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[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1415 Reported in Senate (RS)]

                                                       Calendar No. 353

105th CONGRESS

  2d Session

                                S. 1415

                          [Report No. 105-180]

_______________________________________________________________________

                                 A BILL

 To reform and restructure the processes by which tobacco products are 
manufactured, marketed, and distributed, to prevent the use of tobacco 
 products by minors, to redress the adverse health effects of tobacco 
                      use, and for other purposes.

_______________________________________________________________________

                              May 1, 1998

        Reported with an amendment in the nature of a substitute

                                                       Calendar No. 353
105th CONGRESS
  2d Session
                                S. 1415

                          [Report No. 105-180]

 To reform and restructure the processes by which tobacco products are 
manufactured, marketed, and distributed, to prevent the use of tobacco 
 products by minors, to redress the adverse health effects of tobacco 
                      use, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            November 7, 1998

  Mr. McCain (for himself, Mr. Hollings, Mr. Breaux, and Mr. Gorton) 
introduced the following bill; which was read twice and referred to the 
           Committee on Commerce, Science, and Transportation

                              May 1, 1998

Reported by Mr. McCain, with an amendment in the nature of a substitute
 [Strike all after the enacting clause and insert the part printed in 
                                italic]

_______________________________________________________________________

                                 A BILL

 
 To reform and restructure the processes by which tobacco products are 
manufactured, marketed, and distributed, to prevent the use of tobacco 
 products by minors, to redress the adverse health effects of tobacco 
                      use, and for other purposes.

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

<DELETED>SECTION 1. SHORT TITLE; TABLE OF CONTENTS.</DELETED>

<DELETED>    (a) Short Title.--This Act may be cited as the ``Universal 
Tobacco Settlement Act''.</DELETED>
<DELETED>    (b) Table of Contents.--The table of contents of this Act 
is as follows:</DELETED>

<DELETED>Sec. 1. Short title; table of contents.
<DELETED>Sec. 2. Findings.
<DELETED>Sec. 3. Purposes.
          <DELETED>TITLE I--REGULATION OF THE TOBACCO INDUSTRY

<DELETED>Sec. 100. Definitions.
     <DELETED>Subtitle A--Restriction on Marketing and Advertising

<DELETED>Sec. 101. Prohibitions on advertising.
<DELETED>Sec. 102. General restrictions.
<DELETED>Sec. 103. Format and content requirements for labeling and 
                            advertising.
<DELETED>Sec. 104. Statement of intended use.
<DELETED>Sec. 105. Ban on nontobacco items and services, contests and 
                            games of chance, and sponsorship of events.
<DELETED>Sec. 106. Use of product descriptors.
         <DELETED>Subtitle B--Warnings, Labeling and Packaging

<DELETED>Sec. 111. Cigarette warnings.
<DELETED>Sec. 112. Smokeless tobacco warnings.
<DELETED>Sec. 113. Ingredients.
<DELETED>Sec. 114. Enforcement, regulations, and construction.
<DELETED>Sec. 115. Preemption.
<DELETED>Sec. 116. Reports.
<DELETED>Sec. 117. Exports.
<DELETED>Sec. 118. Repeals.
     <DELETED>Subtitle C--Restriction on Access to Tobacco Products

<DELETED>Sec. 121. Requirements relating to retailers.
<DELETED>Sec. 122. Manufacture, sale, and distribution.
        <DELETED>Subtitle D--Licensing of Retail Tobacco Sellers

<DELETED>Sec. 131. Establishment of program.
<DELETED>Sec. 132. Requirements.
<DELETED>Sec. 133. Penalties, revocations and suspensions.
<DELETED>Sec. 134. Federal licensing of military and other entities.
  <DELETED>Subtitle E--Regulation of Tobacco Product Development and 
                             Manufacturing

<DELETED>Sec. 141. Reference.
<DELETED>Sec. 142. Treatment of tobacco products as drugs.
<DELETED>Sec. 143. Health and safety regulation of tobacco products.
      <DELETED>Subtitle F--Compliance Plans and Corporate Culture

<DELETED>Sec. 151. Compliance plans.
<DELETED>Sec. 152. Compliance programs.
<DELETED>Sec. 153. Whistleblower protections.
<DELETED>Sec. 154. Provisions relating to lobbying.
<DELETED>Sec. 155. Termination of certain entities.
<DELETED>Sec. 156. Enforcement.
          <DELETED>TITLE II--REDUCTION IN UNDERAGE TOBACCO USE

<DELETED>Sec. 201. Purpose.
<DELETED>Sec. 202. Determination of underage use base percentages.
<DELETED>Sec. 203. Annual daily incidence of underage use of tobacco 
                            products.
<DELETED>Sec. 204. Required reduction in underage tobacco use.
<DELETED>Sec. 205. Application of surcharges.
<DELETED>Sec. 206. Abatement procedures.
<DELETED>TITLE III--STANDARDS TO REDUCE INVOLUNTARY EXPOSURE TO TOBACCO 
                                 SMOKE

<DELETED>Sec. 301. Definitions.
<DELETED>Sec. 302. Smoke-free environment policy.
<DELETED>Sec. 303. Citizen actions.
<DELETED>Sec. 304. Preemption.
<DELETED>Sec. 305. Regulations.
<DELETED>Sec. 306. Effective date.
       <DELETED>TITLE IV--NATIONAL TOBACCO SETTLEMENT TRUST FUND

<DELETED>Sec. 401. Establishment of Trust Fund.
<DELETED>Sec. 402. Liability of industry sources.
<DELETED>Sec. 403. Enforcement.
           <DELETED>TITLE V--PUBLIC HEALTH AND OTHER PROGRAMS

         <DELETED>Subtitle A--Public Health Block Grant Program

<DELETED>Sec. 501. Public Health Trust Fund.
<DELETED>Sec. 502. Block grants to States.
<DELETED>Sec. 503. Allotments.
<DELETED>Sec. 504. Use of funds.
<DELETED>Sec. 505. Withholding of funds.
                  <DELETED>Subtitle B--Other Programs

<DELETED>Sec. 511. National Smoking Cessation Program.
<DELETED>Sec. 512. National Reduction in Tobacco Usage Program.
<DELETED>Sec. 513. National Tobacco-Free Public Education Program.
<DELETED>Sec. 514. National Event Sponsorship Program.
<DELETED>Sec. 515. National Community Action Program.
<DELETED>Sec. 516. National Cessation Research Program.
<DELETED>Sec. 517. Use of surcharge payments.
 <DELETED>TITLE VI--CONSENT DECREES, NON-PARTICIPATING MANUFACTURERS, 
                         AND STATE ENFORCEMENT

<DELETED>Sec. 601. Purposes.
      <DELETED>Subtitle A--Consent Decrees and Non-Participating 
                             Manufacturers

<DELETED>Sec. 611. Consent decrees.
<DELETED>Sec. 612. National tobacco control protocol.
<DELETED>Sec. 613. Non-participating manufacturers.
                 <DELETED>Subtitle B--State Enforcement

<DELETED>Sec. 621. Requirement of no sale to minors law.
<DELETED>Sec. 622. State reporting.
<DELETED>Sec. 623. Reduction in State payments.
   <DELETED>TITLE VII--PROVISIONS RELATING TO TOBACCO-RELATED CIVIL 
                                ACTIONS

<DELETED>Sec. 701. General immunity.
<DELETED>Sec. 702. Civil liability for past conduct.
<DELETED>Sec. 703. Civil liability for future conduct.
<DELETED>Sec. 704. Non-participating manufacturers.
       <DELETED>TITLE VIII--PUBLIC DISCLOSURE OF HEALTH RESEARCH

<DELETED>Sec. 801. Purpose.
<DELETED>Sec. 802. National Tobacco Document Depository.
    <DELETED>TITLE IX--ASSISTANCE TO TOBACCO GROWERS AND COMMUNITIES

<DELETED>Sec. 1001. Short title; table of contents.
<DELETED>Sec. 1002. Definitions.
    <DELETED>SUBTITLE A--TOBACCO COMMUNITY REVITALIZATION TRUST FUND

<DELETED>Sec. 1011. Establishment of Trust Fund.
<DELETED>Sec. 1012. Contributions by tobacco product manufacturers and 
                            importers.
     <DELETED>SUBTITLE B--AGRICULTURAL MARKET TRANSITION ASSISTANCE

<DELETED>Sec. 1021. Payments for lost tobacco quota.
<DELETED>Sec. 1022. Industry payments for all Department costs 
                            associated with tobacco production.
<DELETED>Sec. 1023. Tobacco community economic development grants.
<DELETED>Sec. 1024. Modifications in Federal tobacco programs.
      <DELETED>SUBTITLE C--FARMER AND WORKER TRANSITION ASSISTANCE

<DELETED>Sec. 1031. Tobacco worker transition program.
<DELETED>Sec. 1032. Farmer opportunity grants.
                     <DELETED>SUBTITLE D--IMMUNITY

<DELETED>Sec. 1041. General immunity for tobacco producers and 
                            warehousers.
        <DELETED>TITLE IX--EFFECTIVE DATES AND OTHER PROVISIONS

<DELETED>Sec. 901. Effective dates.
<DELETED>Sec. 902. Native Americans.
<DELETED>Sec. 903. Preemption.

<DELETED>SEC. 2. FINDINGS.</DELETED>

<DELETED>    (a) General Findings.--Congress makes the following 
findings:</DELETED>
        <DELETED>    (1) The Food and Drug Administration and other 
        public health authorities view the use of tobacco products by 
        the nation's children as a ``pediatric disease'' of epic and 
        worsening proportions that results in new generations of 
        tobacco-dependent children and adults.</DELETED>
        <DELETED>    (2) There is a consensus within the scientific and 
        medical communities that tobacco products are inherently 
        dangerous and cause cancer, heart disease, and other serious 
        adverse health effects.</DELETED>
        <DELETED>    (3) The Food and Drug Administration and other 
        health authorities have concluded that virtually all new users 
        of tobacco products are under the age of 18. Virtually all 
        Federal, State, and local officials and entities believe that 
        tobacco advertising and marketing contribute significantly to 
        the use of nicotine-containing tobacco products by adolescents 
        and as such, sweeping new restriction on the sale, promotion, 
        and distribution of such products are needed.</DELETED>
        <DELETED>    (4) Federal, State, and local governments lack 
        many of the legal means and resources needed to address the 
        societal problems caused by the use of tobacco 
        products.</DELETED>
        <DELETED>    (5) Public health authorities believe that the 
        societal benefits of enacting tobacco settlement legislation in 
        human and economic terms would be vast. The Food and Drug 
        Administration found that reducing underage tobacco use 50 
        percent ``would prevent well over 60,000 early deaths''. The 
        Food and Drug Administration has estimated that the monetary 
        value of the regulations promulgated as a result of this Act 
        will be worth up to $43,000,000,000 per year in reduced medical 
        costs, improved productivity, and the benefit of avoiding the 
        premature death of loved ones.</DELETED>
        <DELETED>    (6) The unique position occupied by tobacco in the 
        history and economy of the United States, the magnitude of the 
        actual and potential tobacco-related litigation, the need to 
        avoid the cost, expense, uncertainty, and inconsistency 
        associated with such protracted litigation, the need to limit 
        the sale, distribution, marketing, and advertising of tobacco 
        products to persons of legal age, and the need to educate the 
        public (especially young people) of the health effects of using 
        tobacco products all dictate that it would be in the public 
        interest to enact legislation to facilitate a resolution of 
        such matters.</DELETED>
<DELETED>    (b) Findings Related to Interstate Commerce and the 
Judicial System.--Congress makes the following findings:</DELETED>
        <DELETED>    (1) The sale, distribution, marketing, 
        advertising, and use of tobacco products are activities 
        substantially affecting interstate commerce. Such products are 
        sold, marketed, advertised, and distributed in interstate 
        commerce on a nationwide basis and have a substantial effect on 
        the economy of the United States.</DELETED>
        <DELETED>    (2) The sale, distribution, marketing, 
        advertising, and use of tobacco products are activities that 
        substantially affect interstate commerce by virtue of the 
        health care and other costs that Federal and State governmental 
        authorities have incurred because of the usage of tobacco 
        products.</DELETED>
        <DELETED>    (3) Various civil actions brought by State 
        attorneys general, cities, counties, the Commonwealth of Puerto 
        Rico, third-party payors, and other private classes and 
        individuals to recover damages relating to tobacco-related 
        diseases, conditions and products are pending throughout the 
        United States, of these actions are slow-moving, expensive, and 
        burdensome not only for the litigants but also for Federal and 
        State judicial systems.</DELETED>

<DELETED>SEC. 3. PURPOSES.</DELETED>

<DELETED>    It is the purpose of this Act to--</DELETED>
        <DELETED>    (1) reiterate and enhance the authority of the 
        Food and Drug Administration to regulate tobacco products and 
        provide for tobacco industry funding of the oversight 
        activities of the Administration;</DELETED>
        <DELETED>    (2) ban all outdoor tobacco advertising and ban 
        all cartoon characters and human figures used in connection 
        with tobacco advertising;</DELETED>
        <DELETED>    (3) provide for the funding by the tobacco 
        industry of an aggressive Federal enforcement program relating 
        to tobacco advertising and distribution, including a State-
        administered retail licensing system to prevent minors from 
        obtaining tobacco products;</DELETED>
        <DELETED>    (4) subject the tobacco industry to severe 
        financial penalties in the event that underage tobacco usage 
        does not decline radically over the next 10 years;</DELETED>
        <DELETED>    (5) provide for the establishment of national 
        standards to control the manufacturing of tobacco products and 
        the ingredients used in such products;</DELETED>
        <DELETED>    (6) provide certain regulatory powers to the Food 
        and Drug Administration to encourage the development and 
        marketing by the tobacco industry of ``less hazardous tobacco 
        products'', including the power to regulate the level of 
        nicotine in such products;</DELETED>
        <DELETED>    (7) require the manufacturers of tobacco products 
        to disclose all present and future non-public internal 
        laboratory research regarding tobacco products;</DELETED>
        <DELETED>    (8) establish a minimum Federal standard to limit 
        smoking in public places;</DELETED>
        <DELETED>    (9) provide for the establishment of a National 
        Tobacco Settlement Trust Fund to be funded by the tobacco 
        industry and used in accordance with this Act;</DELETED>
        <DELETED>    (10) provide for the establishment of a national 
        education-oriented counter advertising and tobacco control 
        campaign to be funded through the National Tobacco Settlement 
        Trust Fund;</DELETED>
        <DELETED>    (11) provide annual payments to States to fund 
        health benefits programs and to create a tobacco products 
        liability judgments and settlements fund to be funded through 
        the National Tobacco Settlement Trust Fund; and</DELETED>
        <DELETED>    (12) provide for the establishment of a national 
        program of smoking cessation to be funded through the National 
        Tobacco Settlement Trust Fund.</DELETED>

     <DELETED>TITLE I--REGULATION OF THE TOBACCO INDUSTRY</DELETED>

<DELETED>SEC. 100. DEFINITIONS.</DELETED>

<DELETED>    In this Act:</DELETED>
        <DELETED>    (1) Brand.--The term ``brand'' means a variety of 
        a tobacco product distinguished by the tobacco used, tar 
        content, nicotine content, flavoring used, size, filtration, or 
        packaging.</DELETED>
        <DELETED>    (2) Cigar.--The term ``cigar'' means any roll of 
        tobacco wrapped in leaf tobacco or in any substance containing 
        tobacco (other than any roll of tobacco which is a cigarette or 
        cigarillo within the meaning of paragraph (3) or 
        (4)).</DELETED>
        <DELETED>    (3) Cigarette.--The term ``cigarette'' means any 
        product which contains nicotine, is intended to be burned under 
        ordinary conditions of use, and consists of--</DELETED>
                <DELETED>    (A) any roll of tobacco wrapped in paper 
                or in any substance not containing tobacco; 
                and</DELETED>
                <DELETED>    (B) any roll of tobacco wrapped in any 
                substance containing tobacco which, because of its 
                appearance, the type of tobacco used in the filler, or 
                its packaging and labeling, is likely to be offered to, 
                or purchased by, consumers as a cigarette described in 
                subparagraph (A).</DELETED>
        <DELETED>    (4) Cigarillos.--The term ``cigarillos'' means any 
        roll of tobacco wrapped in leaf tobacco or any substance 
        containing tobacco (other than any roll of tobacco which is a 
        cigarette within the meaning of paragraph (3)) and as to which 
        1,000 units weigh not more than 3 pounds.</DELETED>
        <DELETED>    (5) Cigarette tobacco.--The term ``cigarette 
        tobacco'' means any product that consists of loose tobacco that 
        contains or delivers nicotine and is intended for use by 
        persons in a cigarette. Unless otherwise stated, the 
        requirements of this Act pertaining to cigarettes shall also 
        apply to cigarette tobacco.</DELETED>
        <DELETED>    (6) Commerce.--The term ``commerce'' means--
        </DELETED>
                <DELETED>    (A) commerce between any State, the 
                District of Columbia, the Commonwealth of Puerto Rico, 
                Guam, the Virgin Islands, American Samoa, the Northern 
                Mariana Islands or any territory or possession of the 
                United States;</DELETED>
                <DELETED>    (B) commerce between points in any State, 
                the District of Columbia, the Commonwealth of Puerto 
                Rico, Guam, the Virgin Islands, American Samoa, the 
                Northern Mariana Islands or any territory or possession 
                of the United States; or</DELETED>
                <DELETED>    (C) commerce wholly within the District of 
                Columbia, Guam, the Virgin Islands, American Samoa, the 
                Northern Mariana Islands, or any territory or 
                possession of the United States.</DELETED>
        <DELETED>    (7) Commissioner.--The term ``Commissioner'' means 
        the Commissioner of Food and Drugs.</DELETED>
        <DELETED>    (8) Distributor.--The term ``distributor'' means 
        any person who furthers the distribution of tobacco products, 
        whether domestic or imported, at any point from the original 
        place of manufacture to the person who sells or distributes the 
        product to individuals for personal consumption. Such term 
        shall not include common carriers.</DELETED>
        <DELETED>    (9) Little cigar.--The term ``little cigar'' means 
        any roll of tobacco wrapped in leaf tobacco or any substance 
        containing tobacco (other than any roll of tobacco which is a 
        cigarette within the meaning of subsection (1)) and as to which 
        1,000 units weigh not more than 3 pounds.</DELETED>
        <DELETED>    (10) Manufacturer.--The term ``manufacturer'' 
        means any person, including any repacker or relabeler, who 
        manufactures, fabricates, assembles, processes, or labels a 
        finished tobacco product.</DELETED>
        <DELETED>    (11) Nicotine.--The term ``nicotine'' means the 
        chemical substance named 3-(1-Methyl-2-pyrrolidinyl) pyridine 
        or C<INF>10</INF>H<INF>14</INF>N<INF>2</INF>, including any 
        salt or complex of nicotine.</DELETED>
        <DELETED>    (12) Package.--The term ``package'' means a pack, 
        box, carton, or container of any kind in which tobacco products 
        are offered for sale, sold, or otherwise distributed to 
        consumers.</DELETED>
        <DELETED>    (13) Person.--The term ``person'' means an 
        individual, partnership, corporation, or any other business or 
        legal entity.</DELETED>
        <DELETED>    (14) Pipe tobacco.--The term ``pipe tobacco'' 
        means any loose tobacco that, because of its appearance, type, 
        packaging, or labeling, is likely to be offered to, or 
        purchased by, consumers as a tobacco product to be smoked in a 
        pipe.</DELETED>
        <DELETED>    (15) Point of sale.--The term ``point of sale'' 
        means any location at which an individual can purchase or 
        otherwise obtain tobacco products for personal 
        consumption.</DELETED>
        <DELETED>    (16) Retailer.--The term ``retailer'' means any 
        person who sells tobacco products to individuals for personal 
        consumption, or who operates a facility where vending machines 
        or self-service displays are permitted under this 
        title.</DELETED>
        <DELETED>    (17) Sale.--The term ``sale'' includes the 
        selling, providing samples of, or otherwise making tobacco 
        products available for personal consumption in any place within 
        the scope of this Act.</DELETED>
        <DELETED>    (18) Secretary.--The term ``Secretary'' means the 
        Secretary of Health and Human Services.</DELETED>
        <DELETED>    (19) Smokeless tobacco.--The term ``smokeless 
        tobacco'' means any product that consists of cut, ground, 
        powdered, or leaf tobacco that contains nicotine and that is 
        intended to be placed in the oral or nasal cavity.</DELETED>
        <DELETED>    (20) State.--The term ``State'' includes the 
        several States, the District of Columbia, the Commonwealth of 
        Puerto Rico, Guam, the Virgin Islands, American Samoa, the 
        Northern Mariana Islands, and any other territory or possession 
        of the United States. Such term includes any political division 
        of any State.</DELETED>
        <DELETED>    (21) Tobacco.--The term ``tobacco'' means tobacco 
        in its unmanufactured form.</DELETED>
        <DELETED>    (22) Tobacco product.--The term ``tobacco 
        product'' means cigars, cigarettes, cigarillos, cigarette 
        tobacco, little cigars, pipe tobacco, and smokeless 
        tobacco.</DELETED>
        <DELETED>    (23) Trust fund.--The term ``Trust Fund'' means 
        the National Tobacco Settlement Trust Fund established under 
        section 401.</DELETED>

<DELETED>Subtitle A--Restriction on Marketing and Advertising</DELETED>

<DELETED>SEC. 101. PROHIBITIONS ON ADVERTISING.</DELETED>

<DELETED>    (a) Prohibition on Outdoor Advertising.--</DELETED>
        <DELETED>    (1) In general.--No manufacturer, distributor, or 
        retailer may use any form of outdoor tobacco product 
        advertising, including billboards, posters, or 
        placards.</DELETED>
        <DELETED>    (2) Stadia and arenas.--Except as otherwise 
        provided in this title, a manufacturer, distributor, or 
        retailer shall not advertise tobacco products in any arena or 
        stadium where athletic, musical, artistic, or other social or 
        cultural events or activities occur.</DELETED>
<DELETED>    (b) Prohibition on Use of Human Images and Cartoons.--No 
manufacturer, distributor, or retailer may use a human image or a 
cartoon character or cartoon-type character in its advertising, 
labeling, or promotional material with respect to a tobacco 
product.</DELETED>
<DELETED>    (c) Prohibition on Advertising on the Internet.--No 
manufacturer, distributor, or retailer may use the Internet to 
advertise tobacco products unless such an advertisement is inaccessible 
in or from the United States.</DELETED>
<DELETED>    (d) Prohibition on Point-of-Sale Advertising.--</DELETED>
        <DELETED>    (1) In general.--Except as otherwise provided in 
        this subsection, no manufacturer, distributor, or retailer may 
        use point-of-sale advertising of tobacco products.</DELETED>
        <DELETED>    (2) Adult-only stores and tobacco outlets.--
        Paragraph (1) shall not apply to point of sale advertising at 
        adult-only stores and tobacco outlets.</DELETED>
        <DELETED>    (3) Permissible advertising.--</DELETED>
                <DELETED>    (A) In general.--Each manufacturer of 
                tobacco products may display not more than 2 separate 
                point-of-sale advertisements in or at each location at 
                which tobacco products are offered for sale.</DELETED>
                <DELETED>    (B) Market share manufacturers.--A 
                manufacturer with at least 25 percent of the market 
                share of the tobacco product involved may display an 
                additional point-of-sale advertisement in or at each 
                location at which tobacco products are offered for 
                sale.</DELETED>
                <DELETED>    (C) Retailers.--A retailer may have not 
                more than 1 point-of-sale advertisement relating to the 
                retailer's own or its wholesaler's contracted retailer 
                or private label brand of tobacco product. No 
                manufacturer or distributor may enter into any 
                arragenment with a retailer to limit the ability of the 
                retailer to display any form of permissible point-of-
                sale advertisement or promotional material originating 
                with another manufacturer or distributor.</DELETED>
        <DELETED>    (4) Limitations.--</DELETED>
                <DELETED>    (A) In general.--A point of sale 
                advertisement permitted under this subsection shall be 
                comprised of a display area than is not larger than 576 
                square inches (either individually or in the aggregate) 
                and shall consist only of black letters on a white 
                background or other recognized typographical marks. 
                Such advertisement shall not be attached to nor located 
                within 2 feet of any fixture on which candy is 
                displayed for sale.</DELETED>
                <DELETED>    (B) Audio and video formats.--Audio and 
                video advertisements permitted under section 103(c) may 
                be distributed to individuals who are 18 years of age 
                or older at point of sale but may not be played or 
                viewed at such point of sale.</DELETED>
                <DELETED>    (C) Display fixtures.--Display fixtures in 
                the form of signs consisting of brand name and price 
                and not larger than 2 inches in height are 
                permitted.?</DELETED>
        <DELETED>    (5) Definition.--For purposes of this subsection, 
        the term ``point-of-sale advertising'' means all printed or 
        graphical materials bearing the brand name (alone or in 
        conjunction with any other word), logo, motto, selling message, 
        recognizable color or pattern of colors, or any other indicia 
        of product identification similar or identical to those used 
        for tobacco products which, when used for its intended purpose, 
        can reasonably be anticipated to be seen by customers at a 
        location at which tobacco products are offered for 
        sale.</DELETED>

<DELETED>SEC. 102. GENERAL RESTRICTIONS.</DELETED>

<DELETED>    (a) Restriction on Product Names.--A manufacturer shall 
not use a trade or brand name of a nontobacco product as the trade or 
brand name for a cigarette or smokeless tobacco product, except for a 
tobacco product whose trade or brand name was on both a tobacco product 
and a nontobacco product that were sold in the United States on or 
before January 1, 1995.</DELETED>
<DELETED>    (b) Advertising Limited to FDA Specified Media.--
</DELETED>
        <DELETED>    (1) In general.--A manufacturer, distributor, or 
        retailer may, in accordance with this title, disseminate or 
        cause to be disseminated advertising or labeling which bears a 
        tobacco product brand name (alone or in conjunction with any 
        other word) or any other indicia of tobacco product 
        identification only in newspapers, in magazines, in periodicals 
        or other publications (whether periodic or limited 
        distribution), on billboards, posters and placards in 
        accordance with section 101(a), in nonpoint-of-sale promotional 
        material (including direct mail), in point-of-sale promotional 
        material, and in audio or video formats delivered at a point-
        of-sale.</DELETED>
        <DELETED>    (2) Limitation.--A manufacturer, distributor, or 
        retailer that intends to disseminate, or to cause to be 
        disseminated, advertising or labeling for a tobacco product in 
        a medium that is not described in paragraph (1) shall notify 
        the Commissioner not less than 30 days prior to the date on 
        which such medium is to be used. Such notice shall describe the 
        medium and discuss the extent to which the advertising or 
        labeling may be seen by individuals who are under 18 years of 
        age.</DELETED>
        <DELETED>    (3) Action by commissioner.--</DELETED>
<DELETED>    (c) Restriction on Placement in Entertainment Media.--
</DELETED>
        <DELETED>    (1) In general.--No payment shall be made by any 
        manufacturer, distributor, or retailer for the placement of any 
        tobacco product or tobacco product package or advertisement--
        </DELETED>
                <DELETED>    (A) as a prop in any television program or 
                motion picture produced for viewing by the general 
                public; or</DELETED>
                <DELETED>    (B) in a video or on a video game 
                machine.</DELETED>
        <DELETED>    (2) Video game.--The term ``video game'' means any 
        electronic amusement device that utilizes a computer, 
        microprocessor, or similar electronic circuitry and its own 
        cathode ray tube, or is designed to be used with a television 
        set or a monitor, that interacts with the user of the 
        device.</DELETED>
<DELETED>    (d) Restrictions on Glamorization of Tobacco Products.--No 
direct or indirect payment shall be made by any manufacturer, 
distributor, or retailer to any entity for the purpose of promoting the 
image or use of a tobacco product through print or film media that 
appeals to individuals under 18 years of age or through a live 
performance by an entertainment artist that appeals to such 
individuals.</DELETED>

<DELETED>SEC. 103. FORMAT AND CONTENT REQUIREMENTS FOR LABELING AND 
              ADVERTISING.</DELETED>

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

<DELETED>SEC. 104. STATEMENT OF INTENDED USE.</DELETED>

<DELETED>    (a) Requirement.--Each manufacturer, distributor, and 
retailer advertising or causing to be advertised, disseminating or 
causing to be disseminated, advertising concerning cigarettes, 
cigarette tobacco, or smokeless tobacco products otherwise permitted 
under this title shall include, as provided in section 502 of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 352), the established 
name of the product and a statement of the intended use of the product 
as provided for in subsection (b).</DELETED>
<DELETED>    (b) Use Statements.--</DELETED>
        <DELETED>    (1) Cigarettes.--A statement of intended use for 
        cigarettes or cigarette tobacco is as follows (whichever is 
        appropriate):</DELETED>
                <DELETED>Cigarettes--A Nicotine-Delivery Device for 
                Persons 18 or Older.</DELETED>
                <DELETED>Cigarette Tobacco--A Nicotine-Delivery Device 
                for Persons 18 or Older.</DELETED>
        <DELETED>    (2) Smokeless tobacco.--A statement of intended 
        use for a smokeless tobacco product is as follows (whichever is 
        appropriate):</DELETED>
                <DELETED>Loose Leaf Chewing Tobacco--A Nicotine-
                Delivery Device for Persons 18 or Older.</DELETED>
                <DELETED>Plug Chewing Tobacco--A Nicotine-Delivery 
                Device for Persons 18 or Older.</DELETED>
                <DELETED>Twist Chewing Tobacco--A Nicotine-Delivery 
                Device for Persons 18 or Older.</DELETED>
                <DELETED>Moist Snuff--A Nicotine-Delivery Device for 
                Persons 18 or Older.</DELETED>
                <DELETED>Dry Snuff--A Nicotine-Delivery Device for 
                Persons 18 or Older.</DELETED>
<DELETED>    (c) Type and Location.--Requirements with respect to type 
size, style, font, and location shall be determined by the 
Commissioner.</DELETED>

<DELETED>SEC. 105. BAN ON NONTOBACCO ITEMS AND SERVICES, CONTESTS AND 
              GAMES OF CHANCE, AND SPONSORSHIP OF EVENTS.</DELETED>

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

<DELETED>SEC. 106. USE OF PRODUCT DESCRIPTORS.</DELETED>

<DELETED>    (a) In General.--With respect to a tobacco product, the 
label of which bears a product description (such as ``light'' or ``low 
tar''), such label shall also contain, and any advertisement concerning 
such product shall contain, a mandatory disclaimer, to be established 
by the Secretary, that states that such product has not been shown to 
be less hazardous than another product of that type.</DELETED>
<DELETED>    (b) Rule of Construction.--Nothing in this section shall 
be construed to limit the authority of the Food and Drug Administration 
with respect to words used as product descriptors.</DELETED>

    <DELETED>Subtitle B--Warnings, Labeling and Packaging</DELETED>

<DELETED>SEC. 111. CIGARETTE WARNINGS.</DELETED>

<DELETED>    (a) In General.--</DELETED>
        <DELETED>    (1) Packaging.--It shall be unlawful for any 
        person to manufacture, package, or import for sale or 
        distribution within the United States any cigarettes the 
        package of which fails to bear, in accordance with the 
        requirements of this section, one of the following 
        labels:</DELETED>
                <DELETED>WARNING: Cigarettes Are Addictive.</DELETED>
                <DELETED>WARNING: Tobacco Smoke Can Harm Your 
                Children.</DELETED>
                <DELETED>WARNING: Cigarettes Cause Fatal Lung 
                Disease.</DELETED>
                <DELETED>WARNING: Cigarettes Cause Cancer.</DELETED>
                <DELETED>WARNING: Cigarettes Cause Strokes And Heart 
                Disease.</DELETED>
                <DELETED>WARNING: Smoking During Pregnancy Can Harm 
                Your Baby.</DELETED>
                <DELETED>WARNING: Smoking Can Kill You.</DELETED>
                <DELETED>WARNING: Tobacco Smoke Causes Fatal Lung 
                Disease In Nonsmokers.</DELETED>
                <DELETED>WARNING: Quitting Smoking Now Greatly Reduces 
                Serious Risks To Your Health.</DELETED>
        <DELETED>    (2) Advertising.--It shall be unlawful for any 
        manufacturer or importer of cigarettes to advertise or cause to 
        be advertised within the United States any cigarette unless the 
        advertising bears, in accordance with the requirements of this 
        section, one of the following labels:</DELETED>
                <DELETED>WARNING: Cigarettes Are Addictive.</DELETED>
                <DELETED>WARNING: Tobacco Smoke Can Harm Your 
                Children.</DELETED>
                <DELETED>WARNING: Cigarettes Cause Fatal Lung 
                Disease.</DELETED>
                <DELETED>WARNING: Cigarettes Cause Cancer.</DELETED>
                <DELETED>WARNING: Cigarettes Cause Strokes And Heart 
                Disease.</DELETED>
                <DELETED>WARNING: Smoking During Pregnancy Can Harm 
                Your Baby.</DELETED>
                <DELETED>WARNING: Smoking Can Kill You.</DELETED>
                <DELETED>WARNING: Tobacco Smoke Causes Fatal Lung 
                Disease In Nonsmokers.</DELETED>
                <DELETED>WARNING: Quitting Smoking Now Greatly Reduces 
                Serious Risks To Your Health.</DELETED>
<DELETED>    (b) Requirements for Labeling.--</DELETED>
        <DELETED>    (1) Location.--Each label statement required by 
        paragraph (1) of subsection (a) shall be located on the upper 
        portion of the front panel of the cigarette package (or carton) 
        and occupy not less than 25 percent of such front 
        panel.</DELETED>
        <DELETED>    (2) Type and color.--With respect to each label 
        statement required by paragraph (1) of subsection (a), the 
        phrase ``WARNING'' shall appear in capital letters and the 
        label statement shall be printed in 17 point type with 
        adjustments as determined appropriate by the Commissioner to 
        reflect the length of the required statement. All the letters 
        in the label shall appear in conspicuous and legible type, in 
        contrast by typography, layout, or color with all other printed 
        material on the package, and be printed in an alternating 
        black-on-white and white-on-black format as determined 
        appropriate by the Commissioner.</DELETED>
        <DELETED>    (3) Exception.--The provisions of paragraph (1) 
        shall not apply in the case of a flip-top cigarette package 
        (offered for sale on the date of enactment of this Act) where 
        the front portion of the flip-top does not comprise at least 25 
        percent of the front panel. In the case of such a package, the 
        label statement required by paragraph (1) of subsection (a) 
        shall occupy the entire front portion of the flip 
        top.</DELETED>
<DELETED>    (c) Requirements for Advertising.--</DELETED>
        <DELETED>    (1) Location.--Each label statement required by 
        paragraph (2) of subsection (a) shall occupy not less than 20 
        percent of the area of the advertisement involved.</DELETED>
        <DELETED>    (2) Type and color.--</DELETED>
                <DELETED>    (A) Type.--With respect to each label 
                statement required by paragraph (2) of subsection (a), 
                the phrase ``WARNING'' shall appear in capital letters 
                and the label statement shall be printed in the 
                following types:</DELETED>
                        <DELETED>    (i) With respect to whole page 
                        advertisements on broadsheet newspaper--45 
                        point type.</DELETED>
                        <DELETED>    (ii) With respect to half page 
                        advertisements on broadsheet newspaper--39 
                        point type.</DELETED>
                        <DELETED>    (iii) With respect to whole page 
                        advertisements on tabloid newspaper--39 point 
                        type.</DELETED>
                        <DELETED>    (iv) With respect to half page 
                        advertisements on tabloid newspaper--27 point 
                        type.</DELETED>
                        <DELETED>    (v) With respect to DPS magazine 
                        advertisements--31.5 point type.</DELETED>
                        <DELETED>    (vi) With respect to whole page 
                        magazine advertisements--31.5 point 
                        type.</DELETED>
                        <DELETED>    (vii) With respect to 28cm x 3 
                        column advertisements--22.5 point 
                        type.</DELETED>
                        <DELETED>    (viii) With respect to 20cm x 2 
                        column advertisements--15 point type.</DELETED>
                <DELETED>The Commissioner may revise the required type 
                sizes as the Commissioner determines appropriate within 
                the 20 percent requirement.</DELETED>
                <DELETED>    (B) Color.--All the letters in the label 
                under this paragraph shall appear in conspicuous and 
                legible type, in contrast by typography, layout, or 
                color with all other printed material on the package, 
                and be printed in an alternating black-on-white and 
                white-on-black format as determined appropriate by the 
                Commissioner.</DELETED>
<DELETED>    (d) Rotation of Label Statements.--</DELETED>
        <DELETED>    (1) In general.--Except as provided in paragraph 
        (2), the label statements specified in paragraphs (1) and (2) 
        of subsection (a) shall be rotated by each manufacturer or 
        importer of cigarettes quarterly in alternating sequence on 
        packages of each brand of cigarettes manufactured by the 
        manufacturer or importer and in the advertisements for each 
        such brand of cigarettes in accordance with a plan submitted by 
        the manufacturer or importer and approved by the Federal Trade 
        Commission. The Federal Trade Commission shall approve a plan 
        submitted by a manufacturer or importer of cigarettes which 
        will provide the rotation required by this subsection and which 
        assures that all of the labels required by paragraphs (1) and 
        (2) will be displayed by the manufacturer or importer at the 
        same time.</DELETED>
        <DELETED>    (2) Application of other rotation requirements.--
        </DELETED>
                <DELETED>    (A) In general.--A manufacturer or 
                importer of cigarettes may apply to the Federal Trade 
                Commission to have the label rotation described in 
                subparagraph (C) apply with respect to a brand style of 
                cigarettes manufactured or imported by such 
                manufacturer or importer if--</DELETED>
                        <DELETED>    (i) the number of cigarettes of 
                        such brand style sold in the fiscal year of the 
                        manufacturer or importer preceding the 
                        submission of the application is less than 
                        </DELETED>\<DELETED>1/4</DELETED>\ <DELETED>of 
                        1 percent of all the cigarettes sold in the 
                        United States in such year; and</DELETED>
                        <DELETED>    (ii) more than 
                        </DELETED>\<DELETED>1/2</DELETED>\ <DELETED>of 
                        the cigarettes manufactured or imported by such 
                        manufacturer or importer for sale in the United 
                        States are packaged into brand styles which 
                        meet the requirements of clause (i).</DELETED>
                <DELETED>If an application is approved by the 
                Commission, the label rotation described in 
                subparagraph (C) shall apply with respect to the 
                applicant during the 1-year period beginning on the 
                date of the application approval.</DELETED>
                <DELETED>    (B) Plan.--An applicant under subparagraph 
                (A) shall include in its application a plan under which 
                the label statements specified in paragraph (1) of 
                subsection (a) will be rotated by the applicant 
                manufacturer or importer in accordance with the label 
                rotation described in subparagraph (C).</DELETED>
                <DELETED>    (C) Other rotation requirements.--Under 
                the label rotation which the manufacturer or importer 
                with an approved application may put into effect, each 
                of the labels specified in paragraph (1) of subsection 
                (a) shall appear on the packages of each brand style of 
                cigarettes with respect to which the application was 
                approved an equal number of times within the 12-month 
                period beginning on the date of the approval by the 
                Commission of the application.</DELETED>
<DELETED>    (e) Application of Requirement.--Subsection (a) does not 
apply to a distributor, a retailer of cigarettes who does not 
manufacture, package, or import cigarettes for sale or distribution 
within the United States.</DELETED>
<DELETED>    (f) Television and Radio Advertising.--It shall be 
unlawful to advertise cigarettes and little cigars on any medium of 
electronic communications subject to the jurisdiction of the Federal 
Communications Commission.</DELETED>

<DELETED>SEC. 112. SMOKELESS TOBACCO WARNINGS.</DELETED>

<DELETED>    (a) In General.--</DELETED>
        <DELETED>    (1) Packaging.--It shall be unlawful for any 
        person to manufacture, package, or import for sale or 
        distribution within the United States any smokeless tobacco 
        product the package of which fails to bear, in accordance with 
        the requirements of this section, one of the following 
        labels:</DELETED>
                <DELETED>WARNING: This Product May Cause Mouth 
                Cancer.</DELETED>
                <DELETED>WARNING: This Product May Cause Gum Disease 
                And Tooth Loss.</DELETED>
                <DELETED>WARNING: This Product Is Not A Safe 
                Alternative To Cigarettes.</DELETED>
                <DELETED>WARNING: Smokeless Tobacco Is 
                Addictive.</DELETED>
        <DELETED>    (2) Advertising.--It shall be unlawful for any 
        manufacturer or importer of smokeless tobacco products to 
        advertise or cause to be advertised within the United States 
        any smokeless tobacco product unless the advertising bears, in 
        accordance with the requirements of this section, one of the 
        following labels:</DELETED>
                <DELETED>WARNING: This Product May Cause Mouth 
                Cancer.</DELETED>
                <DELETED>WARNING: This Product May Cause Gum Disease 
                And Tooth Loss.</DELETED>
                <DELETED>WARNING: This Product Is Not A Safe 
                Alternative To Cigarettes.</DELETED>
                <DELETED>WARNING: Smokeless Tobacco Is 
                Addictive.</DELETED>
<DELETED>    (b) Requirements for Labeling.--</DELETED>
        <DELETED>    (1) Location.--Each label statement required by 
        paragraph (1) of subsection (a) shall be located on the 
        principal display panel of the product and occupy not less than 
        25 percent of such panel.</DELETED>
        <DELETED>    (2) Type and color.--With respect to each label 
        statement required by paragraph (1) of subsection (a), the 
        phrase ``WARNING'' shall appear in capital letters and the 
        label statement shall be printed in 17 point type with 
        adjustments as determined appropriate by the Commissioner to 
        reflect the length of the required statement. All the letters 
        in the label shall appear in conspicuous and legible type in 
        contrast by typography, layout, or color with all other printed 
        material on the package and be printed in an alternating black 
        on white and white on black format as determined appropriate by 
        the Commissioner.</DELETED>
<DELETED>    (c) Advertising and Rotation.--The provisions of 
subsections (c) and (d)(1) of section 111 shall apply to advertisements 
for smokeless tobacco products and the rotation of the label statements 
required under subsection (a)(1) on such products.</DELETED>
<DELETED>    (d) Application of Requirement.--Subsection (a) does not 
apply to a distributor or a retailer of smokeless tobacco products who 
does not manufacture, package, or import such products for sale or 
distribution within the United States.</DELETED>
<DELETED>    (e) Television and Radio Advertising.--It shall be 
unlawful to advertise smokeless tobacco on any medium of electronic 
communications subject to the jurisdiction of the Federal 
Communications Commission.</DELETED>

