as

20 provided in subparagraph (B), be paid by man21 ufacturers.

22 (B) LIMITATION ON AMOUNT.—The aggre23 gate amount of all payments described in sub24 paragraph (A) (excluding amounts paid through

25 the Fund) for which manufacturers shall be lia-
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•S 1889 PCS

1 ble in any fiscal year shall not exceed

2 $4,000,000,000. Amounts paid by a manufac3 turer to settle a civil action commenced by a

4 State prior to the date of enactment of this Act

5 shall not apply in determining the liability of a

6 manufacturer under this subparagraph.

7 (2) USE OF CONTINGENCY RESERVE AC8 COUNT.—In any fiscal year in which the aggregate

9 amount of all payments to be made to eligible appli10 cants under subsection (b) exceed the sum of the

11 amount in the Fund for such year and the limitation

12 described in paragraph (2)(B), such excess amount

13 shall be paid from amounts contained in the Ac14 count.

15 (3) PAYMENT OF EXCESS.—If the Attorney

16 General determines under subsection (b) that

17 amounts to be paid to eligible applicants for a fiscal

18 year exceed the sum of the amounts available in the

19 Fund for such year, the limitation described in para20 graph (1)(B), and the amounts contained in the Ac21 count, the Attorney General shall provide for the

22 payment of any unpaid amounts in the subsequent

23 fiscal year.

24 (e) APPLICATION TO CERTAIN MANUFACTURERS.—

25 The provisions of this section shall apply to a manufac-
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•S 1889 PCS

1 turer that begins manufacturing tobacco products after

2 the date of enactment of this Act, except that if such a

3 manufacturer fails to make payments as provided for in

4 subsection (d)(1), such manufacturer shall pay to the At5 torney General an amount equal to 150 percent of the

6 amount that such manufacturer would have paid under

7 such subsection.

8 (f) REGULATIONS.—The Attorney General shall pro9 mulgate regulations to establish procedures for the imple10 mentation and enforcement of this section.

11 (g) LIMITATION ON APPLICATION OF CAP.—

12 (1) IN GENERAL.—The provisions of subsection

13 (d) shall not apply with respect to any judgment or

14 settlement in any civil action where it has been de15 termined that the manufacturer involved—

16 (A) has failed to make payments on assess17 ment under section 102;

18 (B) has failed to disclose documents in ac19 cordance with discovery requests or section 404;

20 (C) has failed to enter into or comply with

21 consent decrees under subtitle B; or

22 (D) has otherwise failed to comply with the

23 provisions of this Act, or an amendment made

24 by this Act.
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1 (2) YEAR INVOLVED.—If, with respect to a

2 manufacturer to which paragraph (1) applies, the

3 cap contained in subsection (d)(1)(B) is not reached

4 for the year involved, the limitation in such para5 graph (1) shall apply to such manufacturer in the

6 first year in which the cap is reached.

7 (h) DISTRIBUTORS AND RETAILERS.—Nothing in

8 this section shall be construed as limiting the liability of

9 any distributor or retailer of a tobacco product.

10 SEC. 402. RULE OF CONSTRUCTION.

11 Nothing in this title shall be construed as granting

12 immunity to any manufacturer of tobacco products with

13 respect to tobacco-related civil actions for damages sus14 tained as a result of tobacco-related conditions or illnesses,

15 or for criminal actions relating to tobacco products, re16 gardless of whether the conduct involved occurred prior

17 to or after the date of enactment of this Act.

18 SEC. 403. ATTORNEY’S FEES AND EXPENSES.

19 (a) ARBITRATION PANEL.—

20 (1) ESTABLISHMENT.—For the purpose of

21 awarding of attorneys’ fees and expenses relating to

22 litigation, involving a claim brought by a Federal,

23 State or local government entity, affected by, or

24 legal services that resulted in whole or in part in,
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•S 1889 PCS

1 this Act, there is established an Arbitration Panel

2 which shall consist of—

3 (A) 3 members to be appointed by the

4 Trustees;

5 (B) 1 member to be appointed by the par6 ticipating manufacturers;

7 (C) 1 member to be appointed by the At8 torneys General of the States who were signato9 ries to the Memorandum of Understanding

10 dated June 20, 1997, by and between tobacco

11 manufacturers, the Attorneys Generals, and pri12 vate attorneys; and

13 (D) 1 member to be appointed by the pri14 vate attorneys, including attorneys representing

15 plaintiffs in the case of Dianne Castano v.

16 American Tobacco Company.

17 (2) OPERATION.—

18 (A) ESTABLISHMENT.—The members of

19 the Arbitration Panel shall be appointed not

20 later than 30 days after the effective date of

21 this Act.

22 (B) PROCEDURES.—Not later than 30

23 days after the date on which all members of the

24 Arbitration Panel are appointed under para25 graph (1), the Panel shall establish the proce-
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•S 1889 PCS

1 dures under which the Panel will operate which

2 shall include—

3 (i) a requirement that any finding by

4 the Arbitration Panel must be in writing

5 and supported by written reasons;

6 (ii) procedures for the exchanging of

7 exhibits and witness lists by the various

8 claimants for awards;

9 (iii) to the maximum extent prac10 ticable, requirements that proceedings be11 fore the Panel be based on affidavits rath12 er than live testimony; and

13 (iv) a requirement that all claims be

14 submitted to the Arbitration Panel not

15 later than 3 months after the effective date

16 of this Act and a determination made by

17 the Panel with respect to such claims not

18 later than 7 months after such date of en19 actment.

20 (3) RIGHT TO PETITION.—Any individual attor21 ney or group of attorneys involved in litigation af22 fected by this Act shall have the right to petition the

23 Arbitration Panel for attorneys’ fees and expenses.
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1 (4) CRITERIA.—In making any award pursuant

2 to this section, the Arbitration Panel shall consider

3 the following criteria:

4 (A) The time and labor required by the

5 claimant.