<DELETED>SEC. 113. INGREDIENTS.</DELETED>

<DELETED>    Each person who manufactures, packages, or imports 
cigarettes or smokeless tobacco products shall annually provide the 
Secretary with the information required under section 910 of the 
Federal Food, Drug, and Cosmetic Act (as added by section 143(3) of 
this Act).</DELETED>

<DELETED>SEC. 114. ENFORCEMENT, REGULATIONS, AND 
              CONSTRUCTION.</DELETED>

<DELETED>    (a) Enforcement.--</DELETED>
        <DELETED>    (1) In general.--A violation of section 111 or 112 
        or the regulations promulgated pursuant to this subtitle shall 
        be considered a violation of section 5 of the Federal Trade 
        Commission Act.</DELETED>
        <DELETED>    (2) Fines.--Any person who is found to violate any 
        provision of sections 111, 112, or 113(a) shall be guilty of a 
        misdemeanor and shall, on conviction thereof, be subject to a 
        fine of not more than $10,000.</DELETED>
<DELETED>    (b) Injunctions.--The several district courts of the 
United States are vested with jurisdiction, for cause shown, to prevent 
and restrain violations of this subtitle upon the application of the 
Federal Trade Commission in the case of a violation of section 111 or 
112 or upon application of the Attorney General of the United States 
acting through the several United States attorneys in their several 
districts in the case of a violation of section 113.</DELETED>
<DELETED>    (c) Regulations.--Not later than 180 days after the date 
of the enactment of this Act, the Federal Trade Commission shall 
promulgate such regulations as it may require to implement sections 111 
and 112.</DELETED>
<DELETED>    (d) Construction.--Nothing in this subtitle (other than 
the requirements of sections 111, 112, and 113) shall be construed to 
limit, restrict, or expand the authority of the Federal Trade 
Commission with respect to unfair or deceptive acts or practices in the 
advertising of cigarettes or smokeless tobacco products.</DELETED>

<DELETED>SEC. 115. PREEMPTION.</DELETED>

<DELETED>    (a) Federal Action.--No statement relating to the use of 
cigarettes or smokeless tobacco products and health, other than the 
statements required by sections 111 or 112, shall be required by any 
Federal agency to appear on any package or in any advertisement of 
cigarettes or a smokeless tobacco product.</DELETED>
<DELETED>    (b) State and Local Action.--No statement relating to the 
use of cigarettes or smokeless tobacco products and health, other than 
the statements required by sections 111 and 112, shall be required by 
any State or local statute or regulation to be included on any package 
or in any advertisement of cigarettes or a smokeless tobacco 
product.</DELETED>
<DELETED>    (c) Effect on Liability Law.--Except as otherwise provided 
in this Act, nothing in this subtitle shall relieve any person from 
liability at common law or under State statutory law to any other 
person.</DELETED>

<DELETED>SEC. 116. REPORTS.</DELETED>

<DELETED>    (a) Secretary's Report.--Not later than 6 months after the 
date of enactment of this Act, and biennially thereafter, the Secretary 
shall prepare and submit to Congress a report containing--</DELETED>
        <DELETED>    (1) a description of the effects of health 
        education efforts on the use of cigarettes and smokeless 
        tobacco products;</DELETED>
        <DELETED>    (2) a description of the use by the public of 
        cigarettes and smokeless tobacco products;</DELETED>
        <DELETED>    (3) an evaluation of the health effects of 
        cigarettes and smokeless tobacco products and the 
        identification of areas appropriate for further research; 
        and</DELETED>
        <DELETED>    (4) such recommendations for legislation and 
        administrative action as the Secretary considers 
        appropriate.</DELETED>
<DELETED>    (b) FTC Report.--Not later than 6 months after the date of 
enactment of this Act, and biennially thereafter, the Federal Trade 
Commission shall prepare and submit to Congress a report containing--
</DELETED>
        <DELETED>    (1) a description of the current sales, 
        advertising, and marketing practices associated with cigarettes 
        and smokeless tobacco products; and</DELETED>
        <DELETED>    (2) such recommendations for legislation and 
        administrative action as the Commission deems 
        appropriate.</DELETED>

<DELETED>SEC. 117. EXPORTS.</DELETED>

<DELETED>    Packages of cigarettes or smokeless tobacco products 
manufactured, imported, or packaged--</DELETED>
        <DELETED>    (1) for export from the United States; 
        or</DELETED>
        <DELETED>    (2) for delivery to a vessel or aircraft, as 
        supplies, for consumption beyond the jurisdiction of the 
        internal revenue laws of the United States;</DELETED>
<DELETED>shall be exempt from the requirements of this subtitle, but 
such exemptions shall not apply to cigarettes or smokeless tobacco 
products manufactured, imported, or packaged for sale or distribution 
to members or units of the Armed Forces of the United States located 
outside of the United States.</DELETED>

<DELETED>SEC. 118. REPEALS.</DELETED>

<DELETED>    The following Acts are repealed:</DELETED>
        <DELETED>    (1) The Federal Cigarette Labeling and Advertising 
        Act (15 U.S.C. 1331 et seq.).</DELETED>
        <DELETED>    (2) The Comprehensive Smokeless Tobacco Health 
        Education Act of 1986 (15 U.S.C. 4401 et seq.).</DELETED>

         <DELETED>Subtitle C--Restriction on Access to Tobacco 
                           Products</DELETED>

<DELETED>SEC. 121. REQUIREMENTS RELATING TO RETAILERS.</DELETED>

<DELETED>    (a) Sales to Minors Prohibited.--No retailer may 
distribute a tobacco product to any individual who is under 18 years of 
age.</DELETED>
<DELETED>    (b) Photo Identification.--</DELETED>
        <DELETED>    (1) Requirement.--Except as provided in paragraph 
        (2), each retailer shall verify, by means of photographic 
        identification containing the date of birth of the bearer, that 
        no individual purchasing a tobacco product is under 18 years of 
        age.</DELETED>
        <DELETED>    (2) Exception.--No verification under paragraph 
        (1) is required for any individual who is at least 27 years of 
        age.</DELETED>
        <DELETED>    (3) Location of products.--Except as provided in 
        section 122(d), a retailer shall ensure that all tobacco 
        products are located in areas where customers do not have 
        access to the products.</DELETED>
<DELETED>    (c) Face-to-Face Transactions.--Except as provided in 
section 122(c)(1), a retailer may sell tobacco products only in a 
direct, face-to-face exchange without the assistance of any electronic 
or mechanical device.</DELETED>
<DELETED>    (d) Out-of-Package Distribution.--No retailer may break or 
otherwise open a tobacco product to sell or distribute to individuals 
portions of such product (including individual cigarettes or a number 
of cigarettes that is smaller than the quantity in the minimum package 
size, or any quantity of cigarette tobacco or smokeless tobacco that is 
smaller than the smallest package distributed by the retailer for 
individual consumer use).</DELETED>
<DELETED>    (e) Retailer Compliance with Respect to Self-Service.--
Each retailer shall ensure that all tobacco-related self-service 
displays, advertising, labeling, and other items that are located in 
the establishment of the retailer and that do not comply with the 
requirements of this title are removed or are brought into compliance 
with the requirements of this title.</DELETED>

<DELETED>SEC. 122. MANUFACTURE, SALE, AND DISTRIBUTION.</DELETED>

<DELETED>    (a) Minimum Cigarette Package Size.--Except as otherwise 
provided in this section, no manufacturer, distributor, or retailer may 
sell or cause to be sold, or distribute or cause to be distributed, any 
cigarette package that contains fewer than 20 cigarettes.</DELETED>
<DELETED>    (b) Prohibition on Sampling.--No manufacturer, 
distributor, or retailer may distribute or cause to be distributed any 
free samples of any tobacco product.</DELETED>
<DELETED>    (c) Prohibition on Distribution Through Self-Service Modes 
of Sale.--</DELETED>
        <DELETED>    (1) Vending machines.--No manufacturer, 
        distributor, or retailer may distribute or cause to be 
        distributed any tobacco product through a vending 
        machine.</DELETED>
        <DELETED>    (2) Other displays.--Except as provided in 
        subsection (d)(1)(B), no manufacturer, distributor, or retailer 
        may distribute or cause to be distributed any tobacco product 
        through a self-service display.</DELETED>
<DELETED>    (d) Permitted Self-Service Modes of Sale.--</DELETED>
        <DELETED>    (1) In general.--Notwithstanding this subtitle, 
        the following methods of distributing tobacco products are 
        permitted:</DELETED>
                <DELETED>    (A) Mail-order sales as provided for in 
                paragraph (2), except that mail-order redemption of 
                coupons and the distribution of free samples through 
                the mail shall be prohibited.</DELETED>
                <DELETED>    (B) Self-service displays that are located 
                in facilities where the retailer ensures that no 
                individuals under 18 years of age are present or 
                permitted to enter at any time.</DELETED>
        <DELETED>    (2) Mail-order sales.--</DELETED>
                <DELETED>    (A) In general.--A manufacturer, 
                distributor, or retailer may distribute or cause to be 
                distributed a tobacco product through mail-order sales 
                only if such sales are subject to a procedure for 
                verifying that no individual purchasing such products 
                is under 18 years of age.</DELETED>
                <DELETED>    (B) Review by commissioner.--Not later 
                than 2 years after the date of enactment of this Act, 
                the Commissioner shall review the verification 
                procedures implemented under subparagraph (A) to 
                determine whether individuals under 18 years of age are 
                obtaining tobacco products through the mail. If the 
                Commissioner determines that a significant number of 
                underage individuals are obtaining such products 
                through the mail, the Commissioner may promulgate 
                regulations to ban the distribution of tobacco products 
                through the mail.</DELETED>

   <DELETED>Subtitle D--Licensing of Retail Tobacco Sellers</DELETED>

<DELETED>SEC. 131. ESTABLISHMENT OF PROGRAM.</DELETED>

<DELETED>    (a) In General.--The Commissioner, after consultation with 
the Secretary, shall establish a program under which an entity would be 
required to obtain a State or local license to sell or otherwise 
distribute tobacco products directly to consumers.</DELETED>
<DELETED>    (b) Prohibition on Distribution.--No entity shall sell or 
otherwise distribute tobacco products directly to consumers unless such 
entity has in effect a tobacco license issued or renewed in accordance 
with the laws of the State in which the products are to be sold or 
otherwise distributed.</DELETED>
<DELETED>    (c) Eligibility of State for Payments.--To be eligible to 
receive a block grant under section 502, a State shall have in effect 
laws that meet the standards described in this subtitle that provide 
for the licensing of entities engaged in the sale or distribution of 
tobacco products directly to consumers and shall enforce such laws in 
accordance with section 133.</DELETED>

<DELETED>SEC. 132. REQUIREMENTS.</DELETED>

<DELETED>    (a) Licensure and Notice.--</DELETED>
        <DELETED>    (1) In general.--The State shall require that each 
        person engaged in the sale or distribution of tobacco products 
        directly to consumers obtain a license that is issued by the 
        State. A separate license shall be required for each place of 
        business where tobacco products are distributed or sold at 
        retail.</DELETED>
        <DELETED>    (2) Notice.--The State shall notify every person 
        in the State who is engaged in the distribution at retail of 
        tobacco products of the license requirement of this section and 
        of the date by which such person shall have obtained a license 
        in order to distribute such products.</DELETED>
<DELETED>    (b) Fee.--The State may assess an annual licensing fee 
with respect to each entity that desires to obtain a license under 
subsection (a). Amounts derived from such fees shall be used to offset 
the administrative costs incurred by the State in issuing and renewing 
licenses under this subtitle.</DELETED>
<DELETED>    (c) Application.--</DELETED>
        <DELETED>    (1) In general.--An entity shall prepare and 
        submit to the State an application for a license (including the 
        renewal of a license) under this section, on such form as the 
        State may require, that shall set forth the name under which 
        the applicant transacts or intends to transact business, the 
        location of the place of business for which the license is to 
        be issued, the street address to which all notices relevant to 
        the license are to be sent (in this Act referred to as ``notice 
        address''), and any other identifying information that the 
        State may require.</DELETED>
        <DELETED>    (2) Action by state.--</DELETED>
                <DELETED>    (A) In general.--The State shall issue or 
                renew a license or deny an application for a license or 
                the renewal of a license within 30 days of receiving a 
                properly completed application and the licensing fee. 
                The State shall provide notice to an applicant of an 
                action on an application denying the issuance of a 
                license or refusing to renew a license.</DELETED>
                <DELETED>    (B) Finding by state.--The State shall 
                deny the issuance or renewal of a license upon an 
                application if the State determines that the applicant 
                has failed to comply with the requirements of this 
                title.</DELETED>
        <DELETED>    (3) Scope and renewal.--Every license issued by 
        the State shall be valid for a period determined by the State 
        and shall be renewed upon application except as otherwise 
        provided in this section.</DELETED>

<DELETED>SEC. 133. PENALTIES, REVOCATIONS AND SUSPENSIONS.</DELETED>

<DELETED>    (a) Penalties.--</DELETED>
        <DELETED>    (1) Criminal penalties applicable to unlicensed 
        sellers.--Any individual who sells or otherwise distributes 
        tobacco products to a consumer without a tobacco license in 
        effect as provided for in this subtitle shall be subject, under 
        the applicable State law, to a fine of not less than $1,000, or 
        imprisonment of not less than 6 months, or both. With respect 
        to any corporate employer of such an individual, the 
        corporation shall be subject to a fine of not more than 
        $50,000.</DELETED>
        <DELETED>    (2) Civil penalties applicable to sellers in 
        violation of license.--</DELETED>
                <DELETED>    (A) In general.--In addition to any 
                criminal penalties that may be imposed under paragraph 
                (1), a State may, in accordance with subsection (b), 
                impose civil penalties on any entity that has sold or 
                distributed tobacco products in the State in violation 
                of the State tobacco licensing laws.</DELETED>
                <DELETED>    (B) Limitations.--The civil penalties that 
                may be imposed under subparagraph (A) shall not exceed 
                the following:</DELETED>
                        <DELETED>    (i) For the first offense within 
                        any 2-year period, $500, or a 3-day suspension 
                        of the tobacco license, or both.</DELETED>
                        <DELETED>    (ii) For a second offense within 
                        any 2-year period, $1,000, or a 7-day 
                        suspension of the tobacco license, or 
                        both.</DELETED>
                        <DELETED>    (iii) For a third offense within 
                        any 2-year period, $2,000, or a 30-day 
                        suspension of the tobacco license, or 
                        both.</DELETED>
                        <DELETED>    (iv) For a fourth offense within 
                        any 2-year period, $5,000, or a 6-month 
                        suspension of the tobacco license, or 
                        both.</DELETED>
                        <DELETED>    (v) For a fifth offense within any 
                        2-year period, $10,000, or a 1-year suspension 
                        of the tobacco license, or both.</DELETED>
                        <DELETED>    (vi) For a sixth and any 
                        subsequent offense within any 2-year period, 
                        $25,000, or a 3-year revocation of the tobacco 
                        license.</DELETED>
                        <DELETED>    (vii) For a tenth offense within 
                        any 2-year period, the permanent revocation of 
                        the tobacco license.</DELETED>
<DELETED>    (b) Revocation and Suspensions.--</DELETED>
        <DELETED>    (1) Notice.--Upon a finding that a tobacco 
        licensee has been determined by a court of competent 
        jurisdiction to have violated a provision of State law under 
        this subtitle during the license term, the State shall notify 
        the licensee in writing, served personally or by registered 
        mail at the principal place of business of the licensee, that 
        any subsequent violation of such law at the same place of 
        business may result in an administrative action to suspend the 
        license for a period determined by the State in accordance with 
        subsection (a)(2)(B).</DELETED>
        <DELETED>    (2) Suspension.--Upon finding that a further 
        violation by the tobacco licensee has occurred involving the 
        same place of business for which the license was issued and the 
        licensee has been provided notice under paragraph (1), the 
        State may initiate an administrative action to suspend the 
        license for a period to be determined in accordance with 
        subsection (a)(2)(B). If an administrative action to suspend a 
        license is initiated, the State shall immediately notify the 
        licensee, in writing at the principal place of business of the 
        licensee, of the initiation of the action and the reasons 
        therefore and permit the licensee an opportunity, at least 30 
        days after written notice is served personally or by registered 
        mail upon the licensee, to show why suspension of the license 
        would be unwarranted or unjust.</DELETED>
        <DELETED>    (3) Revocation.--The State may initiate an 
        administrative action to revoke a tobacco license that 
        previously has been suspended under paragraph (2) if, during 
        the 2-year period described in subsection (a)(2)(B), a further 
        violation of this subtitle is committed after the suspension by 
        the licensee involving the same place of business for which the 
        license was issued. If an administrative action to revoke a 
        license is initiated, the State shall immediately notify the 
        licensee, in writing at the principal place of business of the 
        licensee, of the initiation of the action and the reasons 
        therefore and permit the licensee an opportunity, at least 30 
        days after written notice is served personally or by registered 
        mail upon the licensee, to show why revocation of the license 
        would be unwarranted or unjust.</DELETED>
<DELETED>    (c) Judicial Review.--A tobacco licensee may seek judicial 
review of an action of the State suspending, revoking, denying, or 
refusing to renew a license under this section by filing a complaint in 
a court of competent jurisdiction. A complaint shall be filed within 30 
days after the date on which notice of the action involved is received 
by the licensee. The court shall review the evidence de novo.</DELETED>

<DELETED>SEC. 134. FEDERAL LICENSING OF MILITARY AND OTHER 
              ENTITIES.</DELETED>

<DELETED>    (a) In General.--The Commissioner, in consultation with 
the Secretary of Defense, Secretary of State, and other appropriate 
Federal officials, shall establish and implement a Federal tobacco 
licensing program to be applied to entities that sell or distribute 
tobacco products--</DELETED>
        <DELETED>    (1) on any military installation (as defined in 
        section 2801(c)(2) of title X, United States Code);</DELETED>
        <DELETED>    (2) in any United States embassy;</DELETED>
        <DELETED>    (3) in any facility owned and operated by the 
        Federal Government either in the United States or in a foreign 
        country;</DELETED>
        <DELETED>    (4) in any duty-free shop located within the 
        United States; or</DELETED>
        <DELETED>    (5) through any other Federal entity or on any 
        other Federal property as determined appropriate by the 
        Commissioner.</DELETED>
<DELETED>    (b) Requirements of Program.--The program established 
under subsection (a) shall apply requirements (including those for 
penalties, suspensions, and revocations) similar to those required to 
be implemented by States under this subtitle.</DELETED>
<DELETED>    (c) Indian Tribes and Tribal Lands.--For purposes of 
applying and enforcing the provisions of this subtitle to entities that 
sell or otherwise distribute tobacco products on Indian reservations 
(as defined in section 403(9) of the Indian Child Protection and Family 
Violence Prevention Act (25 U.S.C. 3202(9))), an Indian tribe or tribal 
organization (as such terms are defined in section 4 of the Indian Self 
Determination and Education Assistance Act (25 U.S.C. 450b)) shall be 
treated as a State.</DELETED>

  <DELETED>Subtitle E--Regulation of Tobacco Product Development and 
                        Manufacturing</DELETED>

<DELETED>SEC. 141. REFERENCE.</DELETED>

<DELETED>    Whenever in this subtitle an amendment or repeal is 
expressed in terms of an amendment to, or repeal of, a section or other 
provision, the reference shall be considered to be made to a section or 
other provision of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
301 et seq.).</DELETED>

<DELETED>SEC. 142. TREATMENT OF TOBACCO PRODUCTS AS DRUGS.</DELETED>

<DELETED>    (a) Definitions.--</DELETED>
        <DELETED>    (1) Drug.--</DELETED>
                <DELETED>    (A) In general.--Section 201(g)(1) (21 
                U.S.C. 321(g)(1)) is amended by inserting before the 
                first period ``; and (E) tobacco products''.</DELETED>
                <DELETED>    (B) Exception.--Section 201(p) of such Act 
                is amended in paragraphs (1) and (2) by striking 
                ``(except a new animal drug'' and inserting ``(except a 
                tobacco product, a new animal drug,''.</DELETED>
        <DELETED>    (2) Devices.--Section 201(h) (21 U.S.C. 321(h)) is 
        amended by adding at the end the following: ``Such term 
        includes a tobacco product which shall be classified as a class 
        II device.''.</DELETED>
        <DELETED>    (3) Other definitions.--Section 201 (21 U.S.C. 
        321) is amended by adding at the end thereof the following new 
        paragraphs:</DELETED>
<DELETED>    ``(ii) Tobacco Additive.--The term `tobacco additive' 
means any substance the intended use of which results or may reasonably 
be expected to result, directly or indirectly, in the substance 
becoming a component of, or otherwise affecting the characteristics of, 
any tobacco product, including any substance that may have been removed 
from the tobacco product and then readded in the substance's original 
or modified form.</DELETED>
<DELETED>    ``(jj) Tar.--The term `tar' means mainstream total 
articulate matter minus nicotine and water.</DELETED>
<DELETED>    ``(kk) Tobacco Product.--The term `tobacco product' has 
the meaning given such term in section 100(22) of the Universal Tobacco 
Settlement Act.''.</DELETED>
<DELETED>    (b) Enforcement.--Section 301 (21 U.S.C. 331) is amended 
by adding at the end thereof the following new subsection:</DELETED>
<DELETED>    ``(x) The manufacture, labeling, distribution, and sale of 
any adulterated or misbranded tobacco product in violation of--
</DELETED>
        <DELETED>    ``(1) regulations issued pursuant to section 
        903;</DELETED>
        <DELETED>    ``(2) title I of the Universal Tobacco Settlement 
        Act.''.</DELETED>
<DELETED>    (c) Adulterated or Misbranded Provisions.--</DELETED>
        <DELETED>    (1) Adulteration.--Section 501 (21 U.S.C. 351) is 
        amended by adding at the end the following:</DELETED>
<DELETED>    ``(j) If it is a tobacco product and it does not comply 
with the provisions of chapter IX.''.</DELETED>
        <DELETED>    (2) Misbranding.--Section 502 (21 U.S.C. 352) is 
        amended by adding at the end the following:</DELETED>
<DELETED>    ``(u) If it is a tobacco product and its labeling does not 
comply with the provisions of chapter IX and the provisions of title I 
of the Universal Tobacco Settlement Act.''.</DELETED>
<DELETED>    (d) Classification of Tobacco Products.--Section 
512(a)(1)(B) (21 U.S.C. 360c(a)(1)(B)) is amended by adding at the end 
the following: ``For purposes of this Act, a tobacco product shall be 
classified as a class II device with performance standards applicable 
under chapter IX.''.</DELETED>

<DELETED>SEC. 143. HEALTH AND SAFETY REGULATION OF TOBACCO 
              PRODUCTS.</DELETED>

<DELETED>    The Act (21 U.S.C. 301 et seq.) is amended--</DELETED>
        <DELETED>    (1) by redesignating chapter IX as chapter 
        X;</DELETED>
        <DELETED>    (2) by redesignating sections 901, 902, 903, 904, 
        and 905 as sections 1001, 1002, 1003, 1004, and 1005, 
        respectively; and</DELETED>
        <DELETED>    (3) by adding after chapter VIII the following new 
        chapter:</DELETED>

           <DELETED>``CHAPTER IX--TOBACCO PRODUCTS</DELETED>

<DELETED>``SEC. 901. DEFINITIONS.</DELETED>

<DELETED>    ``For purposes of this chapter and in addition to the 
definitions contained in section 201, the definitions under section 100 
of the Universal Tobacco Settlement Act shall apply.</DELETED>

<DELETED>``SEC. 902. PURPOSE.</DELETED>

<DELETED>    ``It is the purpose of this chapter to impose a regulatory 
scheme applicable to the development and manufacturing of cigarettes 
and smokeless tobacco products/tobacco products. Such scheme shall 
include the approval of the ingredients used in such products and the 
imposition of standards to reduce the level of certain constituents 
contained in such products, including nicotine.</DELETED>

<DELETED>``SEC. 903. PROMULGATION OF REGULATIONS.</DELETED>

<DELETED>    ``The Commissioner shall promulgate regulations governing 
the misbranding, adulteration, and dispensing of tobacco products that 
are consistent with this chapter and with the manner in which other 
products that are ingested into the body are regulated under this Act, 
except that the Commissioner may not promulgate a regulation that 
prohibits the sale and distribution of a tobacco product solely on the 
basis of the fact that tobacco causes disease. Such regulations shall 
be promulgated not later than 6 months after the date of enactment of 
the Universal Tobacco Settlement Act.</DELETED>

<DELETED>``SEC. 904. MINIMUM REQUIREMENTS.</DELETED>

<DELETED>    ``(a) Misbranding.--The regulations promulgated under 
section 903 shall at a minimum require that a tobacco product be deemed 
to be misbranded if the labeling of the package of such product is not 
in compliance with the provisions of this chapter, of other applicable 
provisions of this Act, or of sections 102(a), 103, 111, 112, and 113 
(as applicable to the type of product involved) of the Universal 
Tobacco Settlement Act.</DELETED>
<DELETED>    ``(b) Adulteration.--The regulations promulgated under 
section 903 shall at a minimum require that a tobacco product be deemed 
to be adulterated if the Commissioner determines that any tobacco 
additive in such product, regardless of the amount of such tobacco 
additive, either by itself or in conjunction with any other tobacco 
additive or ingredient significantly increases the risk to human health 
or the risk of addiction to such product.</DELETED>

<DELETED>``SEC. 905. PERFORMANCE STANDARDS FOR TOBACCO 
              PRODUCTS.</DELETED>

<DELETED>    ``(a) In General.--With respect to tobacco products, the 
special controls required by section 513(a)(1)(B) shall include 
performance standards for such products as established in accordance 
with this section.</DELETED>
<DELETED>    ``(b) Requirements.--A performance standard established 
under this section for a tobacco product--</DELETED>
        <DELETED>    ``(1) shall include provisions to require the 
        modification of the product to minimize the illness or injury 
        that may result in consumers as a result of the use of such 
        products, including the components of such products that 
        produce dependence among such consumers; and</DELETED>
        <DELETED>    ``(2) include, where appropriate--</DELETED>
                <DELETED>    ``(A) provisions with respect to the 
                construction, components, ingredients, and properties 
                of the tobacco product;</DELETED>
                <DELETED>    ``(B) provisions for the testing (on a 
                sample basis or, if necessary, on an individual basis) 
                of the tobacco product or, if it is determined that no 
                other more practicable means are available to the 
                Secretary to assure the conformity of the device to the 
                standard, provisions for the testing (on a sample basis 
                or, if necessary, on an individual basis) by the 
                Secretary or by another person at the direction of the 
                Secretary;</DELETED>
                <DELETED>    ``(C) provisions for the measurement of 
                the performance characteristics of the tobacco 
                product;</DELETED>
                <DELETED>    ``(D) provisions requiring that the 
                results of each or of certain of the tests of the 
                device required to be made under subparagraph (B) 
                demonstrate that the tobacco product is in conformity 
                with the portions of the standard for which the test or 
                tests were required; and</DELETED>
                <DELETED>    ``(E) a provision requiring that the sale 
                and distribution of the device be restricted but only 
                to the extent that the sale and distribution of a 
                device may be otherwise restricted under this Act of 
                title I of the Universal Tobacco Settlement 
                Act.</DELETED>
<DELETED>    ``(c) Evaluation.--The Secretary shall provide for the 
periodic evaluation of a performance standard established under this 
section to determine if such standards should be changed to reflect new 
medical, scientific, or other technological data.</DELETED>
<DELETED>    ``(d) Procedures.--In carrying out this section, the 
Secretary shall, to the maximum extent practicable--</DELETED>
        <DELETED>    ``(1) use personnel, facilities, and other 
        technical support available in other Federal 
        agencies;</DELETED>
        <DELETED>    ``(2) consult with the Scientific Advisory 
        Committee established under section 906 and other Federal 
        agencies concerned with standard-setting and other nationally 
        or internationally recognized standard-setting entities; 
        and</DELETED>
        <DELETED>    ``(3) invite appropriate participation, through 
        joint or other conferences, workshops, or other means, by 
        informed persons representative of scientific, professional, 
        industry, or consumer organizations who in the judgment of the 
        Secretary can make a significant contribution.</DELETED>
<DELETED>    ``(e) Procedures.--</DELETED>
        <DELETED>    ``(1) In general.--The Secretary shall publish in 
        the Federal Register a notice of proposed rulemaking for the 
        establishment, amendment, or revocation of any performance 
        standard under this section.</DELETED>
        <DELETED>    ``(2) Notice requirements.--A notice of proposed 
        rulemaking for the establishment or amendment of a performance 
        standard under this section shall--</DELETED>
                <DELETED>    ``(A) set forth a finding with supporting 
                justification that the performance standard is 
                appropriate under subsection (b)(1) with respect to the 
                product; and</DELETED>
                <DELETED>    ``(B) invite interested persons to submit 
                an existing performance standard for the product, 
                including a draft or proposed performance standard, for 
                consideration by the Secretary.</DELETED>
        <DELETED>    ``(3) Comment period.--The Secretary shall provide 
        for a comment period of not less than 60 days.</DELETED>
        <DELETED>    ``(4) Applicability of section 514.--The 
        provisions of paragraphs (3) and (4) of section 514(b) shall 
        apply to the establishment, amendment, or revocation of any 
        performance standard under this section, except that any 
        reference to an advisory committee shall be deemed to be a 
        reference the Scientific Advisory Committee established under 
        section 906.</DELETED>
<DELETED>    ``(f) Nicotine.--Except as provided in section 907, a 
performance standard established under this section may not require the 
elimination of nicotine from tobacco products.</DELETED>
<DELETED>    ``(g) Limitation.--The Commissioner may not establish a 
performance standard under this section that has the effect of 
prohibiting the sale and distribution, to individuals who are at least 
18 years of age, of traditional tobacco products in the basic form of 
the particular product as described in the definition of the particular 
product under section 100 of the Universal Tobacco Settlement 
Act.</DELETED>

<DELETED>``SEC. 906. SCIENTIFIC ADVISORY COMMITTEE.</DELETED>

<DELETED>    ``(a) Establishment.--Not later than 1 year after the date 
of enactment of the Universal Tobacco Settlement Act, the Secretary 
shall establish an advisory committee, to be known as the `Scientific 
Advisory Committee', to assist the Secretary in establishing, amending, 
or revoking a performance standard under section 905.</DELETED>
<DELETED>    ``(b) Membership.--The Secretary shall appoint as members 
of the Scientific Advisory Committee any individuals with expertise in 
the medical, scientific, or other technological data involving the 
manufacture and use of tobacco products, and of appropriately 
diversified professional backgrounds. The Secretary may not appoint to 
the Committee any individual who is in the regular full-time employ of 
the Federal Government. The Secretary shall designate one of the 
members of each advisory committee to serve as chairperson of the 
Committee. The Committee shall include as nonvoting members a 
representative of consumer interests and a representative of interests 
of the device manufacturing industry.</DELETED>
<DELETED>    ``(c) Compensation and Expenses.--</DELETED>
        <DELETED>    ``(1) Compensation.--Members of the Scientific 
        Advisory Committee who are not officers or employees of the 
        United States, while attending conferences or meetings of the 
        Committee or otherwise serving at the request of the Secretary, 
        shall be entitled to receive compensation at rates to be fixed 
        by the Secretary, which rates may not exceed the daily 
        equivalent of the rate of pay for level 4 of the Senior 
        Executive Schedule under section 5382 of title 5, United States 
        Code, for each day (including traveltime) they are so 
        engaged.</DELETED>
        <DELETED>    ``(2) Expenses.--While conducting the business of 
        the Scientific Advisory Committee away from their homes or 
        regular places of business, each member may be allowed travel 
        expenses, including per diem in lieu of subsistence, as 
        authorized by section 5703 of title 5 of the United States Code 
        for persons in the Government service employed 
        intermittently.</DELETED>
<DELETED>    ``(d) Duties.--The Scientific Advisory Committee shall--
</DELETED>
        <DELETED>    ``(1) assist the Secretary in establishing, 
        amending, or revoking performance standards under section 
        905;</DELETED>
        <DELETED>    ``(2) examine and determine the effects of the 
        alteration of the nicotine yield levels in tobacco 
        products;</DELETED>
        <DELETED>    ``(3) examine and determine whether there is a 
        threshold level below which nicotine yields do not produce 
        dependence on the tobacco product involved, and, if so, 
        determine what that level is; and</DELETED>
        <DELETED>    ``(4) review other safety, dependence or health 
        issues relating to tobacco products as determined appropriate 
        by the Secretary.</DELETED>

<DELETED>``SEC. 907. REQUIREMENTS RELATING TO NICOTINE AND OTHER 
              CONSTITUENTS.</DELETED>

<DELETED>    ``(a) General Rule.--Except as provided in subsection (d), 
the Secretary, based on a finding under subsection (b), may adopt a 
performance standard under section 905 that requires the modification 
of a tobacco product in a manner that involves--</DELETED>
        <DELETED>    ``(1) the gradual reduction of nicotine yields of 
        the product; or</DELETED>
        <DELETED>    ``(2) the reduction or elimination of other 
        constituents or harmful components of the product.</DELETED>
<DELETED>    ``(b) Required Finding.--</DELETED>
        <DELETED>    ``(1) In general.--A modification described in 
        subsection (a) shall not be adopted unless the Secretary 
        determines that the modification--</DELETED>
                <DELETED>    ``(A) will result in a significant 
                reduction in the health risks associated with the use 
                of the tobacco product involved;</DELETED>
                <DELETED>    ``(B) is technologically feasible; 
                and</DELETED>
                <DELETED>    ``(C) will not result in the creation of a 
                significant demand for contraband products or other 
                tobacco products that do not meet the performance 
                standard that requires the modification.</DELETED>
        <DELETED>    ``(2) Contraband products.--For purposes of 
        paragraph (1)(C), the Secretary, in determining whether a 
        significant demand for contraband products will be created, 
        shall take in account--</DELETED>
                <DELETED>    ``(A) the estimated number of dependent 
                tobacco product users residing in the United States on 
                the date on which the proposed modification is being 
                considered;</DELETED>
                <DELETED>    ``(B) the availability to such users, or 
                lack thereof, of alternative products; and</DELETED>
                <DELETED>    ``(C) any other factors determined 
                appropriate by the Secretary.</DELETED>
        <DELETED>    ``(3) Substantial evidence.--A determination under 
        paragraph (2) shall be based upon substantial evidence as 
        demonstrated through an administrative record developed through 
        formal rulemaking procedures as required under title 5, United 
        States Code. Any such determination, and any determination by 
        the Secretary with respect to a petition filed for an 
        administrative review of the modification, shall be subject to 
        judicial review in the United States District Court for the 
        District of Columbia.</DELETED>
<DELETED>    ``(c) Limitation.--Effective on the date that is 3 years 
after the date of enactment of the Universal Tobacco Settlement Act, 
and notwithstanding any performance standard established under this 
chapter, no cigarette or tobacco product shall be sold or otherwise 
distributed in the United States that exceeds a 12 milligram tar yield, 
as determined using the testing methodology used by the Federal Trade 
Commission on such date of enactment.</DELETED>
<DELETED>    ``(d) 12-Year Prohibition.--During the 12-year period 
beginning on the date of enactment of the Universal Tobacco Settlement 
Act, the Secretary shall not adopt any performance standard under 
section 905 that requires the complete elimination of nicotine yields 
in a tobacco product.</DELETED>
<DELETED>    ``(e) Action After Prohibition.--</DELETED>
        <DELETED>    ``(1) In general.--After the expiration of the 12-
        year period referred to in subsection (d), the Secretary may 
        establish or amend any performance standard to completely 
        eliminate nicotine yields in a tobacco product.</DELETED>
        <DELETED>    ``(2) Determination.--Any performance standard 
        described in paragraph (1) shall not be adopted unless the 
        Secretary determines that the standard--</DELETED>
                <DELETED>    ``(A) will result in a significant overall 
                reduction in the health risks associated with the use 
                of the tobacco product involved by consumers, including 
                individuals who continue to use tobacco products but 
                use such products less often and individuals who stop 
                using such products;</DELETED>
                <DELETED>    ``(B) is technologically feasible; 
                and</DELETED>
                <DELETED>    ``(C) will not result in the creation of a 
                significant demand for contraband products or other 
                tobacco products that do not meet the performance 
                standard.</DELETED>
        <DELETED>    ``(3) Health benefits.--In making a determination 
        with respect to health risks under paragraph (2)(A), the 
        Secretary shall consider--</DELETED>
                <DELETED>    ``(A) the number of dependent tobacco 
                users residing in the United States on the date on 
                which the proposed performance standard is being 
                considered;</DELETED>
                <DELETED>    ``(B) the availability and demonstrated 
                market acceptance of alternative products;</DELETED>
                <DELETED>    ``(C) the effectiveness of tobacco product 
                cessation techniques and devices on the market on the 
                date on which the proposed performance standard is 
                being considered; and</DELETED>
                <DELETED>    ``(D) any other factors determined 
                appropriate by the Secretary.</DELETED>
        <DELETED>    ``(4) Preponderance of the evidence.--A 
        determination under paragraph (2) with respect to the 
        elimination of nicotine, or an action that would have an effect 
        comparable to the elimination of nicotine, shall be based upon 
        a preponderance of the evidence as demonstrated, upon the 
        request of a manufacturer, through a Part 12 hearing or notice 
        and comment rulemaking as required under title 5, United States 
        Code. Any such determination, and any determination by the 
        Secretary with respect to a petition filed for an 
        administrative review of the modification, shall be subject to 
        judicial review in the United States District Court for the 
        District of Columbia.</DELETED>
        <DELETED>    ``(5) Phase-in.--A performance standard described 
        in paragraph (1) shall be implemented during a 2-year phase-in 
        period beginning on the date on which all administrative or 
        judicial action provided for under this chapter with respect to 
        the standard is completed.</DELETED>
<DELETED>    ``(f) Tobacco Constituents.--The Secretary shall 
promulgate regulations for the testing, reporting and disclosure of 
tobacco smoke constituents that the Secretary determines the public 
should be informed of to protect public health, including tar, 
nicotine, and carbon monoxide. Such regulations may require label and 
advertising disclosures relating to tar and nicotine.</DELETED>

<DELETED>``SEC. 908. REDUCED RISK PRODUCTS.</DELETED>

<DELETED>    ``(a) Misbranding.--Except as provided in subsection (b), 
the regulations promulgated in accordance with section 904(a) shall 
require that a tobacco product be deemed to be misbranded if the 
labeling of the package of the product, or the claims of the 
manufacturer in connection with the product, can reasonably be 
interpreted by an objective consumer as stating or implying that the 
product presents a reduced health risk as compared to other similar 
products.</DELETED>
<DELETED>    ``(b) Exception.--</DELETED>
        <DELETED>    ``(1) In general.--Subsection (a) shall not apply 
        to the labeling of a tobacco product, or the claims of the 
        manufacturer in connection with the product, if--</DELETED>
                <DELETED>    ``(A) the manufacturer, based on 
                scientific evidence, demonstrates to the Commissioner 
                that the product significantly reduces the risk to the 
                health of the user as compared to other similar tobacco 
                products; and</DELETED>
                <DELETED>    ``(B) the Commissioner approves the 
                specific claim that will be made a part of the labeling 
                of the product, or the specific claims of the 
                manufacturer in connection with the product.</DELETED>
        <DELETED>    ``(2) Reduction in harm.--The Commissioner shall 
        promulgate regulations to permit the inclusion of 
        scientifically-based specific health claims on the labeling of 
        a tobacco product package, or the making of such claims by the 
        manufacturer in connection with the product, where the 
        Commissioner determines that the inclusion or making of such 
        claims would reduce harm to consumers and otherwise promote 
        public health.</DELETED>
<DELETED>    ``(c) Development of Reduced Risk Product Technology.--
</DELETED>
        <DELETED>    ``(1) Notification of commissioner.--The 
        manufacturer of a tobacco product shall provide written notice 
        to the Commissioner upon the development or acquisition by the 
        manufacturer of any technology that would reduce the risk of 
        such products to the health of the user.</DELETED>
        <DELETED>    ``(2) Confidentiality.--The Commissioner shall 
        promulgate regulations to provide a manufacturer with 
        appropriate confidentiality protections with respect to 
        technology that is the subject of a notification under 
        paragraph (1) that contains evidence that the technology 
        involved is in the early developmental stages.</DELETED>
        <DELETED>    ``(3) Licensing.--</DELETED>
                <DELETED>    ``(A) In general.--With respect to any 
                technology developed or acquired under paragraph (1), 
                the manufacturer shall permit the use of such 
                technology by other manufacturers of tobacco products 
                to which this chapter applies.</DELETED>
                <DELETED>    ``(B) Fees.--The Commissioner shall 
                promulgate regulations to provide for the payment of a 
                commercially reasonable fee by each manufacturer that 
                uses the technology described under subparagraph (A) to 
                the manufacturer that submits the notice under 
                paragraph (1) for such technology. Such regulations 
                shall contain procedures for the resolution of fee 
                disputes between manufacturers under this 
                subparagraph.</DELETED>
<DELETED>    ``(d) Requirement of Manufacture and Marketing.--
</DELETED>
        <DELETED>    ``(1) Purpose.--It is the purpose of this 
        subsection to provide for a mechanism to ensure that tobacco 
        products that are designed to be less hazardous to the health 
        of users are developed, tested, and made available to 
        consumers.</DELETED>
        <DELETED>    ``(2) Determination.--Upon a determination by the 
        Commissioner that the manufacture of a tobacco product that is 
        less hazardous to the health of users is technologically 
        feasible, the Commissioner may, in accordance with this 
        subsection, require that certain manufacturers of such products 
        manufacture and market such less hazardous products.</DELETED>
        <DELETED>    ``(3) Manufacturer.--</DELETED>
                <DELETED>    ``(A) Requirement.--Except as provided in 
                subparagraph (B), the requirement under paragraph (2) 
                shall apply to any manufacturer that provides a 
                notification to the Commissioner under subsection 
                (c)(1) concerning the technology that is the subject of 
                the determination of the Commissioner.</DELETED>
                <DELETED>    ``(B) Exception.--The requirement under 
                subparagraph (A) shall not apply to a manufacturer if--
                </DELETED>
                        <DELETED>    ``(i) the manufacturer elects not 
                        to manufacture such products and provides 
                        notice to the Commissioner of such election; 
                        and</DELETED>
                        <DELETED>    ``(ii) the manufacturer agrees to 
                        provide the technology involved, for a 
                        commercially reasonable fee, to other 
                        manufacturers that enter into agreements to use 
                        such technology to manufacture and market 
                        tobacco products that are less hazardous to the 
                        health of users.</DELETED>
        <DELETED>    ``(4) Action by public health service.--If no 
        manufacturer elects or agrees to manufacture and market tobacco 
        products that are less hazardous to the health of users through 
        the use of technology available pursuant to this subsection 
        within a reasonable period of time, as determined appropriate 
        by the Commissioner, the Commissioner, in consultation with the 
        Secretary and acting through the Public Health Service, shall, 
        either directly or through grants or contracts, provide for the 
        manufacture and marketing of such products.</DELETED>