6 (B) The novelty and difficulty of the ques7 tions involved in the action for which the claim8 ant is making a claim.

9 (C) The skill requisite to perform the legal

10 service involved properly.

11 (D) The preclusion of other employment by

12 the attorney due to acceptance of the action in13 volved.

14 (E) Whether the fee is fixed or a percent15 age.

16 (F) Time limitations imposed by the client

17 or the circumstances.

18 (G) The amount involved and the results

19 obtained.

20 (H) The experience, reputation, and ability

21 of the attorneys involved.

22 (I) The undesirability of the action.

23 (J) Whether the fee is excessive in relation

24 to the overall judgment or settlement award.
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1 (5) APPEAL AND ENFORCEMENT.—The findings

2 of the Arbitration Panel shall be final, binding, non3 appealable, and payable within 30 days after the

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

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

6 installment shall be payable within such 30 day pe7 riod and succeeding installments shall be paid annu8 ally thereafter.

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

10 event shall any award of the Arbitration Panel be paid

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

12 fee payments that are required to be made by any partici13 pating manufacturer under section 102 or under any other

14 provision of this Act. Any such award shall be paid by

15 participating manufacturers (except a manufacturer de16 scribed in section 102(a)(7)(B)) pursuant to an allocation

17 agreement among such manufacturers.

18 (c) VALIDITY AND ENFORCEABILITY OF PRIVATE

19 AGREEMENTS.—Notwithstanding any other provision of

20 this Act, nothing in this section shall be construed to abro21 gate or restrict in any way the rights of any parties to

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

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

24 private agreements with respect to the allocation or divi-
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•S 1889 PCS

1 sion of fees among the attorneys party to any such agree2 ment.

3 (d) DISCLOSURE.—The Secretary shall promulgate

4 regulations for the public disclosure of any award of attor5 neys’ fees under this section.

6 SEC. 404. PUBLIC DISCLOSURE OF TOBACCO INDUSTRY

7 DOCUMENTS.

8 (a) FINDINGS.—Congress finds that—

9 (1) the American tobacco industry has made

10 claims of attorney-client privilege, attorney work

11 product, and trade secrets to protect from public

12 disclosure thousands of internal documents sought

13 by civil litigants;

14 (2) a number of courts have found that these

15 claims of privilege were not made in good faith; and

16 (3) to promote understanding by the public of

17 the tobacco industry’s research and practices, a

18 prompt and full exposition of tobacco documents will

19 further the purposes of this Act.

20 (b) APPLICABILITY.—To be eligible to be issued a li21 cense to manufacture tobacco products under section 222,

22 a manufacturer shall comply with the provisions of this

23 section.

24 (c) NATIONAL TOBACCO DOCUMENT DEPOSITORY.—

25 Manufacturers of tobacco products shall, not later than
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•S 1889 PCS

1 60 days after the date of enactment of this Act, establish

2 a National Tobacco Document Depository (in this section

3 referred to as the ‘‘Depository’’). Such Depository shall

4 be located in the Washington, D.C. area.

5 (d) SUBMISSION OF DOCUMENTS.—Not later than 60

6 days after the date on which the Depository is established

7 under subsection (c), each manufacturer of a tobacco

8 product shall submit to the Depository every existing doc9 ument (including any document subject to a claim of at10 torney-client privilege, attorney work product, or trade se11 cret protection) in the manufacturer’s possession, custody,

12 or control—

13 (1) relating, referring, or pertaining to—

14 (A) any studies, research, or analysis of

15 any possible health or pharmacological effects

16 in humans or animals, including addiction, as17 sociated with the use of tobacco products or

18 components of tobacco products;

19 (B) the engineering, manipulation, or con20 trol of nicotine in tobacco products;

21 (C) the sale or marketing of tobacco prod22 ucts;

23 (D) any research involving safer or less

24 hazardous tobacco products;

25 (E) tobacco use by minors; or
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•S 1889 PCS

1 (F) the relationship between advertising or

2 promotion and the use of tobacco products;

3 (2) produced, or ordered to be produced, by the

4 tobacco product manufacturer in any health-related

5 civil or criminal proceeding, judicial or administra6 tive; and

7 (3) that the National Tobacco Documents Re8 view Board (established under subsection (h)) deter9 mines is appropriate for submission to the Deposi10 tory.

11 (e) DOCUMENT IDENTIFICATION AND INDEX.—Docu12 ments submitted to the depository under this section shall

13 be sequentially numbered and marked to identify the to14 bacco manufacturer. Not later than 30 days after the date

15 on which such documents are submitted to the Depository,

16 each tobacco manufacturer shall supply the Depository

17 with a comprehensive document index which references the

18 applicable documents described in subsection (c)(1).

19 (f) PRIVILEGE AND TRADE SECRET CLAIMS.—

20 (1) IN GENERAL.—Any document that is sub21 ject to a claim by a tobacco manufacturer of attor22 ney-client privilege, attorney work product, or trade

23 secret protection shall be identified as such and shall

24 be submitted separately to the Depository. The com25 pliance with this section by a manufacturer shall not
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•S 1889 PCS

1 be deemed to be a waiver of any applicable claim of

2 privilege or trade secret protection.

3 (2) PRIVILEGE AND TRADE SECRET LOGS.—Not

4 later than 90 days after the date on which the De5 pository is established, each manufacturer shall sub6 mit to the Depository a comprehensive log that iden7 tifies on a document-by-document basis all docu8 ments submitted to the Depository for which the

9 manufacturer asserts attorney-client privilege, attor10 ney work product, or trade secrecy. Any such claim

11 shall be made by a manufacturer in good faith.

12 (3) REQUIREMENTS.—The log established

13 under paragraph (2) shall—

14 (A) be organized in numerical order based

15 upon the document identifier assigned to each

16 document;

17 (B) with respect to each such document

18 contained in the log, the log shall contain—

19 (i) a description of the document, in20 cluding type of document, title of docu21 ment, name and position or title of each

22 author, addressee, and other recipient, the

23 document date, the document purpose and

24 general subject matter;
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•S 1889 PCS

1 (ii) an explanation of why the docu2 ment or a portion of the document is privi3 leged or subject to trade secret protection;

4 and

5 (iii) a statement whether any previous

6 claim of privilege or trade secret was de7 nied and, if so, in what proceeding.