<DELETED>``SEC. 909. GOOD MANUFACTURING PRACTICE STANDARDS.</DELETED>

<DELETED>    ``(a) Authority.--</DELETED>
        <DELETED>    ``(1) In general.--The Secretary may, in 
        accordance with paragraph (2), prescribe regulations requiring 
        that the methods used in, and the facilities and controls used 
        for, the manufacture, pre-production design validation 
        (including a process to assess the performance of a tobacco 
        product), packing, and storage of a tobacco product conform to 
        current good manufacturing practice, as prescribed in such 
        regulations, to ensure that such products will be in compliance 
        with this chapter.</DELETED>
        <DELETED>    ``(2) Requirements prior to regulations.--Prior to 
        the Secretary promulgating any regulation under paragraph (1) 
        the Secretary shall--</DELETED>
                <DELETED>    ``(A) afford the Scientific Advisory 
                Committee established under section 906 an opportunity 
                (with a reasonable time period) to submit 
                recommendations with respect to the regulations 
                proposed to be promulgated; and</DELETED>
                <DELETED>    ``(B) afford opportunity for an oral 
                hearing.</DELETED>
<DELETED>    ``(b) Minimum Requirements.--The regulations promulgated 
under subsection (a) shall at a minimum require--</DELETED>
        <DELETED>    ``(1) the implementation of a quality control 
        system by the manufacturer of a tobacco product;</DELETED>
        <DELETED>    ``(2) a process for the inspection of tobacco 
        product material prior to the packaging of such product to be 
        determined by the Commissioner;</DELETED>
        <DELETED>    ``(3) procedures for the proper handling and 
        storage of the packaged tobacco product;</DELETED>
        <DELETED>    ``(4) after consultation with the Administrator of 
        the Environmental Protection Agency, the development and 
        adherence to applicable tolerances with respect to pesticide 
        chemical residues in or on commodities used by the manufacturer 
        in the manufacture of the finished tobacco product;</DELETED>
        <DELETED>    ``(5) the inspection of facilities by officials of 
        the Food and Drug Administration as otherwise provided for in 
        this Act; and</DELETED>
        <DELETED>    ``(6) record keeping and the reporting of certain 
        information.</DELETED>
<DELETED>    ``(c) Petitions for Exemptions and Variances.--</DELETED>
        <DELETED>    ``(1) In general.--Any person subject to any 
        requirement prescribed by regulations under subsection (a) may 
        petition the Secretary for an exemption or variance from such 
        requirement. Such a petition shall be submitted to the 
        Secretary in such form and manner as the Secretary shall 
        prescribe and shall--</DELETED>
                <DELETED>    ``(A) in the case of a petition for an 
                exemption from a requirement, set forth the basis for 
                the petitioner's determination that compliance with the 
                requirement is not required to ensure that the device 
                is in compliance with this chapter;</DELETED>
                <DELETED>    ``(B) in the case of a petition for a 
                variance from a requirement, set forth the methods 
                proposed to be used in, and the facilities and controls 
                proposed to be used for, the manufacture, packing, and 
                storage of the product in lieu of the methods, 
                facilities, and controls prescribed by the requirement; 
                and</DELETED>
                <DELETED>    ``(C) contain such other information as 
                the Secretary shall prescribe.</DELETED>
        <DELETED>    ``(2) Scientific advisory committee.--The 
        Secretary may refer to the Scientific Advisory Committee 
        established under section 906 any petition submitted under 
        paragraph (1). The Scientific Advisory Committee shall report 
        its recommendations to the Secretary with respect to a petition 
        referred to it within 60 days of the date of the petition's 
        referral. Within 60 days after--</DELETED>
                <DELETED>    ``(A) the date the petition was submitted 
                to the Secretary under paragraph (1); or</DELETED>
                <DELETED>    ``(B) if the petition was referred to the 
                Scientific Advisory Committee, the expiration of the 
                60-day period beginning on the date the petition was 
                referred to such Committee;</DELETED>
        <DELETED>whichever occurs later, the Secretary shall by order 
        either deny the petition or approve it.</DELETED>
        <DELETED>    ``(3) Approval of petition.--</DELETED>
                <DELETED>    ``(A) In general.--The Secretary may 
                approve--</DELETED>
                        <DELETED>    ``(i) a petition for an exemption 
                        for a tobacco product from a requirement if the 
                        Secretary determines that compliance with such 
                        requirement is not required to assure that the 
                        product will comply with this chapter; 
                        and</DELETED>
                        <DELETED>    ``(ii) a petition for a variance 
                        for a tobacco product from a requirement if the 
                        Secretary determines that the methods to be 
                        used in, and the facilities and controls to be 
                        used for, the manufacture, packing, and storage 
                        of the product in lieu of the methods, 
                        controls, and facilities prescribed by the 
                        requirement are sufficient to ensure that the 
                        product will comply with this 
                        chapter.</DELETED>
                <DELETED>    ``(B) Conditions.--An order of the 
                Secretary approving a petition for a variance shall 
                prescribe such conditions respecting the methods used 
                in, and the facilities and controls used for, the 
                manufacture, packing, and storage of the tobacco 
                product to be granted the variance under the petition 
                as may be necessary to ensure that the product will 
                comply with this chapter.</DELETED>
        <DELETED>    ``(4) Informal hearing.--After the issuance of an 
        order under paragraph (2) respecting a petition, the petitioner 
        shall have an opportunity for an informal hearing on such 
        order.</DELETED>
<DELETED>    ``(d) Agricultural Producers.--The Secretary may not 
promulgate any regulation under this section that has the effect of 
placing regulatory burdens on tobacco producers (as such term is used 
for purposes of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 
et seq.) and the Agricultural Act of 1949 (7 U.S.C. 1441 et seq.)) in 
excess of the regulatory burdens generally placed on other agricultural 
commodity producers.</DELETED>

<DELETED>``SEC. 910. DISCLOSURE AND REPORTING OF NONTOBACCO 
              INGREDIENTS.</DELETED>

<DELETED>    ``(a) Annual Submission.--</DELETED>
        <DELETED>    ``(1) In general.--Each manufacturer of a tobacco 
        product shall annually provide the Secretary with--</DELETED>
                <DELETED>    ``(A) a list of all ingredients, 
                substances, and compounds (other than tobacco, water or 
                reconstituted tobacco sheet made wholly from tobacco) 
                that are added to the tobacco (and the paper or filter 
                of the product if applicable) in the manufacture of the 
                tobacco product, for each brand of tobacco product so 
                manufactured; and</DELETED>
                <DELETED>    ``(B) a description of the quantity of the 
                ingredients, substances, and compounds that are listed 
                under subparagraph (A) with respect to each brand of 
                tobacco product.</DELETED>
        <DELETED>    ``(2) General disclosure of safety.--With respect 
        to each annual submission under paragraph (1) during the 5-year 
        period beginning on the date of enactment of the Universal 
        Tobacco Settlement Act, the manufacturer shall, for each 
        ingredient, substance, or compound contained on the list of the 
        manufacturer for the year involved, disclose whether the 
        manufacturer has determined that the ingredient, substance, or 
        compound would be exempt from public disclosure under this 
        section.</DELETED>
<DELETED>    ``(b) Safety Assessments.--</DELETED>
        <DELETED>    ``(1) Requirement.--Not later than 5 years after 
        the date of enactment of the Universal Tobacco Settlement Act, 
        and annually thereafter, each manufacturer shall submit to the 
        Secretary a safety assessment for each ingredient, substance, 
        or compound that is listed under subsection (a)(1)(A) with 
        respect to each brand of tobacco product manufactured by each 
        such manufacturer.</DELETED>
        <DELETED>    ``(2) Basis of assessment.--The safety assessment 
        of an ingredient, substance, or compound described in paragraph 
        (1) shall--</DELETED>
                <DELETED>    ``(A) be based on the best scientific 
                evidence available at the time of the submission of the 
                assessment; and</DELETED>
                <DELETED>    ``(B) result in a finding that there is a 
                reasonable certainty in the minds of competent 
                scientists that the ingredient, substance, or compound 
                is not harmful in the quantities used under the 
                intended conditions of use.</DELETED>
<DELETED>    ``(c) Prohibition.--</DELETED>
        <DELETED>    ``(1) Regulations.--Not later than 12 months after 
        the date of enactment of the Universal Tobacco Settlement Act, 
        the Secretary shall promulgate regulations to prohibit the use 
        of any ingredient, substance, or compound in the tobacco 
        product of a manufacturer--</DELETED>
                <DELETED>    ``(A) if no safety assessment has been 
                submitted by the manufacturer for the ingredient, 
                substance, or compound; or</DELETED>
                <DELETED>    ``(B) if the Secretary disapproves of the 
                safety of the ingredient, substance, or compound that 
                was the subject of the assessment under paragraph 
                (2).</DELETED>
        <DELETED>    ``(2) Review of assessments.--</DELETED>
                <DELETED>    ``(A) General review.--Not later than 90 
                days after the receipt of a safety assessment under 
                subsection (b), the Secretary shall review the findings 
                contained in such assessment.</DELETED>
                <DELETED>    ``(B) Approval or disapproval.--Not later 
                than 90 days after the completion of a review under 
                subparagraph (A), the Secretary shall approve or 
                disapprove of the safety of the ingredient, substance, 
                or compound that was the subject of the assessment and 
                provide notice to the manufacturer of such 
                action.</DELETED>
                <DELETED>    ``(C) Inaction by secretary.--If the 
                Secretary fails to act with respect to an assessment 
                during the 90-day period referred to in subparagraph 
                (B), the safety of the ingredient, substance, or 
                compound involved shall be deemed to be 
                approved.</DELETED>
<DELETED>    ``(d) Disclosure of Ingredients to the Public.--</DELETED>
        <DELETED>    ``(1) Initial disclosure.--The regulations 
        promulgated in accordance with section 904(a) shall, at a 
        minimum, require that, during the 5-year period beginning on 
        the date that is 6 months after the date of enactment of the 
        Universal Tobacco Settlement Act, a tobacco product be deemed 
        to be misbranded if the labeling of the package of such product 
        does not disclose the ingredients of the product in accordance 
        with the labeling provisions applicable to food ingredients 
        under this Act.</DELETED>
        <DELETED>    ``(2) Disclosure of all ingredients.--The 
        regulations referred to in paragraph (1) shall, at a minimum, 
        require that, subsequent to the 5-year period referred to in 
        such paragraph, a tobacco product be deemed to be misbranded if 
        the labeling of the package of such product does not disclose 
        all ingredients, substances, or compounds contained in the 
        product in accordance with the labeling provisions applicable 
        to food ingredients under this Act.</DELETED>
        <DELETED>    ``(3) Exception.--Notwithstanding paragraph (1), 
        the Secretary may require that any ingredient, substance, or 
        compound contained in a tobacco product that is otherwise 
        exempt from disclosure be disclosed if the Secretary determines 
        that such ingredient, substance, or compound is not safe as 
        provided for in subsection (c).</DELETED>
<DELETED>    ``(e) Confidentiality.--Any information reported to or 
otherwise obtained by the Secretary under this section, and that is not 
required to be disclosed to the public under subsection (d), shall be 
exempt from disclosure pursuant to subsection (a) of section 552 of 
title 5, United States Code, by reason of subsection (b)(4) of such 
section, shall be considered confidential and shall not be disclosed 
and may not be used by the Secretary as the basis for the establishment 
or amendment of a performance standard under section 905, except that 
such information may be disclosed to other officers or employees 
concerned with carrying out this Act or when relevant in any proceeding 
under this Act.</DELETED>

<DELETED>``SEC. 911. NONAPPLICATION OF CERTAIN PROVISIONS.</DELETED>

<DELETED>    ``Sections 502(j), 516, 518, and 520(f) shall not apply to 
tobacco products to which this chapter applies.''.</DELETED>

 <DELETED>Subtitle F--Compliance Plans and Corporate Culture</DELETED>

<DELETED>SEC. 151. COMPLIANCE PLANS.</DELETED>

<DELETED>    (a) In General.--Not later than 1 year after the date of 
enactment of this Act, and annually thereafter, each manufacturer of a 
tobacco product shall prepare and submit to the Secretary a plan to 
ensure that the manufacturer complies with all applicable Federal, 
State, and local laws with respect to the manufacture and distribution 
of tobacco products.</DELETED>
<DELETED>    (b) Requirements.--A compliance plan submitted under 
subsection (a) shall--</DELETED>
        <DELETED>    (1) contain the assurances of the manufacturer 
        that tobacco products will only be manufactured and distributed 
        in accordance with this Act and the amendments made by this 
        Act;</DELETED>
        <DELETED>    (2) identify methods to achieve the goals of--
        </DELETED>
                <DELETED>    (A) reducing the access of individuals 
                under 18 years of age to tobacco products; 
                and</DELETED>
                <DELETED>    (B) reducing the incidence of the underage 
                consumption of tobacco products;</DELETED>
        <DELETED>    (3) provide for the implementation of internal 
        incentives for achieving the reductions described in paragraph 
        (2);</DELETED>
        <DELETED>    (4) provide for the implementation of internal 
        incentives for the development of tobacco products with a 
        reduced health risk;</DELETED>
        <DELETED>    (5) contain a description of the compliance 
        programs implemented under section 152 and the effectiveness of 
        such programs; and</DELETED>
        <DELETED>    (6) contain such other information as the 
        Secretary may require.</DELETED>

<DELETED>SEC. 152. COMPLIANCE PROGRAMS.</DELETED>

<DELETED>    (a) In General.--Not later than 1 year after the date of 
enactment of this Act, each manufacturer of a tobacco product shall 
establish and implement one or more compliance programs designed to 
ensure the compliance of the manufacturer with Federal, State, and 
local laws that limit the access of individuals under 18 years of age 
to tobacco products.</DELETED>
<DELETED>    (b) Requirements.--A compliance program established under 
subsection (a) shall--</DELETED>
        <DELETED>    (1) implement standards and procedures to be 
        adhered to by employees and agents that are designed to reduce 
        the incidence of violations of the laws described in subsection 
        (a);</DELETED>
        <DELETED>    (2) provide for the assignment to 1 or more 
        specific corporate executives of the overall responsibility for 
        ensuring that the manufacturer complies with the standards and 
        procedures applicable under this Act;</DELETED>
        <DELETED>    (3) ensure that due care is taken by the corporate 
        executives designated under paragraph (2) to avoid delegating 
        substantial discretionary authority to individuals who the 
        executives know (or should have known through the exercise of 
        due diligence) have a propensity to disregard corporate 
        policy;</DELETED>
        <DELETED>    (4) include procedures to inform all employees and 
        agents of the relevant standards and procedures applicable to 
        the manufacturer and the tobacco products manufactured under 
        this Act, including procedures for the implementation of 
        training programs or the dissemination of informational 
        materials;</DELETED>
        <DELETED>    (5) provide for the conduct of internal audits, 
        and the establishment of hotlines and other measures to promote 
        compliance with the laws described in subsection (a);</DELETED>
        <DELETED>    (6) provide for the application of appropriate 
        disciplinary mechanisms and measures to employees who are 
        directly or indirectly violating the laws described in 
        subsection (a) or otherwise not complying with this 
        Act;</DELETED>
        <DELETED>    (7) include measures to respond appropriately 
        where violations of laws described in subsection (a) are 
        alleged to have occurred or are occurring;</DELETED>
        <DELETED>    (8) include the promulgation of corporate policy 
        statements that express and explain the commitment of the 
        manufacturer to--</DELETED>
                <DELETED>    (A) compliance with applicable Federal, 
                State, and local laws;</DELETED>
                <DELETED>    (B) reducing the use of tobacco products 
                by individuals who are under 18 years of age; 
                and</DELETED>
                <DELETED>    (C) developing tobacco products that pose 
                a reduced risk to the health of the user;</DELETED>
        <DELETED>    (9) provide for the designation of a specific 
        corporate executive to serve as the compliance officer to 
        promote efforts to fulfill the commitment of the 
        manufacturer;</DELETED>
        <DELETED>    (10) include provisions for compiling reports on 
        compliance with this Act and the laws described in paragraph 
        (1) and including those reports in materials provided to 
        stockholders; and</DELETED>
        <DELETED>    (11) include any other measures determined 
        appropriate by the Secretary.</DELETED>
<DELETED>    (c) Reporting of Noncompliance.--Under the compliance 
program of a manufacturer, the manufacturer's employees shall be 
encouraged to report to the compliance officer any known or alleged 
violations of this Act (or an amendment made by this Act), including 
violations by distributors or retailers. The compliance officer shall 
furnish a copy of all such reports to the Secretary for reference to 
the appropriate Federal or State enforcement authority.</DELETED>
<DELETED>    (d) Retail Establishments.--As part of the compliance 
program established under this section, a manufacturer shall carry out 
efforts to encourage and assist (including retail compliance checks and 
financial incentives) retailers of the tobacco products manufactured by 
the manufacturer in compliance with the Federal, State, and local laws 
described in subsection (a).</DELETED>

<DELETED>SEC. 153. WHISTLEBLOWER PROTECTIONS.</DELETED>

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

<DELETED>SEC. 154. PROVISIONS RELATING TO LOBBYING.</DELETED>

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

<DELETED>SEC. 155. TERMINATION OF CERTAIN ENTITIES.</DELETED>

<DELETED>    (a) Requirement.--Not later than 90 days after the date of 
enactment of this Act, manufacturers, distributors, or retailers of 
tobacco products shall provide for the termination of the activities of 
the Tobacco Institute and the Council for Tobacco Research, U.S.A. and 
the Institute and Council shall be dissolved.</DELETED>
<DELETED>    (b) Establishment of Other Entities.--</DELETED>
        <DELETED>    (1) Authority.--Manufacturers, distributors, or 
        retailers of tobacco products may form or participate in any 
        trade organization or other industry association only in 
        accordance with this subsection.</DELETED>
        <DELETED>    (2) Board of directors.--A trade organization or 
        other industry association formed or participated in under this 
        subsection shall--</DELETED>
                <DELETED>    (A) shall be administered by an 
                independent board of directors, of which--</DELETED>
                        <DELETED>    (i) during the 10-year period 
                        beginning on the date on which the organization 
                        or association is formed or first participated 
                        in under this subsection, not less than 20 
                        percent (at least 1 member) shall be 
                        individuals who are not current or former 
                        directors, officers, or employees of an entity 
                        terminated under subsection (a) or of the 
                        members of the association or organization; 
                        and</DELETED>
                        <DELETED>    (ii) during the life of the 
                        association or organization, no member shall be 
                        a director of any of the members of the 
                        association or organization;</DELETED>
                <DELETED>    (B) be administered by officers who are 
                appointed by the board of directors and who are not 
                otherwise employed by any of the members of the 
                association or organization; and</DELETED>
                <DELETED>    (C) be provided with legal advice by a 
                legal adviser who is appointed by the board of 
                directors and who is not otherwise employed by any of 
                the members of the association or 
                organization.</DELETED>
        <DELETED>    (3) By-laws.--A trade organization or other 
        industry association formed or participated in under this 
        subsection shall adopt by-laws that--</DELETED>
                <DELETED>    (A) prohibit meetings by members of the 
                association or organization who are competitors in the 
                tobacco industry except under the sponsorship of the 
                association or organization;</DELETED>
                <DELETED>    (B) require that every meeting of the 
                board of directors, or a subcommittee of the board or 
                other general committee, proceed under and strictly 
                adhere to an agenda that is approved by the legal 
                counsel and circulated in advance; and</DELETED>
                <DELETED>    (C) require the taking of minutes that 
                describe the substance of any meeting of the members of 
                the association or organization and the maintenance of 
                such minutes in the records of the association or 
                organization for a period of 5 years following the 
                meeting.</DELETED>
<DELETED>    (c) Department of Justice.--</DELETED>
        <DELETED>    (1) Oversight.--The Attorney General and, as 
        appropriate, State antitrust authorities shall exercise 
        oversight authority over any association or organization to 
        which subsection (b) applies.</DELETED>
        <DELETED>    (2) Access and inspection.--During the 10-year 
        period beginning on the date on which an association or 
        organization to which subsection (b) applies is formed, the 
        Attorney General and, as appropriate State antitrust 
        authorities shall, upon the provision of reasonable notice to 
        the legal counsel of the association or organization, have 
        access to--</DELETED>
                <DELETED>    (A) all books, records, meeting agenda and 
                minutes, and other documents maintained by the 
                association or organization; and</DELETED>
                <DELETED>    (B) the directors, officers, and employees 
                of the association or organization for interview 
                purposes.</DELETED>
        <DELETED>    (3) Multi-state committee.--Two or more States, 
        acting through the attorney general of each such State, may 
        establish a multi-State oversight committee to assist the 
        Attorney General in exercising the oversight responsibilities 
        under this section.</DELETED>
        <DELETED>    (4) Confidentiality.--The Attorney General shall 
        promulgate regulations to provide that materials provided under 
        paragraph (2) are protected with appropriate confidentiality 
        protections.</DELETED>
<DELETED>    (d) Antitrust Exemptions.--The provisions of the Sherman 
Act (15 U.S.C. 1 et seq.), the Clayton Act (29 U.S.C. 52 et seq.), and 
any other Federal or State antitrust laws shall not apply to an 
association or organization to which subsection (b) applies.</DELETED>

<DELETED>SEC. 156. ENFORCEMENT.</DELETED>

<DELETED>    (a) Assessment.--</DELETED>
        <DELETED>    (1) In general.--The Secretary may assess a civil 
        penalty against any manufacturer of a tobacco product of up to 
        $25,000 per day of violation whenever, on the basis of any 
        available information, the Secretary finds that such 
        manufacturer has violated or is violating any requirement of 
        this subtitle.</DELETED>
        <DELETED>    (2) Limitation.--The authority of the Secretary 
        under this subsection shall be limited to matters where the 
        total penalty sought does not exceed $200,000 and the first 
        alleged date of violation occurred not more than 12 months 
        prior to the initiation of the administrative action, except 
        where the Secretary and the Attorney General jointly determine 
        that a matter involving a larger penalty amount or longer 
        period of violation is appropriate for action.</DELETED>
        <DELETED>    (3) Judicial review.--Any determination by the 
        Administrator and the Attorney General under paragraph (2) 
        shall not be subject to judicial review.</DELETED>
<DELETED>    (b) Procedure.--</DELETED>
        <DELETED>    (1) In general.--A civil penalty under subsection 
        (a) shall be assessed by the Secretary by an order made after 
        an opportunity for a hearing on the record in accordance with 
        sections 554 and 556 of title 5 of the United States Code. The 
        Secretary shall issue reasonable rules for discovery and other 
        procedures for hearings under this paragraph. Before issuing 
        such an order, the Secretary shall give written notice to the 
        manufacturer against whom the assessment is being made of the 
        Secretary's proposal to issue such an order and provide such 
        manufacturer with an opportunity to request such a hearing on 
        the order, within 30 days of the date the notice is received by 
        such manufacturer.</DELETED>
        <DELETED>    (2) Modifications.--The Secretary may compromise, 
        modify, or remit, with or without conditions, any penalty which 
        may be imposed under this section.</DELETED>
<DELETED>    (c) Field Citation Program.--</DELETED>
        <DELETED>    (1) Implementation.--The Secretary may provide for 
        the implementation, after consultation with the Attorney 
        General and the States, of a field citation program through 
        regulations establishing appropriate minor violations of this 
        subtitle for which field citations, assessing civil penalties 
        not to exceed $5,000 per day of violation, may be issued by 
        officers or employees designated by the Secretary.</DELETED>
        <DELETED>    (2) Hearing.--Any manufacturer to which a field 
        citation is assessed may, within a reasonable time as 
        prescribed by the Secretary through regulation, elect to pay 
        the penalty assessment or to request a hearing on the field 
        citation. If a request for a hearing is not made within the 
        time specified in the regulation, the penalty assessment in the 
        field citation shall be final. Such hearing shall not be 
        subject to section 554 or 556 of title 5 of the United States 
        Code, but shall provide a reasonable opportunity to be heard 
        and to present evidence.</DELETED>
        <DELETED>    (3) No defense.--Payment of a civil penalty 
        required by a field citation under this paragraph shall not be 
        a defense to further enforcement by the United States or a 
        State to correct a violation, or to assess the statutory 
        maximum penalty pursuant to other authorities in the subtitle, 
        if the violation continues.</DELETED>
<DELETED>    (d) Judicial Review.--</DELETED>
        <DELETED>    (1) Right.--Any manufacturer against whom a civil 
        penalty is assessed under subsection (c) or to which a penalty 
        order is issued under subsection (a) may seek review of such 
        assessment in the United States District Court for the District 
        of Columbia or for the district in which the violation is 
        alleged to have occurred or in which the principal place of 
        business of the manufacturer is located, by filing in such 
        court within 30 days following the date the penalty order 
        becomes final under subsection paragraph (b), the assessment 
        becomes final under subsection (c), or a final decision 
        following a hearing under subsection (c) is rendered, and by 
        simultaneously sending a copy of the filing by certified mail 
        to the Secretary and the Attorney General.</DELETED>
        <DELETED>    (2) Filing.--Within 30 days after a filing under 
        paragraph (1), the Secretary shall file in the court involved a 
        certified copy, or certified index, as appropriate, of the 
        record on which the penalty order or assessment was 
        issued.</DELETED>
        <DELETED>    (3) Action by court.--A court shall not set aside 
        or remand a penalty order or assessment under this section 
        unless there is not substantial evidence in the record, taken 
        as a whole, to support the finding of a violation or unless the 
        order or penalty assessment constitutes an abuse of 
        discretion.</DELETED>
        <DELETED>    (4) Limitation.--A penalty order or assessment 
        under this section shall not be subject to review by any court 
        except as provided in this subsection. In any such proceedings, 
        the United States may seek to recover civil penalties ordered 
        or assessed under this section.</DELETED>
<DELETED>    (e) Failure to Pay.--</DELETED>
        <DELETED>    (1) In general.--If any manufacturer fails to pay 
        an assessment of a civil penalty or fails to comply with an 
        penalty order under this section--</DELETED>
                <DELETED>    (A) after the order or assessment has 
                become final; or</DELETED>
                <DELETED>    (B) after a court, in an action brought 
                under subsection (d), has entered a final judgment in 
                favor of the Secretary;</DELETED>
        <DELETED>the Secretary shall request the Attorney General to 
        bring a civil action in an appropriate district court to 
        enforce the order or to recover the amount ordered or assessed 
        (plus interest at rates established pursuant to section 
        6621(a)(2) of the Internal Revenue Code of 1986 from the date 
        of the final order or decision or the date of the final 
        judgment, as the case may be). In such an action, the validity, 
        amount, and appropriateness of such order or assessment shall 
        not be subject to review.</DELETED>
        <DELETED>    (2) Enforcement expenses.--Any manufacturer who 
        fails to pay on a timely basis a civil penalty ordered or 
        assessed under this section shall be required to pay, in 
        addition to such penalty and interest, the United States 
        enforcement expenses, including attorneys fees and costs 
        incurred by the United States for collection proceedings and a 
        quarterly nonpayment penalty for each quarter during which such 
        failure to pay persists. Such nonpayment penalty shall be 10 
        percent of the aggregate amount of such manufacturer's 
        outstanding penalties and nonpayment penalties accrued as of 
        the beginning of such quarter.</DELETED>
<DELETED>    (f) Scarlet Letter Advertising.--</DELETED>

     <DELETED>TITLE II--REDUCTION IN UNDERAGE TOBACCO USE</DELETED>

<DELETED>SEC. 201. PURPOSE.</DELETED>

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

<DELETED>SEC. 202. DETERMINATION OF UNDERAGE USE BASE 
              PERCENTAGES.</DELETED>

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

<DELETED>SEC. 203. ANNUAL DAILY INCIDENCE OF UNDERAGE USE OF TOBACCO 
              PRODUCTS.</DELETED>

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

<DELETED>SEC. 204. REQUIRED REDUCTION IN UNDERAGE TOBACCO 
              USE.</DELETED>

<DELETED>    (a) In General.--For purposes of assessing surcharges 
under section 205, the Secretary shall determine whether the required 
percentage reduction in the underage use of tobacco products for a year 
(based on the tables contained in subsection (b)) has been achieved for 
the year involved. Such determination shall be based on--</DELETED>
        <DELETED>    (1) with respect to cigarette products, the 
        average annual incidence of the daily use of tobacco products 
        by individuals who are under 18 years of age for the year 
        involved (as determined under section 203(b)) as compared to 
        the underage use base percentage for cigarette products (as 
        determined under section 202(a)); and</DELETED>
        <DELETED>    (2) with respect to smokeless tobacco products, 
        the average annual incidence of the daily use of smokeless 
        tobacco products by individuals who are under 18 years of age 
        for the year involved (as determined under section 203(c)) as 
        compared to the underage use base percentage for smokeless 
        tobacco products (as determined under section 
        202(b)).</DELETED>
<DELETED>    (b) Percentage Reduction in Underage Use of Tobacco 
Products.--For purposes of subsection (a), the required percentage 
reduction in the underage use of tobacco products with respect to each 
tobacco product shall be determined according to the following 
tables:</DELETED>
        <DELETED>    (1) Cigarettes.--</DELETED>

<DELETED>``Calender year after      The percentage decrease in the use 
        enactment--                         of cigarette products--
    <DELETED>Fifth................................                  30 
    <DELETED>Sixth................................                  30 
    <DELETED>Seventh..............................                  50 
    <DELETED>Eighth...............................                  50 
    <DELETED>Ninth................................                  50 
    <DELETED>Tenth and thereafter.................                 60 .
        <DELETED>    (2) Smokeless tobacco products.--</DELETED>

<DELETED>``Calender year after      The percentage decrease in the use 
        enactment--                         of smokeless tobacco 
                                            products--
    <DELETED>Fifth................................                  25 
    <DELETED>Sixth................................                  25 
    <DELETED>Seventh..............................                  35 
    <DELETED>Eighth...............................                  35 
    <DELETED>Ninth................................                  35 
    <DELETED>Tenth and thereafter.................                 45 .

<DELETED>SEC. 205. APPLICATION OF SURCHARGES.</DELETED>

<DELETED>    (a) In General.--If the Secretary determines that the 
percentage reduction in the underage use of tobacco products for a year 
has not been achieved as required under section 204, the Secretary 
shall impose a surcharge on the manufacturers of the tobacco products 
involved.</DELETED>
<DELETED>    (b) Amount of Surcharge.--</DELETED>
        <DELETED>    (1) In general.--The amount of any surcharge to be 
        imposed under this section for a calendar year shall be equal 
        to the product of--</DELETED>
                <DELETED>    (A) $80,000,000; and</DELETED>
                <DELETED>    (B) the number of applicable surcharge 
                percentage points as determined under subsection 
                (c).</DELETED>
        <DELETED>    (2) Adjustments.--The amount applicable under 
        paragraph (1) shall be annually adjusted by the Secretary based 
        on--</DELETED>
                <DELETED>    (A) with respect to subparagraph (A) of 
                such paragraph--</DELETED>
                        <DELETED>    (i) the proportional percentage 
                        increase or decrease, as compared to calendar 
                        year 1995, in the population of individuals 
                        residing in the United States who are at least 
                        13 years of age but less than 18 years of 
                        age;</DELETED>
                        <DELETED>    (ii) the proportional percentage 
                        increase or decrease, as compared to calendar 
                        year 1996, in the average profit per unit 
                        (measured in cents and weighted by annual 
                        sales) earned by tobacco manufacturers for the 
                        tobacco product involved (as determined by the 
                        Secretary through a contract with a nationally 
                        recognized accounting firm having no connection 
                        to tobacco manufacturers); and</DELETED>
                <DELETED>    (B) any methodology utilized to avoid the 
                double counting of underage individuals whose tobacco 
                use has previously resulted in the imposition of a 
                surcharge, limited to the extent that there were not 
                other underage users of tobacco in such previous years 
                for whom a surcharge was not paid because of the 
                limitation contained in section 206.</DELETED>
        <DELETED>    (3) Profit per unit.--For purposes of paragraph 
        (2)(A)(ii), the average profit per unit for calendar 1996 shall 
        be determined using the operating profit reported by 
        manufacturers to the Securities and Exchange 
        Commission.</DELETED>
<DELETED>    (c) Determination of Applicable Surcharge Percentage 
Points.--</DELETED>
        <DELETED>    (1) In general.--Except as provided in paragraph 
        (2), with respect to a calendar year, the applicable surcharge 
        percentage points shall be equal to the percentage point 
        difference between--</DELETED>
                <DELETED>    (A) the required percentage reduction in 
                the underage use of the tobacco product involved for 
                the year (based on the tables in section 204(b)); 
                and</DELETED>
                <DELETED>    (B) the number of percentage points by 
                which the average annual incidence of the daily use of 
                the tobacco products involved by individuals who are 
                under 18 years of age for the year (as determined under 
                section 203) is less than the underage use base 
                percentage for such products (as determined under 
                section 202).</DELETED>
        <DELETED>    (2) Adjustment.--If for any calendar year the 
        Secretary determines that the average annual incidence of the 
        daily use of the tobacco products involved by individuals who 
        are under 18 years of age (as determined under section 203) is 
        greater than the underage use base percentage for such products 
        (as determined under section 202), the applicable surcharge 
        percentage point shall be equal to--</DELETED>
                <DELETED>    (A) the percentage point amount determined 
                under paragraph (1)(A); and</DELETED>
                <DELETED>    (B) the number of percentage points by 
                which the average annual incidence of the daily use of 
                the tobacco products involved by individuals who are 
                under 18 years of age (as determined under section 203) 
                is greater that the underage use base percentage for 
                such products (as determined under section 
                202).</DELETED>
        <DELETED>    (3) Type of product.--Separate determinations 
        shall be made under this section for cigarette products and 
        smokeless tobacco products.</DELETED>
<DELETED>    (d) Limitation.--The total amount of surcharges imposed 
with respect to each type of tobacco product (cigarette products or 
smokeless tobacco products) under this section shall not exceed 
$2,000,000,000 (adjusted each year by the Secretary to account for 
inflation) for any calendar year.</DELETED>
<DELETED>    (e) Joint and Several Obligation.--Any surcharge imposed 
under this section with respect to a tobacco product (cigarette 
products or smokeless tobacco products) shall be the joint and several 
obligation of all manufacturers of such product as allocated by the 
market share of each such manufacturer with respect to such product. 
The market share of each manufacturer for each such product shall be 
based on the actual Federal excise tax payments made by such 
manufacturers for each such product under the Internal Revenue Code of 
1986.</DELETED>
<DELETED>    (f) Assessment.--Not later than May 1 of each year in 
which a surcharge will be imposed under this section, the Secretary 
shall assess to each manufacturer the amount for which such 
manufacturer is obligated. Not later than July 1 of any year in which a 
manufacturer receives an assessment under this section, the 
manufacturer shall pay such assessment in full or be subject to such 
interest on such amount as the Secretary may by regulation 
prescribe.</DELETED>
<DELETED>    (g) Use of Amounts.--Amounts received under this section 
shall be used as provided for in section 517.</DELETED>
<DELETED>    (h) Prohibition.--No stay or other injunctive relief may 
be granted by the Secretary or any court that has the effect of 
enjoining the imposition and collection of the surcharges to be applied 
under this section.</DELETED>

<DELETED>SEC. 206. ABATEMENT PROCEDURES.</DELETED>

<DELETED>    (a) Petitions.--Upon payment by a manufacturer of the 
amount assessed to the manufacturer under section 205(f), the 
manufacturer may submit a petition to the Secretary for an abatement of 
the assessment. A notice of such abatement petition shall be submitted 
to the attorney general of each State.</DELETED>
<DELETED>    (b) Hearing.--The Secretary shall provide for the conduct 
of a hearing on an abatement petition received under subsection (a) 
pursuant to the procedures described in sections 554, 556, and 557 of 
title 5, United States Code. The attorney general of any State shall be 
permitted to be heard at any hearing conducted under this 
subsection.</DELETED>
<DELETED>    (c) Burden.--The burden at any hearing under subsection 
(b) shall be on the manufacturer to prove, by a preponderance of the 
evidence, that the manufacturer should be granted the 
abatement.</DELETED>
<DELETED>    (d) Basis of Decision.--Any decision regarding a petition 
for an abatement under this section shall be based on a determination 
as to whether--</DELETED>
        <DELETED>    (1) the manufacturer has acted in good faith and 
        in full compliance with this Act (and any amendment made by 
        this Act) and any regulations or State or local laws 
        promulgated in furtherance of this Act;</DELETED>
        <DELETED>    (2) the manufacturer has pursued all reasonably 
        available measures to attain the reductions;</DELETED>
        <DELETED>    (3) there is any evidence of any direct or 
        indirect action by the manufacturer to undermine the 
        achievement of the reductions required under section 204 or to 
        undermine any other provision of this Act (or amendment); 
        and</DELETED>
        <DELETED>    (4) the manufacturer has taken (or failed to take) 
        any other action as determined appropriate by the 
        Secretary.</DELETED>
<DELETED>    (e) Amount.--Upon a determination granting an abatement 
under this section, the Secretary shall order the abatement of not to 
exceed 75 percent of the amount paid by the manufacturer, together with 
interest that may have accrued on such amount during the period between 
the date on which payment by the manufacturer was made and the date on 
which the abatement order was granted. Such interest shall be equal to 
that provided for the average 52-week Treasury Bill during the period 
involved.</DELETED>
<DELETED>    (f) Aggrieved Parties.--Any manufacturer or attorney 
general of any State that is aggrieved by an abatement that is granted 
under this section may seek judicial review of the abatement decision 
within 30 days of the date of such decision in the Court of Appeals for 
the District of Columbia Circuit. Review in such cases shall be subject 
to the procedures described in sections 701 through 706 of title 5, 
United States Code.</DELETED>
<DELETED>    (g) Prohibition.--A manufacturer may not file a petition 
under subsection (a) until such time as the manufacturer has fully paid 
the Secretary the amount assessed to the manufacturer under section 
205(f).</DELETED>

<DELETED>TITLE III--STANDARDS TO REDUCE INVOLUNTARY EXPOSURE TO TOBACCO 
                            SMOKE</DELETED>

<DELETED>SEC. 301. DEFINITIONS.</DELETED>

<DELETED>    In this title--</DELETED>
        <DELETED>    (1) Administrator.--The term ``Administrator'' 
        means the Administrator of the Occupational Safety and Health 
        Administration.</DELETED>
        <DELETED>    (2) Public facility.--</DELETED>
                <DELETED>    (A) In general.--The term ``public 
                facility'' means any building regularly entered by 10 
                or more individuals at least 1 day per week, including 
                any such building owned by or leased to a Federal, 
                State, or local government entity. Such term shall not 
                include any building or portion thereof regularly used 
                for residential purposes.</DELETED>
                <DELETED>    (B) Exclusions.--Such term does not 
                include a building which is used as a restaurant (other 
                than a fast food restaurant), bar, private club, hotel 
                guest room, casino, bingo parlor, tobacco merchant, or 
                prison.</DELETED>
                <DELETED>    (C) Fast food restaurant.--The term ``fast 
                food restaurant'' means any restaurant or chain of 
                restaurants that primarily distributes food through a 
                customer pick-up (either at a counter or drive-through 
                window). The Administrator of the Occupational Safety 
                and Health Administration may promulgate regulations to 
                clarify this subparagraph to ensure that the intended 
                inclusion of establishments catering largely to 
                individuals under 18 years of age is 
                achieved.</DELETED>
        <DELETED>    (3) Responsible entity.--The term ``responsible 
        entity'' means, with respect to any public facility, the owner 
        of such facility except that, in the case of any such facility 
        or portion thereof which is leased, such term means the 
        lessee.</DELETED>

<DELETED>SEC. 302. SMOKE-FREE ENVIRONMENT POLICY.</DELETED>

<DELETED>    (a) Policy Required.--In order to protect children and 
adults from cancer, respiratory disease, heart disease, and other 
adverse health effects from breathing environmental tobacco smoke, the 
responsible entity for each public facility shall adopt and implement 
at such facility a smoke-free environment policy which meets the 
requirements of subsection (b).</DELETED>
<DELETED>    (b) Elements of Policy.--</DELETED>
        <DELETED>    (1) In general.--Each smoke-free environment 
        policy for a public facility shall--</DELETED>
                <DELETED>    (A) prohibit the smoking of cigarettes, 
                cigars, and pipes, and any other combustion of tobacco 
                within the facility and on facility property within the 
                immediate vicinity of the entrance to the facility; 
                and</DELETED>
                <DELETED>    (B) post a clear and prominent notice of 
                the smoking prohibition in appropriate and visible 
                locations at the public facility.</DELETED>
        <DELETED>    (2) Exception.--The smoke-free environment policy 
        for a public facility may provide an exception to the 
        prohibition specified in paragraph (1) for 1 or more specially 
        designated smoking areas within a public facility if such area 
        or areas meet the requirements of subsection (c).</DELETED>
<DELETED>    (c) Specially Designated Smoking Areas.--A specially 
designated smoking area meets the requirements of this subsection if--
</DELETED>
        <DELETED>    (1) the area is ventilated in accordance with 
        specifications promulgated by the Administrator that ensure 
        that air from the area is directly exhausted to the outside and 
        does not recirculate or drift to other areas within the public 
        facility;</DELETED>
        <DELETED>    (2) the area is maintained at negative pressure, 
        as compared to adjoined nonsmoking areas, as determined under 
        regulations promulgated by the Administrator; and</DELETED>
        <DELETED>    (3) nonsmoking individuals do not have to enter 
        the area for any purpose while smoking is occurring in such 
        area.</DELETED>
<DELETED>Cleaning and maintenance work shall be conducted in such area 
only while no smoking is occurring in the area.</DELETED>

<DELETED>SEC. 303. CITIZEN ACTIONS.</DELETED>

<DELETED>    (a) In General.--An action may be brought to enforce the 
requirements of this title by any aggrieved person, any State or local 
government agency, or the Administrator.</DELETED>
<DELETED>    (b) Venue.--Any action to enforce this title may be 
brought in any United States district court for the district in which 
the defendant resides or is doing business to enjoin any violation of 
this title or to impose a civil penalty for any such violation in the 
amount of not more than $5,000 per day of violation. The district 
courts shall have jurisdiction, without regard to the amount in 
controversy or the citizenship of the parties, to enforce this title 
and to impose civil penalties under this title.</DELETED>
<DELETED>    (c) Notice.--An aggrieved person shall give any alleged 
violator notice of at least 60 days prior to commencing an action under 
this section. No action may be commenced by an aggrieved person under 
this section if such alleged violator complies with the requirements of 
this title within such 60-day period and thereafter.</DELETED>
<DELETED>    (d) Costs.--The court, in issuing any final order in any 
action brought pursuant to this section, may award costs of litigation 
(including reasonable attorney and expert witness fees) to any 
prevailing plaintiff, whenever the court determines such award is 
appropriate.</DELETED>
<DELETED>    (e) Penalties.--The court, in any action under this 
section to apply civil penalties, shall have discretion to order that 
such civil penalties be used for projects which further the policies of 
this title. The court shall obtain the view of the Administrator in 
exercising such discretion and selecting any such projects.</DELETED>

<DELETED>SEC. 304. PREEMPTION.</DELETED>

<DELETED>    Nothing in this title shall preempt or otherwise affect 
any other Federal, State or local law which provides protection from 
health hazards from environmental tobacco smoke.</DELETED>

<DELETED>SEC. 305. REGULATIONS.</DELETED>

<DELETED>    The Administrator is authorized to promulgate such 
regulations as the Administrator deems necessary to carry out this 
title.</DELETED>

<DELETED>SEC. 306. EFFECTIVE DATE.</DELETED>

<DELETED>    The provisions of this title shall take effect on the date 
that is 1 year after the date of enactment of this Act.</DELETED>

  <DELETED>TITLE IV--NATIONAL TOBACCO SETTLEMENT TRUST FUND</DELETED>

<DELETED>SEC. 401. ESTABLISHMENT OF TRUST FUND.</DELETED>

<DELETED>    (a) Creation.--</DELETED>
        <DELETED>    (1) In general.--There is established in the 
        Treasury of the United States a trust fund to be known as the 
        ``National Tobacco Settlement Trust Fund'', consisting of such 
        amounts as may be appropriated or credited to the Trust 
        Fund.</DELETED>
        <DELETED>    (2) Trustees.--The trustees of the Trust Fund 
        shall be the Commissioner and the Secretary.</DELETED>
<DELETED>    (b) Transfers.--There are hereby appropriated and 
transferred to the Trust Fund--</DELETED>
        <DELETED>    (1) amounts repaid or recovered under section 205, 
        including interest thereon;</DELETED>
        <DELETED>    (2) amounts equivalent to amounts received under 
        section 402; and</DELETED>
        <DELETED>    (3) amounts paid as fines or penalties, including 
        interest thereon, under section 403.</DELETED>
<DELETED>    (c) Repayable Advances.--</DELETED>
        <DELETED>    (1) Authorization.--There are authorized to be 
        appropriated to the Trust Fund, as repayable advances, such 
        sums as may from time to time be necessary to make the 
        expenditures described in subsection (d).</DELETED>
        <DELETED>    (2) Repayment with interest.--Repayable advances 
        made to the Trust Fund shall be repaid, and interest on such 
        advances shall be paid, to the general fund of the Treasury 
        when the Secretary of the Treasury determined that moneys are 
        available in the Trust Fund for such purposes.</DELETED>
        <DELETED>    (3) Rate of interest.--Interest on advances made 
        pursuant to this subsection shall be at a rate determined by 
        the Secretary of the Treasury (as of the close of the calendar 
        month proceeding the month in which the advance is made) to be 
        equal to the current average market yield on outstanding 
        marketable obligations of the United States with remaining 
        period to maturity comparable to the anticipated period during 
        which the advance will be outstanding.</DELETED>
<DELETED>    (d) Expenditures From Trust Fund.--Amounts in the Trust 
Fund shall be available in each calendar year, as provided by 
appropriations Act, as follows:</DELETED>
        <DELETED>    (1) With respect to--</DELETED>
                <DELETED>    (A) the first and second years following 
                the establishment of the Trust Fund, not less than 
                $2,500,000,000 each year;</DELETED>
                <DELETED>    (B) the third year following the 
                establishment of the Trust Fund, not less than 
                $3,500,000,000;</DELETED>
                <DELETED>    (C) the fourth year following the 
                establishment of the Trust Fund, not less than 
                $4,000,000,000;</DELETED>
                <DELETED>    (D) the fifth year following the 
                establishment of the Trust Fund, not less than 
                $5,000,000,000; and</DELETED>
                <DELETED>    (E) the sixth year following the 
                establishment of the Trust Fund, and each year 
                thereafter, not less than $2,500,000,000;</DELETED>
        <DELETED>of the amounts available in the Trust Fund shall be 
        made available to the Secretary to makes grants to States to 
        carry out subtitle A of title V.</DELETED>
        <DELETED>    (2) With respect to each of the first 4 years 
        following the establishment of the Trust Fund, not less than 
        $1,000,000,000, and with respect to each year thereafter, not 
        less than $1,500,000,000, of the amounts available in the Trust 
        Fund shall be made available to the Secretary to carry out the 
        National Smoking Cessation Program under section 511.</DELETED>
        <DELETED>    (3) With respect to each of the first 3 years 
        following the establishment of the Trust Fund, not less than 
        $125,000,000, and with respect to each year thereafter, not 
        less than $225,000,000, of the amounts available in the Trust 
        Fund shall be made available to the Secretary to carry out the 
        National Reduction in Tobacco Usage Program under section 
        512.</DELETED>
        <DELETED>    (4) Not less than $500,000,000 of the amounts 
        available in the Trust Fund each year shall be made available 
        to the Tobacco-Free Education Board to carry out activities 
        under section 513.</DELETED>
        <DELETED>    (5) With respect to each of the first 10 years 
        following the establishment of the Trust Fund, not less than 
        $75,000,000 of the amounts available in the Trust Fund shall be 
        made available to the Secretary to carry out the National Event 
        Sponsorship Program under section 514.</DELETED>
        <DELETED>    (6) With respect to each of the first 2 years 
        following the establishment of the Trust Fund, not less than 
        $75,000,000, with respect to the third such year, not less than 
        $100,000,000, and with respect to each year thereafter, not 
        less than $125,000,000, of the amounts available in the Trust 
        Fund shall be made available to the Secretary to carry out the 
        National Community Action Program under section 515.</DELETED>
        <DELETED>    (7) Not less than $100,000,000 of the amounts 
        available in the Trust Fund each year shall be made available 
        to the Secretary to carry out the National Cessation Research 
        Program under section 516.</DELETED>
        <DELETED>    (8) Not less than $300,000,000 of the amounts 
        available in the Trust Fund each year shall be made available 
        to the Commissioner as reimbursement for the costs incurred by 
        the Food and Drug Administration in implementing and enforcing 
        requirements relating to tobacco products.</DELETED>
        <DELETED>    (9) Not less than the amount collected under 
        section 205 and available each year shall be made available to 
        the Secretary for use as provided for in section 517.</DELETED>

<DELETED>SEC. 402. LIABILITY OF INDUSTRY SOURCES.</DELETED>

<DELETED>    (a) Definition.--As used in this subtitle, the term 
``industry sources'' means all entities which are signatories to the 
National Tobacco Control Protocol under section 612.</DELETED>
<DELETED>    (b) Payments.--</DELETED>
        <DELETED>    (1) Initial payment.--Each industry source shall 
        pay to the Trust Fund on the date of enactment of this Act, an 
        amount that bears the same ratio to $10,000,000,000 as the 
        relevant domestic tobacco product unit sales volume of the 
        industry source (as defined in paragraph (3)) bears to the 
        relevant domestic tobacco product unit volume of all industry 
        sources for 1996.</DELETED>
        <DELETED>    (2) Annual payments.--Each industry source shall 
        pay to the Trust Fund for each calendar year, beginning on 
        December 31 of the year following the year in which this Act is 
        enacted, and each December 31 thereafter, an annual payment 
        equal to--</DELETED>
                <DELETED>    (A) with respect to the first year for 
                which payments are to be made, an amount that bears the 
                same ratio to $8,500,000,000 as the relevant domestic 
                tobacco product unit sales volume of the industry 
                source (as defined in paragraph (3)) for the year 
                involved bears to the relevant domestic tobacco product 
                unit sales volume of all industry sources for such 
                year;</DELETED>
                <DELETED>    (B) with respect to the second year for 
                which payments are to be made, an amount that bears the 
                same ratio to $9,500,000,000 as the relevant domestic 
                tobacco product unit sales volume of the industry 
                source (as defined in paragraph (3)) for the year 
                involved bears to the relevant domestic tobacco product 
                unit sales volume of all industry sources for such 
                year;</DELETED>
                <DELETED>    (C) with respect to the third year for 
                which payments are to be made, an amount that bears the 
                same ratio to $11,500,000,000 as the relevant domestic 
                tobacco product unit sales volume of the industry 
                source (as defined in paragraph (3)) for the year 
                involved bears to the relevant domestic tobacco product 
                unit sales volume of all industry sources for such 
                year;</DELETED>
                <DELETED>    (D) with respect to the fourth year for 
                which payments are to be made, an amount that bears the 
                same ratio to $14,000,000,000 as the relevant domestic 
                tobacco product unit sales volume of the industry 
                source (as defined in paragraph (3)) for the year 
                involved bears to the relevant domestic tobacco product 
                unit sales volume of all industry sources for such 
                year; and</DELETED>
                <DELETED>    (E) with respect to each of the fifth 
                through 25th years for which payments are to be made, 
                an amount that bears the same ratio to $15,000,000,000 
                as the relevant domestic tobacco product unit sales 
                volume of the industry source (as defined in paragraph 
                (3)) for the year involved bears to the relevant 
                domestic tobacco product unit sales volume of all 
                industry sources for such year.</DELETED>
        <DELETED>    (3) Relevant domestic tobacco product unit sales 
        volume.--</DELETED>
                <DELETED>    (A) In general.--For purposes of this 
                subsection, the relevant domestic tobacco product unit 
                sales volume of an industry source for a year shall be 
                determined by the Commissioner based on data submitted 
                by industry sources and other appropriate 
                data.</DELETED>
        <DELETED>    (4) Adjustments.--</DELETED>
                <DELETED>    (A) Volume decrease.--If the Commissioner 
                makes a determination under paragraph (3)(B) that the 
                total relevant domestic tobacco product unit sales 
                volume has decreased, the Commissioner shall in 
                subsequent years, make determinations as to sales 
                volume based solely on adult use.</DELETED>
                <DELETED>    (B) Increase in profits.--</DELETED>
                        <DELETED>    (i) In general.--With respect to 
                        an industry source that experiences a decrease 
                        in the amount owed under paragraph (2) for a 
                        year as compared to the previous year, the 
                        industry source shall be subject to an increase 
                        in such amount (as provided for under clause 
                        (ii)) if the Commissioner determines that the 
                        net operating profits of the source derived 
                        from domestic sales of tobacco products has 
                        increased over that of the previous 
                        year.</DELETED>
                        <DELETED>    (ii) Amount of increase.--The 
                        amount by which the amount owed by an industry 
                        source is increased under clause (i) shall be 
                        equal to 25 percent of the amount of the 
                        decrease involved.</DELETED>
                <DELETED>    (C) Inflation.--Each of the amounts 
                described in subparagraphs (B) through (E) of paragraph 
                (2) shall be increased by 3 percent each year, or 
                adjusted each year to reflect the increase in the 
                Consumer Price Index for all urban consumers (as 
                published by the Bureau of Labor Statistics) from the 
                year previous to the year for which the adjustment is 
                being applied, whichever is greater.</DELETED>
<DELETED>    (c) Affect of Bankruptcy.--Section 507(a) of title 11, 
United States Code, is amended by inserting after paragraph (9) the 
following:</DELETED>
        <DELETED>    ``Tenth, payments required to be paid into the 
        National Tobacco Settlement Trust Fund under section 402 of the 
        Universal Tobacco Settlement Act.''.</DELETED>
<DELETED>    (d) Pass-Through.--An industry source that is required to 
make payments under this section shall annually adjust the prices of 
the tobacco products sold by such source to reflect the amounts of such 
payments.</DELETED>
<DELETED>    (e) Tax Treatment of Payments.--For purposes of section 
162 of the Internal Revenue Code of 1986, any payment to the Tobacco 
Settlement Trust Fund under section 401 shall be considered to be an 
ordinary and necessary expense in carrying on a trade or business and 
shall be deductible in the taxable year in which paid.</DELETED>

<DELETED>SEC. 403. ENFORCEMENT.</DELETED>

<DELETED>    (a) General Rule.--There is hereby imposed a penalty on 
the failure of any industry source to make any payment required under 
section 402.</DELETED>
<DELETED>    (b) Amount of Penalty.--The amount of the penalty imposed 
by subsection (a) on any failure with respect to an industry source 
shall be established by the Commissioner for each day during the 
noncompliance period.</DELETED>
<DELETED>    (c) Noncompliance Period.--For purposes of this section, 
the term ``noncompliance period'' means, with respect to any failure to 
makes the payment required under section 402, the period--</DELETED>
        <DELETED>    (1) beginning on the due date for such payment; 
        and</DELETED>
        <DELETED>    (2) ending on the date on which such payment is 
        paid in full.</DELETED>
<DELETED>    (d) Limitations.--</DELETED>
        <DELETED>    (1) In general.--No penalty shall be imposed by 
        subsection (a) on any failure to make payment under section 402 
        during any period for which it is established to the 
        satisfaction of the Commissioner that none of the persons 
        responsible for such failure knew or, exercising reasonable 
        diligence, would have known, that such failure 
        existed.</DELETED>
        <DELETED>    (2) Corrections.--No penalty shall be imposed 
        under subsection (a) on any failure to make payment under 
        section 402 if--</DELETED>
                <DELETED>    (A) such failure was due to reasonable 
                cause and not to willful neglect; and</DELETED>
                <DELETED>    (B) such failure is corrected during the 
                30-day period beginning on the 1st date that any of the 
                persons responsible for such failure knew or, 
                exercising reasonable diligence, would have known, that 
                such failure existed.</DELETED>
        <DELETED>    (3) Waiver.--In the case of any failure to make 
        payment under section 402 that is due to reasonable cause and 
        not to willful neglect, the Commissioner may waive all or part 
        of the penalty imposed under subsection (a) to the extent that 
        the Commissioner determines that the payment of such penalty 
        would be excessive relative to the failure involved.</DELETED>

      <DELETED>TITLE V--PUBLIC HEALTH AND OTHER PROGRAMS</DELETED>

    <DELETED>Subtitle A--Public Health Block Grant Program</DELETED>

<DELETED>SEC. 501. PUBLIC HEALTH TRUST FUND.</DELETED>

<DELETED>    (a) Establishment.--</DELETED>
        <DELETED>    (1) In general.--The Secretary shall establish, as 
        a separate fund within the Trust Fund established under section 
        401, a trust fund to be known as the ``Public Health Trust 
        Fund'', consisting of such amounts as may be appropriated or 
        credited to the Trust Fund.</DELETED>
        <DELETED>    (2) Trustees.--The trustees of the Trust Fund 
        shall be the Commissioner and the Secretary.</DELETED>
<DELETED>    (b) Transfers.--There are hereby appropriated and 
transferred to the Trust Fund the amounts described in section 
401(d)(1) with respect to the year involved.</DELETED>
<DELETED>    (c) Expenditures from Trust Fund.--Amounts in the Public 
Health Trust Fund shall be available in each calendar year, as provided 
by appropriations Act, for block grants under section 502.</DELETED>

<DELETED>SEC. 502. BLOCK GRANTS TO STATES.</DELETED>

<DELETED>    (a) In General.--For the purpose described in subsection 
(b), the Secretary shall award a block grant to each State in each 
fiscal year in an amount based on the allotment of the State as 
determined in accordance with section 503.</DELETED>
<DELETED>    (b) Authorized Activities.--A State shall use amounts 
received under a block grant only for the purpose of planning, carrying 
out, and evaluating activities as provided for in section 
504.</DELETED>
<DELETED>    (c) Application.--To be eligible to receive a grant under 
this subtitle a State shall prepare and submit to the Secretary an 
application at such time, in such manner, and containing such 
information as the Secretary may require, including such assurances as 
the Secretary may require regarding the compliance of the State with 
the requirements of this Act.</DELETED>

<DELETED>SEC. 503. ALLOTMENTS.</DELETED>

<DELETED>    (a) In General.--Of the amounts appropriated and available 
for block grants for a fiscal year under section 502, the Secretary 
shall allot to each State an amount determined under the allotment 
formula under subsection (b).</DELETED>
<DELETED>    (b) Allotment Formula.--</DELETED>
<DELETED>    (c) Reallotments.--To the extent that all the funds 
appropriated under section 501(c) for a fiscal year and available for 
allotment in such fiscal year are not otherwise allotted to States 
because--</DELETED>
        <DELETED>    (1) one or more States have not submitted an 
        application in accordance with section 502(c) for the fiscal 
        year; or</DELETED>
        <DELETED>    (2) one or more States have notified the Secretary 
        that they do not intend to use the full amount of their 
        allotment;</DELETED>
<DELETED>such excess shall be reallotted among each of the remaining 
States in proportion to the amount otherwise allotted to such States 
for the fiscal year without regard to this subsection.</DELETED>
<DELETED>    (d) Indian Tribes and Tribal Organizations.--</DELETED>
        <DELETED>    (1) In general.--If the Secretary--</DELETED>
                <DELETED>    (A) receives a request from the governing 
                body of an Indian tribe or tribal organization within 
                any State that funds under this subtitle be provided 
                directly by the Secretary to such tribe or 
                organization; and</DELETED>
                <DELETED>    (B) determines that the members of such 
                tribe or tribal organization would be better served by 
                means of grants made directly by the Secretary under 
                this subtitle;</DELETED>
        <DELETED>the Secretary shall reserve from amounts which would 
        otherwise be allotted to such State under subsection (a) for 
        the fiscal year the amount determined under paragraph 
        (2).</DELETED>
        <DELETED>    (2) Amount.--The Secretary shall reserve for the 
        purpose of paragraph (1) from amounts that would otherwise be 
        allotted to such State under subsection (a) an amount to be 
        determined by a formula developed by the Secretary after 
        consultation with the Secretary of the Interior.</DELETED>
        <DELETED>    (3) Grant.--The amount reserved by the Secretary 
        on the basis of a determination under this subsection shall be 
        granted to the Indian tribe or tribal organization serving the 
        individuals for whom such a determination has been 
        made.</DELETED>
        <DELETED>    (4) Plan.--In order for an Indian tribe or tribal 
        organization to be eligible for a grant for a fiscal year under 
        this subsection, it shall submit to the Secretary a plan for 
        such fiscal year which meets such criteria as the Secretary may 
        prescribe.</DELETED>
        <DELETED>    (5) Definitions.--The terms ``Indian tribe'' and 
        ``tribal organization'' shall have the same meaning given such 
        terms in section 4(b) and section 4(c) of the Indian Self-
        Determination and Education Assistance Act (25 U.S.C. 450b(b) 
        and (c)).</DELETED>

<DELETED>SEC. 504. USE OF FUNDS.</DELETED>

<DELETED>    (a) In General.--Amounts provided to a State under a grant 
under this subtitle shall be used--</DELETED>
        <DELETED>    (1) to reimburse the State for expenses incurred 
        by the State under the State program under title XIX of the 
        Social Security Act (42 U.S.C. 1396 et seq.) relating to the 
        treatment of tobacco-related illnesses or conditions;</DELETED>
        <DELETED>    (2) to reimburse the State for other expenses 
        incurred by the State in providing directly, or reimbursing 
        others for the provision of, treatment for tobacco-related 
        illnesses or conditions;</DELETED>
        <DELETED>    (3) to provide health care coverage, either 
        directly or through arrangements with other entities, for 
        uninsured individuals under 18 years of age who reside in the 
        State;</DELETED>
        <DELETED>    (4) to establish a State tobacco products 
        liability judgments and settlement fund, as provided for in 
        subsection (c);</DELETED>
        <DELETED>    (5) to reimburse the State for expenses incurred 
        in carrying out the tobacco licensure requirements of subtitle 
        D of title I; and</DELETED>
        <DELETED>    (6) to carry out any other activities determined 
        appropriate by the State.</DELETED>
<DELETED>    (b) Limitations on Uses.--A State may not use amounts 
provided under a grant under this subtitle for programs or projects not 
approved of by the Secretary.</DELETED>
<DELETED>    (c) Judgment and Settlement Fund.--</DELETED>
        <DELETED>    (1) In general.--Each State that receives a grant 
        under this subtitle shall establish a fund for the purpose of 
        making payments under paragraph (2).</DELETED>
        <DELETED>    (2) Payments.--The fund established under 
        paragraph (1) shall be used to make payments to individuals who 
        have obtained a judgment in a tobacco-related action brought in 
        a State court, or who have entered into a settlement of such an 
        action, of the amount of any award under such judgment or 
        settlement that represents punitive damages.</DELETED>

<DELETED>SEC. 505. WITHHOLDING OF FUNDS.</DELETED>

<DELETED>    (a) Authority.--</DELETED>
        <DELETED>    (1) In general.--The Secretary shall, after 
        adequate notice and an opportunity for a hearing conducted 
        within the affected State, withhold funds from any State which 
        does not use its allotment in accordance with the requirements 
        of this subtitle. The Secretary shall withhold such funds until 
        the Secretary finds that the reason for the withholding has 
        been removed and there is reasonable assurance that it will not 
        recur.</DELETED>
        <DELETED>    (2) Investigation.--The Secretary may not 
        institute proceedings to withhold funds under paragraph (1) 
        unless the Secretary has conducted an investigation concerning 
        whether the State has used its allotment in accordance with the 
        requirements of this subtitle. Investigations required by this 
        paragraph shall be conducted within the affected State by 
        qualified investigators.</DELETED>
        <DELETED>    (3) Response to complaints.--The Secretary shall 
        respond in an expeditious manner to complaints of a substantial 
        or serious nature that a State has failed to use funds in 
        accordance with the requirements of this subtitle.</DELETED>
        <DELETED>    (4) Minor failure.--The Secretary may not withhold 
        funds under paragraph (1) from a State for a minor failure to 
        comply with the requirements of this subtitle.</DELETED>
<DELETED>    (b) Investigations.--The Secretary shall conduct in 
several States in each fiscal year investigations of the use of funds 
received by the States under this subtitle in order to evaluate 
compliance with the requirements of this subtitle.</DELETED>
<DELETED>    (c) Availability of Information.--Each State, and each 
entity which has received funds from an allotment made to a State under 
this subtitle, shall make available to the Secretary, for examination, 
copying, or mechanical reproduction on or off the premises, appropriate 
books, documents, papers, and records of the entity upon a reasonable 
request therefore.</DELETED>

             <DELETED>Subtitle B--Other Programs</DELETED>

<DELETED>SEC. 511. NATIONAL SMOKING CESSATION PROGRAM.</DELETED>

<DELETED>    (a) Establishment.--The Secretary shall establish a 
program to be known as the ``National Smoking Cessation Program'' under 
which the Secretary may award grants to eligible public and nonprofit 
entities and individuals for smoking cessation purposes.</DELETED>
<DELETED>    (b) Eligibility.--</DELETED>
        <DELETED>    (1) Of entities.--To be eligible to receive a 
        grant under this section an entity shall--</DELETED>
                <DELETED>    (A) be a public or nonprofit private 
                entity;</DELETED>
                <DELETED>    (B) prepare and submit to the Secretary an 
                application at such time, in such manner, and 
                containing such information as the Secretary may 
                require;</DELETED>
                <DELETED>    (C) provide assurances that amounts 
                received under the grant will be used in accordance 
                with subsection (c)(1); and</DELETED>
                <DELETED>    (D) meet any other requirements determined 
                appropriate by the Secretary.</DELETED>
        <DELETED>    (2) Of individuals.--To be eligible to receive a 
        grant under this section an individual shall--</DELETED>
                <DELETED>    (A) prepare and submit to the Secretary an 
                application at such time, in such manner, and 
                containing such information as the Secretary may 
                require;</DELETED>
                <DELETED>    (B) provide assurances that amounts 
                received under the grant will be used only in 
                accordance with subsection (c)(2); and</DELETED>
                <DELETED>    (C) meet any other requirements determined 
                appropriate by the Secretary.</DELETED>
<DELETED>    (c) Use of Funds.--</DELETED>
        <DELETED>    (1) By entities.--An entity that receives a grant 
        under this section shall use amounts provided under the grant 
        to establish or administer tobacco product use cessation 
        programs that are approved in accordance with subsection 
        (d).</DELETED>
        <DELETED>    (2) By individuals.--An individual that receive a 
        grant under this section shall use amounts provided under the 
        grant to enroll in a tobacco product use cessation program or 
        to purchase a tobacco product cessation device that has been 
        approved in accordance with subsection (d). Grants to 
        individuals under this section may be in the form of vouchers 
        that may be used to pay the costs of enrollment in an approved 
        program or to purchase an approved device.</DELETED>
<DELETED>    (d) Approval of Cessation Program or Devices.--Using the 
best available scientific information, the Secretary shall promulgate 
regulations to provide for the approval of tobacco product use 
cessation programs and devices. Such regulations shall be designed to 
ensure that tobacco product users, if requested, are provided with 
reasonable access to safe and effective cessation programs and devices. 
Such regulations shall ensure that such individuals have access to a 
broad range of cessation options that are tailored to the needs of the 
individual tobacco user.</DELETED>
<DELETED>    (e) Funding.--The Secretary shall use amounts available 
under section 401(d)(2) to carry out this section.</DELETED>

<DELETED>SEC. 512. NATIONAL REDUCTION IN TOBACCO USAGE 
              PROGRAM.</DELETED>

<DELETED>    (a) Establishment.--The Secretary shall establish a 
program to be known as the ``National Reduction in Tobacco Usage 
Program'' under which the Secretary may award grants to eligible public 
and nonprofit entities to carry out activities designed to reduce the 
use of tobacco products.</DELETED>
<DELETED>    (b) Eligibility.--To be eligible to receive a grant under 
this section an entity shall--</DELETED>
        <DELETED>    (1) be a State health department, other public 
        entity, or a nonprofit private entity;</DELETED>
        <DELETED>    (2) prepare and submit to the Secretary an 
        application at such time, in such manner, and containing such 
        information as the Secretary may require;</DELETED>
        <DELETED>    (3) provide assurances that amounts received under 
        the grant will be used in accordance with subsection (c); 
        and</DELETED>
        <DELETED>    (4) meet any other requirements determined 
        appropriate by the Secretary.</DELETED>
<DELETED>    (c) Use of Funds.--An entity that receives a grant under 
this section shall use amounts provided under the grant to--</DELETED>
        <DELETED>    (1) carry out media-based and nonmedia-based 
        education, prevention and cessation campaigns designed to 
        discourage the use of tobacco products by individuals who are 
        under 18 years of age and to encourage those who use such 
        products to quit;</DELETED>
        <DELETED>    (2) carry out research concerning, and provide for 
        the development and public dissemination of, technologies and 
        methods to reduce the risk of dependence and injury from 
        tobacco product usage and exposure;</DELETED>
        <DELETED>    (3) provide for the identification, testing, and 
        evaluation of the health effects of both tobacco and non-
        tobacco constituents of tobacco products; or</DELETED>
        <DELETED>    (4) carry out any other activities determined by 
        the Secretary to be consistent with the purposes of this 
        Act.</DELETED>
<DELETED>    (d) Funding.--The Secretary shall use amounts available 
under section 401(d)(3) to carry out this section.</DELETED>

<DELETED>SEC. 513. NATIONAL TOBACCO-FREE PUBLIC EDUCATION 
              PROGRAM.</DELETED>

<DELETED>    (a) Establishment of Board.--</DELETED>
        <DELETED>    (1) In general.--The Secretary shall establish an 
        independent board to be known as the ``Tobacco-Free Education 
        Board'' (referred to in this section as the ``Board'') to enter 
        into contracts with or award grants to eligible public and 
        nonprofit private entities to carry out public informational 
        and educational activities designed to reduce the use of 
        tobacco products.</DELETED>
        <DELETED>    (2) Appointment.--The Board shall be composed of 9 
        members to be appointed by the Secretary, of which--</DELETED>
                <DELETED>    (A) at least 3 such members shall be an 
                individual who is widely recognized by the general 
                public for achievement in the athletic, cultural, 
                entertainment, educational, business, or political 
                field; and</DELETED>
                <DELETED>    (B) at least 3 of whom shall be 
                individuals who are heads of a major public health 
                organizations.</DELETED>
        <DELETED>    (3) Terms and vacancies.--The members of the Board 
        shall serve staggered terms as determined appropriate at the 
        time of appointment by the Secretary. Any vacancy in the Board 
        shall not affect its powers, but shall be filled in the same 
        manner as the original appointment.</DELETED>
        <DELETED>    (4) Powers.--</DELETED>
                <DELETED>    (A) Hearings.--The Board may hold such 
                hearings, sit and act at such times and places, take 
                such testimony, and receive such evidence as the Board 
                considers advisable to carry out the purposes of this 
                section.</DELETED>
                <DELETED>    (B) Information from federal agencies.--
                The Board may secure directly from any Federal 
                department or agency such information as the Board 
                considers necessary to carry out the provisions of this 
                section.</DELETED>
        <DELETED>    (5) Personnel matters.--</DELETED>
                <DELETED>    (A) Compensation.--Each member of the 
                Board who is not an officer or employee of the Federal 
                Government shall be compensated at a rate equal to the 
                daily equivalent of the annual rate of basic pay 
                prescribed for level IV of the Executive Schedule under 
                section 5315 of title 5, United States Code, for each 
                day (including travel time) during which such member is 
                engaged in the performance of the duties of the Board. 
                All members of the Board who are officers or employees 
                of the United States shall serve without compensation 
                in addition to that received for their services as 
                officers or employees of the United States.</DELETED>
                <DELETED>    (B) Travel expenses.--The members of the 
                Board shall be allowed travel expenses, including per 
                diem in lieu of subsistence, at rates authorized for 
                employees of agencies under subchapter I of chapter 57 
                of title 5, United States Code, while away from their 
                homes or regular places of business in the performance 
                of services for the Board.</DELETED>
<DELETED>    (b) Establishment of Program.--The Secretary shall 
establish a program to be known as the ``National Tobacco-Free Public 
Education Program'' under which the Board may enter into contracts with 
or award grants to eligible public and nonprofit private entities to 
carry out public informational and educational activities designed to 
reduce the use of tobacco products.</DELETED>
<DELETED>    (c) Eligibility.--To be eligible to receive a grant under 
this section an entity shall--</DELETED>
        <DELETED>    (1) be a--</DELETED>
                <DELETED>    (A) public entity or a State health 
                department; or</DELETED>
                <DELETED>    (B) nonprofit private entity that--
                </DELETED>
                        <DELETED>    (i) is not affiliated with a 
                        tobacco product manufacturer or 
                        importer;</DELETED>
                        <DELETED>    (ii) has a demonstrated record of 
                        working effectively to reduce tobacco product 
                        use; and</DELETED>
                        <DELETED>    (iii) has expertise in conducting 
                        a multi-media communications 
                        campaign;</DELETED>
        <DELETED>    (2) prepare and submit to the Secretary an 
        application at such time, in such manner, and containing such 
        information as the Secretary may require, including a 
        description of the activities to be conducted using amounts 
        received under the grant or contract;</DELETED>
        <DELETED>    (3) provide assurances that amounts received under 
        the grant will be used in accordance with subsection (d); 
        and</DELETED>
        <DELETED>    (4) meet any other requirements determined 
        appropriate by the Secretary.</DELETED>
<DELETED>    (d) Use of Funds.--An entity that receives a grant or 
contract under this section shall use amounts provided under the grant 
or contract to conduct multi-media public educational or informational 
campaigns that are designed to discourage and de-glamorize the use of 
tobacco products. Such campaigns shall be designed to discourage the 
initiation of tobacco use by minors and encourage those using such 
products to quit.</DELETED>
<DELETED>    (e) Needs of Certain Populations.--In awarding grants and 
contracts under this section, the Board shall take into consideration 
the needs of particular populations.</DELETED>
<DELETED>    (f) Funding.--The Secretary shall use amounts available 
under section 401(d)(4) to carry out this section.</DELETED>

<DELETED>SEC. 514. NATIONAL EVENT SPONSORSHIP PROGRAM.</DELETED>

<DELETED>    (a) Establishment.--The Secretary shall establish a 
program to be known as the ``National Event Sponsorship Program'' under 
which the Secretary may award grants to eligible entities or 
individuals for the sponsorship of activities described in subsection 
(c).</DELETED>
<DELETED>    (b) Eligibility.--To be eligible to receive a grant under 
this section an entity or individual shall--</DELETED>
        <DELETED>    (1) prepare and submit to the Secretary an 
        application at such time, in such manner, and containing such 
        information as the Secretary may require, including--</DELETED>
                <DELETED>    (A) a description of the event, activity, 
                team, or entry for which the grant is to be 
                provided;</DELETED>
                <DELETED>    (B) documentation that the event, 
                activity, team, or entry involved was sponsored or 
                otherwise funded by a tobacco manufacturer or 
                distributor prior to the date of the application; 
                and</DELETED>
                <DELETED>    (C) a certification that the applicant is 
                unable to secure funding for the event, activity, team, 
                or entry involved from sources other than those 
                described in paragraph (2);</DELETED>
        <DELETED>    (2) provide assurances that amounts received under 
        the grant will be used in accordance with subsection (d); 
        and</DELETED>
        <DELETED>    (3) meet any other requirements determined 
        appropriate by the Secretary.</DELETED>
<DELETED>    (c) Permissible Sponsorship Activities.--Events, 
activities, teams, or entries for which a grant may be provided under 
this section include--</DELETED>
        <DELETED>    (1) an athletic, musical, artistic, or other 
        social or cultural event or activity that was sponsored in 
        whole or in part by a tobacco manufacturer or distributor prior 
        to the date of enactment of this Act;</DELETED>
        <DELETED>    (2) the participation of a team that was sponsored 
        in whole or in part by a tobacco manufacturer or distributor 
        prior to the date of enactment of this Act, in an athletic 
        event or activity; and</DELETED>
        <DELETED>    (3) the payment of a portion or all of the entry 
        fees of, or other financial or technical support provided to, 
        an individual or team by a tobacco manufacturer or distributor 
        prior to the date of enactment of this Act, for participation 
        of the individual in an athletic, musical, artistic, or other 
        social or cultural event.</DELETED>
<DELETED>    (d) Use of Funds.--Amounts received under a grant under 
this section shall be used to--</DELETED>
        <DELETED>    (1)(A) pay the costs associated with the 
        sponsorship of an event or activity described in subsection 
        (c)(1);</DELETED>
        <DELETED>    (B) provide for the sponsorship of an individual 
        or team;</DELETED>
        <DELETED>    (C) pay the required entry fees associated with 
        the participation of an individual or team in an event or 
        activity described in subsection (c)(3);</DELETED>
        <DELETED>    (D) provide financial or technical support to an 
        individual or team in connection with the participation of that 
        individual or team in an activity described in subsection 
        (c)(3); or</DELETED>
        <DELETED>    (E) for any other purposes determined appropriate 
        by the Secretary; and</DELETED>
        <DELETED>    (2) promote images or activities to discourage 
        individuals from using tobacco products or encourage 
        individuals who use such products to quit.</DELETED>
<DELETED>    (e) Allocation of Unexpended Funds.--Amounts available for 
purposes of carrying out this section and remaining available at the 
end of the 10-year period described in section 401(d)(5), shall be used 
as follows:</DELETED>
        <DELETED>    (1) 50 percent of such amounts shall be used to 
        supplement amounts available for multi-media campaigns under 
        section 512;</DELETED>
        <DELETED>    (2) 25 percent of such amounts shall be used to 
        supplement amounts available for enforcement purposes under 
        section 401(d)(8); and</DELETED>
        <DELETED>    (3) 25 percent of such amounts shall be used to 
        supplement amounts available for community action programs 
        under section 515.</DELETED>
<DELETED>    (f) Funding.--The Secretary shall use amounts available 
under section 401(d)(5) to carry out this section.</DELETED>

<DELETED>SEC. 515. NATIONAL COMMUNITY ACTION PROGRAM.</DELETED>

<DELETED>    (a) Establishment.--The Secretary shall establish a 
program to be known as the ``National Community Action Program'' under 
which the Secretary may award grants to eligible State and local 
governmental entities to carry out community-based tobacco control 
efforts that are designed to encourage community involvement in 
reducing tobacco product use.</DELETED>
<DELETED>    (b) Eligibility.--To be eligible to receive a grant under 
this section an entity shall--</DELETED>
        <DELETED>    (1) be a State or local public entity;</DELETED>
        <DELETED>    (2) prepare and submit to the Secretary an 
        application at such time, in such manner, and containing such 
        information as the Secretary may require;</DELETED>
        <DELETED>    (3) provide assurances that amounts received under 
        the grant will be used in accordance with the purposes of this 
        section; and</DELETED>
        <DELETED>    (4) meet any other requirements determined 
        appropriate by the Secretary.</DELETED>
<DELETED>    (c) Funding.--The Secretary shall use amounts available 
under section 401(d)(6) to carry out this section.</DELETED>

<DELETED>SEC. 516. NATIONAL CESSATION RESEARCH PROGRAM.</DELETED>

<DELETED>    (a) Establishment.--The Secretary shall establish a 
program to be known as the ``National Cessation Research Program'' 
under which the Secretary may award grants to eligible entities for 
research concerning, and the development of methods, drugs, and devices 
to discourage individuals from using tobacco products and to assist 
individuals who use such products in quitting such use.</DELETED>
<DELETED>    (b) Eligibility.--</DELETED>
<DELETED>    (c) Use of Funds.--</DELETED>
<DELETED>    (d) Additional Requirements.--</DELETED>
<DELETED>    (e) Funding.--The Secretary shall use amounts available 
under section 401(d)(7) to carry out this section.</DELETED>

<DELETED>SEC. 517. USE OF SURCHARGE PAYMENTS.</DELETED>

<DELETED>    (a) In General.--Of the amount made available to the 
Secretary each year under section 401(d)(9), the Secretary shall--
</DELETED>
        <DELETED>    (1) use not less than 90 percent of such amount to 
        award grants to State and local governmental and public health 
        agencies to carry out activities to further reduce the use of 
        tobacco products by individuals who are under 18 years of age; 
        and</DELETED>
        <DELETED>    (2) use not more than 10 percent of such amount 
        for the administrative costs associated with the administration 
        of title II and of chapter IX of the Federal Food, Drug and 
        Cosmetic Act (as added by section 143(3)).</DELETED>
<DELETED>    (b) Transfer of Certain Amounts.--If the Secretary 
determines that the administrative costs described in subsection (a)(2) 
are less than the amount available under section subsection, the 
Secretary may--</DELETED>
        <DELETED>    (1) transfer any such excess amount to other 
        Federal, State, or local agencies to meet the needs associated 
        with the reduction of underage tobacco usage; or</DELETED>
        <DELETED>    (2) expend such amounts directly for activities to 
        expedite the reduction of underage tobacco use.</DELETED>
<DELETED>    (c) Eligibility.--To be eligible to receive a grant under 
this section an entity shall--</DELETED>
        <DELETED>    (1) be a State or local governmental or public 
        health agency;</DELETED>
        <DELETED>    (2) prepare and submit to the Secretary an 
        application at such time, in such manner, and containing such 
        information as the Secretary may require;</DELETED>
        <DELETED>    (3) provide assurances that amounts received under 
        the grant will be used in accordance with this section; 
        and</DELETED>
        <DELETED>    (4) meet any other requirements determined 
        appropriate by the Secretary.</DELETED>
<DELETED>    (d) Funding.--The Secretary shall use amounts available 
under section 401(d)(9) to carry out this section.</DELETED>

 <DELETED>TITLE VI--CONSENT DECREES, NON-PARTICIPATING MANUFACTURERS, 
                    AND STATE ENFORCEMENT</DELETED>

<DELETED>SEC. 601. PURPOSES.</DELETED>

<DELETED>    It is the purpose of this title to provide for the 
establishment of consent decrees and the imposition of certain payment 
provisions, in addition to those otherwise provided for under Federal 
or State laws, to encourage manufacturers, distributors, and retailers 
to comply with this Act, and to otherwise provide for the enforcement 
of this Act with respect to non-participating manufacturers.</DELETED>

      <DELETED>Subtitle A--Consent Decrees and Non-Participating 
                        Manufacturers</DELETED>