8 (4) REVIEW.—With respect to documents for

9 which the manufacturer previously has asserted one

10 or more of the privileges described in paragraph (2),

11 or has asserted a claim of trade secret protection,

12 the manufacturer shall conduct a good faith de novo

13 review of such documents to determine whether such

14 privilege or trade secret protection is appropriate.

15 Each manufacturer shall submit a declaration, pur16 suant to section 1746 of title 28, United States

17 Code, by an individual with responsibility for the de

18 novo review of such documents, the preparation of

19 the privilege log and who has knowledge of its con20 tents. The declarant shall attest to the manufactur21 er’s compliance with the requirements of this section

22 pertaining to the review of documents and prepara23 tion of a privilege log.

24 (5) PUBLIC AVAILABILITY.—Not later than 30

25 days after the receipt of a log under this subsection,
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•S 1889 PCS

1 the Depository shall make such log available for

2 public inspection and review.

3 (g) DISCLOSURE BY THE DEPOSITORY.—Not later

4 than 30 days after the receipt of a document that is not

5 subject to a claim of attorney-client privilege, attorney

6 work product, or trade secret protection, the Depository

7 shall make the document available to the public using the

8 Internet and other means.

9 (h) TOBACCO DOCUMENTS REVIEW BOARD.—

10 (1) IN GENERAL.—There shall be established a

11 Tobacco Documents Review Board (referred to in

12 this subsection as the ‘‘Board’’) that shall consist of

13 5 members to be appointed by the President with

14 the advice and consent of the Senate.

15 (2) ADMINISTRATIVE PROVISIONS.—

16 (A) ELIGIBILITY.—To be eligible to serve

17 as a member of the Board, a individual shall—

18 (i) be a citizen of the United States;

19 (ii) not be in violation of any Federal

20 ethics or conflict of interest rules applica21 ble to Federal appointees; and

22 (iii) have a demonstrated skill in the

23 law.
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1 (B) TERMS.—A member of the Board shall

2 be appointed for a term of 7 years and shall be

3 eligible for reappointment.

4 (C) STAFF.—The Board may hire such

5 staff and establish such operating procedures as

6 the Board determines to be necessary to carry

7 out its functions under this section.

8 (3) RESPONSIBILITY FOR DEPOSITORY.—The

9 Board shall maintain the Depository and, in con10 sultation with the General Services Administration,

11 establish guidelines and procedures for the establish12 ment and operation of the Depository, including

13 guidelines for the immediate disclosure of documents

14 that are not subject to unresolved claims of privilege

15 or trade secrecy. In establishing such guidelines and

16 procedures, the Board shall ensure that the Deposi17 tory is open to the public and maintained in a man18 ner that permits it to be used as a resource for liti19 gants, public health groups, and persons with an in20 terest in tobacco industry records and research con21 cerning smoking and health, addiction or nicotine

22 dependency, safer or less hazardous cigarettes, and

23 underage tobacco use and marketing.

24 (4) RESOLUTION OF DISPUTED PRIVILEGE AND

25 TRADE SECRET CLAIMS.—
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•S 1889 PCS

1 (A) IN GENERAL.—The Board, upon a pe2 tition by any individual to resolve a claim relat3 ing to the disclosure of a document to the pub4 lic, shall determine whether to uphold or reject

5 disputed claims of attorney-client privilege, at6 torney work product, or trade secret protection

7 with respect to documents submitted to the De8 pository under subsection (f).

9 (B) DETERMINATION.—A determination

10 under subparagraph (A) shall be made by a sin11 gle member of the Board, in writing, and shall

12 be subject to judicial review as specified in this

13 section. All such determinations shall be based

14 solely on consideration of the subject of the doc15 ument involved and on written submissions

16 from the person claiming that the document is

17 privileged or protected by trade secrecy and

18 from any person seeking disclosure of the docu19 ment.

20 (C) PRIVILEGE.—In making determination

21 under subparagraph (B), the Board shall apply

22 the attorney-client privilege and the attorney

23 work-product doctrine in a manner consistent

24 with Federal law.
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•S 1889 PCS

1 (D) TRADE SECRET.—In making deter2 minations under subparagraph (B), the Board

3 shall define ‘‘trade secret’’ as ‘any commercially

4 valuable plan, formula, process or device that is

5 used for making or preparing trade commod6 ities and that can be said to be the end product

7 of either innovation or substantial effort. There

8 must be a direct relationship between the trade

9 secret and the productive process.

10 (E) FINAL DETERMINATION.—The Board

11 may uphold a claim of privilege or trade protec12 tion with respect to a claim under this section

13 in its entirety or, in its sole discretion, it may

14 redact that portion of a document that it deter15 mines is protected from public disclosure under

16 this paragraph. Any decision of the Board shall

17 be final unless judicial review is sought as pro18 vided for in subparagraph (F). In the event

19 that judicial review is sought, the Board’s deci20 sion shall be stayed pending a final judicial de21 cision.

22 (F) PETITION; RIGHT OF APPEAL.—

23 (i) IN GENERAL.—Any person may

24 obtain judicial review of a final determina25 tion of the Board under subparagraph (E)
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•S 1889 PCS

1 by filing a petition for review with the

2 United States Court of Appeals for the

3 Federal Circuit within 30 days after the

4 entry of such determination. A copy of the

5 petition shall be transmitted by the Clerk

6 of the Court to the Board. The Board shall

7 file in the court the record of the proceed8 ings on which the Board based its decision

9 (including any documents reviewed by the

10 Board in camera) as provided for in sec11 tion 2112 of title 28, United States Code.

12 Upon the filing of such a petition, the

13 court shall have exclusive jurisdiction to af14 firm or set aside the Board’s decision, ex15 cept that until the filing of the record the

16 Board may modify or set aside its decision.

17 (ii) ADDITIONAL EVIDENCE AND AR18 GUMENTS.—If a petitioner under clause (i)

19 applies to the court for leave to adduce ad20 ditional evidence or arguments with respect

21 to the determination being reviewed and

22 demonstrated to the satisfaction of the

23 court that such additional evidence or ar24 guments are material and that there were

25 reasonable grounds for the failure to ad-
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•S 1889 PCS

1 duce such evidence or arguments in the

2 proceedings before the Board, the court

3 may order the Board to provide additional

4 opportunity for the presentation of evi5 dence or arguments in such manner and

6 upon such terms as the court determines

7 to be proper. The Board may modify its

8 findings or make new findings by reason of

9 the additional evidence or arguments and

10 shall file with the court such modified or

11 new findings, and its recommendation, if

12 any, for the modification or setting aside

13 of the decision being reviewed.

14 (iii) STANDARD OF REVIEW; FINALITY

15 OF JUDGMENTS.—With respect to a review

16 by the court under this subparagraph, the

17 Board’s findings of fact, if supported by

18 substantial evidence on the record taken as

19 a whole, shall be conclusive. The court

20 shall review the Board’s legal conclusions

21 on a de novo basis. The judgment of the

22 court affirming or setting aside the

23 Board’s decision shall be final, subject to

24 review by the Supreme Court of the United

25 States upon certiorari or certification, as
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1 provided in section 1254 of title 28, United

2 States Code.

3 (5) PUBLIC DISCLOSURE AFTER FINAL DECI4 SION.—Not later than 30 days after the date of a

5 final determination by the Board that a document,

6 as redacted by the Board or in its entirely, is not

7 protected from disclosure by a claim of attorney-cli8 ent privilege, attorney work product, or trade secret

9 protection, the Board shall direct the Depository to

10 make the document available to the public. No Fed11 eral or State court shall have jurisdiction to review

12 a claim of attorney-client privilege, attorney work

13 product, or trade secret protection for a document

14 that has lawfully been made available to the public

15 pursuant to this paragraph.

16 (6) EFFECT OF NONDISCLOSURE DECISION ON

17 JUDICIAL PROCEEDINGS.—The Board’s decision that

18 a document is protected by attorney-client privilege,

19 attorney work product, or trade secret protection is

20 binding only for the purpose of protecting the docu21 ment from disclosure by the Depository. The deci22 sion by the Board shall not be construed to resolve

23 a claim that a document should not be disclosed in

24 a judicial proceeding.

25 (i) SANCTIONS.—
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1 (1) REQUIREMENT OF GOOD FAITH.—

2 (A) IN GENERAL.—Each tobacco manufac3 turer shall act in good faith and have a readily

4 understood claim of privilege or trade secret

5 protection based on fact and law as described in

6 subsection (h)(4). If the Board determines that

7 a tobacco manufacturer has not acted in good

8 faith with full knowledge of the truth of the

9 facts asserted and with a reasonable basis

10 under existing law, the manufacturer shall be

11 assessed costs, which shall include the full ad12 ministrative costs of handling the claim of privi13 lege, and all attorneys’ fees incurred by the

14 Board and any party contesting the privilege.

15 (B) CIVIL PENALTIES.—With respect to a

16 manufacturer that has failed to act in good

17 faith as required under subparagraph (A), the

18 Board may impose civil penalties of not to ex19 ceed $50,000 per violation if it determines that

20 the manufacturer knowingly acted with the in21 tent to delay, frustrate, defraud, or obstruct the

22 Board’s determination of privilege, attorney

23 work product, or trade secret protection claims.

24 (2) FAILURE TO PRODUCE.—The Board may

25 impose a civil penalty upon the failure of a tobacco
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1 manufacturer to produce indexes and documents in

2 compliance with this section, of not to exceed

3 $50,000 per violation.

4 (3) SEPARATE VIOLATIONS.—For purposes of

5 this subsection, a separate violation shall be deemed

6 to have occurred for each document the manufac7 turer has failed to produce in a timely manner.

8 (4) LIMITATION.—The maximum penalty that

9 may be imposed on a manufacturer under this sub10 section for a related series of violations is

11 $5,000,000.

12 (5) AMOUNT OF PENALTY.—In determining the

13 amount of any civil penalty under this subsection,

14 the Board shall consider the number of documents,

15 length of delay, any history of prior violations, the

16 ability to pay, and such other matters as justice re17 quires.

18 (6) RULE OF CONSTRUCTION.—Nothing in this

19 subsection shall be construed to replace or supersede

20 any criminal sanctions that may apply under title

21 18, United States Code, or under any other title of

22 the United States Code.

23 (j) RULE OF CONSTRUCTION.—The disclosure proc24 ess in this section shall not be construed to affect the Fed25 eral Rules of Civil or Criminal Procedure or any Federal
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1 law which requires the disclosure of documents or which

2 deals with attorney-client privilege, attorney work product,

3 or trade secret protection.

4 (k) DEFINITIONS.—In this section:

5 (1) DOCUMENT.—The term ‘‘document’’ shall

6 include originals and drafts of any kind of written

7 or graphic matter, regardless of the manner of pro8 duction or reproduction, of any kind of description,

9 whether sent or received or neither, and all copies

10 thereof that are different in any way from the origi11 nal (whether by interlineation, receipt stamp, nota12 tion, indication of copies sent or received or other13 wise) regardless of whether confidential, privileged,

14 or otherwise, including any paper, book, account,

15 photograph, blueprint, drawing, agreement, contract,

16 memorandum, advertising material, letter, telegram,

17 object, report, record, transcript, study, note, nota18 tion, working paper, intra-office communication,

19 intra-department communication, chart, minute,

20 index sheet, routing sheet, computer software, com21 puter data, delivery ticket, flow sheet, price list,

22 quotation, bulletin, circular, manual, summary, re23 cording of telephone or other conversation or of

24 interviews, or of conferences, or any other written,

25 recorded, transcribed, punched, taped, filmed, or
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1 graphic matter, regardless of the manner produced

2 or reproduced. Such term shall also include any

3 tape, recording, videotape, computerization, or other

4 electronic recording, whether digital or analog or a

5 combination of the two.