<DELETED>SEC. 611. CONSENT DECREES.</DELETED>

<DELETED>    (a) Requirement.--To be eligible to receive payments under 
title V, a State, and to be eligible to receive liability protections 
under title VII, a tobacco manufacturer or distributor, shall enter 
into consent decrees under this section to be effective on the date of 
enactment of this Act.</DELETED>
<DELETED>    (b) Terms and Conditions.--</DELETED>
        <DELETED>    (1) In general.--The terms and conditions 
        contained in the consent decrees described in subsection (a) 
        shall contain provisions to clarify the application and 
        requirements of this Act (and the amendments made by this Act), 
        including provisions relating to--</DELETED>
                <DELETED>    (A) restrictions on tobacco product 
                advertising and marketing and youth access to such 
                products;</DELETED>
                <DELETED>    (B) the termination, establishment, and 
                operation of trade associations;</DELETED>
                <DELETED>    (C) restrictions on tobacco 
                lobbying;</DELETED>
                <DELETED>    (D) the disclosure of tobacco smoke 
                constituents;</DELETED>
                <DELETED>    (E) the disclosure of nontobacco 
                ingredients found in tobacco products;</DELETED>
                <DELETED>    (F) the disclosure of existing and future 
                documents relating to health, toxicity, and addition 
                related to tobacco product usage;</DELETED>
                <DELETED>    (G) compliance and corporate 
                culture;</DELETED>
                <DELETED>    (H) the obligation of manufacturers to 
                make payments for the benefit of States;</DELETED>
                <DELETED>    (I) the obligation of manufacturers to 
                interact only with distributors and retailers that 
                operate in compliance with the applicable provisions of 
                Federal, State, or local law regarding the marketing 
                and sale of tobacco products;</DELETED>
                <DELETED>    (J) requirements for warnings, labeling, 
                and packaging of tobacco products;</DELETED>
                <DELETED>    (K) the dismissal of pending litigation as 
                required under title VII and as agreed to by the 
                parties to the decree; and</DELETED>
                <DELETED>    (L) any other matter determined 
                appropriate by the Secretary or the parties 
                involved.</DELETED>
        <DELETED>    (2) Limitations.--The terms and conditions 
        contained in the consent decrees described in subsection (a) 
        shall not contain provisions relating to--</DELETED>
                <DELETED>    (A) tobacco product design, performance, 
                or modification;</DELETED>
                <DELETED>    (B) manufacturing standards and good 
                manufacturing practices;</DELETED>
                <DELETED>    (C) testing and regulation with respect to 
                toxicity and ingredients approval; and</DELETED>
                <DELETED>    (D) the required percentage reductions in 
                the underage use of tobacco products for a year under 
                section 204.</DELETED>
        <DELETED>    (3) Waiver of constitutional claims.--The terms 
        and conditions contained in the consent decrees described in 
        subsection (a) shall include a provision waiving the Federal or 
        State constitutional claims of the parties and providing for 
        the severability of the provisions of the decree.</DELETED>
        <DELETED>    (4) Construction.--The terms and conditions 
        contained in the consent decrees described in subsection (a) 
        shall provide that the terms of the decree will be construed in 
        a manner that is consistent with the provision of this 
        Act.</DELETED>
<DELETED>    (c) Approval.--To be valid under this section, the 
provisions of a consent decree must be approved by the Secretary prior 
to approval or entry by a court.</DELETED>
<DELETED>    (d) Enforcement.--</DELETED>
        <DELETED>    (1) Changes in law.--The provisions of a consent 
        decree entered under this section shall remain in effect and 
        enforceable regardless of whether the provisions of this Act 
        are amended, except that any amendments to this Act that--
        </DELETED>
                <DELETED>    (A) establish Federal requirements that 
                are in conflict with obligations contained in the 
                consent decrees shall render such obligations 
                unenforceable;</DELETED>
                <DELETED>    (B) require allocations of funds that are 
                in conflict with the allocation contained in the 
                consent decrees shall render such consent decree 
                allocation unenforceable; and</DELETED>
                <DELETED>    (C) require warnings, labeling, or 
                packaging that conflicts with the warning, labeling, or 
                packaging requirements of the consent decree, shall 
                require that modifications be made in the consent 
                decree to conform with such amendments.</DELETED>
        <DELETED>    (2) By state.--</DELETED>
                <DELETED>    (A) In general.--A State may bring an 
                action to enforce the provisions of any consent decree 
                under this section in any appropriate State court. Such 
                proceedings may seek injunctive relief only and may not 
                seek criminal or monetary sanctions. Enforcement of any 
                injunctive relief provided under a State action under 
                this section shall be permitted under any applicable 
                State law.</DELETED>
                <DELETED>    (B) Consistency.--The Secretary, in 
                consultation with the Attorney General, shall 
                promulgate regulations to ensure the consistency of 
                State court ruling with respect to conduct under a 
                consent decree that is not exclusively local in 
                nature.</DELETED>

<DELETED>SEC. 612. NATIONAL TOBACCO CONTROL PROTOCOL.</DELETED>

<DELETED>    (a) Requirement.--Not later than 6 months after the date 
of enactment of this Act, each tobacco manufacturer to which this Act 
applies shall enter into a National Tobacco Control Protocol.</DELETED>
<DELETED>    (b) Terms and Conditions.--The Protocol referred to in 
subsection (a) shall be--</DELETED>
        <DELETED>    (1) developed by the Secretary as a binding and 
        enforceable contract that embodies the terms of this Act; 
        and</DELETED>
        <DELETED>    (2) designed to be enforceable in Federal or State 
        courts.</DELETED>

<DELETED>SEC. 613. NON-PARTICIPATING MANUFACTURERS.</DELETED>

<DELETED>    (a) In General.--With respect to a manufacturer that 
elects not to enter into a consent decree under section 602, such 
manufacturer shall not be eligible to receive the liability protections 
under title VII.</DELETED>
<DELETED>    (b) Imposition of User Fee.--</DELETED>
        <DELETED>    (1) In general.--Each manufacturer that elects not 
        to enter into a consent decree under section 602 and not to 
        become a signatory to the National Tobacco Control Protocol 
        under section 603 shall be subject to an annual fee established 
        under this subsection.</DELETED>
        <DELETED>    (2) Amount of fee.--</DELETED>
                <DELETED>    (A) Total.--The total amount of all fees 
                established under this subsection for a year shall be 
                equal to the amounts provided under paragraphs (1) and 
                (8) of section 401(d) for the year.</DELETED>
                <DELETED>    (B) Per manufacturer.--The Secretary shall 
                promulgate regulations for the purpose of assessing 
                fees under this subsection and determining the amount 
                of the fee to be assessed to each 
                manufacturer.</DELETED>
<DELETED>    (c) Settlement Reserve Fund.--</DELETED>
        <DELETED>    (1) In general.--Each manufacturer to which 
        subsection (b)(1) applies shall annually deposit into an 
        escrowed reserve fund an amount equal to 150 percent of the 
        amount that such manufacturer would have paid under section 402 
        (except for that portion of the payments that would have been 
        made available under paragraphs (1) and (8) of section 401(d)) 
        for the year in which the manufacturer is making such deposit 
        if the manufacturer had been a signatory to the National 
        Tobacco Control Protocol under section 603.</DELETED>
        <DELETED>    (2) Use.--Amounts contained in the reserve fund of 
        a manufacturer under paragraph (1) shall be used solely for 
        tobacco-related liability payments. The manufacturer may 
        reclaim any amounts remaining in the fund (with interest) at 
        the end of the 35-year period beginning on the date on which 
        such fund is established.</DELETED>

            <DELETED>Subtitle B--State Enforcement</DELETED>

<DELETED>SEC. 621. REQUIREMENT OF NO SALE TO MINORS LAW.</DELETED>

<DELETED>    (a) Relevant Law.--</DELETED>
        <DELETED>    (1) In general.--Subject to paragraph (2), for 
        each calendar year, the Secretary may not make any payments to 
        a State under section 403 unless the State involved has in 
        effect a law providing that it is unlawful for any 
        manufacturer, retailer, or distributor of tobacco products to 
        sell or distribute any such product to any individual under the 
        age of 18 that meets the requirements of this 
        section.</DELETED>
        <DELETED>    (2) Delayed applicability for certain states.--In 
        the case of a State whose legislature does not convene a 
        regular session in fiscal year 1997, and in the case of a State 
        whose legislature does not convene a regular session in fiscal 
        year 1998, the requirement described in paragraph (1) as a 
        condition of a receipt of payments under section 403 shall 
        apply only for fiscal year 1999 and subsequent fiscal 
        years.</DELETED>
<DELETED>    (b) Requirements.--A State law described in subsection (a) 
shall comply with the following:</DELETED>
        <DELETED>    (1) Prohibition on sale.--Such law shall provide 
        that it is unlawful for any manufacturer, retailer, or 
        distributor of tobacco products to sell or distribute any such 
        product within the State to any individual under the age of 18 
        years.</DELETED>
        <DELETED>    (2) Purchase, receipt or possession.--</DELETED>
                <DELETED>    (A) In general.--Such law shall provide 
                that an individual under 18 years of age shall not 
                purchase or attempt to purchase, receive or attempt to 
                receive, possess or attempt to possess, smoke or 
                attempt to smoke, or otherwise use or consume or 
                attempt to use or consume a tobacco product in a public 
                place.</DELETED>
                <DELETED>    (B) Employment.--Such law may permit an 
                individual under the age of 18 to possess a tobacco 
                product during regular working hours and in the course 
                of such individual's employment if the tobacco product 
                is not possessed for such individual's 
                consumption.</DELETED>
        <DELETED>    (3) Inspections.--</DELETED>
                <DELETED>    (A) In general.--Such law shall provide 
                that the State Police of a State, or such local law 
                enforcement authority duly designated by the State 
                Police, shall enforce this law in a manner that can 
                reasonably be expected to reduce the extent to which 
                tobacco products are distributed to individuals under 
                18 years of age and shall, at least monthly, conduct 
                random, unannounced inspections in accordance with 
                regulations promulgated by the Secretary under this 
                section to ensure compliance with this law.</DELETED>
                <DELETED>    (B) Conduct.--Inspections under this 
                paragraph shall be conducted in communities 
                geographically and statistically representative of the 
                entire State and the youth population of the State. Not 
                less than 250 such inspections shall be conducted with 
                respect to each 1,000,000 residents of the 
                State.</DELETED>

<DELETED>SEC. 622. STATE REPORTING.</DELETED>

<DELETED>    (a) In General.--Not later than 2 years after the date of 
enactment of this Act, and annually thereafter, the State shall prepare 
and submit to the Secretary a reduction in tobacco product usage 
report. Such report shall, except as provided in subsection (b)(3), be 
made available to the general public of the State.</DELETED>
<DELETED>    (b) Contents.--A report submitted under subsection (a) 
shall include--</DELETED>
        <DELETED>    (1) a detailed description of the enforcement 
        activities undertaken by the State and the political 
        subdivisions of the State concerning tobacco product usage laws 
        for the year for which the report is being prepared;</DELETED>
        <DELETED>    (2) a detailed description of the progress of the 
        State in reducing the availability of tobacco products to 
        individuals under 18 years of age, including the detailed 
        statistical results of the compliance inspection required under 
        section 621;</DELETED>
        <DELETED>    (3) a detailed description of the methods used in 
        such compliance inspection and in identifying outlets which 
        were tested (the Secretary shall provide protections for the 
        confidentiality of information provided under this 
        paragraph);</DELETED>
        <DELETED>    (4) a detailed description of the strategies that 
        the State intends to utilize in the current and succeeding 
        years to make further progress on reducing the availability of 
        tobacco products to individuals under 18 years of age; 
        and</DELETED>
        <DELETED>    (5) the identity of a single State agency that is 
        responsible for administering the requirements of title III in 
        the State.</DELETED>

<DELETED>SEC. 623. REDUCTION IN STATE PAYMENTS.</DELETED>

<DELETED>    (a) Annual Determination.--Beginning with respect to the 
fifth full fiscal year after the date of enactment of this Act, and 
each fiscal year thereafter the Secretary shall make a determination as 
to whether each State has pursued all reasonably available measures to 
enforce the law described in section 621.</DELETED>
<DELETED>    (b) Presumptive Finding.--The Secretary shall find 
presumptively that a State has not pursued all reasonably available 
measures to enforce the law described in section 621 if the Secretary 
determines that the State has not achieved the following compliance 
rate results based on the findings of the retail compliance inspections 
conducted under the State law:</DELETED>
        <DELETED>    (1) With respect to each of the fifth and sixth 
        fiscal years following the date of enactment, 75 percent 
        compliance with State law.</DELETED>
        <DELETED>    (2) With respect to each of the seventh through 
        ninth fiscal years following the date of enactment, 85 percent 
        compliance with State law.</DELETED>
        <DELETED>    (3) With respect to the tenth and each subsequent 
        fiscal year following the date of enactment, 90 percent 
        compliance with State law.</DELETED>
<DELETED>    (c) Amount of Reduction.--</DELETED>
        <DELETED>    (1) In general.--With respect to a State that the 
        Secretary determines does not meet the compliance rates 
        described in subsection (b), the Secretary may reduce the 
        amount that the State may be eligible for under section 501. 
        The amount of any such reduction shall not exceed an amount 
        equal to 1 percent of the amount for which the State is 
        eligible for under section 501 for the fiscal year involved for 
        each 1 percentage point by which the State's compliance 
        performance is below the applicable compliance rate.</DELETED>
        <DELETED>    (2) Limitation.--In no event shall the amount of 
        any reduction under this section exceed an amount equal to 20 
        percent of the amount for which the State is eligible for under 
        section 501 for the fiscal year involved.</DELETED>
        <DELETED>    (3) Reallotment.--The Secretary shall reallot any 
        amounts withheld under this subsection to States with 
        compliance rates that exceed the rates applicable under 
        subsection (b) in amounts to be determined by the Secretary as 
        appropriate to reward States with the highest compliance 
        rates.</DELETED>
<DELETED>    (d) Review.--</DELETED>
        <DELETED>    (1) Petition for release.--Not later than 90 days 
        after the date on which a notice from the Secretary that the 
        Secretary intends to make a reduction under subsection (c) is 
        received, a State may petition the Secretary for a release and 
        disbursement of such amount (referred to in this subsection as 
        the ``withhold amount''). The State shall give prompt written 
        notice of such petition to the State attorney 
        general.</DELETED>
        <DELETED>    (2) Action by secretary.--</DELETED>
                <DELETED>    (A) Holding and investing of funds.--Upon 
                receipt of a petition under paragraph (1), the 
                Secretary shall designate the withhold amount as 
                subject to a petition and invest such amount in 
                interest-bearing securities of the United States 
                subject to a final disposition of the 
                petition.</DELETED>
                <DELETED>    (B) Basis for determination.--In 
                considering a petition received under paragraph (1), 
                the Secretary shall consider--</DELETED>
                        <DELETED>    (i) whether the State has acted in 
                        good faith and in full compliance with the 
                        provisions of this Act (and the amendments made 
                        by this Act) and any regulations promulgated in 
                        furtherance of this Act;</DELETED>
                        <DELETED>    (ii) whether the State has pursued 
                        all reasonably available measures to achieve 
                        the compliance rates applicable under 
                        subsection (b) and the goals of this Act for 
                        reducing the underage use of tobacco 
                        products;</DELETED>
                        <DELETED>    (iii) whether there is any 
                        evidence of any direct or indirect action taken 
                        by the State to undermine the achievement of 
                        the compliance rates and goals described in 
                        clause (ii); and</DELETED>
                        <DELETED>    (iv) any other evidence determined 
                        appropriate by the Secretary.</DELETED>
                <DELETED>    (C) Burden.--With respect to any action by 
                the Secretary on a petition under paragraph (1), the 
                burden shall be on the State to prove, by a 
                preponderance of the evidence, that the State should be 
                granted a release and disbursement under the 
                petition.</DELETED>
                <DELETED>    (D) Hearing.--The Secretary shall hold a 
                hearing, with notice and an opportunity to be heard 
                provided to the attorney general of the State and to 
                manufacturers, prior to making any determination as to 
                a petition under paragraph (1).</DELETED>
                <DELETED>    (E) Release of funds.--Upon a 
                determination by the Secretary that the State has met 
                the burden imposed under subparagraph (C) with respect 
                to a petition, the Secretary shall disburse not to 
                exceed 75 percent of the withhold amount (and any 
                interest accrued on such amount) to the State. The 
                Secretary may consider all relevant evidence in 
                determining the amount to disburse to the State under 
                this subparagraph.</DELETED>
        <DELETED>    (3) Appeals.--</DELETED>
                <DELETED>    (A) In general.--Any manufacturer or State 
                attorney general aggrieved by a decision of the 
                Secretary under paragraph (2) may, within 30 days of 
                the date of such decision, seek judicial review of the 
                decision in the United States Court of Appeals for the 
                District of Columbia Circuit. The provisions of 
                sections 701 through 706 of title 5, United States 
                Code, shall apply to appeals filed under this 
                paragraph.</DELETED>
                <DELETED>    (B) Limitation.--No stay or other 
                injunctive relief that has the effect of enjoining the 
                withholding of amounts under this section shall be 
                permitted during the pendency of an appeal filed under 
                this paragraph.</DELETED>
                <DELETED>    (C) Finality.--The decision of the Court 
                of Appeals in an action under this paragraph shall be 
                final.</DELETED>

   <DELETED>TITLE VII--PROVISIONS RELATING TO TOBACCO-RELATED CIVIL 
                           ACTIONS</DELETED>

<DELETED>SEC. 701. GENERAL IMMUNITY.</DELETED>

<DELETED>    (a) State Attorney General Actions.--</DELETED>
        <DELETED>    (1) Pending actions.--Civil actions that have been 
        commenced by a State or local governmental entity, or on behalf 
        of such an entity, against a manufacturer, distributor, or 
        retailer that is a signatory to the National Tobacco Control 
        Protocol under section 612, and that are pending on the date of 
        enactment of this Act are terminated.</DELETED>
        <DELETED>    (2) Future actions.--A manufacturer, distributor 
        or retailer that is a signatory to the National Tobacco Control 
        Protocol under section 612 shall be immune from any civil 
        action commenced after the date of enactment of this Act by a 
        Federal, State, or local governmental entity, or on behalf of 
        such an entity, for all claims arising from the use of a 
        tobacco product.</DELETED>
<DELETED>    (b) Other Actions.--</DELETED>
        <DELETED>    (1) Class actions.--</DELETED>
                <DELETED>    (A) Pending actions.--Class actions for 
                claims arising from the use of a tobacco product that 
                are pending against a manufacturer, distributor, or 
                retailer that is a signatory to the National Tobacco 
                Control Protocol under section 612, are 
                terminated.</DELETED>
                <DELETED>    (B) Future actions.--A manufacturer, 
                distributor, or retailer that is a signatory to the 
                National Tobacco Control Protocol under section 612 
                shall be immune from any class action commenced after 
                the date of enactment of this Act for all claims 
                arising from the use of a tobacco product.</DELETED>
        <DELETED>    (2) Addiction and dependence claims.--</DELETED>
                <DELETED>    (A) Pending actions.--Any civil action for 
                claims based on addition to or dependence on a tobacco 
                product that are pending against a manufacturer, 
                distributor, or retailer that is a signatory to the 
                National Tobacco Control Protocol under section 612, 
                are terminated.</DELETED>
                <DELETED>    (B) Future actions.--A manufacturer, 
                distributor, or retailer that is a signatory to the 
                National Tobacco Control Protocol under section 612 
                shall be immune from any civil action commenced after 
                the date of enactment of this Act for all claims based 
                on addition to or dependence on a tobacco 
                product.</DELETED>
<DELETED>    (c) Preservation.--All personal injury claims arising from 
the use of a tobacco product by an individual shall be 
preserved.</DELETED>

<DELETED>SEC. 702. CIVIL LIABILITY FOR PAST CONDUCT.</DELETED>

<DELETED>    (a) Application.--The provisions of this section shall 
apply to all civil actions permitted under section 701 for relief 
arising from the conduct of a manufacturer, distributor, or retailer 
that is a signatory to the National Tobacco Control Protocol under 
section 612 that occurred prior to the date of enactment of this 
Act.</DELETED>
<DELETED>    (b) Punitive Damages Prohibited.--No punitive damages 
shall be awarded in any claim described in subsection (a).</DELETED>
<DELETED>    (c) Individual Trials.--No class action suits, joinder of 
parties, aggregation of claims, consolidation of actions, 
extrapolations, or other devices to resolve cases other than on the 
basis of individual actions shall be permitted without the consent of 
the defendant. Any defendant, in an action that involves a violation of 
this subsection, may remove such action to an appropriate Federal 
court.</DELETED>
<DELETED>    (d) Joint Sharing Agreement.--As part of the National 
Tobacco Control Protocol under section 612, all signatories shall agree 
to the joint sharing of any civil liability for actions for damages 
arising from the use of tobacco products. Such signatories shall not be 
jointly and severally liable for damages involving nonsignatories. 
Actions involving both signatories and nonsignatories shall be 
severed.</DELETED>
<DELETED>    (e) Permissible Parties.--</DELETED>
        <DELETED>    (1) Plaintiffs.--The following individuals may be 
        plaintiffs in a civil action to which this section 
        applies:</DELETED>
                <DELETED>    (A) Individuals bringing claims, or claims 
                derivative of such claims, on their own behalf for a 
                tobacco-related injury, or the heirs of such 
                individuals.</DELETED>
                <DELETED>    (B) Third-party payors for claims not 
                based on subrogation that were pending on June 9, 
                1997.</DELETED>
                <DELETED>    (C) Third-party payors for claims based on 
                subrogation of individual claims permitted under 
                subparagraph (A).</DELETED>
        <DELETED>    (2) Defendants.--This section shall apply only to 
        actions brought against a signatory of the National Tobacco 
        Control Protocol under section 612, a successor or assign of 
        such a signatory, any future fraudulent transferees, or any 
        entity for suit designated to survive a defunct signatory. Such 
        signatories shall be vicariously liable for the actions of 
        their agents.</DELETED>
<DELETED>    (f) Removal.--Except as provided in subsection (c), there 
shall be no removal of a action to which this section 
applies.</DELETED>
<DELETED>    (g) Discovery.--The development, after the date of 
enactment of this Act, of any tobacco product that reduces the risk of 
injury or illness to a user shall not be admissible or 
discoverable.</DELETED>
<DELETED>    (h) Caps on Settlements.--</DELETED>
        <DELETED>    (1) Aggregate annual cap.--With respect to a 
        calendar year, the aggregate amount of all tobacco claims 
        judgments or settlements to which this section applies, that 
        the signatories of the National Tobacco Control Protocol under 
        section 612 shall be required to pay, shall not exceed an 
        amount equal to 33 percent of the annual payment required under 
        section 402 for the year involved.</DELETED>
        <DELETED>    (2) Payment of excess.--If the amount of the 
        judgments and settlements described in paragraph (1) exceed an 
        amount equal to 33 percent of the annual payment required under 
        section 402 for the year involved, such excess amount shall be 
        paid in the following year.</DELETED>
        <DELETED>    (3) Affect of settlement.--The signatories 
        described in paragraph (1) shall receive a credit, to be 
        applied against the amount owed by such signatories to the 
        National Tobacco Settlement Trust Fund for the year involved, 
        in an amount equal to 80 percent of the aggregate amounts paid 
        under judgments or settlements of tobacco-related claims to 
        which this section applies for such year.</DELETED>
        <DELETED>    (4) Individual cap.--With respect to an action to 
        which this section applies, any amount awarded in excess of 
        $1,000,000 may be paid in the year following the year in which 
        the judgment or settlement was entered, except that this 
        paragraph shall not apply if all other awards under judgments 
        or settlements entered in the first year can be paid without 
        exceeding the aggregate annual cap under paragraph (1). Such 
        excess amount shall carry over from year to year with no 
        payments in any single year exceeding $1,000,000 and no 
        interest accruing on such amounts until such time as the annual 
        aggregate cap is not exceeded.</DELETED>
        <DELETED>    (5) Unused portion of credit.--</DELETED>
<DELETED>    (i) Defense Costs.--The signatories of the National 
Tobacco Control Protocol under section 612 shall be responsible for the 
payment of all attorneys' fees and other costs associated with being a 
defendant in an action to which this section applies.</DELETED>

<DELETED>SEC. 703. CIVIL LIABILITY FOR FUTURE CONDUCT.</DELETED>

<DELETED>    (a) Application.--The provisions of this section shall 
apply to all civil actions permitted under section 701 for relief 
arising from the conduct of a manufacturer, distributor, or retailer 
that is a signatory to the National Tobacco Control Protocol under 
section 612 that occurs after the date of enactment of this 
Act.</DELETED>
<DELETED>    (b) General Provisions.--The provisions of subsections (c) 
and (e) through (i) of section 702 shall apply to actions under this 
section.</DELETED>
<DELETED>    (c) Third-Party Payor Claims.--Third-party payor claims 
that are not based on subrogation shall not be commenced under this 
section.</DELETED>

<DELETED>SEC. 704. NON-PARTICIPATING MANUFACTURERS.</DELETED>

<DELETED>    The provisions of this title shall not apply to any 
manufacturer, distributor, or retailer that is not a signatory to the 
National Tobacco Control Protocol under section 612.</DELETED>

  <DELETED>TITLE VIII--PUBLIC DISCLOSURE OF HEALTH RESEARCH</DELETED>

<DELETED>SEC. 801. PURPOSE.</DELETED>

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

<DELETED>SEC. 802. NATIONAL TOBACCO DOCUMENT DEPOSITORY.</DELETED>

<DELETED>    (a) Establishment.--To be eligible to receive the 
protections provided under title VII, manufacturers of tobacco 
products, acting in conjunction with the Tobacco Institute and the 
Council for Tobacco Research, U.S.A. (prior to the termination of such 
entities under section 155), shall, not later than 180 days after the 
date of enactment of this Act, establish and maintain a National 
Tobacco Document Depository (in this title referred to as the 
``Depository''). Such Depository shall be located in the Washington, 
D.C. area and be open to the public.</DELETED>
<DELETED>    (b) Use of Depository.--The Depository shall be maintained 
in a manner that permits the Depository to be used as a resource for 
litigants, public health groups, and any other individuals who have an 
interest in the corporate records and research of the manufacturers 
concerning smoking and health, addiction or nicotine dependency, safer 
or less hazardous cigarettes, and underage tobacco use and 
marketing.</DELETED>
<DELETED>    (c) Contents.--The Depository shall include (and 
manufacturers and the Tobacco Institute and the Council for Tobacco 
Research, U.S.A. shall provide)--</DELETED>
        <DELETED>    (1) within 180 days of the date of enactment of 
        this Act, all documents provided by such entities to plaintiffs 
        in--</DELETED>
                <DELETED>    (A) civil or criminal actions brought by 
                State attorneys general (including all documents 
                selected by plaintiffs from the Guilford Repository of 
                the United Kingdom);</DELETED>
                <DELETED>    (B) Philip Morris Companies Inc.'s 
                defamation action against Capital Cities/American 
                Broadcasting Company News;</DELETED>
                <DELETED>    (C) the Federal Trade Commission's 
                investigation concerning Joe Camel and underage 
                marketing;</DELETED>
                <DELETED>    (D) the Haines and Cippollone actions; 
                and</DELETED>
                <DELETED>    (E) the Butler action in 
                Mississippi;</DELETED>
        <DELETED>    (2) within 90 days after the date of enactment of 
        this Act, any exiting documents discussing or referring to 
        health research, addiction or dependency, safer or less 
        hazardous cigarettes, studies of the smoking habits of minors, 
        and the relationship between advertising or promotion and youth 
        smoking, that the entities described in subsection (a) have not 
        completed producing as required in the actions described in 
        paragraph (1);</DELETED>
        <DELETED>    (3) within 180 days of the date of enactment of 
        this Act, all documents relating to indices (as defined by the 
        court in the Minnesota Attorney General action) of documents 
        relating to smoking and health, including all indices 
        identified by the manufacturers in the Washington, Texas, and 
        Minnesota Attorney General actions;</DELETED>
        <DELETED>    (4) upon the settlement of any action referred to 
        in this subsection, and after a good-faith, de novo, document-
        by-document review of all documents previously withheld from 
        production in any actions on the grounds of attorney-client 
        privilege, all documents determined to be outside of the scope 
        of the privilege;</DELETED>
        <DELETED>    (5) all existing or future documents relating to 
        original laboratory research concerning the health or safety of 
        tobacco products, including all laboratory research results 
        relating to methods used to make tobacco products less 
        hazardous to consumers;</DELETED>
        <DELETED>    (6) a comprehensive new attorney-client privilege 
        log of all documents, itemized in sufficient detail so as to 
        enable any interested individual to determine whether the 
        individual will challenge the claim of privilege, that the 
        entities described in subsection (a) (based on the de novo 
        review of such documents by such entities) claim are protected 
        from disclosure under the attorney-client privilege;</DELETED>
        <DELETED>    (7) all existing or future documents relating to 
        studies of the smoking habits of minors or documents referring 
        to any relationship between advertising and promotion and 
        underage smoking; and</DELETED>
        <DELETED>    (8) all other documents determined appropriate 
        under regulations promulgated by the Secretary.</DELETED>
<DELETED>    (d) Dispute Resolution Panel.--</DELETED>
        <DELETED>    (1) Establishment.--The Judicial Conference of the 
        United States shall establish a Tobacco Documents Dispute 
        Resolution Panel, to be composed of three Federal judges to be 
        appointed by the Conference, to resolve all disputes involving 
        claims of attorney-client, work product, or trade secrets 
        privilege with respect to documents required to be deposited 
        into the Depository under subsection (c) that may be brought by 
        Federal, State, or local governmental officials or the public 
        or asserted in any action by a manufacturer.</DELETED>
        <DELETED>    (2) Basis for determinations.--The determinations 
        of the Panel established under paragraph (1) shall be based 
        on--</DELETED>
                <DELETED>    (A) the American Bar Association/American 
                Law Institute Model Rules or the principals of Federal 
                law with respect to attorney-client or work product 
                privilege; and</DELETED>
                <DELETED>    (B) the Uniform Trade Secrets Act with 
                respect to trade secrecy.</DELETED>
        <DELETED>    (3) Decision.--Any decision of the Panel 
        established under paragraph (1) shall be final and binding upon 
        all Federal and State courts.</DELETED>
        <DELETED>    (4) Assessing of fees.--As part of a determination 
        under this subsection, the Panel established under paragraph 
        (1) shall determined whether a claimant of the privilege acted 
        in good faith and had a factual and legal basis for asserting 
        the claim. If the Panel determines that the claimant did not 
        act in good faith, the Panel may assess costs against the 
        claimant, including a reasonable attorneys' fee, and may apply 
        such other sanctions as the Panel determines 
        appropriate.</DELETED>
        <DELETED>    (5) Accelerated review.--The Panel established 
        under paragraph (1) shall establish procedures for the 
        accelerated review of challenges to a claim of privilege. Such 
        procedures shall include assurances that an individual filing a 
        challenge to such a claim need not make a prima facie showing 
        of any kind as a prerequisite to an in camera review of the 
        documents at issue.</DELETED>
        <DELETED>    (6) Special masters.--The Panel established under 
        paragraph (1) may appoint Special Masters in accordance with 
        Rule 53 of the Federal Rules of Civil Procedure. The cost 
        relating to any Special Master shall be assessed to the 
        manufacturers as part of a fee process to be established under 
        regulations promulgated by the Secretary.</DELETED>
<DELETED>    (e) Other Provisions.--</DELETED>
        <DELETED>    (1) No waiver of privilege.--Compliance with this 
        section by the entities described in subsection (a) shall not 
        be deemed to be a waiver on behalf of such entities of any 
        applicable privilege or protection.</DELETED>
        <DELETED>    (2) Avoidance of destruction.--In establishing the 
        Depository, procedures shall be implemented to protect against 
        the destruction of documents.</DELETED>
        <DELETED>    (3) Deemed produced.--Any documents contained in 
        the Depository shall be deemed to have been produced for 
        purposes of any tobacco-related litigation in the United 
        States.</DELETED>
<DELETED>    (f) Documents.--For purposes of this section, the term 
``documents'' shall include any paper documents that may be printed 
using data that is contained in computer files.</DELETED>

         <DELETED>TITLE IX--ASSISTANCE TO TOBACCO GROWERS AND 
                         COMMUNITIES</DELETED>

<DELETED>SEC. 901. SHORT TITLE.</DELETED>

<DELETED>    This title may be cited as the ``Long-Term Economic 
Assistance for Farmers Act'' or the ``LEAF Act''.</DELETED>

<DELETED>SEC. 902. DEFINITIONS.</DELETED>

<DELETED>    In this title:</DELETED>
        <DELETED>    (1) Active tobacco producer.--The term ``active 
        tobacco producer'' means a quota holder, quota lessee, or quota 
        tenant.</DELETED>
        <DELETED>    (2) Quota holder.--The term ``quota holder'' means 
        a producer that owns a farm for which a tobacco farm marketing 
        quota or farm acreage allotment was established under the 
        Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.) for 
        any of the 1994, 1995, or 1996 crop years.</DELETED>
        <DELETED>    (3) Quota lessee.--The term ``quota lessee'' 
        means--</DELETED>
                <DELETED>    (A) a producer that owns a farm that 
                produced tobacco pursuant to a lease and transfer to 
                that farm of all or part of a tobacco farm marketing 
                quota or farm acreage allotment established under the 
                Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et 
                seq.) for any of the 1994, 1995, or 1996 crop years; 
                or</DELETED>
                <DELETED>    (B) a producer that rented land from a 
                farm operator to produce tobacco under a tobacco farm 
                marketing quota or farm acreage allotment established 
                under the Agricultural Adjustment Act of 1938 (7 U.S.C. 
                1281 et seq.) for any of the 1994, 1995, or 1996 crop 
                years.</DELETED>
        <DELETED>    (4) Quota tenant.--The term ``quota tenant'' means 
        a producer who--</DELETED>
                <DELETED>    (A) is the principal producer, as 
                determined by the Secretary, of tobacco on a farm where 
                tobacco is produced pursuant to a tobacco farm 
                marketing quota or farm acreage allotment established 
                under the Agricultural Adjustment Act of 1938 (7 U.S.C. 
                1281 et seq.) for any of the 1994, 1995, or 1996 crop 
                years; and</DELETED>
                <DELETED>    (B) is not a quota holder or quota 
                lessee.</DELETED>
        <DELETED>    (5) Secretary.--The term ``Secretary'' means--
        </DELETED>
                <DELETED>    (A) in titles I and II, the Secretary of 
                Agriculture; and</DELETED>
                <DELETED>    (B) in section 301, the Secretary of 
                Labor.</DELETED>
        <DELETED>    (6) Tobacco product importer.--The term ``tobacco 
        product importer'' has the meaning given the term ``importer'' 
        in section 5702 of the Internal Revenue Code of 1986.</DELETED>
        <DELETED>    (7) Tobacco product manufacturer.--</DELETED>
                <DELETED>    (A) In general.--The term ``tobacco 
                product manufacturer'' has the meaning given the term 
                ``manufacturer of tobacco products'' in section 5702 of 
                the Internal Revenue Code of 1986.</DELETED>
                <DELETED>    (B) Exclusion.--The term ``tobacco product 
                manufacturer'' does not include a person that 
                manufactures cigars or pipe tobacco.</DELETED>
        <DELETED>    (8) Trust fund.--The term ``Trust Fund'' means the 
        Tobacco Community Revitalization Trust Fund established under 
        section 101.</DELETED>

      <DELETED>SUBTITLE A--TOBACCO COMMUNITY REVITALIZATION TRUST 
                             FUND</DELETED>

<DELETED>SEC. 911. ESTABLISHMENT OF TRUST FUND.</DELETED>

<DELETED>    (a) In General.--There is established in the Treasury of 
the United States a trust fund to be known as the ``Tobacco Community 
Revitalization Trust Fund'', consisting of such amounts as may be 
appropriated or credited to the Trust Fund. The Trust Fund shall be 
administered by the Secretary.</DELETED>
<DELETED>    (b) Transfers to Trust Fund.--There are appropriated and 
transferred to the Trust Fund for each fiscal year--</DELETED>
        <DELETED>    (1) amounts contributed by tobacco product 
        manufacturers and tobacco product importers under section 102; 
        and</DELETED>
        <DELETED>    (2) amounts made available to the Trust Fund out 
        of funds allocated through national tobacco settlement 
        legislation.</DELETED>
<DELETED>    (c) Repayable Advances.--</DELETED>
        <DELETED>    (1) Authorization.--There are authorized to be 
        appropriated to the Trust Fund, as repayable advances, such 
        sums as may from time to time be necessary to make expenditures 
        under subsection (d).</DELETED>
        <DELETED>    (2) Repayment with interest.--Repayable advances 
        made to the Trust Fund shall be repaid, and interest on the 
        advances shall be paid, to the general fund of the Treasury 
        when the Secretary of the Treasury determines that moneys are 
        available in the Trust Fund to make the payments.</DELETED>
        <DELETED>    (3) Rate of interest.--Interest on an advance made 
        under this subsection shall be at a rate determined by the 
        Secretary of Treasury (as of the close of the calendar month 
        preceding the month in which the advance is made) that is equal 
        to the current average market yield on outstanding marketable 
        obligations of the United States with remaining period to 
        maturity comparable to the anticipated period during which the 
        advance will be outstanding.</DELETED>
<DELETED>    (d) Expenditures From Trust Fund.--Amounts in the Trust 
Fund shall be available for making expenditures after October 1, 1998, 
to meet those necessary obligations of the Federal Government that are 
authorized to be paid under--</DELETED>
        <DELETED>    (1) section 201 for payments for lost tobacco 
        quota for each of fiscal years 1999 through 2023, but not to 
        exceed $1,600,000,000 for any fiscal year except to the extent 
        the payments are made in accordance with section 
        201(j);</DELETED>
        <DELETED>    (2) section 202 for industry payments for all 
        costs of the Department of Agriculture associated with the 
        production of tobacco;</DELETED>
        <DELETED>    (3) section 203 for tobacco community economic 
        development grants, but not to exceed--</DELETED>
                <DELETED>    (A) $400,000,000 for each of fiscal years 
                1999 through 2008, less any amount required to be paid 
                under section 202 for the fiscal year; and</DELETED>
                <DELETED>    (B) $450,000,000 for each of fiscal year 
                2009 through 2023, less any amount required to be paid 
                under section 202 during the fiscal year;</DELETED>
        <DELETED>    (4) section 301 for assistance provided under the 
        tobacco worker transition program, but not to exceed 
        $50,000,000 for any fiscal year; and</DELETED>
        <DELETED>    (5) subpart 9 of part A of title IV of the Higher 
        Education Act of 1965 for farmer opportunity grants, but not to 
        exceed--</DELETED>
                <DELETED>    (A) $42,500,000 for each of the academic 
                years 1999-2000 through 2003-2004;</DELETED>
                <DELETED>    (B) $50,000,000 for each of the academic 
                years 2004-2005 through 2008-2009;</DELETED>
                <DELETED>    (C) $57,500,000 for each of the academic 
                years 2009-2010 through 2013-2014;</DELETED>
                <DELETED>    (D) $65,000,000 for each of the academic 
                years 2014-2015 through 2018-2019; and</DELETED>
                <DELETED>    (E) $72,500,000 for each of the academic 
                years 2019-2020 through 2023-2024.</DELETED>
<DELETED>    (e) Budgetary Treatment.--This section constitutes budget 
authority in advance of appropriations Acts and represents the 
obligation of the Federal Government to provide payments to States and 
eligible persons in accordance with this title.</DELETED>

<DELETED>SEC. 912. CONTRIBUTIONS BY TOBACCO PRODUCT MANUFACTURERS AND 
              IMPORTERS.</DELETED>

<DELETED>    (a) Definition of Market Share.--In this section, the term 
``market share'' means the ratio of--</DELETED>
        <DELETED>    (1) the tax liability of a tobacco product 
        manufacturer or tobacco product importer (as defined in section 
        2) for a calendar year under section 5703 of the Internal 
        Revenue Code of 1986; to</DELETED>
        <DELETED>    (2) the tax liability of all tobacco product 
        manufacturers or tobacco product importers (as defined in 
        section 2) for the calendar year under section 5703 of the 
        Internal Revenue Code of 1986.</DELETED>
<DELETED>    (b) Determinations.--Not later than September 30 of each 
fiscal year, the Secretary of the Treasury shall--</DELETED>
        <DELETED>    (1) determine--</DELETED>
                <DELETED>    (A) the market share of each tobacco 
                product manufacturer or tobacco product importer during 
                the most recent calendar year;</DELETED>
                <DELETED>    (B) the total amount of assessments 
                payable for the subsequent fiscal year under subsection 
                (c); and</DELETED>
                <DELETED>    (C) the amount of an assessment payable by 
                the tobacco product manufacturer or tobacco product 
                importer for the fiscal year under subsection (d); 
                and</DELETED>
        <DELETED>    (2) notify each tobacco product manufacturer and 
        tobacco product importer of the determinations made under 
        paragraph (1) with respect to the manufacturer or 
        importer.</DELETED>
<DELETED>    (c) Total Amount of Assessments.--</DELETED>
        <DELETED>    (1) In general.--The total amount of assessments 
        payable by all tobacco product manufacturers and tobacco 
        product importers into the Trust Fund for a fiscal year shall 
        be equal to--</DELETED>
                <DELETED>    (A) the amount of the contribution to the 
                Trust Fund for the fiscal year required under paragraph 
                (2); less</DELETED>
                <DELETED>    (B) any amount made available during the 
                preceding fiscal year to the Trust Fund out of funds 
                allocated through national tobacco settlement 
                legislation.</DELETED>
        <DELETED>    (2) Trust fund contributions.--The amount of the 
        contribution to the Trust Fund shall be--</DELETED>
                <DELETED>    (A) $2,100,000,000 for each of fiscal 
                years 1999 through 2008;</DELETED>
                <DELETED>    (B) $500,000,000 for each of fiscal years 
                2009 through 2023; and</DELETED>
                <DELETED>    (C) for fiscal year 2024 and each 
                subsequent fiscal year, the amount payable under 
                section 202.</DELETED>
<DELETED>    (d) Individual Amount of Assessments.--The amount of an 
assessment payable by each tobacco product manufacturer and tobacco 
product importer into the Trust Fund for a fiscal year shall be equal 
to the product obtained by multiplying--</DELETED>
        <DELETED>    (1) the total amount of assessments payable by all 
        tobacco product manufacturers and tobacco product importers for 
        the fiscal year under subsection (c); by</DELETED>
        <DELETED>    (2) the market share of the tobacco product 
        manufacturer or tobacco product importer during the most recent 
        calendar year determined under subsection (b)(1)(A).</DELETED>