6 (2) MANUFACTURER.—The term ‘‘manufac7 turer’’ includes subsidiaries, assigns, agents, and re8 lated or affiliated entities that are primarily funded

9 by persons who manufacture a tobacco product;

10 (3) PROCEEDING.—The term ‘‘proceeding’’ in11 cludes any action undertaken pursuant to this sec12 tion including the search, indexing, and production

13 of documents.

14 Subtitle B—Consent Decrees

15 SEC. 411. CONSENT DECREES.

16 (a) REQUIREMENT.—

17 (1) IN GENERAL.—Except as provided in para18 graph (2), to be eligible to receive payments under

19 section 111, a State, and to be eligible to receive the

20 damages protections under section 401, a tobacco

21 manufacturer, shall enter into consent decrees under

22 this section to be effective on the date of enactment

23 of this Act.

24 (2) GOOD FAITH EFFORTS.—The limitation de25 scribed in paragraph (1) with respect to payments
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1 under section 111 shall not apply to a State if the

2 attorney general of the State certifies to the Sec3 retary that—

4 (A) the State has made good faith efforts

5 to enter into a consent decree in accordance

6 with this subtitle; and

7 (B) such State is willing to be bound by

8 such decree but such decree does not exist be9 cause—

10 (i) of the refusal on the part of a to11 bacco manufacturer to enter into such de12 cree; or

13 (ii) the appropriate court has not en14 tered the decree even though the parties

15 have lodged such a decree with the court.

16 (b) TERMS AND CONDITIONS.—

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

18 contained in the consent decrees described in sub19 section (a) shall contain provisions relating to—

20 (A) an agreement not to directly or indi21 rectly pursue or support legal challenges to the

22 implementation of any aspect of this Act (or an

23 amendment made by this Act), including any

24 existing or future regulatory authority under

25 the Federal Food, Drug and Cosmetic Act, any
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1 document disclosure requirements, any survey

2 methodology used or penalties applied under

3 title III, and any advertising and marketing re4 strictions aimed at reducing youth tobacco use;

5 (B) an agreement to pass-through the

6 costs of the assessments made under section

7 102 to consumers through increases in the price

8 of tobacco products;

9 (C) restrictions on tobacco product adver10 tising and marketing aimed at preventing youth

11 tobacco use and youth access to such products;

12 (D) in order to reduce youth tobacco use,

13 restrictions on tobacco industry trade associa14 tions;

15 (E) the disclosure of tobacco smoke con16 stituents;

17 (F) the disclosure of nontobacco constitu18 ents and ingredients found in tobacco products;

19 (G) the disclosure of existing and future

20 documents relating to health, toxicity, and ad21 diction related to tobacco product usage;

22 (H) the obligation of manufacturers to

23 make payments for the benefit of States, pri24 vate litigants and the general public;
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1 (I) the obligation of manufacturers to

2 interact only with exporters, importers, whole3 salers, distributors and retailers that operate in

4 compliance with the applicable provisions of

5 Federal, State, or local law regarding the mar6 keting and sale of tobacco products;

7 (J) requirements for warnings, labeling,

8 and packaging of tobacco products; and

9 (K) any other matter determined appro10 priate by the Secretary or the parties involved.

11 (2) LIMITATIONS.—The terms and conditions

12 contained in the consent decrees described in sub13 section (a) shall not contain provisions relating to—

14 (A) tobacco product design, performance,

15 or modification;

16 (B) manufacturing standards and good

17 manufacturing practices; and

18 (C) testing and regulation with respect to

19 toxicity and ingredients approval.

20 (3) ENFORCEABILITY.—The terms and condi21 tions contained in the consent decrees described in

22 subsection (a) shall be enforceable by the signato23 ries, as well as the Attorney General, and shall in24 clude a provision that prohibits signatories from

25 challenging the enforceability of the consent decrees.
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1 (4) CONSTRUCTION.—The terms and conditions

2 contained in the consent decrees described in sub3 section (a) shall provide that the terms of the decree

4 will be construed in a manner that is consistent with

5 the provision of this Act.

6 (c) APPROVAL.—

7 (1) IN GENERAL.—Prior to the entry of a con8 sent decree by a court under this section the court

9 must find that the provisions of the consent de10 cree—

11 (A) have been approved by the Secretary

12 and the Attorney General;

13 (B) are fair and reasonable; and

14 (C) are in the public interest.

15 (2) DETERMINATION BY SECRETARY.—To ap16 prove a consent decree under paragraph (1)(A), the

17 Secretary and the Attorney General shall have deter18 mined whether the provisions of the decree are con19 sistent with this Act and the Food, Drug and Cos20 metic Act or the rules and regulations promulgated

21 under such Acts.

22 (3) NOTICE TO PUBLIC.—With respect to the

23 approval of a consent decree under this section, the

24 court shall ensure that the public has been given not

25 less than 60 days notice of the filing of the decree
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1 by the parties and any objections thereto must be

2 addressed to the satisfaction of the court.

3 (d) ENFORCEMENT.—The provisions of a consent de4 cree entered under this section shall remain in effect and

5 enforceable in the court in which the decree is entered.

6 (e) NONAPPLICATION OF PROVISIONS.—If any of the

7 provisions of a consent decree entered into under this sec8 tion by a tobacco manufacturer are held to be unconstitu9 tional or otherwise held not to apply to such manufacturer,

10 the liability protection contained in section 401 shall cease

11 to apply to such manufacturer.