          <DELETED>SUBTITLE B--AGRICULTURAL MARKET TRANSITION 
                          ASSISTANCE</DELETED>

<DELETED>SEC. 921. PAYMENTS FOR LOST TOBACCO QUOTA.</DELETED>

<DELETED>    (a) In General.--Beginning with the 1999 marketing year, 
the Secretary shall make payments for lost tobacco quota to eligible 
quota holders, quota lessees, and quota tenants as reimbursement for 
lost tobacco quota as a result of a decrease in demand for domestically 
produced tobacco.</DELETED>
<DELETED>    (b) Eligibility.--To be eligible to receive payments under 
this section, a quota holder, quota lessee, or quota tenant shall--
</DELETED>
        <DELETED>    (1) prepare and submit to the Secretary an 
        application at such time, in such manner, and containing such 
        information as the Secretary may require, including information 
        sufficient to make the demonstration required under paragraph 
        (2); and</DELETED>
        <DELETED>    (2) demonstrate to the satisfaction of the 
        Secretary that, with respect to the 1996 marketing year--
        </DELETED>
                <DELETED>    (A) the producer was a quota holder and 
                realized income from the production of tobacco 
                through--</DELETED>
                        <DELETED>    (i) the active production of 
                        tobacco;</DELETED>
                        <DELETED>    (ii) the lease and transfer of 
                        tobacco quota to another farm;</DELETED>
                        <DELETED>    (iii) the rental of all or part of 
                        the farm of the quota holder, including the 
                        right to produce tobacco, to another tobacco 
                        producer; or</DELETED>
                        <DELETED>    (iv) the hiring of a quota tenant 
                        to produce tobacco;</DELETED>
                <DELETED>    (B) the producer was a quota lessee; 
                or</DELETED>
                <DELETED>    (C) the producer was a quota 
                tenant.</DELETED>
<DELETED>    (c) Base Quota Level.--</DELETED>
        <DELETED>    (1) In general.--The Secretary shall determine, 
        for each quota holder, quota lessee, and quota tenant, the base 
        quota level for the 1994 through 1996 marketing 
        years.</DELETED>
        <DELETED>    (2) Quota holders.--The base quota level for a 
        quota holder shall be equal to the average tobacco farm 
        marketing quota established for the farm owned by the quota 
        holder for the 1994 through 1996 marketing years.</DELETED>
        <DELETED>    (3) Quota lessees.--The base quota level for a 
        quota lessee shall be equal to--</DELETED>
                <DELETED>    (A) 50 percent of the average number of 
                pounds of tobacco quota established for a farm for the 
                1994 through 1996 marketing years--</DELETED>
                        <DELETED>    (i) that was leased and 
                        transferred to a farm owned by the quota 
                        lessee; or</DELETED>
                        <DELETED>    (ii) for which the rights to 
                        produce the tobacco were rented to the quota 
                        lessee; less</DELETED>
                <DELETED>    (B) 25 percent of the average number of 
                pounds of tobacco quota described in paragraph (A) for 
                which a quota tenant was the principal producer of the 
                tobacco quota.</DELETED>
        <DELETED>    (4) Quota tenants.--The base quota level for a 
        quota tenant shall be equal to the sum of--</DELETED>
                <DELETED>    (A) 50 percent of the average number of 
                pounds of tobacco quota established for a farm for the 
                1994 through 1996 marketing years--</DELETED>
                        <DELETED>    (i) that was owned by a quota 
                        holder; and</DELETED>
                        <DELETED>    (ii) for which the quota tenant 
                        was the principal producer of the tobacco on 
                        the farm; and</DELETED>
                <DELETED>    (B) 25 percent of the average number of 
                pounds of tobacco quota for the 1994 through 1996 
                marketing years--</DELETED>
                        <DELETED>    (i)(I) that was leased and 
                        transferred to a farm owned by the quota 
                        lessee; or</DELETED>
                        <DELETED>    (II) for which the rights to 
                        produce the tobacco were rented to the quota 
                        lessee; and</DELETED>
                        <DELETED>    (ii) for which the quota tenant 
                        was the principal producer of the tobacco on 
                        the farm.</DELETED>
        <DELETED>    (5) Marketing quotas other than poundage quotas.--
        For each kind of tobacco for which there is a marketing quota 
        or allotment (on an acreage basis), the base quota level for 
        each quota holder, quota lessee, or quota tenant shall be 
        determined in accordance with this subsection (based on a 
        poundage conversion) in an amount equal to the product obtained 
        by multiplying--</DELETED>
                <DELETED>    (A) the average tobacco farm marketing 
                quota or allotment for the 1994 through 1996 marketing 
                years; by</DELETED>
                <DELETED>    (B) the average county yield per acre for 
                the county in which the farm is located for the kind of 
                tobacco for the marketing years.</DELETED>
<DELETED>    (d) Payments.--Except as otherwise provided in this 
section, during any marketing year in which the national marketing 
quota for a kind of tobacco is less than the average national marketing 
quota level for the kind of tobacco for the 1994 through 1996 marketing 
years, the Secretary shall make payments for lost tobacco quota to each 
quota holder, quota lessee, and quota tenant that is eligible under 
subsection (b) in an amount that is equal to the product obtained by 
multiplying--</DELETED>
        <DELETED>    (1) the percentage by which the national marketing 
        quota for the kind of tobacco is less than the average national 
        marketing quota level for the kind of tobacco for the 1994 
        through 1996 marketing years; by</DELETED>
        <DELETED>    (2) the base quota level for the quota holder, 
        quota lessee, or quota tenant; by</DELETED>
        <DELETED>    (3) $4 per pound.</DELETED>
<DELETED>    (e) Lifetime Limitation on Payments.--Except as otherwise 
provided in this section, the total amount of payments made under this 
section to a quota holder, quota lessee, or quota tenant during the 
lifetime of the holder, lessee, or tenant shall not exceed the product 
obtained by multiplying--</DELETED>
        <DELETED>    (1) the base quota level for the quota holder, 
        quota lessee, or quota tenant; by</DELETED>
        <DELETED>    (2) $8 per pound.</DELETED>
<DELETED>    (f) Limitations on Aggregate Annual Payments.--</DELETED>
        <DELETED>    (1) In general.--Except as otherwise provided in 
        this subsection, the total amount payable under this section 
        for any marketing year shall not exceed 
        $1,600,000,000.</DELETED>
        <DELETED>    (2) Accelerated payments.--Paragraph (1) shall not 
        apply if accelerated payments for lost tobacco quota are made 
        in accordance with subsection (j).</DELETED>
        <DELETED>    (3) Reductions.--If the amount determined under 
        subsection (d) for a marketing year exceeds the amount 
        described in paragraph (1), the Secretary shall make a pro rata 
        reduction in the amounts payable to quota holders, quota 
        lessees, and quota tenants under this section to ensure that 
        the total amount of the payments for lost tobacco quota does 
        not exceed the limitation established under paragraph 
        (1).</DELETED>
        <DELETED>    (4) Rollover of payments for lost tobacco quota.--
        Subject to paragraph (1), if the Secretary makes a reduction in 
        accordance with paragraph (3), the amount of the reduction 
        shall be applied to the next marketing year and added to the 
        payments for lost tobacco for the marketing year.</DELETED>
<DELETED>    (g) Subsequent Sale and Transfer of Quota.--Effective 
beginning January 1, 1999, on the sale and transfer of a farm marketing 
quota under section 316(g) or 319(g) of the Agricultural Adjustment Act 
of 1938 (7 U.S.C. 1314b(g), 1314e(g))--</DELETED>
        <DELETED>    (1) the person who sold and transferred the quota 
        shall have--</DELETED>
                <DELETED>    (A) the base quota level attributable to 
                the person reduced by the base quota level attributable 
                to the quota that is sold and transferred; 
                and</DELETED>
                <DELETED>    (B) the lifetime limitation on payments 
                established under subsection (e) attributable to the 
                person reduced by the product obtained by multiplying--
                </DELETED>
                        <DELETED>    (i) the base quota level 
                        attributable to the quota; by</DELETED>
                        <DELETED>    (ii) $8 per pound; and</DELETED>
        <DELETED>    (2) the person who acquired the quota shall have--
        </DELETED>
                <DELETED>    (A) the base quota level attributable to 
                the person increased by the base quota level 
                attributable to the quota that was sold and 
                transferred; and</DELETED>
                <DELETED>    (B) the lifetime limitation on payments 
                established under subsection (e) attributable to the 
                person--</DELETED>
                        <DELETED>    (i) increased by the product 
                        obtained by multiplying--</DELETED>
                                <DELETED>    (I) the base quota level 
                                attributable to the quota; by</DELETED>
                                <DELETED>    (II) $8 per pound; 
                                but</DELETED>
                        <DELETED>    (ii) decreased by any payments for 
                        lost tobacco quota previously made that are 
                        attributable to the quota that was sold and 
                        transferred.</DELETED>
<DELETED>    (h) Sale or Transfer of Farm.--On the sale or transfer of 
ownership of a farm that is owned by a quota holder, the base quota 
level established under subsection (c), the right to payments under 
subsection (d), and the lifetime limitation on payments established 
under subsection (e) shall transfer to the new owner of the farm to the 
same extent and in the same manner as those subsections applied to the 
previous quota holder.</DELETED>
<DELETED>    (i) Death of Quota Lessee or Quota Tenant.--If a quota 
lessee or quota tenant who is entitled to payments under this section 
dies and is survived by a spouse or 1 or more dependents, the right to 
receive the payments shall transfer to the surviving spouse or, if 
there is no surviving spouse, to the surviving dependents in equal 
shares.</DELETED>
<DELETED>    (j) Acceleration of Payments.--</DELETED>
        <DELETED>    (1) In general.--On the occurrence of any of the 
        events described in paragraph (2), the Secretary shall make an 
        accelerated lump sum payment for lost tobacco quota to each 
        quota holder, quota lessee, and quota tenant for any affected 
        kind of tobacco in accordance with paragraph (3).</DELETED>
        <DELETED>    (2) Triggering events.--The Secretary shall make 
        accelerated payments under paragraph (1) if after the date of 
        enactment of this title--</DELETED>
                <DELETED>    (A) for 3 consecutive marketing years, the 
                national marketing quota for a kind of tobacco is less 
                than 50 percent of the national marketing quota for the 
                kind of tobacco for the 1996 marketing year; 
                or</DELETED>
                <DELETED>    (B) Congress repeals or makes ineffective, 
                directly or indirectly, any provision of--</DELETED>
                        <DELETED>    (i) section 316(g) of the 
                        Agricultural Adjustment Act of 1938 (7 U.S.C. 
                        1314b(g));</DELETED>
                        <DELETED>    (ii) section 319(g) of the 
                        Agricultural Adjustment Act of 1938 (7 U.S.C. 
                        1314e(g));</DELETED>
                        <DELETED>    (iii) section 106 of the 
                        Agricultural Act of 1949 (7 U.S.C. 
                        1445);</DELETED>
                        <DELETED>    (iv) section 106A of the 
                        Agricultural Act of 1949 (7 U.S.C. 1445-1); 
                        or</DELETED>
                        <DELETED>    (v) section 106B of the 
                        Agricultural Act of 1949 (7 U.S.C. 1445-
                        2).</DELETED>
        <DELETED>    (3) Amount.--The amount of the accelerated 
        payments made to each quota holder, quota lessee, and quota 
        tenant under this subsection shall be equal to--</DELETED>
                <DELETED>    (A) the amount of the lifetime limitation 
                established for the quota holder, quota lessee, or 
                quota tenant under subsection (e); less</DELETED>
                <DELETED>    (B) any payments for lost tobacco quota 
                received by the quota holder, quota lessee, or quota 
                tenant before the occurrence of any of the events 
                described in paragraph (2).</DELETED>

<DELETED>SEC. 922. INDUSTRY PAYMENTS FOR ALL DEPARTMENT COSTS 
              ASSOCIATED WITH TOBACCO PRODUCTION.</DELETED>

<DELETED>    (a) In General.--The Secretary shall use such amounts as 
are necessary from the Trust Fund at the end of each fiscal year to 
reimburse the Secretary for--</DELETED>
        <DELETED>    (1) costs associated with the administration of 
        programs established under this title and amendments made by 
        this title;</DELETED>
        <DELETED>    (2) costs associated with the administration of 
        the tobacco quota and price support programs administered by 
        the Secretary;</DELETED>
        <DELETED>    (3) costs to the Federal Government of carrying 
        out crop insurance programs for tobacco;</DELETED>
        <DELETED>    (4) costs associated with all agricultural 
        research, extension, or education activities associated with 
        tobacco;</DELETED>
        <DELETED>    (5) costs associated with the administration of 
        loan association and cooperative programs for tobacco 
        producers, as approved by the Secretary; and</DELETED>
        <DELETED>    (6) any other costs incurred by the Department of 
        Agriculture associated with the production of 
        tobacco.</DELETED>
<DELETED>    (b) Limitations.--Amounts made available under subsection 
(a) may not be used--</DELETED>
        <DELETED>    (1) to provide direct benefits to quota holders, 
        quota lessees, or quota tenants; or</DELETED>
        <DELETED>    (2) in a manner that results in a decrease, or an 
        increase relative to other crops, in the amount of the crop 
        insurance premiums assessed to active tobacco producers under 
        the Federal Crop Insurance Act (7 U.S.C. 1501 et 
        seq.).</DELETED>
<DELETED>    (c) Determinations.--Not later than September 30, 1998, 
and each fiscal year thereafter, the Secretary shall determine--
</DELETED>
        <DELETED>    (1) the amount of costs described in subsection 
        (a); and</DELETED>
        <DELETED>    (2) the amount that will be provided under this 
        section as reimbursement for the costs.</DELETED>

<DELETED>SEC. 923. TOBACCO COMMUNITY ECONOMIC DEVELOPMENT 
              GRANTS.</DELETED>

<DELETED>    (a) Authority.--The Secretary shall make grants to 
tobacco-growing States in accordance with this section to enable the 
States to carry out economic development initiatives in tobacco-growing 
communities.</DELETED>
<DELETED>    (b) Application.--To be eligible to receive payments under 
this section, a State shall prepare and submit to the Secretary an 
application at such time, in such manner, and containing such 
information as the Secretary may require, including--</DELETED>
        <DELETED>    (1) a description of the activities that the State 
        will carry out using amounts received under the 
        grant;</DELETED>
        <DELETED>    (2) a designation of an appropriate State agency 
        to administer amounts received under the grant; and</DELETED>
        <DELETED>    (3) a description of the steps to be taken to 
        ensure that the funds are distributed in accordance with 
        subsection (e).</DELETED>
<DELETED>    (c) Amount of Grant.--</DELETED>
        <DELETED>    (1) In general.--From the amounts available to 
        carry out this section for a fiscal year, the Secretary shall 
        allot to each State an amount that bears the same ratio to the 
        amounts available as the total income of the State derived from 
        the production of tobacco during the 1994 through 1996 
        marketing years (as determined under paragraph (2)) bears to 
        the total income of all States derived from the production of 
        tobacco during the 1994 through 1996 marketing years.</DELETED>
        <DELETED>    (2) Tobacco income.--For the 1994 through 1996 
        marketing years, the Secretary shall determine the amount of 
        income derived from the production of tobacco in each State and 
        in all States.</DELETED>
<DELETED>    (d) Payments.--</DELETED>
        <DELETED>    (1) In general.--A State that has an application 
        approved by the Secretary under subsection (b) shall be 
        entitled to a payment under this section in an amount that is 
        equal to its allotment under subsection (c).</DELETED>
        <DELETED>    (2) Form of payments.--The Secretary may make 
        payments under this section to a State in installments, and in 
        advance or by way of reimbursement, with necessary adjustments 
        on account of overpayments or underpayments, as the Secretary 
        may determine.</DELETED>
        <DELETED>    (3) Reallotments.--Any portion of the allotment of 
        a State under subsection (c) that the Secretary determines will 
        not be used to carry out this section in accordance with an 
        approved State application required under subsection (b), shall 
        be reallotted by the Secretary to other States in proportion to 
        the original allotments to the other States.</DELETED>
<DELETED>    (e) Use and Distribution of Funds.--</DELETED>
        <DELETED>    (1) In general.--Amounts received by a State under 
        this section shall be used to carry out economic development 
        activities, including--</DELETED>
                <DELETED>    (A) rural business enterprise activities 
                described in subsections (c) and (e) of section 310B of 
                the Consolidated Farm and Rural Development Act (7 
                U.S.C. 1932);</DELETED>
                <DELETED>    (B) down payment loan assistance programs 
                that are similar to the program described in section 
                310E of the Consolidated Farm and Rural Development Act 
                (7 U.S.C. 1935);</DELETED>
                <DELETED>    (C) activities designed to help create 
                productive farm or off-farm employment in rural areas 
                to provide a more viable economic base and enhance 
                opportunities for improved incomes, living standards, 
                and contributions by rural individuals to the economic 
                and social development of tobacco 
                communities;</DELETED>
                <DELETED>    (D) activities that expand existing 
                infrastructure, facilities, and services to capitalize 
                on opportunities to diversify economies in tobacco 
                communities and that support the development of new 
                industries or commercial ventures;</DELETED>
                <DELETED>    (E) activities by agricultural 
                organizations that provide assistance directly to 
                active tobacco producers to assist in developing other 
                agricultural activities that supplement tobacco-
                producing activities;</DELETED>
                <DELETED>    (F) initiatives designed to create or 
                expand locally owned value-added processing and 
                marketing operations in tobacco communities; 
                and</DELETED>
                <DELETED>    (G) technical assistance activities by 
                persons to support farmer-owned enterprises, or 
                agriculture-based rural development enterprises, of the 
                type described in section 252 or 253 of the Trade Act 
                of 1974 (19 U.S.C. 2342, 2343).</DELETED>
        <DELETED>    (2) Tobacco-growing counties.--Assistance may be 
        provided by a State under this section only to assist a county 
        in the State that has been determined by the Secretary to have 
        in excess of $100,000 in income derived from the production of 
        tobacco during 1 or more of the 1994 through 1996 marketing 
        years.</DELETED>
        <DELETED>    (3) Distribution.--</DELETED>
                <DELETED>    (A) Economic development activities.--Not 
                less than 20 percent of the amounts received by a State 
                under this section shall be used to carry out--
                </DELETED>
                        <DELETED>    (i) economic development 
                        activities described in subparagraph (E) or (F) 
                        of paragraph (1); or</DELETED>
                        <DELETED>    (ii) agriculture-based rural 
                        development activities described in paragraph 
                        (1)(G).</DELETED>
                <DELETED>    (B) Technical assistance activities.--Not 
                less than 4 percent of the amounts received by a State 
                under this section shall be used to carry out technical 
                assistance activities described in paragraph 
                (1)(G).</DELETED>
                <DELETED>    (C) Tobacco-growing counties.--To be 
                eligible to receive payments under this section, a 
                State shall demonstrate to the Secretary that funding 
                will be provided, during each 5-year period for which 
                funding is provided under this section, for activities 
                in each county in the State that has been determined 
                under paragraph (2) to have in excess of $100,000 in 
                income derived from the production of tobacco, in 
                amounts that are at least equal to the product obtained 
                by multiplying--</DELETED>
                        <DELETED>    (i) the ratio that the tobacco 
                        production income in the county determined 
                        under paragraph (2) bears to the total tobacco 
                        production income for the State determined 
                        under subsection (c); by</DELETED>
                        <DELETED>    (ii) 50 percent of the total 
                        amounts received by a State under this section 
                        during the 5-year period.</DELETED>
<DELETED>    (f) Preferences in Hiring.--A State may require recipients 
of funds under this section to provide a preference in employment to--
</DELETED>
        <DELETED>    (1) an individual who--</DELETED>
                <DELETED>    (A) during the 1996 calendar year, was 
                employed in the manufacture, processing, or warehousing 
                of tobacco or tobacco products, or resided, in a county 
                described in subsection (e)(2); and</DELETED>
                <DELETED>    (B) is eligible for assistance under the 
                tobacco worker transition program established under 
                section 301; or</DELETED>
        <DELETED>    (2) an individual who--</DELETED>
                <DELETED>    (A) during the 1996 marketing year, 
                carried out tobacco quota or relevant tobacco 
                production activities in a county described in 
                subsection (e)(2);</DELETED>
                <DELETED>    (B) is eligible for a farmer opportunity 
                grant under subpart 9 of part A of title IV of the 
                Higher Education Act of 1965; and</DELETED>
                <DELETED>    (C) has successfully completed a course of 
                study at an institution of higher education.</DELETED>

<DELETED>SEC. 924. MODIFICATIONS IN FEDERAL TOBACCO PROGRAMS.</DELETED>

<DELETED>    (a) Program Referenda.--Section 312(c) of the Agricultural 
Adjustment Act of 1938 (7 U.S.C. 1312(c)) is amended--</DELETED>
        <DELETED>    (1) by striking ``(c) Within thirty'' and 
        inserting the following:</DELETED>
<DELETED>    ``(c) Referenda on Quotas.--</DELETED>
        <DELETED>    ``(1) In general.--Not later than 30''; 
        and</DELETED>
        <DELETED>    (2) by adding at the end the following:</DELETED>
        <DELETED>    ``(2) Referenda on program changes.--</DELETED>
                <DELETED>    ``(A) In general.--In the case of any kind 
                of tobacco for which marketing quotas are in effect, on 
                the receipt of a petition from more than 5 percent of 
                the producers of that kind of tobacco in a State, the 
                Secretary shall conduct a statewide referendum on any 
                proposal related to the lease and transfer of tobacco 
                quota within a State requested by the petition that is 
                authorized under this part.</DELETED>
                <DELETED>    ``(B) Approval of proposals.--If a 
                majority of producers of the kind of tobacco in the 
                State approve a proposal in a referendum conducted 
                under subparagraph (A), the Secretary shall implement 
                the proposal in a manner that applies to all producers 
and quota holders of that kind of tobacco in the State.''.</DELETED>
<DELETED>    (b) Purchase Requirements.--Section 320B of the 
Agricultural Adjustment Act of 1938 (7 U.S.C. 1314h) is amended--
</DELETED>
        <DELETED>    (1) in subsection (c), by striking paragraph (1) 
        and inserting the following:</DELETED>
        <DELETED>    ``(1) 105 percent of the average market price for 
        the kind of tobacco involved during the preceding marketing 
        year; by''; and</DELETED>
        <DELETED>    (2) by striking subsection (d) and inserting the 
        following:</DELETED>
<DELETED>    ``(d) Use of Penalty Payments.--An amount equivalent to 
each penalty collected by the Secretary under this section shall be 
transmitted by the Secretary to the Secretary of the Treasury for 
deposit in the Tobacco Community Revitalization Trust Fund established 
under section 101 of the LEAF Act.''.</DELETED>
<DELETED>    (c) Elimination of Tobacco Marketing Assessment.--
</DELETED>
        <DELETED>    (1) In general.--Section 106 of the Agricultural 
        Act of 1949 (7 U.S.C. 1445(g)) is amended by striking 
        subsection (g).</DELETED>
        <DELETED>    (2) Conforming amendment.--Section 422(c) of the 
        Uruguay Round Agreements Act (Public Law 103-465; 7 U.S.C. 1445 
        note) is amended by striking ``section 106(g), 106A, or 106B of 
        the Agricultural Act of 1949 (7 U.S.C. 1445(g), 1445-1, or 
        1445-2)'' and inserting ``section 106A or 106B of the 
        Agricultural Act of 1949 (7 U.S.C. 1445-1, 1445-2)''.</DELETED>

 <DELETED>SUBTITLE C--FARMER AND WORKER TRANSITION ASSISTANCE</DELETED>

<DELETED>SEC. 931. TOBACCO WORKER TRANSITION PROGRAM.</DELETED>

<DELETED>    (a) Group Eligibility Requirements.--</DELETED>
        <DELETED>    (1) Criteria.--A group of workers (including 
        workers in any firm or subdivision of a firm involved in the 
        manufacture, processing, or warehousing of tobacco or tobacco 
        products) shall be certified as eligible to apply for 
        adjustment assistance under this section pursuant to a petition 
        filed under subsection (b) if the Secretary of Labor determines 
        that a significant number or proportion of the workers in such 
        workers' firm or an appropriate subdivision of the firm have 
        become totally or partially separated, or are threatened to 
        become totally or partially separated, and--</DELETED>
                <DELETED>    (A) the sales or production, or both, of 
                such firm or subdivision have decreased absolutely; 
                and</DELETED>
                <DELETED>    (B) the implementation of the national 
                tobacco settlement contributed importantly to such 
                workers' separation or threat of separation and to the 
                decline in the sales or production of such firm or 
                subdivision.</DELETED>
        <DELETED>    (2) Definition of contributed importantly.--In 
        paragraph (1)(B), the term ``contributed importantly'' means a 
        cause that is important but not necessarily more important than 
        any other cause.</DELETED>
        <DELETED>    (3) Regulations.--The Secretary shall issue 
        regulations relating to the application of the criteria 
        described in paragraph (1) in making preliminary findings under 
        subsection (b) and determinations under subsection 
        (c).</DELETED>
<DELETED>    (b) Preliminary Findings and Basic Assistance.--</DELETED>
        <DELETED>    (1) Filing of petitions.--A petition for 
        certification of eligibility to apply for adjustment assistance 
        under this section may be filed by a group of workers 
        (including workers in any firm or subdivision of a firm 
        involved in the manufacture, processing, or warehousing of 
        tobacco or tobacco products) or by their certified or 
        recognized union or other duly authorized representative with 
        the Governor of the State in which such workers' firm or 
        subdivision thereof is located.</DELETED>
        <DELETED>    (2) Findings and assistance.--Upon receipt of a 
        petition under paragraph (1), the Governor shall--</DELETED>
                <DELETED>    (A) notify the Secretary that the Governor 
                has received the petition;</DELETED>
                <DELETED>    (B) within 10 days after receiving the 
                petition--</DELETED>
                        <DELETED>    (i) make a preliminary finding as 
                        to whether the petition meets the criteria 
                        described in subsection (a)(1); and</DELETED>
                        <DELETED>    (ii) transmit the petition, 
                        together with a statement of the finding under 
                        clause (i) and reasons for the finding, to the 
                        Secretary for action under subsection (c); 
                        and</DELETED>
                <DELETED>    (C) if the preliminary finding under 
                subparagraph (B)(i) is affirmative, ensure that rapid 
                response and basic readjustment services authorized 
                under other Federal laws are made available to the 
                workers.</DELETED>
<DELETED>    (c) Review of Petitions by Secretary; Certifications.--
</DELETED>
        <DELETED>    (1) In general.--The Secretary, within 30 days 
        after receiving a petition under subsection (b)(2)(B)(ii), 
        shall determine whether the petition meets the criteria 
        described in subsection (a)(1). Upon a determination that the 
        petition meets such criteria, the Secretary shall issue to 
        workers covered by the petition a certification of eligibility 
        to apply for the assistance described in subsection 
        (d).</DELETED>
        <DELETED>    (2) Denial of certification.--Upon the denial of a 
        certification with respect to a petition under paragraph (1), 
        the Secretary shall review the petition in accordance with the 
        requirements of other applicable assistance programs to 
        determine if the workers may be certified under such other 
        provisions.</DELETED>
<DELETED>    (d) Comprehensive Assistance.--</DELETED>
        <DELETED>    (1) In general.--Workers covered by a 
        certification issued by the Secretary under subsection (c)(1) 
        shall be provided with benefits and services described in 
        paragraph (2) in the same manner and to the same extent as 
        workers covered under a certification under subchapter A of 
        title II of the Trade Act of 1974 (19 U.S.C. 2271 et seq.), 
        except that the total amount of payments under this section for 
        any fiscal year shall not exceed $50,000,000.</DELETED>
        <DELETED>    (2) Benefits and services.--The benefits and 
        services described in this paragraph are the 
        following:</DELETED>
                <DELETED>    (A) Employment services of the type 
                described in section 235 of the Trade Act of 1974 (19 
                U.S.C. 2295).</DELETED>
                <DELETED>    (B) Training described in section 236 of 
                the Trade Act of 1974 (19 U.S.C. 2296), except that 
                notwithstanding the provisions of section 236(a)(2)(A) 
                of such Act, the total amount of payments for training 
                under this section for any fiscal year shall not exceed 
                $25,000,000.</DELETED>
                <DELETED>    (C) Tobacco worker readjustment 
                allowances, which shall be provided in the same manner 
                as trade readjustment allowances are provided under 
                part I of subchapter B of chapter 2 of title II of the 
                Trade Act of 1974 (19 U.S.C. 2291 et seq.), except 
                that--</DELETED>
                        <DELETED>    (i) the provisions of sections 
                        231(a)(5)(C) and 231(c) of such Act (19 U.S.C. 
                        2291(a)(5)(C), 2291(c)), authorizing the 
                        payment of trade readjustment allowances upon a 
                        finding that it is not feasible or appropriate 
                        to approve a training program for a worker, 
                        shall not be applicable to payment of 
                        allowances under this section; and</DELETED>
                        <DELETED>    (ii) notwithstanding the 
                        provisions of section 233(b) of such Act (19 
                        U.S.C. 2293(b)), in order for a worker to 
                        qualify for tobacco readjustment allowances 
                        under this section, the worker shall be 
                        enrolled in a training program approved by the 
                        Secretary of the type described in section 
                        236(a) of such Act (19 U.S.C. 2296(a)) by the 
                        later of--</DELETED>
                                <DELETED>    (I) the last day of the 
                                16th week of such worker's initial 
                                unemployment compensation benefit 
                                period; or</DELETED>
                                <DELETED>    (II) the last day of the 
                                6th week after the week in which the 
                                Secretary issues a certification 
                                covering such worker.</DELETED>
                        <DELETED>In cases of extenuating circumstances 
                        relating to enrollment of a worker in a 
                        training program under this section, the 
                        Secretary may extend the time for enrollment 
                        for a period of not to exceed 30 
                        days.</DELETED>
                <DELETED>    (D) Job search allowances of the type 
                described in section 237 of the Trade Act of 1974 (19 
                U.S.C. 2297).</DELETED>
                <DELETED>    (E) Relocation allowances of the type 
                described in section 238 of the Trade Act of 1974 (19 
                U.S.C. 2298).</DELETED>
<DELETED>    (e) Ineligibility of Individuals Receiving Payments for 
Lost Tobacco Quota.--No benefits or services may be provided under this 
section to any individual who has received payments for lost tobacco 
quota under section 201.</DELETED>
<DELETED>    (f) Funding.--Of the amounts in the Trust Fund, the 
Secretary may use not to exceed $50,000,000 for each of fiscal years 
1999 through 2008 to provide assistance under this section.</DELETED>
<DELETED>    (g) Effective Date.--This section shall take effect on the 
date that is the later of--</DELETED>
        <DELETED>    (1) October l, 1998; or</DELETED>
        <DELETED>    (2) the date on which legislation implementing the 
        national tobacco settlement is enacted.</DELETED>
<DELETED>    (h) Termination Date.--No assistance, vouchers, 
allowances, or other payments may be provided under this section after 
the date that is the earlier of--</DELETED>
        <DELETED>    (1) the date that is 10 years after the effective 
        date of this section under subsection (g); or</DELETED>
        <DELETED>    (2) the date on which legislation establishing a 
        program providing dislocated workers with comprehensive 
        assistance substantially similar to the assistance provided by 
        this section becomes effective.</DELETED>

<DELETED>SEC. 932. FARMER OPPORTUNITY GRANTS.</DELETED>

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

       <DELETED>``Subpart 9--Farmer Opportunity Grants</DELETED>

<DELETED>``SEC. 420D. STATEMENT OF PURPOSE.</DELETED>

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

<DELETED>``SEC. 420E. PROGRAM AUTHORITY; AMOUNT AND DETERMINATIONS; 
              APPLICATIONS.</DELETED>

<DELETED>    ``(a) Program Authority and Method of Distribution.--
</DELETED>
        <DELETED>    ``(1) Program authority.--From amounts made 
        available under section 101(d)(5) of the LEAF Act, the 
        Secretary, during the period beginning July 1, 1999, and ending 
        September 30, 2024, shall pay to each eligible institution such 
        sums as may be necessary to pay to each eligible student 
        (determined in accordance with section 420F) for each academic 
        year during which that student is in attendance at an 
        institution of higher education, as an undergraduate, a farmer 
        opportunity grant in the amount for which that student is 
        eligible, as determined pursuant to subsection (b). Not less 
        than 85 percent of such sums shall be advanced to eligible 
        institutions prior to the start of each payment period and 
        shall be based upon an amount requested by the institution as 
        needed to pay eligible students, except that this sentence 
        shall not be construed to limit the authority of the Secretary 
        to place an institution on a reimbursement system of 
        payment.</DELETED>
        <DELETED>    ``(2) Construction.--Nothing in this section shall 
        be construed to prohibit the Secretary from paying directly to 
        students, in advance of the beginning of the academic term, an 
        amount for which the students are eligible, in cases where the 
        eligible institution elects not to participate in the 
        disbursement system required by paragraph (1).</DELETED>
        <DELETED>    ``(3) Designation.--Grants made under this subpart 
        shall be known as `farmer opportunity grants'.</DELETED>
<DELETED>    ``(b) Amount of Grants.--</DELETED>
        <DELETED>    ``(1) Amounts.--</DELETED>
                <DELETED>    ``(A) In general.--The amount of the grant 
                for a student eligible under this subpart shall be--
                </DELETED>
                        <DELETED>    ``(i) $1,700 for each of the 
                        academic years 1999-2000 through 2003-
                        2004;</DELETED>
                        <DELETED>    ``(ii) $2,000 for each of the 
                        academic years 2004-2005 through 2008-
                        2009;</DELETED>
                        <DELETED>    ``(iii) $2,300 for each of the 
                        academic years 2009-2010 through 2013-
                        2014;</DELETED>
                        <DELETED>    ``(iv) $2,600 for each of the 
                        academic years 2014-2015 through 2018-2019; 
                        and</DELETED>
                        <DELETED>    ``(v) $2,900 for each of the 
                        academic years 2019-2020 through 2023-
                        2024.</DELETED>
                <DELETED>    ``(B) Part-time rule.--In any case where a 
                student attends an institution of higher education on 
                less than a full-time basis (including a student who 
                attends an institution of higher education on less than 
                a half-time basis) during any academic year, the amount 
                of the grant for which that student is eligible shall 
                be reduced in proportion to the degree to which that 
                student is not so attending on a full-time basis, in 
                accordance with a schedule of reductions established by 
                the Secretary for the purposes of this subparagraph, 
                computed in accordance with this subpart. Such schedule 
                of reductions shall be established by regulation and 
                published in the Federal Register.</DELETED>
        <DELETED>    ``(2) Maximum.--No grant under this subpart shall 
        exceed the cost of attendance (as described in section 472) at 
        the institution at which that student is in attendance. If, 
        with respect to any student, it is determined that the amount 
        of a grant exceeds the cost of attendance for that year, the 
        amount of the grant shall be reduced to an amount equal to the 
        cost of attendance at such institution.</DELETED>
        <DELETED>    ``(3) Prohibition.--No grant shall be awarded 
        under this subpart to any individual who is incarcerated in any 
        Federal, State, or local penal institution.</DELETED>
<DELETED>    ``(c) Period of Eligibility for Grants.--</DELETED>
        <DELETED>    ``(1) In general.--The period during which a 
        student may receive grants shall be the period required for the 
        completion of the first undergraduate baccalaureate course of 
        study being pursued by that student at the institution at which 
        the student is in attendance, except that any period during 
        which the student is enrolled in a noncredit or remedial course 
        of study as described in paragraph (2) shall not be counted for 
        the purpose of this paragraph.</DELETED>
        <DELETED>    ``(2) Construction.--Nothing in this section shall 
        be construed to--</DELETED>
                <DELETED>    ``(A) exclude from eligibility courses of 
                study that are noncredit or remedial in nature and that 
                are determined by the institution to be necessary to 
                help the student be prepared for the pursuit of a first 
                undergraduate baccalaureate degree or certificate or, 
                in the case of courses in English language instruction, 
                to be necessary to enable the student to utilize 
                already existing knowledge, training, or skills; 
                and</DELETED>
                <DELETED>    ``(B) exclude from eligibility programs of 
                study abroad that are approved for credit by the home 
                institution at which the student is enrolled.</DELETED>
        <DELETED>    ``(3) Prohibition.--No student is entitled to 
        receive farmer opportunity grant payments concurrently from 
        more than 1 institution or from the Secretary and an 
        institution.</DELETED>
<DELETED>    ``(d) Applications for Grants.--</DELETED>
        <DELETED>    ``(1) In general.--The Secretary shall from time 
        to time set dates by which students shall file applications for 
        grants under this subpart. The filing of applications under 
        this subpart shall be coordinated with the filing of 
        applications under section 401(c).</DELETED>
        <DELETED>    ``(2) Information and assurances.--Each student 
        desiring a grant for any year shall file with the Secretary an 
        application for the grant containing such information and 
        assurances as the Secretary may deem necessary to enable the 
        Secretary to carry out the Secretary's functions and 
        responsibilities under this subpart.</DELETED>
<DELETED>    ``(e) Distribution of Grants to Students.--Payments under 
this section shall be made in accordance with regulations promulgated 
by the Secretary for such purpose, in such manner as will best 
accomplish the purpose of this section. Any disbursement allowed to be 
made by crediting the student's account shall be limited to tuition and 
fees and, in the case of institutionally owned housing, room and board. 
The student may elect to have the institution provide other such goods 
and services by crediting the student's account.</DELETED>
<DELETED>    ``(f) Insufficient Funding.--If, for any fiscal year, the 
funds made available to carry out this subpart from the Tobacco 
Community Revitalization Trust Fund are insufficient to satisfy fully 
all grants for students determined to be eligible under section 420F, 
the amount of the grant provided under subsection (b) shall be reduced 
on a pro rata basis among all eligible students.</DELETED>
<DELETED>    ``(g) Treatment of Institutions and Students Under Other 
Laws.--Any institution of higher education that enters into an 
agreement with the Secretary to disburse to students attending that 
institution the amounts those students are eligible to receive under 
this subpart shall not be deemed, by virtue of such agreement, to be a 
contractor maintaining a system of records to accomplish a function of 
the Secretary. Recipients of farmer opportunity grants shall not be 
considered to be individual grantees for purposes of the Drug-Free 
Workplace Act of 1988 (41 U.S.C. 701 et seq.).</DELETED>

<DELETED>``SEC. 420F. STUDENT ELIGIBILITY.</DELETED>

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

                <DELETED>SUBTITLE D--IMMUNITY</DELETED>

<DELETED>SEC. 941. GENERAL IMMUNITY FOR TOBACCO PRODUCERS AND 
              WAREHOUSERS.</DELETED>

<DELETED>    Notwithstanding any other provision of this title, an 
active tobacco producer, tobacco-related growers association, or 
tobacco warehouse owner or employee may not be subject to liability in 
any Federal or State court for any cause of action resulting from the 
failure of any tobacco product manufacturer, distributor, or retailer 
to comply with national tobacco settlement legislation.</DELETED>

    <DELETED>TITLE X--EFFECTIVE DATES AND OTHER PROVISIONS</DELETED>

<DELETED>SEC. 1001. EFFECTIVE DATES.</DELETED>

<DELETED>    (a) In General.--Except as provided in subsection (b), and 
as otherwise provided in this Act, the provisions of this Act shall 
take effect on the date of enactment of this Act.</DELETED>
<DELETED>    (b) Exceptions.--The following provisions shall become 
effective as follows:</DELETED>
        <DELETED>    (1) The retail tobacco product display provisions 
        under subtitle A of title I shall be applicable to retailers on 
        the date that is 9 months after the date of enactment of this 
        Act.</DELETED>
        <DELETED>    (2) The provisions relating to the display of 
        tobacco product signs and displays by retailers under subtitle 
        A of title I shall be applicable to retailers on the date that 
        is 5 months after the date of enactment of this Act.</DELETED>
        <DELETED>    (3) The provisions of subtitle A of title I 
        relating to advertising shall be applicable on the date that is 
        9 months after the date of enactment of this Act.</DELETED>
        <DELETED>    (4) The labeling requirements of subtitle A of 
        title I and of chapter 9 of the Federal Food, Drug and Cosmetic 
        Act (as added by section 143(3) of this Act) shall be 
        applicable (as determined under regulations promulgated by the 
        Secretary) with respect to--</DELETED>
                <DELETED>    (A) </DELETED>\<DELETED>1/3</DELETED>\ 
                <DELETED>of all tobacco product packages, on the date 
                that is 90 days after the date of enactment of this 
                Act;</DELETED>
                <DELETED>    (B) </DELETED>\<DELETED>1/3</DELETED>\ 
                <DELETED>of all tobacco product packages, on the date 
                that is 120 days after the date of enactment of this 
                Act; and</DELETED>
                <DELETED>    (C) </DELETED>\<DELETED>1/3</DELETED>\ 
                <DELETED>of all tobacco product packages, on the date 
                that is 180 days after the date of enactment of this 
                Act.</DELETED>
        <DELETED>    (5) The provisions of section 105 relating to the 
        sponsorship of events shall be applicable on December 31, 
        1998.</DELETED>
        <DELETED>    (6) The provisions of section 121 shall be 
        applicable on the date that is 3 months after the date of 
        enactment of this Act.</DELETED>
        <DELETED>    (7) The provisions of section 122 relating to 
        vending machines shall be applicable on the date that is 12 
        months after the date of enactment of this Act.</DELETED>
        <DELETED>    (8) The provisions of section 122 relating to 
        minimum package size shall be applicable on the date that is 3 
        months after the date of enactment of this Act.</DELETED>
        <DELETED>    (9) The provisions of section 122 relating to 
        vending machines shall be applicable on the date that is 12 
        months after the date of enactment of this Act.</DELETED>
        <DELETED>    (10) The provisions of section 122 relating to 
        sampling shall be applicable on the date that is 3 months after 
        the date of enactment of this Act.</DELETED>
        <DELETED>    (11) The provisions of section 909 of the Federal 
        Food, Drug and Cosmetic Act (as added by section 143(3) of this 
        Act) relating to good manufacturing practices shall be 
        applicable on the date that is 24 months after the date of 
        enactment of this Act or on a date determined appropriate by 
        the Secretary.</DELETED>
        <DELETED>    (12) The provisions of subtitle F of title I 
        relating to corporate compliance shall be applicable on the 
        date that is 12 months after the date of enactment of this 
        Act.</DELETED>

<DELETED>SEC. 1002. NATIVE AMERICANS.</DELETED>

<DELETED>    (a) Indian Country.--The provisions of this Act (or an 
amendment made by this Act) shall apply to the manufacture, 
distribution, and sale of tobacco products within Indian 
country.</DELETED>
<DELETED>    (b) Indian Tribes.--To the extent that an Indian tribe or 
tribal organization engages in the manufacture, distribution, or sale 
of tobacco products, the provisions of this Act (or an amendment made 
by this Act) shall apply to such tribe or organization.</DELETED>
<DELETED>    (c) Payments to Trust Fund.--Any Indian tribe or tribal 
organization that engages in the manufacturer of tobacco products shall 
be subject to liability under section 402, or shall be considered a 
non-participating manufacturer for purposes of section 613, and shall 
be subject to surcharges under section 205.</DELETED>
<DELETED>    (d) Application of FDA Requirements.--</DELETED>
        <DELETED>    (1) In general.--The Secretary shall promulgate 
        regulations to provide for the application of the requirements 
        of the Food, Drug and Cosmetic Act to tobacco products 
        manufactured, distributed, or sold within Indian 
        country.</DELETED>
        <DELETED>    (2) Eligibility for assistance.--Under the 
        regulations promulgated under paragraph (1), the Secretary may 
        provide assistance to an Indian tribe or tribal organization in 
        meeting and enforcing the requirements under such regulations 
        if--</DELETED>
                <DELETED>    (A) the tribe or organization has a 
                governing body that has powers and carries out duties 
                that are similar to the powers and duties of State or 
                local governments;</DELETED>
                <DELETED>    (B) the functions to be exercised through 
                the use of such assistance relate to activities on 
                lands within the jurisdiction of the tribe or 
                organization; and</DELETED>
                <DELETED>    (C) the tribe or organization is 
                reasonably expected to be capable of carrying out the 
                functions required by the Secretary.</DELETED>
<DELETED>    (e) Retail Licensing Requirements.--</DELETED>
        <DELETED>    (1) In general.--The requirements of subtitle D of 
        title I shall apply to retailers that sell tobacco products 
        within Indian country.</DELETED>
        <DELETED>    (2) Self-regulation.--The Secretary shall 
        promulgate regulations to permit the Indian tribe or tribal 
        organization with jurisdiction over the lands involved to 
        implement a tribal licensing program that is at least as strict 
        as the program in operation in the State in which the land 
        involved is located.</DELETED>
        <DELETED>    (3) Implementation by secretary.--If the Secretary 
        determines that the Indian tribe or tribal organization is not 
        qualified to administer the requirements of subtitle D of title 
        I, the Secretary shall implement such requirements on behalf of 
        the tribe or organization or delegate such authority to the 
        State involved.</DELETED>
<DELETED>    (f) Eligibility for Public Health Payments.--</DELETED>
        <DELETED>    (1) In general.--Except as provided in paragraph 
        (2), an Indian tribe or tribal organization shall be considered 
        a State for purposes of eligibility under title V.</DELETED>
        <DELETED>    (2) Public health program.--</DELETED>
                <DELETED>    (A) In general.--Each State that receives 
                a payment under section 502 shall set-aside an 
                appropriate portion, as determined under regulations 
                prescribed by the Secretary, of such payment for use by 
                Indian tribes or tribal organizations within the 
                State.</DELETED>
                <DELETED>    (B) Amount.--The amount of any funds under 
                subparagraph for which an Indian tribe or tribal 
                organization is eligible shall be determined by the 
                State based on the proportion of the registered members 
                of the tribe involved as compared to the total 
                population of all such registered members in the 
                State.</DELETED>
                <DELETED>    (C) Use.--Amounts provided to a tribe or 
                organization under this paragraph shall be used as 
                provided for in section 504 and in accordance with a 
                plan submitted by the tribe or organization and 
                approved by the Secretary as being in compliance with 
                this Act.</DELETED>
                <DELETED>    (D) Reallotment.--Any amounts set-aside 
                and not expended under this paragraph shall be 
                reallotted among other eligible tribes and 
                organizations.</DELETED>
<DELETED>    (g) Obligation of Manufacturers.--</DELETED>
        <DELETED>    (1) Prohibition.--A manufacturer shall not engage 
        in any activity within Indian country that is otherwise 
        prohibited under this Act (or an amendment made by this 
        Act).</DELETED>
        <DELETED>    (2) Limitation on sale.--A manufacturer shall not 
        sell or otherwise distribute a tobacco product for subsequent 
        manufacture, distribution, or sale to an Indian tribe or tribal 
        organization, or provide such products to a manufacturer, 
        distributor, or retailer that is subject to the jurisdiction of 
        a tribe or organization, except under the same terms and 
        conditions as the manufacturer imposes on other manufacturers, 
        distributors, or retailers.</DELETED>
<DELETED>    (h) Definitions.--In this section:</DELETED>
        <DELETED>    (1) Indian country.--The term ``Indian country'' 
        has the meaning given such term by section 1151 of title 18, 
        United States Code.</DELETED>
        <DELETED>    (2) Indian tribe.--The term ``Indian tribe'' has 
        the meaning given to such term by section 4(e) of the Indian 
        Self-Determination and Education Assistance Act (25 U.S.C. 
        450b(e)).</DELETED>
        <DELETED>    (3) Tribal organization.--The term ``tribal 
        organization'' has the meaning given such term in section 4 of 
        the Indian Self Determination and Education Assistance Act (25 
        U.S.C. 450b).</DELETED>

<DELETED>SEC. 1003. PREEMPTION.</DELETED>

<DELETED>    (a) General Preemption.--Except as otherwise provided for 
in this section, nothing in this Act shall be construed as prohibiting 
a State from imposing requirements, prohibitions, penalties or other 
measures to further the purposes of this Act that are in addition to 
the requirements, prohibitions, or penalties required under this Act. 
To the extent not inconsistent with the purposes of this Act, State and 
local governments may impose additional tobacco product control 
measures to further restrict or limit the use of such products by 
minors.</DELETED>
<DELETED>    (b) Enforcement.--A State may not impose obligations or 
requirements relating to the enforcement of this Act in a manner that 
conflicts with the provisions of title VI.</DELETED>
<DELETED>    (c) Public Exposure to Smoke.--Nothing in title III shall 
be construed to preempt or otherwise affect any other Federal, State or 
local law which provides greater protection from the health hazards of 
environmental tobacco smoke.</DELETED>
<DELETED>    (d) Taxes.--Nothing in this Act shall be construed to 
prohibit a State from imposing taxes on tobacco products or tobacco 
product manufacturers, distributors, or retailers.</DELETED>
<DELETED>    (e) Native Americans.--Except as provided in section 902, 
a State may not impose obligations or requirements relating to the 
application of this Act to Indian tribes and tribal 
organizations.</DELETED>

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``National Tobacco 
Policy and Youth Smoking Reduction Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Purpose.
Sec. 4. Scope and effect.
Sec. 5. Non-preemption of more restrictive laws.
Sec. 6. Definitions.
Sec. 7. Notification if youthful cigarette smoking restrictions 
                            increase youthful pipe and cigar smoking.
Sec. 8. Liability limitations disappear if manufacturers challenge 
                            advertising limits.
Sec. 9. FTC jurisdiction not affected.
Sec. 10. Congressional review provisions.

              TITLE I--REGULATION OF THE TOBACCO INDUSTRY

    Subtitle A--Jurisdiction, Etc., of Food and Drug Administration

Sec. 101. Amendment of Federal Food, Drug, and Cosmetic Act of 1938.

                     ``CHAPTER IX--TOBACCO PRODUCTS

        ``Sec. 901. FDA authority over tobacco products
        ``Sec. 902. Adulterated tobacco products.
        ``Sec. 903. Misbranded tobacco products.
        ``Sec. 904. Submission of health information to the Secretary.
        ``Sec. 905. Registration.
        ``Sec. 906. General provisions respecting control of tobacco 
                            products.
        ``Sec. 907. Performance standards.
        ``Sec. 908. Notification and other remedies
        ``Sec. 909. Records and reports on tobacco products.
        ``Sec. 910. Premarket review of certain tobacco products.
        ``Sec. 911. Judicial review.
        ``Sec. 912. Postmarket surveillance
        ``Sec. 913. Reduced risk tobacco products.
        ``Sec. 914. Preservation of State and local authority.
        ``Sec. 915. Tobacco Products Scientific Advisory Committee.
        ``Sec. 916. Equal treatment of retail outlets.
Sec. 102. Conforming and other amendments to general provisions.

                        Subtitle B--Advertising

Sec. 121. Advertising provisions in protocol.
Sec. 122. Tobacco product labeling and advertising .
Sec. 123. Point-of-sale restrictions.

              TITLE II--REDUCTIONS IN UNDERAGE TOBACCO USE

                        Subtitle A--Underage Use

Sec. 201. Goals for reducing underage tobacco use.
Sec. 202. Look-back assessment.
Sec. 203. Substantial non-attainment of required reductions.
Sec. 204. Definitions.

                Subtitle B--State Enforcement Incentives

Sec. 211. Compliance bonus fund.
Sec. 212. Block grants.
Sec. 213. State enforcement incentives.
Sec. 214. Conforming change.

                       Subtitle C--Other Programs

Sec. 221. National smoking cessation program.
Sec. 222. National tobacco-free public education program.
Sec. 223. National community action program.
Sec. 224. State retail licensing program.

  TITLE III--TOBACCO PRODUCT WARNINGS AND SMOKE CONSTITUENT DISCLOSURE

          Subtitle A--Product Warnings, Labeling and Packaging

Sec. 301. Cigarette label and advertising warnings.
        ``Sec. 4. Labeling.
Sec. 302. Authority to revise cigarette warning label statements.
Sec. 303. Smokeless tobacco labels and advertising warnings.
        ``Sec. 3. Smokeless tobacco warning.
Sec. 304. Authority to revise smokeless tobacco product warning label 
                            statements.
Sec. 305. Tar, nicotine, and other smoke constituent disclosure to the 
                            public.

Subtitle B--Testing and Reporting of Tobacco Product Smoke Constituents

Sec. 311. Regulation requirement.

            TITLE IV--NATIONAL TOBACCO SETTLEMENT TRUST FUND

                 Subtitle A--General Payment Provisions

Sec. 401. Establishment of trust fund.
Sec. 402. State litigation settlement account.
Sec. 403. Payments by industry
Sec. 404. Adjustments.
Sec. 405. Tax treatment of payments.
Sec. 406. Enforcement for nonpayment.
Sec. 407. Administrative provisions.

                Subtitle B--General Spending Provisions

Sec. 411. Implementing and enforcement funds.
Sec. 412. Improving child care and early childhood development.

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

Sec. 501. Definitions.
Sec. 502. Smoke-free environment policy.
Sec. 503. Citizen actions.
Sec. 504. Preemption.
Sec. 505. Regulations.
Sec. 506. Effective date.
Sec. 507. State choice.

                 TITLE VI--APPLICATION TO INDIAN TRIBES

Sec. 601. Short title.
Sec. 602. Findings and purposes.
Sec. 603. Application of tobacco-related provisions to native 
                            Americans.
Sec. 604. State tobacco excise tax compliance.

    TITLE VII--CIVIL LIABILITY OF MANUFACTURERS OF TOBACCO PRODUCTS

Sec. 701. Definitions.
Sec. 702. Application.
Sec. 703. Preemption and relationship to other law.
Sec. 704. Governmental claims and Castano civil actions.
Sec. 705. Concurrent jurisdiction; Federal cause of action; actions; 
                            damages; liability.
Sec. 706. Payment of tobacco claim settlements and judgments.
Sec. 707. Attorney's fees and expenses.
Sec. 708. Non-participating manufacturers.
Sec. 709. Conforming amendments.

 TITLE VIII--TOBACCO INDUSTRY COMPLIANCE AND EMPLOYEE PROTECTION FROM 
                               REPRISALS

Sec. 801. Tobacco industry compliance accountability requirements.
Sec. 802. Tobacco product manufacturer employee protection.

       TITLE IX--PUBLIC DISCLOSURE OF TOBACCO INDUSTRY DOCUMENTS

Sec. 901. Findings.
Sec. 902. Applicability.
Sec. 903. National Tobacco Document Depository.
Sec. 904. Privilege and trade secret claims.
Sec. 905. Disclosure by the depository.
Sec. 906. National Tobacco Documents Review Board.
Sec. 907. Resolution of disputed privilege and trade secret claims.
Sec. 908. Appeal of board decision.
Sec. 909. Miscellaneous.
Sec. 910. Penalties.
Sec. 911. Definitions.

           TITLE X--LONG-TERM ECONOMIC ASSISTANCE FOR FARMERS

Sec. 1001. Short title.
Sec. 1002. Definitions.

        Subtitle A--Tobacco Community Revitalization Trust Fund

Sec. 1011. Establishment of trust fund.
Sec. 1012. Contributions by tobacco product manufacturers and 
                            importers.

            Subtitle B--Tobacco Market Transition Assistance

Sec. 1021. Payments for lost tobacco quota.
Sec. 1022. Industry payments for all department costs associated with 
                            tobacco production.
Sec. 1023. Tobacco community economic development grants.
Sec. 1024. Flue-cured tobacco production permits.
        ``Sec. 317a. Flue-cured tobacco production permits.
Sec. 1025. Modifications in federal tobacco programs.

          Subtitle C--Farmer and Worker Transition Assistance

Sec. 1031. Tobacco worker transition program.
Sec. 1032. Farmer opportunity grants.

                 ``Subpart 9--Farmer Opportunity Grants

        ``Sec. 420d. Statement of purpose.
        ``Sec. 420e. Program authority; amount and determinations; 
                            applications.
        ``Sec. 420f. Student eligibility.

                          Subtitle D--Immunity

Sec. 1041. General immunity for tobacco producers and tobacco warehouse 
                            owners.

                        TITLE XI--MISCELLANEOUS

   Subtitle A--Prohibitions Relating to Tobacco Products and Children

Sec. 1101. Short title.
Sec. 1102. Prohibitions relating to tobacco products and children.
        ``Sec. 804. Prohibition on sale or distribution of tobacco 
                            products to children.
        ``Sec. 805. Labeling.
Sec. 1103. Enforcement.
Sec. 1104. Reward.
Sec. 1105. Definitions.
Sec. 1106. Amendments to Public Health Service Act.

        ``TITLE XXVIII--NATIONAL EFFORTS TO REDUCE YOUTH SMOKING

   ``Subtitle E--Reducing Youth Smoking and Tobacco-Related Diseases 
                            Through Research

        ``Sec. 2801. Study by the Institute of Medicine.
        ``Sec. 2802. National tobacco task force.
        ``Sec. 2803. Research activities of the Centers for Disease 
                            Control and Prevention.
        ``Sec. 2804. Research activities of the National Institutes of 
                            Health.
Sec. 1107. Ban on distribution of tobacco products produced by child 
                            labor.

     Subtitle B--Federal Licensing of Tobacco Product Distribution

Sec. 1121. Licensing of Tobacco Product Distribution.

                  Subtitle C--International Provisions

Sec. 1131. International tobacco control trust fund.
Sec. 1132. American center on global health and tobacco.
Sec. 1133. Prohibition on use of funds to facilitate the exportation or 
                            promotion of tobacco.
Sec. 1134. Harmonization with United States international commitments 
                            and obligations.

              Subtitle D--Prevention of Tobacco Smuggling

Sec. 1141. Definitions.
Sec. 1142. Tobacco product labeling requirements.
Sec. 1143. Requirements for the tracking of tobacco products.
Sec. 1144. Tobacco product permits.
Sec. 1145. Prohibitions.
Sec. 1146. Pricing and labeling of products sold on military 
                            installations or by native Americans.
Sec. 1147. Prohibition against sale of tobacco products in or to duty-
                            free shops or forwarding through or 
                            manufacture in trade zones.
Sec. 1148. Jurisdiction; penalties; compromise of liability.
Sec. 1149. Amendments to the Contraband Cigarette Trafficking Act.
Sec. 1150. Authorization of appropriations.

                    Subtitle E--Antitrust Exemption

Sec. 1161. Limited Antitrust Exemption.

     Subtitle F--Special Provisions Concerning Programs for Women, 
                         Minorities, and Others

Sec. 1171. Research related to patterns of smoking by women and 
                            minorities.
Sec. 1172. Counter-advertising programs.
Sec. 1173. Prevention activities of community and migrant health 
                            centers.

                    Subtitle G--Sense of the Senate

Sec. 1181. Sense of the Senate.

Subtitle H--Ban On Sale Of Tobacco Products Through The Use Of Vending 
                                Machines

Sec. 1191. Ban of sale of tobacco products through the use of vending 
                            machines.

                 TITLE XII--TOBACCO ASBESTOS TRUST FUND

Sec. 1201. Definitions.
Sec. 1202. Tobacco Asbestos Trust Fund.
Sec. 1203. Payments from fund I.
Sec. 1204. Payments from fund II.
Sec. 1205. Transfers from National Tobacco Settlement Trust Fund.
Sec. 1206. Rules for claims against asbestos trusts, asbestos 
                            defendants, and tobacco companies.

                     TITLE XIII--VETERANS' BENEFITS

Sec. 1301. Recovery by secretary of veterans affairs.

    ``Part VII--Recovery of Compensation Costs for Tobacco-Related 
                          Disability or Death

``CHAPTER 91--TORT LIABILITY FOR DISABILITY OR DEATH DUE TO TOBACCO USE

        ``Sec.  9101. Recovery by Secretary of Veterans Affairs
        ``Sec.  9102. Regulations
        ``Sec.  9103. Limitation or repeal of other provisions for 
                            recovery of compensation
        ``Sec.  9104. Exemption from annual limitation on damages

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) The use of tobacco products by the Nation's children is 
        a pediatric disease of epic and worsening proportions that 
        results in new generations of tobacco-dependent children and 
        adults.
            (2) A consensus exists within the scientific and medical 
        communities that tobacco products are inherently dangerous and 
        cause cancer, heart disease, and other serious adverse health 
        effects.
            (3) Nicotine is an addictive drug.
            (4) Virtually all new users of tobacco products are under 
        the minimum legal age to purchase such products.
            (5) Tobacco advertising and marketing contribute 
        significantly to the use of nicotine-containing tobacco 
        products by adolescents.
            (6) Because past efforts to restrict advertising and 
        marketing of tobacco products have failed adequately to curb 
        tobacco use by adolescents, comprehensive restrictions on the 
        sale, promotion, and distribution of such products are needed.
            (7) Federal and State governments have lacked the legal and 
        regulatory authority and resources they need to address 
        comprehensively the public health and societal problems caused 
        by the use of tobacco products.
            (8) Federal and State public health officials, the public 
        health community, and the public at large recognize that the 
        tobacco industry should be subject to ongoing oversight.
            (9) Under Article I, Section 8 of the Constitution, the 
        Congress is vested with the responsibility for regulating 
        interstate commerce and commerce with Indian tribes.
            (10) The sale, distribution, marketing, advertising, and 
        use of tobacco products are activities in and substantially 
        affecting interstate commerce. Such products are sold, 
        marketed, advertised, and distributed in interstate commerce on 
        a nationwide basis, and have a substantial effect on the 
        Nation's economy.
            (11) The sale, distribution, marketing, advertising, and 
        use of such products substantially affect interstate commerce 
        through the health care and other costs attributable to the use 
        of tobacco products.
            (12) Civil actions against tobacco product manufacturers 
        and others are pending in Federal and State courts arising from 
        the use, marketing, and sale of tobacco products. Among these 
        actions are cases brought by the attorneys general of more than 
        40 States, certain cities and counties, and the Commonwealth of 
        Puerto Rico, and other parties, including Indian tribes, and 
        class actions brought by private claimants (such as in the 
        Castano Civil Actions), seeking to recover monies expended to 
        treat tobacco-related diseases and for the protection of minors 
        and consumers, as well as penalties and other relief for 
        violations of antitrust, health, consumer protection, and other 
        laws.
            (13) Civil actions have been filed throughout the United 
        States against tobacco product manufacturers and their 
        distributors, trade associations, law firms, and consultants on 
        behalf of individuals or classes of individuals claiming to be 
        dependent upon and injured by tobacco products.
            (14) These civil actions are complex, time-consuming, 
        expensive, and burdensome for both the litigants and Federal 
        and State courts. To date, these civil actions have not 
        resulted in sufficient redress for smokers or non-governmental 
        third-party payers. To the extent that governmental entities 
        have been or may in the future be compensated for tobacco-
        related claims they have brought, it is not now possible to 
        identify what portions of such past or future recoveries can be 
        attributed to their various antitrust, health, consumer 
        protection, or other causes of action.
            (15) It is in the public interest for Congress to adopt 
        comprehensive public health legislation because of tobacco's 
        unique position in the Nation's history and economy; the need 
        to prevent the sale, distribution, marketing and advertising of 
        tobacco products to persons under the minimum legal age to 
        purchase such products; and the need to educate the public, 
        especially young people, regarding the health effects of using 
        tobacco products.
            (16) The public interest requires a timely, fair, 
        equitable, and consistent result that will serve the public 
        interest by (A) providing that a portion of the costs of 
        treatment for diseases and adverse health effects associated 
        with the use of tobacco products is borne by the manufacturers 
        of these products, and (B) restricting throughout the Nation 
        the sale, distribution, marketing, and advertising of tobacco 
        products only to persons of legal age to purchase such 
        products.
            (17) Public health authorities estimate that the benefits 
        to the Nation of enacting Federal legislation to accomplish 
these goals would be significant in human and economic terms.
            (18) Reducing the use of tobacco by minors by 50 percent 
        would prevent well over 60,000 early deaths each year and save 
        up to $43 billion each year in reduced medical costs, improved 
        productivity, and the avoidance of premature deaths.
            (19) Advertising, marketing, and promotion of tobacco 
        products have been especially directed to attract young persons 
        to use tobacco products and these efforts have resulted in 
        increased use of such products by youth. Past efforts to 
        oversee these activities have not been successful in adequately 
        preventing such increased use.
            (20) In 1995, the tobacco industry spent close to 
        $4,900,000,000 to attract new users, retain current users, 
        increase current consumption, and generate favorable long-term 
        attitudes toward smoking and tobacco use.
            (21) Tobacco product advertising often misleadingly 
        portrays the use of tobacco as socially acceptable and 
        healthful to minors.
            (22) Tobacco product advertising is regularly seen by 
        persons under the age of 18, and persons under the age of 18 
        are regularly exposed to tobacco product promotional efforts.
            (23) Through advertisements during and sponsorship of 
        sporting events, tobacco has become strongly associated with 
        sports and has become portrayed as an integral part of sports 
        and the healthy lifestyle associated with rigorous sporting 
        activity.
            (24) Children are exposed to substantial and unavoidable 
        tobacco advertising that leads to favorable beliefs about 
        tobacco use, plays a role in leading young people to 
        overestimate the prevalence of tobacco use, and increases the 
        number of young people who begin to use tobacco.
            (25) Tobacco advertising increases the size of the tobacco 
        market by increasing consumption of tobacco products including 
        increasing tobacco use by young people.
            (26) Children are more influenced by tobacco advertising 
        than adults, they smoke the most advertised brands, and 
        children as young as 3 to 6 years old can recognize a character 
        associated with smoking at the same rate as they recognize 
        cartoons and fast food characters.
            (27) Tobacco company documents indicate that young people 
        are an important and often crucial segment of the tobacco 
        market.
            (28) Comprehensive advertising restrictions will have a 
        positive effect on the smoking rates of young people.
            (29) Restrictions on advertising are necessary to prevent 
        unrestricted tobacco advertising from undermining legislation 
        prohibiting access to young people and providing for education 
        about tobacco use.
            (30) International experience shows that advertising 
        regulations that are stringent and comprehensive have a greater 
        impact on overall tobacco use and young people's use than 
        weaker or less comprehensive ones. Text-only requirements, 
        while not as stringent as a ban, will help reduce underage use 
        of tobacco products while preserving the informational function 
        of advertising.
            (31) It is in the public interest for Congress to adopt 
        legislation to address the public health crisis created by 
        actions of the tobacco industry.
            (32) If, as a direct or indirect result of this Act, the 
        consumption of tobacco products in the United States is reduced 
        significantly, then tobacco farmers, their families, and their 
        communities may suffer economic hardship and displacement, 
        notwithstanding their lack of involvement in the manufacturing 
        and marketing of tobacco products.

SEC. 3. PURPOSE.

    The purposes of this Act are--
            (1) to confirm the authority of the Food and Drug 
        Administration to regulate tobacco products under the Federal 
        Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.), by 
        recognizing it as the primary Federal regulatory authority with 
        respect to the manufacture, marketing, and distribution of 
        tobacco products;
            (2) to require the tobacco industry to fund both Federal 
        and State oversight of the tobacco industry from on-going 
        payments by tobacco product manufacturers;
            (3) to require tobacco product manufacturers to provide 
        ongoing funding to be used for an aggressive Federal, State, 
        and local enforcement program and for a nationwide retail 
        licensing system to prevent minors from obtaining tobacco 
        products, while expressly permitting the States to adopt 
        additional measures that further restrict or eliminate the 
        products' use;
            (4) to ensure that the Food and Drug Administration and the 
        States may continue to address issues of particular concern to 
        public health officials, especially the use of tobacco by young 
        people and dependence on tobacco;
            (5) to impose severe financial surcharges on tobacco 
        product manufacturers if they do not substantially reduce 
        tobacco use by young people during the next decade;
            (6) to authorize appropriate agencies of the Federal 
        government to set national standards controlling the 
        manufacture of tobacco products and the identity, public 
        disclosure, and amount of ingredients used in such products;
            (7) to provide new and flexible enforcement authority to 
        ensure that the tobacco industry makes efforts to develop and 
        introduce less harmful tobacco products;
            (8) to confirm the Food and Drug Administration's authority 
        to regulate the levels of tar, nicotine, and other harmful 
        components of tobacco products;
            (9) in order to ensure that adults are better informed, to 
        require tobacco product manufacturers to disclose all research 
        which has not previously been made available, as well as 
        research generated in the future, relating to the health and 
        dependency effects or safety of tobacco products;
            (10) to impose on tobacco product manufacturers the 
        obligation to provide funding for a variety of public health 
        initiatives;
            (11) to establish a minimum Federal standard for stringent 
        restrictions on smoking in public places, with funding to 
        enforce such standard derived from payments made by tobacco 
        product manufacturers, while also to permit State, Tribal, and 
        local governments to enact additional and more stringent 
        standards or elect not to be covered by the Federal standard;
            (12) to authorize and fund from payments by tobacco product 
        manufacturers a continuing national counter-advertising and 
        tobacco control campaign which seeks to educate consumers and 
        discourage children and adolescents from beginning to use 
        tobacco products, and which encourages current users of tobacco 
        products to discontinue using such products;
            (13) to establish a mechanism to compensate the States in 
        settlement of their various claims against tobacco product 
        manufacturers;
            (14) to authorize and to fund from payments by tobacco 
        product manufacturers a nationwide program of smoking cessation 
        administered through State and Tribal governments and the 
        private sector;
            (15) to establish and fund from payments by tobacco product 
        manufacturers a National Tobacco Settlement Fund;
            (16) to affirm the rights of individuals to access to the 
        courts, to civil trial by jury, and to damages to compensate 
        them for harm caused by tobacco products;
            (17) to continue to permit the sale of tobacco products to 
        adults in conjunction with measures to ensure that they are not 
        sold or accessible to underage purchasers;
            (18) to impose appropriate regulatory controls on the 
        tobacco industry; and
            (19) to protect tobacco farmers and their communities from 
        the economic impact of this Act by providing full funding for 
        and the continuation of the Federal tobacco program and by 
        providing funds for farmers and communities to develop new 
        opportunities in tobacco-dependent communities.

SEC. 4. SCOPE AND EFFECT.

    (a) Intended Effect.--This Act is not intended to--
            (1) establish a precedent with regard to any other 
        industry, situation, circumstance, or legal action;
            (2) express any position of the Congress with regard to the 
        imposition of punitive damages in general or as applied to any 
        specific industry, case, controversy, or product other than as 
        provided in this Act;
            (3) provide any authority regarding the imposition of, or 
        the appropriateness of imposing, punitive damages; or
            (4) except as provided in this Act, affect any action 
        pending in State, Tribal, or Federal court, or any agreement, 
        consent decree, or contract of any kind.
    (b) Taxation.--Notwithstanding any other provision of law, this Act 
and the amendments made by this Act shall not affect any authority of 
the Secretary of the Treasury (including any authority assigned to the 
Bureau of Alcohol, Tobacco and Firearms) or of State or local 
governments with regard to taxation for tobacco or tobacco products.
    (c) Agricultural Activities.--The provisions of this Act which 
authorize the Secretary to take certain actions with regard to tobacco 
and tobacco products shall not be construed to affect any authority of 
the Secretary of Agriculture under existing law regarding the growing, 
cultivation, or curing of raw tobacco.

SEC. 5. NON-PREEMPTION OF MORE RESTRICTIVE LAWS.

    (a) Age Restrictions.--Nothing in this Act or the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 301 et seq.), as amended by this Act, 
shall prevent a Federal agency (including the Armed Forces), a State or 
its political subdivisions, or the government of an Indian tribe from 
adopting and enforcing additional measures that further restrict or 
prohibit tobacco product sale to, use by, and accessibility to persons 
under the legal age of purchase established by such agency, State, 
subdivision, or government of an Indian tribe.
    (b) Additional Measures.--Except as otherwise expressly provided in 
this Act, nothing in this Act, the Federal Food, Drug, and Cosmetic Act 
(21 U.S.C. 301 et seq.), or rules promulgated under such Acts, shall 
limit the authority of a Federal agency (including the Armed Forces), a 
State or its political subdivisions, or the government of an Indian 
tribe to enact, adopt, promulgate, and enforce any law, rule, 
regulation, or other measure with respect to tobacco products, 
including laws, rules, regulations, or other measures relating to or 
prohibiting the sale, distribution, possession, exposure to, or use of 
tobacco products by persons of any age that are in addition to the 
provisions of this Act and the amendments made by this Act. No 
provision of this Act or amendment made by this Act shall limit or 
otherwise affect any State, Tribal, or local taxation of tobacco 
products.
    (c) State Law Not Affected.--Except as otherwise expressly provided 
in this Act, nothing in this Act, the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 301 et seq.), or rules promulgated under such Acts, 
shall supersede the authority of the States, pursuant to State law, to 
expend funds provided by this Act.

SEC. 6. DEFINITIONS.

    In this Act:
            (1) Brand.--The term ``brand'' means a variety of tobacco 
        product distinguished by the tobacco used, tar content, 
        nicotine content, flavoring used, size, filtration, or 
        packaging, logo, registered trademark or brand name, 
        identifiable pattern of colors, or any combination of such 
        attributes.
            (2) Cigarette.--The term ``cigarette'' has the meaning 
        given that term by section 3(1) of the Federal Cigarette 
        Labeling and Advertising Act (15 U.S.C. 1332(1)), but also 
        includes tobacco, in any form, that is functional in the 
        product, which, because of its appearance, the type of tobacco 
        used in the filler, or its packaging and labeling, is likely to 
        be offered to, or purchased by, consumers as a cigarette or as 
        roll-your-own tobacco.
            (3) Cigarette tobacco.--The term ``cigarette tobacco'' 
        means any product that consists of loose tobacco that is 
        intended for use by consumers in a cigarette. Unless otherwise 
        stated, the requirements for cigarettes shall also apply to 
        cigarette tobacco.
            (4) Commerce.--The term ``commerce'' has the meaning given 
        that term by section 3(2) of the Federal Cigarette Labeling and 
        Advertising Act (15 U.S.C. 1332(2)).
            (5) Consent decree.--The term ``consent decree'' means a 
        consent decree among participating tobacco product 
        manufacturers whose substantive terms are substantially 
        equivalent to the form consent decree published for purposes of 
        this paragraph in the Congressional Record.
            (6) Distributor.--The term ``distributor'' as regards a 
        tobacco product means any person who furthers the distribution 
        of cigarette or smokeless tobacco, whether domestic or 
        imported, at any point from the original place of manufacture 
        to the person who sells or distributes the product to 
        individuals for personal consumption. Common carriers are not 
        considered distributors for purposes of this Act.
            (7) Indian country; Indian lands.--The terms ``Indian 
        country'' and ``Indian lands'' have the meaning given the term 
        ``Indian country'' by section 1151 of title 18, United States 
        Code, and includes lands under the jurisdiction of an Indian 
        tribe or tribal organization.
            (8) Indian tribe.--The term ``Indian tribe'' has the 
        meaning given such term in section 4(e) of the Indian Self 
        Determination and Education Assistance Act (25 U.S.C. 450b(e)).
            (9) Little cigar.--The term ``little cigar'' has the 
        meaning given that term by section 3(7) of the Federal 
        Cigarette Labeling and Advertising Act (15 U.S.C. 1332(7)).
            (10) Tobacco product manufacturer.--Except in title VII, 
        the term ``tobacco product manufacturer'' means any person, 
        including any repacker or relabeler, who manufactures, 
        fabricates, assembles, processes, or labels a finished 
        cigarette or smokeless tobacco product.
            (11) Nicotine.--The term ``nicotine'' means the chemical 
        substance named 3-(1-Methyl-2-pyrrolidinyl) pyridine or 
        C[10]H[14]N[2], including any salt or complex of nicotine.
            (12) Package.--The term ``package'' means a pack, box, 
        carton, or container of any kind or, if no other container, any 
        wrapping (including cellophane), in which cigarettes or 
        smokeless tobacco are offered for sale, sold, or otherwise 
        distributed to consumers.
            (13) Point-of-sale.--The term ``point-of-sale'' means any 
        location at which a consumer can purchase or otherwise obtain 
        cigarettes or smokeless tobacco for personal consumption.
            (14) Retailer.--The term ``retailer'' means any person who 
        sells cigarettes or smokeless tobacco to individuals for 
        personal consumption, or who operates a facility where self-
        service displays of tobacco products are permitted.
            (15) Roll-your-own tobacco.--The term ``roll-your-own 
        tobacco'' means any tobacco which, because of its appearance, 
        type, packaging, or labeling, is suitable for use and likely to 
        be offered to, or purchased by, consumers as tobacco for making 
        cigarettes.
            (16) Secretary.--Except in title VII and where the context 
        otherwise requires, the term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (17) Smokeless tobacco.--The term ``smokeless tobacco'' 
        means any product that consists of cut, ground, powdered, or 
        leaf tobacco that contains nicotine and that is intended to be 
        placed in the oral cavity.
            (18) State.--The term ``State'' means any State of the 
        United States and, for purposes of this Act, includes the 
        District of Columbia, the Commonwealth of Puerto Rico, Guam, 
        the Virgin Islands, American Samoa, Wake Island, Midway 
        Islands, Kingman Reef, Johnston Atoll, the Northern Mariana 
        Islands, and any other trust territory or possession of the 
        United States.
            (19) Tobacco product.--The term ``tobacco product'' means 
        cigarettes, cigarette tobacco, smokeless tobacco, little 
        cigars, roll-your-own tobacco, and fine cut products.
            (20) United States.--The term ``United States'' means the 
        50 States of the United States of America and the District of 
        Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin 
        Islands, American Samoa, Wake Island, Midway Islands, Kingman 
        Reef, Johnston Atoll, the Northern Mariana Islands, and any 
        other trust territory or possession of the United States.
            (21) Master Settlement Agreement.-- The term ``Master 
        Settlement Agreement'' means the agreement either previously 
        entered or to be entered into by the States, the participating 
tobacco product manufacturers, and the Trade Associations implementing 
the June 20, 1997, Proposed Resolution, and published in the 
Congressional Record for purposes of this Act.
            (22) Participating tobacco product manufacturer.-- The term 
        ``participating tobacco product manufacturer'' means--
                    (A) a tobacco product manufacturer that, within 45 
                days after the date of enactment of this Act (or within 
                45 days after the date on which such manufacturer first 
                manufactures tobacco products for sale or distribution 
                in the United States, if such date is after the date of 
                enactment of this Act)--
                            (i) becomes a signatory to the Master 
                        Settlement Agreement; and
                            (ii) enters into consent decrees with each 
                        State that made a request within the time 
                        period described in section 704(b); or
                    (B) a surviving entity established by a 
                participating tobacco product manufacturer.
            (23) Non-participating tobacco product manufacturer.-- The 
        term ``non-participating tobacco product manufacturer'' means a 
        tobacco product manufacturer that is not a participating 
        tobacco product manufacturer.
            (24) Protocol.-- The term ``Protocol'' means the agreement 
        to be entered into by the Secretary of Health and Human 
        Services with the participating tobacco product manufacturers 
        under this Act.

SEC. 7. NOTIFICATION IF YOUTHFUL CIGARETTE SMOKING RESTRICTIONS 
              INCREASE YOUTHFUL PIPE AND CIGAR SMOKING.

    The Secretary shall notify the Congress if the Secretary determines 
that a decrease in underage use of tobacco products resulting from the 
enactment of this Act has produced an increase in underage use of pipe 
tobacco and cigars.

SEC. 8. LIABILITY LIMITATIONS DISAPPEAR IF TOBACCO PRODUCT MANUFACTURER 
              CHALLENGES ADVERTISING LIMITS.

    If a tobacco product manufacturer, or any party acting on behalf 
of, in collusion with, or at the request of, a tobacco product 
manufacturer brings an action to have the advertising restrictions 
imposed on tobacco products under this Act, or the amendments made by 
this Act, or the application of those regulations to any person or 
circumstance held to be unconstitutional or otherwise invalid under the 
laws of the United States then the provisions of title VII relating to 
limitations on liability shall not apply to that manufacturer, 
beginning on the date on which the action is filed in a court of 
competent jurisdiction, and continuing until such time as the action is 
withdrawn or dismissed.

SEC. 9. FTC JURISDICTION NOT AFFECTED.

    (a) In General.--Except where expressly provided in this Act, 
nothing in this Act shall be construed as limiting or diminishing the 
authority of the Federal Trade Commission to enforce the laws under its 
jurisdiction with respect to the advertising, sale, or distribution of 
tobacco products.
    (b) Enforcement by FTC.--Any advertising that violates this Act, 
part 897 of title 21, Code of Federal Regulations, or the Protocol is 
an unfair or deceptive act or practice under section 5(a) of the 
Federal Trade Commission Act (15 U.S.C. 45(a)) and shall be considered 
a violation of a rule promulgated under section 18 of that Act (15 
U.S.C. 57a).

SEC. 10. CONGRESSIONAL REVIEW PROVISIONS.

    In accordance with section 801 of title 5, United States Code, the 
Congress shall review, and may disapprove, any rule under this Act that 
is subject to section 801. This section does not apply to the rule set 
forth in part 897 of title 21, Code of Federal Regulations.

              TITLE I--REGULATION OF THE TOBACCO INDUSTRY

    Subtitle A--Jurisdiction, etc., of Food and Drug Administration

SEC. 101. AMENDMENT OF FEDERAL FOOD, DRUG, AND COSMETIC ACT OF 1938.

    (a) Definition of Tobacco Products.--Section 201 of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 321) is amended by adding at 
the end the following:
            ``(kk) The term `tobacco product' means any product made or 
        derived from tobacco that is intended for human consumption, 
        including any component, part, or accessory of a tobacco 
        product (except for raw materials other than tobacco used in 
        manufacturing a component, part, or accessory of a tobacco 
        product).''.
    (b) FDA Authority Over Tobacco Products.--The Federal Food, Drug, 
and Cosmetic Act (21 U.S.C. 301 et seq.) is amended--
            (1) by redesignating chapter IX as chapter X;
            (2) by redesignating sections 901 through 907 as sections 
        1001 through 1007; and
            (3) by inserting after section 803 the following:

                     ``CHAPTER IX--TOBACCO PRODUCTS

``SEC. 901. FDA AUTHORITY OVER TOBACCO PRODUCTS.

     ``(a) In General.--Tobacco products shall be regulated by the 
Secretary under this chapter and shall not be subject to the provisions 
of chapter V, unless--
            ``(1) such products are intended for use in the diagnosis, 
        cure, mitigation, treatment, or prevention of disease (within 
        the meaning of section 201(g)(1)(B) or section 201(h)(2)); or
            ``(2) a health claim is made for such products under 
        section 201(g)(1)(C) or 201(h)(3).
    ``(b) Applicability.--This chapter shall apply to all tobacco 
products subject to the provisions of part 897 of title 21, Code of 
Federal Regulations, and to any other tobacco products that the 
Secretary by regulation deems to be subject to this chapter.
    ``(c) FDA Rule in Effect.--The provisions of part 897 of title 21, 
Code of Federal Regulations, shall be deemed to be lawful and to have 
been lawfully promulgated under the authority of this chapter. The 
provisions of such part that are not in effect on the date of enactment 
of this chapter shall take effect as in such part or upon such later 
date as determined by the Secretary by order.
    ``(d) Scope.--
            ``(1) Nothing in this chapter shall be construed to affect 
        the regulation of drugs and devices under chapter V that are 
        not tobacco products by the Secretary under the Federal Food, 
        Drug and Cosmetic Act.
            ``(2) The provisions of this chapter shall not apply to 
        tobacco leaf that is not in the possession of the manufacturer, 
        or to the producers of tobacco leaf, including tobacco growers, 
        tobacco warehouses, and tobacco grower cooperatives, nor shall 
        any employee of the Food and Drug Administration have any 
        authority whatsoever to enter onto a farm owned by a producer 
        of tobacco leaf without the written consent of such producer. 
        Notwithstanding any other provision of this subparagraph, if a 
        producer of tobacco leaf is also a tobacco product manufacturer 
        or controlled by a tobacco product manufacturer, the producer 
        shall be subject to this chapter in the producer's capacity as 
        a manufacturer. Nothing in this chapter shall be construed to 
        grant the Secretary authority to promulgate regulations on any 
        matter that involves the production of tobacco leaf or a 
        producer thereof, other than activities by a manufacturer 
        affecting production. For purposes of the preceding sentence, 
        the term `controlled by' means a member of the same controlled 
        group of corporations as that term is used in section 52(a) of 
        the Internal Revenue Code of 1986, or under common control 
        within the meaning of the regulations promulgated under section 
        52(b) of such Code.