12 TITLE V—TOBACCO FARM FAM13 ILY AND COMMUNITY ASSIST14 ANCE TRUST FUND

15 SEC. 501. TOBACCO FARM FAMILY AND COMMUNITY AS16 SISTANCE TRUST FUND.

17 (a) ESTABLISHMENT.—There is established within

18 the National Tobacco Trust Fund a fund to be known as

19 the ‘‘Trust Fund for Tobacco Farming Families and Com20 munities’’ (referred to in this section as the ‘‘Fund’’), con21 sisting of such amounts as may be appropriated or cred22 ited to the Trust Fund.

23 (b) TRANSFERS TO TRUST FUND.—There are au24 thorized to be appropriated to the Fund for each fiscal

25 year amounts made available to the Trust Fund as pro-
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1 vided for in section 101(d)(2)(D) and any amounts pro2 vided under section 102(a)(1) that are not appropriated

3 in fiscal year 1999.

4 (c) REPAYABLE ADVANCES.—

5 (1) AUTHORIZATION.—There are authorized to

6 be appropriated to the Fund, as repayable advances,

7 such sums as may from time to time be necessary

8 to make expenditures under subsection (d).

9 (2) REPAYMENT WITH INTEREST.—Repayable

10 advances made to the Fund shall be repaid, and in11 terest on the advances shall be paid, to the general

12 fund of the Treasury when the Secretary of the

13 Treasury determines that moneys are available in

14 the Fund to make the payments.

15 (3) RATE OF INTEREST.—Interest on an ad16 vance made under this subsection shall be at a rate

17 determined by the Secretary of Treasury (as of the

18 close of the calendar month preceding the month in

19 which the advance is made) that is equal to the cur20 rent average market yield on outstanding marketable

21 obligations of the United States with remaining pe22 riod to maturity comparable to the anticipated pe23 riod during which the advance will be outstanding.

24 (d) EXPENDITURES FROM FUND.—
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1 (1) IN GENERAL.—Subject to paragraph (2),

2 amounts in the Fund shall be available for making

3 expenditures to assist tobacco-dependent farm fami4 lies, workers and communities, including—

5 (A) compensation and economic and tran6 sitional assistance to tobacco farming families;

7 (B) economic and transitional assistance,

8 including employment-related compensation and

9 services, to workers and businesses (not includ10 ing manufacturers of tobacco products) in to11 bacco-related industries; and

12 (C) economic development and related

13 transitional assistance for communities whose

14 economies depend significantly upon the pro15 duction, handling, marketing and processing of

16 tobacco.

17 (2) IMPLEMENTATION.—Amounts in the Fund

18 shall be available for making expenditures described

19 in paragraph (1) only if a law is enacted not later

20 than January 1, 2000, that specifically prescribes

21 authorized uses of the Fund.

22 (e) BUDGETARY TREATMENT.—This section con23 stitutes budget authority in advance of appropriations

24 Acts.
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1 (f) TERMINATION OF EFFECTIVENESS.—The author2 ity provided by this section terminates effective January

3 1, 2000, unless a law is enacted not later than January

4 1, 2000, that specifically prescribes authorized uses of the

5 Fund.

6 TITLE VI—REDUCING EXPOSURE

7 TO ENVIRONMENTAL TO8 BACCO SMOKE

9 SEC. 601. EDUCATION AND OUTREACH.

10 From amounts made available for each fiscal year

11 under section 101(d)(2)(D), $100,000,000 shall be pro12 vided to enable States to conduct education and outreach

13 activities relating to the health-related effects of environ14 mental tobacco smoke.

15 SEC. 602. INVOLUNTARY EXPOSURE TO ENVIRONMENTAL

16 TOBACCO SMOKE.

17 From amounts made available for each fiscal year

18 under section 101(d)(2)(D), $100,000,000 shall be pro19 vided to enable States to establish programs to reduce in20 voluntary exposure to environmental tobacco smoke.

21 SEC. 603. COVERAGE OF CONGRESSIONAL BUILDINGS.

22 The provisions of Executive Order 13058 (62 FR

23 43451; August 13, 1997) shall apply to any public facility

24 at which a covered employee (as such term is defined in

25 section 101(3) of the Congressional Accountability Act of
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1 1995 (2 U.S.C. 1301(3)) performs work. With respect to

2 such facilities, the enforcement provisions of such Execu3 tive Order shall be carried out by the Office of Compli4 ance.

5 TITLE VII—MISCELLANEOUS

6 PROVISIONS

7 SEC. 701. WHISTLEBLOWER PROTECTIONS.

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

9 any manufacturer, distributor, or retailer of a tobacco

10 product may not be discharged, demoted, or otherwise dis11 criminated against (with respect to compensation, terms,

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

13 disclosing to an employee of the Food and Drug Adminis14 tration, the Department of Health and Human Services,

15 the Department of Justice, or any State or local regu16 latory or enforcement authority, information relating to a

17 substantial violation of law related to this Act or a State

18 or local law enacted to further the purposes of this Act.

19 (b) ENFORCEMENT.—Any employee or former em20 ployee who believes that such employee has been dis21 charged, demoted, or otherwise discriminated against in

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

23 appropriate United States district court before the end of

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

25 demotion, or discrimination.
218

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

2 a violation has occurred, the court may order the manufac3 turer, distributor, or retailer involved to—

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

5 former position;

6 (2) pay compensatory damages; or

7 (3) take other appropriate actions to remedy

8 any past discrimination.

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

10 shall not apply to any employee who—

11 (1) deliberately causes or participates in the al12 leged violation of law or regulation; or

13 (2) knowingly or recklessly provides substan14 tially false information to the Food and Drug Ad15 ministration, the Department of Health and Human

16 Services, the Department of Justice, or any State or

17 local regulatory or enforcement authority.

18 SEC. 702. PROHIBITION ON USE OF FUNDS TO FACILITATE

19 THE EXPORTATION OR PROMOTION OF TO20 BACCO.

21 (a) LIMITATIONS.—

22 (1) IN GENERAL.—Notwithstanding any other

23 provision of law, no funds made available by appro24 priations or otherwise made available may be used
219

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1 by any officer, employee, department, or agency of

2 the United States—

3 (A) to challenge tobacco-related laws or

4 regulations in any country if such laws or regu5 lations—

6 (i) are based on sound public health

7 principles;

8 (ii) are applied in a nondiscriminatory

9 manner to both imported and domestic to10 bacco and tobacco products; and

11 (iii) if sufficient notice (not to exceed

12 6 months) of the application of such laws

13 or regulations has been made public;

14 (B) promote the sale or exportation of to15 bacco or tobacco products or to assist the ef16 forts of a domestic individual or entity in any

17 such promotion; or

18 (C) to attend or otherwise support recep19 tions that feature tobacco products brand

20 names, trade promotions, or any events that are

21 sponsored by individuals or entities involved in

22 the export, manufacture, promotion, distribu23 tion or sale of tobacco or tobacco products.
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1 (2) REQUIREMENTS.—With respect to tobacco

2 or tobacco products, United States Diplomatic Posts

3 shall—

4 (A) assist and promote tobacco-control ef5 forts in foreign countries; and

6 (B) with respect to laws or regulations de7 scribed in paragraph (1)(A), refer such laws or

8 regulations to the appropriate trade agencies of

9 the United States if it is suspected that such

10 laws or regulations do not comply with any of

11 the requirements of such paragraph.

12 (b) EXCEPTION.—Subsection (a)(1) shall not apply

13 to any restriction or proposed restriction by a foreign

14 country if—

15 (1) the restriction is applied in a manner which

16 constitutes a means of arbitrary or unjustifiable dis17 crimination between countries; and

18 (2) the United States Trade Representative, in

19 conjunction with the Secretary of Health and

20 Human Services, determines that—

21 (A) the restriction is being applied in a

22 manner that constitutes a means of arbitrary or

23 unjustifiable discrimination between countries;

24 and
221

•S 1889 PCS

1 (B) that the restriction is not a reasonable

2 means of protecting the public health.

3 (c) REPORTS.—The United States Trade Representa4 tive shall include a description of all exceptions made pur5 suant to subsection (b) in reports submitted to Congress

6 as required under Federal law prior to the date of enact7 ment of this Act.

8 (d) DEFINITION.—In this section, the term ‘‘arbi9 trary or unjustifiable discrimination’’ means a restriction

10 or proposed restriction by a foreign country that—

11 (1) is arbitrary or unjustifiable; and

12 (2) does not adhere to the principle of national

13 treatment and applies less favorable treatment to

14 goods that are imported into that country than the

15 country applies to like goods that are the product,

16 growth, or manufacture of that country.

17 SEC. 703. PROVISIONS RELATING TO NATIVE AMERICANS.

18 (a) IN GENERAL.—The provisions of this Act (or an

19 amendment made by this Act) shall apply to the manufac20 ture, distribution, and sale of tobacco products in any area

21 within the jurisdiction of an Indian tribe or tribal organi22 zation.

23 (b) RELIGIOUS PRACTICE EXCEPTION.—In recogni24 tion of the religious, traditional and ceremonial uses of

25 tobacco and tobacco products by many Indian tribes and
222

•S 1889 PCS

1 the members of such tribes, nothing in this Act (or an

2 amendment made by this Act) shall be construed to in3 fringe upon the rights of such tribes or members to trans4 fer, acquire, possess, or use any tobacco or tobacco prod5 ucts for such purposes. The preceding sentence shall only

6 be construed to apply to those quantities of tobacco prod7 ucts necessary to fulfill recognized religious, traditional or

8 ceremonial purposes and not to permit the general market9 ing of tobacco products not in compliance with subchapter

10 F of chapter V of the Federal Food, Drug and Cosmetic

11 Act.

12 (c) PAYMENTS TO TRUST FUND.—Any Indian tribe

13 or tribal organization that engages in the manufacture of

14 tobacco products shall be subject to liability for an assess15 ment under section 102.

16 (d) APPLICATION OF FEDERAL FOOD, DRUG AND

17 COSMETIC ACT REQUIREMENTS.—

18 (1) IN GENERAL.—The Secretary, in consulta19 tion with the Secretary of the Interior, shall promul20 gate regulations to provide for the application of any

21 requirements of the Food, Drug and Cosmetic Act

22 with respect to tobacco products manufactured, dis23 tributed, or sold in any area within the jurisdiction

24 of an Indian tribe or tribal organization as appro25 priate to comply with subsections (a) and (b).
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1 (2) ELIGIBILITY FOR ASSISTANCE.—Under the

2 regulations promulgated under paragraph (1), the

3 Secretary, after consultation with the Secretary of

4 the Interior, may provide assistance to an Indian

5 tribe or tribal organization in meeting and enforcing

6 the requirements under such regulations if—

7 (A) the tribe or organization has a govern8 ing body that has powers and carries out duties

9 that are similar to the powers and duties of

10 State or local governments and requests such

11 assistance by application to the Secretary;

12 (B) the functions to be exercised through

13 the use of such assistance relate to activities

14 within the exterior boundaries of the reservation

15 or other areas within the jurisdiction of the

16 tribe involved; and

17 (C) the tribe or organization is reasonably

18 expected to be capable of carrying out the func19 tions required by the Secretary.

20 (3) DETERMINATIONS.—The Secretary, in con21 sultation with the Secretary of the Interior, shall

22 make determinations concerning the eligibility of an

23 Indian tribe or tribal organization for assistance

24 under regulations under paragraph (1) not later

25 than 90 days after the date on which such tribe or
224

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1 organization submits an application for such assist2 ance.

3 (4) IMPLEMENTATION BY SECRETARY.—If the

4 Secretary determines that the Indian tribe or tribal

5 organization is not willing or qualified to administer

6 the requirements of the regulations promulgated

7 under this subsection, the Secretary, in consultation

8 with the Secretary of the Interior, shall implement

9 and enforce such regulations on behalf of the tribe

10 or organization.

11 (e) RETAIL LICENSING REQUIREMENTS.—

12 (1) IN GENERAL.—The requirements of sub13 chapter F of chapter V of the Federal Food, Drug

14 and Cosmetic Act (as added by section 221 of this

15 Act) relating to minors’ access to tobacco products

16 shall apply to retailers that sell tobacco products in

17 any area within the jurisdiction of an Indian tribe

18 or tribal organization.

19 (2) SELF-REGULATION.—In order to be eligible

20 for funds under subsection (f), an Indian tribe or

21 tribal organization shall implement a tribal licensing

22 program within the exterior boundaries of the res23 ervation and other areas within the jurisdiction of

24 the tribe consistent with the regulations promulgated

25 under such subchapter F of chapter V of the Fed-
225

•S 1889 PCS

1 eral Food, Drug and Cosmetic Act relating to mi2 nors’ access to tobacco products.

3 (3) IMPLEMENTATION BY SECRETARY.—If the

4 Secretary, in consultation with the Secretary of the

5 Interior, determines that the Indian tribe or tribal

6 organization is not qualified to administer the re7 quirements of subchapter F of chapter V of the Fed8 eral Food, Drug and Cosmetic Act relating to mi9 nors’ access to tobacco products, the Secretary, in

10 consultation with the Secretary of the Interior, shall

11 implement such requirements on behalf of the tribe

12 or organization.

13 (f) ELIGIBILITY FOR PUBLIC HEALTH PAYMENTS.—

14 (1) IN GENERAL.—For each fiscal year the Sec15 retary shall pay to each Indian tribe that has an ap16 proved tribal anti-smoking plan a tribal grant for

17 the fiscal year in an amount equal to the amount de18 termined under paragraph (3), and shall reduce the

19 amounts payable under section 111 to any State in

20 which the service area or areas of the Indian tribe

21 are located by the amount so determined.

22 (2) PLAN.—To be eligible to receive a payment

23 under paragraph (1), an Indian tribe shall prepare

24 and submit to the Secretary for approval an anti-
226

•S 1889 PCS

1 smoking plan and shall otherwise meet the require2 ments of subsection (e).

3 (3) AMOUNT DETERMINED.—The amount of

4 any funds for which an Indian tribe is eligible under

5 paragraph (1) shall be determined by the Secretary

6 based on the ratio of the total number of Indians re7 siding on such tribe’s reservation or in areas within

8 the jurisdiction of the tribe in the State to the total

9 population of the State multiplied by the amount al10 located to State under section 111.

11 (4) USE.—Amounts provided to a tribe or orga12 nization under this paragraph shall be used to reim13 burse the tribe for smoking-related health expendi14 tures, to further the purposes of this Act, and in ac15 cordance with a plan submitted by the tribe or orga16 nization and approved by the Secretary as being in

17 compliance with this Act. Tribes and tribal organiza18 tions shall have the flexibility to utilize such

19 amounts to meet the unique health needs of such

20 tribes within the context of tribal health programs if

21 such programs meet the fundamental Federal re22 quirements under this Act as determined by the Sec23 retary.

24 (5) REALLOTMENT.—Any amounts set-aside

25 and not expended under this paragraph shall be re-
227

•S 1889 PCS

1 allotted among other eligible tribes and organiza2 tions.

3 (g) OBLIGATION OF MANUFACTURERS.—A partici4 pating manufacturer shall not engage in any activity in

5 an area within the jurisdiction of an Indian tribe or tribal

6 organization that is prohibited under this Act.

7 (h) INDIAN HEALTH SERVICE.—Amounts made

8 available under section 101(d)(2)(D) shall be provided to

9 the Indian Health Service to be used for anti-tobacco-re10 lated consumption and cessation activities including—

11 (1) clinic and facility design, construction, re12 pair, renovation, maintenance and improvement;

13 (2) provider services and equipment;

14 (3) domestic and community sanitation associ15 ated with clinic and facility construction and im16 provement;

17 (4) inpatient and outpatient services; and

18 (5) other programs and services provided

19 through the Indian Health Service or through tribal

20 contracts, compacts, grants or cooperative agree21 ments with the Indian Health Service and which are

22 deemed appropriate to raising the health status of

23 Indians.

24 (i) PREEMPTION.—
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1 (1) GENERAL PREEMPTION.—Except as other2 wise provided for in this section, nothing in this Act

3 shall be construed as prohibiting an Indian tribe or

4 tribal organization from imposing requirements, pro5 hibitions, penalties or other measures to further the

6 purposes of this Act that are in addition to the re7 quirements, prohibitions, or penalties required under

8 this Act.

9 (2) PUBLIC EXPOSURE TO SMOKE.—Nothing in

10 the amendment made by title V shall be construed

11 to preempt or otherwise affect any Indian tribe or

12 tribal organization rule or practice that provides

13 greater protection from the health hazards of envi14 ronmental tobacco smoke.

15 (3) NATIVE AMERICANS.—A State may not im16 pose obligations or requirements relating to the ap17 plication of this Act to Indian tribes and tribal orga18 nizations.

19 SEC. 704. PRESERVATION OF STATE AND LOCAL AUTHOR20 ITY.

21 Except as otherwise provided for in this Act (or an

22 amendment made by this Act), nothing in this Act shall

23 be construed as prohibiting a State from imposing require24 ments, prohibitions, penalties or other measures to further

25 the purposes of this Act that are in addition to the re-
229

•S 1889 PCS

1 quirements, prohibitions, or penalties required under this

2 Act. To the extent not inconsistent with the purposes of

3 this Act, State and local governments may impose addi4 tional tobacco product control measures to further restrict

5 or limit the use of such products by minors, except that

6 such State and local governments may not impose any la7 beling requirements in addition to those required under

8 Federal law.