``SEC. 902. ADULTERATED TOBACCO PRODUCTS.

    ``A tobacco product shall be deemed to be adulterated if--
            ``(1) it consists in whole or in part of any filthy, 
        putrid, or decomposed substance, or is otherwise contaminated 
        by any poisonous or deleterious substance that may render the 
        product injurious to health;
            ``(2) it has been prepared, packed, or held under 
        insanitary conditions whereby it may have been contaminated 
        with filth, or whereby it may have been rendered injurious to 
        health;
            ``(3) its container is composed, in whole or in part, of 
        any poisonous or deleterious substance which may render the 
        contents injurious to health;
            ``(4) it is, or purports to be or is represented as, a 
        tobacco product which is subject to a performance standard 
        established under section 907 unless such tobacco product is in 
        all respects in conformity with such standard;
            ``(5) it is required by section 910(a) to have premarket 
        approval, is not exempt under section 906(f), and does not have 
        an approved application in effect;
            ``(6) the methods used in, or the facilities or controls 
        used for, its manufacture, packing or storage are not in 
        conformity with applicable requirements under section 906(e)(1) 
        or an applicable condition prescribed by an order under section 
        906(e)(2); or
            ``(7) it is a tobacco product for which an exemption has 
        been granted under section 906(f) for investigational use and 
        the person who was granted such exemption or any investigator 
        who uses such tobacco product under such exemption fails to 
        comply with a requirement prescribed by or under such section.

``SEC. 903. MISBRANDED TOBACCO PRODUCTS.

    ``(a) In General.--A tobacco product shall be deemed to be 
misbranded--
            ``(1) if its labeling is false or misleading in any 
        particular;
            ``(2) if in package form unless it bears a label 
        containing--
                    ``(A) the name and place of business of the tobacco 
                product manufacturer, packer, or distributor; and
                    ``(B) an accurate statement of the quantity of the 
                contents in terms of weight, measure, or numerical 
                count,
        except that under subparagraph (B) of this paragraph reasonable 
        variations shall be permitted, and exemptions as to small 
        packages shall be established, by regulations prescribed by the 
        Secretary;
            ``(3) if any word, statement, or other information required 
        by or under authority of this chapter to appear on the label or 
        labeling is not prominently placed thereon with such 
        conspicuousness (as compared with other words, statements or 
        designs in the labeling) and in such terms as to render it 
        likely to be read and understood by the ordinary individual 
        under customary conditions of purchase and use;
            ``(4) if it has an established name, unless its label 
        bears, to the exclusion of any other nonproprietary name, its 
        established name prominently printed in type as required by the 
        Secretary by regulation;
            ``(5) if the Secretary has issued regulations requiring 
        that its labeling bear adequate directions for use, or adequate 
        warnings against use by children, that are necessary for the 
        protection of users unless its labeling conforms in all 
        respects to such regulations;
            ``(6) if it was manufactured, prepared, propagated, 
        compounded, or processed in any State in an establishment not 
        duly registered under section 905(b), if it was not included in 
        a list required by section 905(i), if a notice or other 
        information respecting it was not provided as required by such 
        section or section 905(j), or if it does not bear such symbols 
        from the uniform system for identification of tobacco products 
        prescribed under section 905(e) as the Secretary by regulation 
        requires;
            ``(7) if, in the case of any tobacco product distributed or 
        offered for sale in any State--
                    ``(A) its advertising is false or misleading in any 
                particular; or
                    ``(B) it is sold, distributed, or used in violation 
                of regulations prescribed under section 906(d);
            ``(8) unless, in the case of any tobacco product 
        distributed or offered for sale in any State, the manufacturer, 
        packer, or distributor thereof includes in all advertisements 
        and other descriptive printed matter issued or caused to be 
        issued by the manufacturer, packer, or distributor with respect 
        to that tobacco product--
                    ``(A) a true statement of the tobacco product's 
                established name as defined in paragraph (4) of this 
                subsection, printed prominently; and
                    ``(B) a brief statement of--
                            ``(i) the uses of the tobacco product and 
                        relevant warnings, precautions, side effects, 
                        and contraindications; and
                            ``(ii) in the case of specific tobacco 
                        products made subject to a finding by the 
                        Secretary after notice and opportunity for 
                        comment that such action is necessary to 
                        protect the public health, a full description 
                        of the components of such tobacco product or 
                        the formula showing quantitatively each 
                        ingredient of such tobacco product to the 
                        extent required in regulations which shall be 
                        issued by the Secretary after an opportunity 
                        for a hearing;
            ``(9) if it is a tobacco product subject to a performance 
        standard established under section 907, unless it bears such 
        labeling as may be prescribed in such performance standard; or
            ``(10) if there was a failure or refusal--
                    ``(A) to comply with any requirement prescribed 
                under section 904 or 908;
                    ``(B) to furnish any material or information 
                required by or under section 909; or
                    ``(C) to comply with a requirement under section 
                912.
    ``(b) Prior Approval of Statements on Label.--The Secretary may, by 
regulation, require prior approval of statements made on the label of a 
tobacco product. No regulation issued under this subsection may require 
prior approval by the Secretary of the content of any advertisement and 
no advertisement of a tobacco product, published after the date of 
enactment of the National Tobacco Policy and Youth Smoking Reduction 
Act shall, with respect to the matters specified in this section or 
covered by regulations issued hereunder, be subject to the provisions 
of sections 12 through 15 of the Federal Trade Commission Act (15 
U.S.C. 52 through 55). This subsection does not apply to any printed 
matter which the Secretary determines to be labeling as defined in 
section 201(m).

``SEC. 904. SUBMISSION OF HEALTH INFORMATION TO THE SECRETARY.

    ``(a) Requirement.--Not later than 6 months after the date of 
enactment of the National Tobacco Policy and Youth Smoking Reduction 
Act, each tobacco product manufacturer or importer of tobacco products, 
or agents thereof, shall submit to the Secretary the following 
information:
            ``(1) A listing of all tobacco ingredients, substances and 
        compounds that are, on such date, added by the manufacturer to 
        the tobacco, paper, filter, or other component of each tobacco 
        product by brand and by quantity in each brand and subbrand.
            ``(2) A description of the content, delivery, and form of 
        nicotine in each tobacco product measured in milligrams of 
        nicotine.
            ``(3) All documents (including underlying scientific 
        information) relating to research activities, and research 
        findings, conducted, supported, or possessed by the 
        manufacturer (or agents thereof) on the health, behavioral, or 
        physiologic effects of tobacco products, their constituents, 
        ingredients, and components, and tobacco additives, described 
        in paragraph (1).
            ``(4) All documents (including underlying scientific 
        information) relating to research activities, and research 
        findings, conducted, supported, or possessed by the 
        manufacturer that relate to the issue of whether a reduction in 
        risk to health from tobacco products can occur upon the 
        employment of technology available or known to the 
        manufacturer.
            ``(5) All documents (including underlying scientific 
        information) relating to marketing research involving the use 
        of tobacco products.
An importer of a tobacco product not manufactured in the United States 
shall supply the information required of a tobacco product manufacturer 
under this subsection.
    ``(b) Annual Submission.--A tobacco product manufacturer or 
importer that is required to submit information under subsection (a) 
shall update such information on an annual basis under a schedule 
determined by the Secretary.
    ``(c) Time for Submission.--
            ``(1) New products.--At least 90 days prior to the delivery 
        for introduction into interstate commerce of a tobacco product 
        not on the market on the date of enactment of this chapter, the 
        manufacturer of such product shall provide the information 
        required under subsection (a) and such product shall be subject 
        to the annual submission under subsection (b).
            ``(2) Modification of existing products.--If at any time a 
        tobacco product manufacturer adds to its tobacco products a new 
        tobacco additive, increases or decreases the quantity of an 
        existing tobacco additive or the nicotine content, delivery, or 
        form, or eliminates a tobacco additive from any tobacco 
        product, the manufacturer shall within 60 days of such action 
        so advise the Secretary in writing and reference such 
        modification in submissions made under subsection (b).

``SEC. 905. ANNUAL REGISTRATION.

    ``(a) Definitions.--As used in this section--
            ``(1) the term `manufacture, preparation, compounding, or 
        processing' shall include repackaging or otherwise changing the 
        container, wrapper, or labeling of any tobacco product package 
        in furtherance of the distribution of the tobacco product from 
        the original place of manufacture to the person who makes final 
        delivery or sale to the ultimate consumer or user; and
            ``(2) the term `name' shall include in the case of a 
        partnership the name of each partner and, in the case of a 
        corporation, the name of each corporate officer and director, 
        and the State of incorporation.
    ``(b) Registration by Owners and Operators.--On or before December 
31 of each year every person who owns or operates any establishment in 
any State engaged in the manufacture, preparation, compounding, or 
processing of a tobacco product or tobacco products shall register with 
the Secretary the name, places of business, and all such establishments 
of that person.
    ``(c) Registration of New Owners and Operators.--Every person upon 
first engaging in the manufacture, preparation, compounding, or 
processing of a tobacco product or tobacco products in any 
establishment owned or operated in any State by that person shall 
immediately register with the Secretary that person's name, place of 
business, and such establishment.
    ``(d) Registration of Added Establishments.--Every person required 
to register under subsection (b) or (c) shall immediately register with 
the Secretary any additional establishment which that person owns or 
operates in any State and in which that person begins the manufacture, 
preparation, compounding, or processing of a tobacco product or tobacco 
products.
    ``(e) Uniform Product Identification System.--The Secretary may by 
regulation prescribe a uniform system for the identification of tobacco 
products and may require that persons who are required to list such 
tobacco products under subsection (i) of this section shall list such 
tobacco products in accordance with such system.
    ``(f) Public Access to Registration Information.--The Secretary 
shall make available for inspection, to any person so requesting, any 
registration filed under this section.
    ``(g) Biennial Inspection of Registered Establishments.--Every 
establishment in any State registered with the Secretary under this 
section shall be subject to inspection under section 704, and every 
such establishment engaged in the manufacture, compounding, or 
processing of a tobacco product or tobacco products shall be so 
inspected by one or more officers or employees duly designated by the 
Secretary at least once in the 2-year period beginning with the date of 
registration of such establishment under this section and at least once 
in every successive 2-year period thereafter.
    ``(h) Foreign Establishments May Register.--Any establishment 
within any foreign country engaged in the manufacture, preparation, 
compounding, or processing of a tobacco product or tobacco products, 
may register under this section under regulations promulgated by the 
Secretary. Such regulations shall require such establishment to provide 
the information required by subsection (i) of this section and shall 
include provisions for registration of any such establishment upon 
condition that adequate and effective means are available, by 
arrangement with the government of such foreign country or otherwise, 
to enable the Secretary to determine from time to time whether tobacco 
products manufactured, prepared, compounded, or processed in such 
establishment, if imported or offered for import into the United 
States, shall be refused admission on any of the grounds set forth in 
section 801(a).
    ``(i) Registration Information.--
            ``(1) Product list.--Every person who registers with the 
        Secretary under subsection (b), (c), or (d) of this section 
        shall, at the time of registration under any such subsection, 
        file with the Secretary a list of all tobacco products which 
        are being manufactured, prepared, compounded, or processed by 
        that person for commercial distribution and which has not been 
        included in any list of tobacco products filed by that person 
        with the Secretary under this paragraph or paragraph (2) before 
        such time of registration. Such list shall be prepared in such 
        form and manner as the Secretary may prescribe and shall be 
        accompanied by--
                    ``(A) in the case of a tobacco product contained in 
                the applicable list with respect to which a performance 
                standard has been established under section 907 or 
                which is subject to section 910, a reference to the 
                authority for the marketing of such tobacco product and 
                a copy of all labeling for such tobacco product;
                    ``(B) in the case of any other tobacco product 
                contained in an applicable list, a copy of all consumer 
                information and other labeling for such tobacco 
                product, a representative sampling of advertisements 
                for such tobacco product, and, upon request made by the 
                Secretary for good cause, a copy of all advertisements 
                for a particular tobacco product; and
                    ``(C) if the registrant filing a list has 
                determined that a tobacco product contained in such 
                list is not subject to a performance standard 
                established under section 907, a brief statement of the 
                basis upon which the registrant made such determination 
                if the Secretary requests such a statement with respect 
                to that particular tobacco product.
            ``(2) Biannual report of any change in product list.--Each 
        person who registers with the Secretary under this section 
        shall report to the Secretary once during the month of June of 
        each year and once during the month of December of each year 
        the following:
                    ``(A) A list of each tobacco product introduced by 
                the registrant for commercial distribution which has 
                not been included in any list previously filed by that 
                person with the Secretary under this subparagraph or 
                paragraph (1) of this subsection. A list under this 
                subparagraph shall list a tobacco product by its 
                established name and shall be accompanied by the other 
                information required by paragraph (1).
                    ``(B) If since the date the registrant last made a 
                report under this paragraph that person has 
                discontinued the manufacture, preparation, compounding, 
                or processing for commercial distribution of a tobacco 
                product included in a list filed under subparagraph (A) 
                or paragraph (1), notice of such discontinuance, the 
                date of such discontinuance, and the identity of its 
                established name.
                    ``(C) If since the date the registrant reported 
                under subparagraph (B) a notice of discontinuance that 
                person has resumed the manufacture, preparation, 
                compounding, or processing for commercial distribution 
                of the tobacco product with respect to which such 
                notice of discontinuance was reported, notice of such 
                resumption, the date of such resumption, the identity 
                of such tobacco product by established name, and other 
                information required by paragraph (1), unless the 
                registrant has previously reported such resumption to 
                the Secretary under this subparagraph.
                    ``(D) Any material change in any information 
                previously submitted under this paragraph or paragraph 
                (1).
    ``(j) Report Preceding Introduction of Certain Substantially-
equivalent Products into Interstate Commerce.--
            ``(1) In general.--Each person who is required to register 
        under this section and who proposes to begin the introduction 
        or delivery for introduction into interstate commerce for 
        commercial distribution of a tobacco product intended for human 
        use that was not commercially marketed (other than for test 
        marketing) in the United States as of August 11, 1995, as 
        defined by the Secretary by regulation shall, at least 90 days 
        before making such introduction or delivery, report to the 
        Secretary (in such form and manner as the Secretary shall by 
        regulation prescribe)--
                    ``(A) the basis for such person's determination 
                that the tobacco product is substantially equivalent, 
                within the meaning of section 910, to a tobacco product 
                commercially marketed (other than for test marketing) 
                in the United States as of August 11, 1995, that is in 
                compliance with the requirements of this Act; and
                    ``(B) action taken by such person to comply with 
                the requirements under section 907 that are applicable 
                to the tobacco product.
            ``(2) Application to certain post-august 11th products.--A 
        report under this subsection for a tobacco product that was 
        first introduced or delivered for introduction into interstate 
        commerce for commercial distribution in the United States after 
        August 11, 1995, and before the date of enactment of the 
        National Tobacco Policy and Youth Smoking Reduction Act shall 
        be submitted to the Secretary within 6 months after the date of 
        enactment of that Act.

``SEC. 906. GENERAL PROVISIONS RESPECTING CONTROL OF TOBACCO PRODUCTS.

    ``(a) In General.--Any requirement established by or under section 
902, 903, 905, or 909 applicable to a tobacco product shall apply to 
such tobacco product until the applicability of the requirement to the 
tobacco product has been changed by action taken under section 907, 
section 910, or subsection (d) of this section, and any requirement 
established by or under section 902, 903, 905, or 909 which is 
inconsistent with a requirement imposed on such tobacco product under 
section 907, section 910, or subsection (d) of this section shall not 
apply to such tobacco product.
    ``(b) Information on Public Access and Comment.--Each notice of 
proposed rulemaking under section 907, 908, 909, or 910, or under this 
section, any other notice which is published in the Federal Register 
with respect to any other action taken under any such section and which 
states the reasons for such action, and each publication of findings 
required to be made in connection with rulemaking under any such 
section shall set forth--
            ``(1) the manner in which interested persons may examine 
        data and other information on which the notice or findings is 
        based; and
            ``(2) the period within which interested persons may 
        present their comments on the notice or findings (including the 
        need therefor) orally or in writing, which period shall be at 
        least 60 days but may not exceed 90 days unless the time is 
        extended by the Secretary by a notice published in the Federal 
        Register stating good cause therefor.
    ``(c) Limited Confidentiality of Information.--Any information 
reported to or otherwise obtained by the Secretary or the Secretary's 
representative under section 904, 907, 908, 909, or 910 or 704, or 
under subsection (e) or (f) of this section, which is exempt from 
disclosure under subsection (a) of section 552 of title 5, United 
States Code, by reason of subsection (b)(4) of that section shall be 
considered confidential and shall not be disclosed, except that the 
information may be disclosed to other officers or employees concerned 
with carrying out this chapter, or when relevant in any proceeding 
under this chapter.
    ``(d) Restrictions.--
            ``(1) The Secretary may by regulation require that a 
        tobacco product be restricted to sale, distribution, or use 
        upon such conditions, including restrictions on the access to, 
        and the advertising and promotion of, the tobacco product, as 
        the Secretary may prescribe in such regulation if, because of 
        its potentiality for harmful effect or the collateral measures 
        necessary to its use, the Secretary determines that such 
        regulation would be appropriate for the protection of the 
        public health. The finding as to whether such regulation would 
        be appropriate for the protection of the public health shall be 
        determined with respect to the risks and benefits to the 
        population as a whole, including users and non-users of the 
        tobacco product, and taking into account--
                    ``(A) the increased or decreased likelihood that 
                existing users of tobacco products will stop using such 
                products; and
                    ``(B) the increased or decreased likelihood that 
                those who do not use tobacco products will start using 
                such products.
        No such condition may require that the sale or distribution of 
        a tobacco product be limited to the written or oral 
        authorization of a practitioner licensed by law to prescribe 
        medical products.
            ``(2) The label of a tobacco product shall bear such 
        appropriate statements of the restrictions required by a 
        regulation under subsection (a) as the Secretary may in such 
        regulation prescribe.
            ``(3) Because of the importance of any decision by the 
        Secretary to restrict the sale of any class of tobacco products 
        on the market on the date of enactment of the National Tobacco 
        Policy and Youth Smoking Reduction Act to specified categories 
        of retail outlets, it is appropriate for the Congress to have 
        the opportunity to review such a decision. Therefore, any such 
        restriction may not take effect before the date that is 2 years 
        after the President notifies the Congress that a final 
        regulation imposing the restriction has been issued.
    ``(e) Good Manufacturing Practice Requirements.--
            ``(1) Methods, facilities, and controls to conform.--
                    ``(A) The Secretary may, in accordance with 
                subparagraph (B), prescribe regulations requiring that 
                the methods used in, and the facilities and controls 
                used for, the manufacture, pre-production design 
                validation (including a process to assess the 
                performance of a tobacco product), packing and storage 
                of a tobacco product, conform to current good 
                manufacturing practice, as prescribed in such 
                regulations, to assure that the public health is 
                protected and that the tobacco product is in compliance 
                with this chapter.
                    ``(B) The Secretary shall--
                            ``(i) before promulgating any regulation 
                        under subparagraph (A), afford the Tobacco 
                        Products Scientific Advisory Committee 
                        established under section 915 an opportunity to 
                        submit recommendations with respect to the 
                        regulation proposed to be promulgated;
                            ``(ii) before promulgating any regulation 
                        under subparagraph (A), afford opportunity for 
                        an oral hearing;
                            ``(iii) provide the advisory committee a 
                        reasonable time to make its recommendation with 
                        respect to proposed regulations under 
                        subparagraph (A); and
                            ``(iv) in establishing the effective date 
                        of a regulation promulgated under this 
                        subsection, take into account the differences 
                        in the manner in which the different types of 
                        tobacco products have historically been 
                        produced, the financial resources of the 
                        different tobacco product manufacturers, and 
                        the state of their existing manufacturing 
                        facilities; and shall provide for a reasonable 
                        period of time for such manufacturers to 
                        conform to good manufacturing practices.
            ``(2) Exemptions; variances.--
                    ``(A) Any person subject to any requirement 
                prescribed under paragraph (1) may petition the 
                Secretary for a permanent or temporary exemption or 
                variance from such requirement. Such a petition shall 
                be submitted to the Secretary in such form and manner 
                as the Secretary shall prescribe and shall--
                            ``(i) in the case of a petition for an 
                        exemption from a requirement, set forth the 
                        basis for the petitioner's determination that 
                        compliance with the requirement is not required 
                        to assure that the tobacco product will be in 
                        compliance with this chapter;
                            ``(ii) in the case of a petition for a 
                        variance from a requirement, set forth the 
                        methods proposed to be used in, and the 
                        facilities and controls proposed to be used 
                        for, the manufacture, packing, and storage of 
                        the tobacco product in lieu of the methods, 
                        facilities, and controls prescribed by the 
                        requirement; and
                            ``(iii) contain such other information as 
                        the Secretary shall prescribe.
                    ``(B) The Secretary may refer to the Tobacco 
                Products Scientific Advisory Committee established 
                under section 915 any petition submitted under 
                subparagraph (A). The advisory committee shall report 
                its recommendations to the Secretary with respect to a 
                petition referred to it within 60 days after the date 
                of the petition's referral. Within 60 days after--
                            ``(i) the date the petition was submitted 
                        to the Secretary under subparagraph (A); or
                            ``(ii) the day after the petition was 
                        referred to an advisory committee,
                whichever occurs later, the Secretary shall by order 
                either deny the petition or approve it.
                    ``(C) The Secretary may approve--
                            ``(i) a petition for an exemption for a 
                        tobacco product from a requirement if the 
                        Secretary determines that compliance with such 
                        requirement is not required to assure that the 
                        tobacco product will be in compliance with this 
                        chapter; and
                            ``(ii) a petition for a variance for a 
                        tobacco product from a requirement if the 
                        Secretary determines that the methods to be 
                        used in, and the facilities and controls to be 
                        used for, the manufacture, packing, and storage 
                        of the tobacco product in lieu of the methods, 
                        controls, and facilities prescribed by the 
                        requirement are sufficient to assure that the 
                        tobacco product will be in compliance with this 
                        chapter.
                    ``(D) An order of the Secretary approving a 
                petition for a variance shall prescribe such conditions 
                respecting the methods used in, and the facilities and 
                controls used for, the manufacture, packing, and 
                storage of the tobacco product to be granted the 
                variance under the petition as may be necessary to 
                assure that the tobacco product will be in compliance 
                with this chapter.
                    ``(E) After the issuance of an order under 
                subparagraph (B) respecting a petition, the petitioner 
                shall have an opportunity for an informal hearing on 
                such order.
            ``(3) Compliance with requirements under this subsection 
        shall not be required before the period ending 3 years after 
        the date of enactment of the National Tobacco Policy and Youth 
        Smoking Reduction Act.
    ``(f) Exemption for Investigational Use.--The Secretary may exempt 
tobacco products intended for investigational use from this chapter 
under such conditions as the Secretary may prescribe by regulation .
    ``(g) Research and Development.--The Secretary may enter into 
contracts for research, testing, and demonstrations respecting tobacco 
products and may obtain tobacco products for research, testing, and 
demonstration purposes without regard to section 3324(a) and (b) of 
title 31, United States Code, and section 5 of title 41, United States 
Code.

``SEC. 907. PERFORMANCE STANDARDS.

    ``(a) In General.--
            ``(1) Finding required.--The Secretary may adopt 
        performance standards for a tobacco product if the Secretary 
        finds that a performance standard is appropriate for the 
        protection of the public health. This finding shall be 
        determined with respect to the risks and benefits to the 
        population as a whole, including users and non-users of the 
        tobacco product, and taking into account--
                    ``(A) the increased or decreased likelihood that 
                existing users of tobacco products will stop using such 
                products; and
                    ``(B) the increased or decreased likelihood that 
                those who do not use tobacco products will start using 
                such products.
            ``(2) Content of performance standards.--A performance 
        standard established under this section for a tobacco product--
                    ``(A) shall include provisions to provide 
                performance that is appropriate for the protection of 
                the public health, including provisions, where 
                appropriate--
                            ``(i) for the reduction or elimination of 
                        nicotine yields of the product;
                            ``(ii) for the reduction or elimination of 
                        other constituents or harmful components of the 
                        product; or
                            ``(iii) relating to any other requirement 
                        under (B);
                    ``(B) shall, where necessary to be appropriate for 
                the protection of the public health, include--
                            ``(i) provisions respecting the 
                        construction, components, ingredients, and 
                        properties of the tobacco product;
                            ``(ii) provisions for the testing (on a 
                        sample basis or, if necessary, on an individual 
                        basis) of the tobacco product;
                            ``(iii) provisions for the measurement of 
                        the performance characteristics of the tobacco 
                        product;
                            ``(iv) provisions requiring that the 
                        results of each or of certain of the tests of 
                        the tobacco product required to be made under 
                        clause (ii) show that the tobacco product is in 
                        conformity with the portions of the standard 
                        for which the test or tests were required; and
                            ``(v) a provision requiring that the sale 
                        and distribution of the tobacco product be 
                        restricted but only to the extent that the sale 
                        and distribution of a tobacco product may be 
                        restricted under a regulation under section 
                        906(d); and
                    ``(C) shall, where appropriate, require the use and 
                prescribe the form and content of labeling for the 
                proper use of the tobacco product.
            ``(3) Periodic re-evaluation of performance standards.--The 
        Secretary shall provide for periodic evaluation of performance 
        standards established under this section to determine whether 
        such standards should be changed to reflect new medical, 
        scientific, or other technological data. The Secretary may 
        provide for testing under paragraph (2) by any person.
            ``(4) Involvement of other agencies; informed persons.--In 
        carrying out duties under this section, the Secretary shall, to 
        the maximum extent practicable--
                    ``(A) use personnel, facilities, and other 
                technical support available in other Federal agencies;
                    ``(B) consult with other Federal agencies concerned 
                with standard-setting and other nationally or 
                internationally recognized standard-setting entities; 
                and
                    ``(C) invite appropriate participation, through 
                joint or other conferences, workshops, or other means, 
                by informed persons representative of scientific, 
                professional, industry, or consumer organizations who 
                in the Secretary's judgment can make a significant 
                contribution.
    ``(b) Establishment of Standards.--
            ``(1) Notice.--
                    ``(A) The Secretary shall publish in the Federal 
                Register a notice of proposed rulemaking for the 
                establishment, amendment, or revocation of any 
                performance standard for a tobacco product.
                    ``(B) A notice of proposed rulemaking for the 
                establishment or amendment of a performance standard 
                for a tobacco product shall--
                            ``(i) set forth a finding with supporting 
                        justification that the performance standard is 
                        appropriate for the protection of the public 
                        health;
                            ``(ii) set forth proposed findings with 
                        respect to the risk of illness or injury that 
                        the performance standard is intended to reduce 
                        or eliminate; and
                            ``(iii) invite interested persons to submit 
                        an existing performance standard for the 
                        tobacco product, including a draft or proposed 
                        performance standard, for consideration by the 
                        Secretary.
                    ``(C) A notice of proposed rulemaking for the 
                revocation of a performance standard shall set forth a 
                finding with supporting justification that the 
                performance standard is no longer necessary to be 
                appropriate for the protection of the public health.
                    ``(D) The Secretary shall consider all information 
                submitted in connection with a proposed standard, 
                including information concerning the countervailing 
                effects of the performance standard on the health of 
                adolescent tobacco users, adult tobacco users, or non-
                tobacco users, such as the creation of a significant 
                demand for contraband or other tobacco products that do 
                not meet the requirements of this chapter and the 
                significance of such demand, and shall issue the 
                standard if the Secretary determines that the standard 
                would be appropriate for the protection of the public 
                health.
                    ``(E) The Secretary shall provide for a comment 
                period of not less than 60 days.
            ``(2) Promulgation.--
                    ``(A) After the expiration of the period for 
                comment on a notice of proposed rulemaking published 
                under paragraph (1) respecting a performance standard 
                and after consideration of such comments and any report 
                from the Tobacco Products Scientific Advisory Committee 
                under section 915, the Secretary shall--
                            ``(i) promulgate a regulation establishing 
                        a performance standard and publish in the 
                        Federal Register findings on the matters 
                        referred to in paragraph (1); or
                            ``(ii) publish a notice terminating the 
                        proceeding for the development of the standard 
                        together with the reasons for such termination.
                    ``(B) A regulation establishing a performance 
                standard shall set forth the date or dates upon which 
                the standard shall take effect, but no such regulation 
                may take effect before one year after the date of its 
                publication unless the Secretary determines that an 
                earlier effective date is necessary for the protection 
                of the public health. Such date or dates shall be 
                established so as to minimize, consistent with the 
                public health, economic loss to, and disruption or 
                dislocation of, domestic and international trade.
            ``(3) Special rule for standard banning class of product or 
        eliminating nicotine content.--Because of the importance of a 
        decision of the Secretary to issue a regulation establishing a 
        performance standard--
                    ``(A) eliminating all cigarettes, all smokeless 
                tobacco products, or any similar class of tobacco 
                products, or
                    ``(B) requiring the reduction of nicotine yields of 
                a tobacco product to zero,
        it is appropriate for the Congress to have the opportunity to 
        review such a decision. Therefore, any such standard may not 
        take effect before a date that is 2 years after the President 
        notifies the Congress that a final regulation imposing the 
        restriction has been issued.
            ``(4) Amendment; revocation.--
                    ``(A) The Secretary, upon the Secretary's own 
                initiative or upon petition of an interested person may 
by a regulation, promulgated in accordance with the requirements of 
paragraphs (1) and (2)(B) of this subsection, amend or revoke a 
performance standard.
                    ``(B) The Secretary may declare a proposed 
                amendment of a performance standard to be effective on 
                and after its publication in the Federal Register and 
                until the effective date of any final action taken on 
                such amendment if the Secretary determines that making 
                it so effective is in the public interest.
            ``(5) Reference to advisory committee.--The Secretary--
                    ``(A) may, on the Secretary's own initiative, refer 
                a proposed regulation for the establishment, amendment, 
                or revocation of a performance standard; or
                    ``(B) shall, upon the request of an interested 
                person which demonstrates good cause for referral and 
                which is made before the expiration of the period for 
                submission of comments on such proposed regulation,
        refer such proposed regulation to the Tobacco Products 
        Scientific Advisory Committee established under section 915, 
        for a report and recommendation with respect to any matter 
        involved in the proposed regulation which requires the exercise 
        of scientific judgment. If a proposed regulation is referred 
        under this subparagraph to the advisory committee, the 
        Secretary shall provide the advisory committee with the data 
        and information on which such proposed regulation is based. The 
        advisory committee shall, within 60 days after the referral of 
        a proposed regulation and after independent study of the data 
        and information furnished to it by the Secretary and other data 
        and information before it, submit to the Secretary a report and 
        recommendation respecting such regulation, together with all 
        underlying data and information and a statement of the reason 
        or basis for the recommendation. A copy of such report and 
        recommendation shall be made public by the Secretary.

``SEC. 908. NOTIFICATION AND OTHER REMEDIES.

    ``(a) Notification.--If the Secretary determines that--
            ``(1) a tobacco product which is introduced or delivered 
        for introduction into interstate commerce for commercial 
        distribution presents an unreasonable risk of substantial harm 
        to the public health; and
            ``(2) notification under this subsection is necessary to 
        eliminate the unreasonable risk of such harm and no more 
        practicable means is available under the provisions of this 
        chapter (other than this section) to eliminate such risk,
the Secretary may issue such order as may be necessary to assure that 
adequate notification is provided in an appropriate form, by the 
persons and means best suited under the circumstances involved, to all 
persons who should properly receive such notification in order to 
eliminate such risk. The Secretary may order notification by any 
appropriate means, including public service announcements. Before 
issuing an order under this subsection, the Secretary shall consult 
with the persons who are to give notice under the order.
    ``(b) No Exemption From Other Liability.--Compliance with an order 
issued under this section shall not relieve any person from liability 
under Federal or State law. In awarding damages for economic loss in an 
action brought for the enforcement of any such liability, the value to 
the plaintiff in such action of any remedy provided under such order 
shall be taken into account.
    ``(c) Recall Authority.--
            ``(1) In general.--If the Secretary finds that there is a 
        reasonable probability that a tobacco product contains a 
        manufacturing or other defect not ordinarily contained in 
        tobacco products on the market that would cause serious, 
        adverse health consequences or death, the Secretary shall issue 
        an order requiring the appropriate person (including the 
        manufacturers, importers, distributors, or retailers of the 
        tobacco product) to immediately cease distribution of such 
        tobacco product. The order shall provide the person subject to 
        the order with an opportunity for an informal hearing, to be 
        held not later than 10 days after the date of the issuance of 
        the order, on the actions required by the order and on whether 
        the order should be amended to require a recall of such tobacco 
        product. If, after providing an opportunity for such a hearing, 
        the Secretary determines that inadequate grounds exist to 
        support the actions required by the order, the Secretary shall 
        vacate the order.
            ``(2) Amendment of order to require recall.--
                    ``(A) If, after providing an opportunity for an 
                informal hearing under paragraph (1), the Secretary 
                determines that the order should be amended to include 
                a recall of the tobacco product with respect to which 
                the order was issued, the Secretary shall, except as 
                provided in subparagraph (B), amend the order to 
                require a recall. The Secretary shall specify a 
                timetable in which the tobacco product recall will 
                occur and shall require periodic reports to the 
Secretary describing the progress of the recall.
                    ``(B) An amended order under subparagraph (A)--
                            ``(i) shall not include recall of a tobacco 
                        product from individuals; and
                            ``(ii) shall provide for notice to persons 
                        subject to the risks associated with the use of 
                        such tobacco product.
                In providing the notice required by clause (ii), the 
                Secretary may use the assistance of retailers and other 
                persons who distributed such tobacco product. If a 
                significant number of such persons cannot be 
                identified, the Secretary shall notify such persons 
                under section 705(b).
            ``(3) Remedy not exclusive.--The remedy provided by this 
        subsection shall be in addition to remedies provided by 
        subsection (a) of this section.

``SEC. 909. RECORDS AND REPORTS ON TOBACCO PRODUCTS.

    ``(a) In General.--Every person who is a tobacco product 
manufacturer or importer of a tobacco product shall establish and 
maintain such records, make such reports, and provide such information, 
as the Secretary may by regulation reasonably require to assure that 
such tobacco product is not adulterated or misbranded and to otherwise 
protect public health. Regulations prescribed under the preceding 
sentence--
            ``(1) may require a tobacco product manufacturer or 
        importer to report to the Secretary whenever the manufacturer 
        or importer receives or otherwise becomes aware of information 
        that reasonably suggests that one of its marketed tobacco 
        products may have caused or contributed to a serious unexpected 
        adverse experience associated with the use of the product or 
        any significant increase in the frequency of a serious, 
        expected adverse product experience;
            ``(2) shall require reporting of other significant adverse 
        tobacco product experiences as determined by the Secretary to 
        be necessary to be reported;
            ``(3) shall not impose requirements unduly burdensome to a 
        tobacco product manufacturer or importer, taking into account 
        the cost of complying with such requirements and the need for 
        the protection of the public health and the implementation of 
        this chapter;
            ``(4) when prescribing the procedure for making requests 
        for reports or information, shall require that each request 
        made under such regulations for submission of a report or 
        information to the Secretary state the reason or purpose for 
        such request and identify to the fullest extent practicable 
        such report or information;
            ``(5) when requiring submission of a report or information 
        to the Secretary, shall state the reason or purpose for the 
        submission of such report or information and identify to the 
        fullest extent practicable such report or information; and
            ``(6) may not require that the identity of any patient or 
        user be disclosed in records, reports, or information required 
        under this subsection unless required for the medical welfare 
        of an individual, to determine risks to public health of a 
        tobacco product, or to verify a record, report, or information 
        submitted under this chapter.
In prescribing regulations under this subsection, the Secretary shall 
have due regard for the professional ethics of the medical profession 
and the interests of patients. The prohibitions of paragraph (6) of 
this subsection continue to apply to records, reports, and information 
concerning any individual who has been a patient, irrespective of 
whether or when he ceases to be a patient.
    ``(b) Reports of Removals and Corrections.--
            (1) Except as provided in paragraph (3), the Secretary 
        shall by regulation require a tobacco product manufacturer or 
        importer of a tobacco product to report promptly to the 
        Secretary any corrective action taken or removal from the 
        market of a tobacco product undertaken by such manufacturer or 
        importer if the removal or correction was undertaken--
                    ``(A) to reduce a risk to health posed by the 
                tobacco product; or
                    ``(B) to remedy a violation of this chapter caused 
                by the tobacco product which may present a risk to 
                health.
        A tobacco product manufacturer or importer of a tobacco product 
        who undertakes a corrective action or removal from the market 
        of a tobacco product which is not required to be reported under 
        this subsection shall keep a record of such correction or 
        removal.
            ``(2) No report of the corrective action or removal of a 
        tobacco product may be required under paragraph (1) if a report 
        of the corrective action or removal is required and has been 
        submitted under subsection (a) of this section.

``SEC. 910. PREMARKET REVIEW OF CERTAIN TOBACCO PRODUCTS.

    ``(a) In General.--
            ``(1) Premarket approval required.--
                    ``(A) New products.--Approval under this section of 
                an application for premarket approval for any tobacco 
                product that is not commercially marketed (other than 
                for test marketing) in the United States as of August 
                11, 1995, is required unless the manufacturer has 
                submitted a report under section 905(j), and the 
                Secretary has issued an order that the tobacco product 
                is substantially equivalent to a tobacco product 
                commercially marketed (other than for test marketing) 
                in the United States as of August 11, 1995, that is in 
                compliance with the requirements of this Act.
                    ``(B) Products introduced between august 11, 1995, 
                and enactment of this chapter.--Subparagraph (A) does 
                not apply to a tobacco product that--
                            ``(i) was first introduced or delivered for 
                        introduction into interstate commerce for 
                        commerce for commercial distribution in the 
                        United States after August 11, 1995, and before 
                        the date of enactment of the National Tobacco 
                        Policy and Youth Smoking Reduction Act; and
                            ``(ii) for which a report was submitted 
                        under section 905(j) within 6 months after such 
                        date,
                until the Secretary issues an order that the tobacco 
                product is substantially equivalent for purposes of 
                this section or requires premarket approval.
            ``(2) Substantially equivalent defined.--
                    ``(A) For purposes of this section and section 
                905(j), the term `substantially equivalent' or 
                `substantial equivalence' mean, with respect to the 
                tobacco product being compared to the predicate tobacco 
                product, that the Secretary by order has found that the 
                tobacco product--
                            ``(i) has the same characteristics as the 
                        predicate tobacco product; or
                            ``(ii) has different characteristics and 
                        the information submitted contains information, 
                        including clinical data if deemed necessary by 
                        the Secretary, that demonstrates that it is not 
                        appropriate to regulate the product under this 
                        section because the product does not raise 
                        different questions of public health.
                    ``(B) For purposes of subparagraph (A), the term 
                `characteristics' means the materials, ingredients, 
                design, composition, heating source, or other features 
                of a tobacco product.
                    ``(C) A tobacco product may not be found to be 
                substantially equivalent to a predicate tobacco product 
                that has been removed from the market at the initiative 
                of the Secretary or that has been determined by a 
                judicial order to be misbranded or adulterated.
            ``(3) Health information.--
                    ``(A) As part of a submission under section 905(j) 
                respecting a tobacco product, the person required to 
                file a premarket notification under such section shall 
                provide an adequate summary of any health information 
                related to the tobacco product or state that such 
                information will be made available upon request by any 
                person.
                    ``(B) Any summary under subparagraph (A) respecting 
                a tobacco product shall contain detailed information 
                regarding data concerning adverse health effects and 
                shall be made available to the public by the Secretary 
                within 30 days of the issuance of a determination that 
                such tobacco product is substantially equivalent to 
                another tobacco product.
    ``(b) Application.--
            ``(1) Contents.--An application for premarket approval 
        shall contain--
                    ``(A) full reports of all information, published or 
                known to or which should reasonably be known to the 
                applicant, concerning investigations which have been 
                made to show the health risks of such tobacco product 
                and whether such tobacco product presents less risk 
                than other tobacco products;
                    ``(B) a full statement of the components, 
                ingredients, and properties, and of the principle or 
                principles of operation, of such tobacco product;
                    ``(C) a full description of the methods used in, 
                and the facilities and controls used for, the 
                manufacture, processing, and, when relevant, packing 
                and installation of, such tobacco product;
                    ``(D) an identifying reference to any performance 
                standard under section 907 which would be applicable to 
                any aspect of such tobacco product, and either adequate 
                information to show that such aspect of such tobacco 
                product fully meets such performance standard or 
                adequate information to justify any deviation from such 
                standard;
                    ``(E) such samples of such tobacco product and of 
                components thereof as the Secretary may reasonably 
                require;
                    ``(F) specimens of the labeling proposed to be used 
                for such tobacco product; and
                    ``(G) such other information relevant to the 
                subject matter of the application as the Secretary may 
                require.
            ``(2) Reference to advisory committee.--Upon receipt of an 
        application meeting the requirements set forth in paragraph 
        (1), the Secretary--
                    ``(A) may, on the Secretary's own initiative; or
                    ``(B) shall, upon the request of an applicant,
        refer such application to the Tobacco Products Scientific 
        Advisory Committee established under section 915 and for 
        submission (within such period as the Secretary may establish) 
        of a report and recommendation respecting approval of the 
        application, together with all underlying data and the reasons 
        or basis for the recommendation.
    ``(c) Action on Application.--
            ``(1) Deadline.--
                    ``(A) As promptly as possible, but in no event 
                later than 180 days after the receipt of an application 
                under subsection (b) of this section, the Secretary, 
                after considering the report and recommendation 
                submitted under paragraph (2) of such subsection, 
                shall--
                            ``(i) issue an order approving the 
                        application if the Secretary finds that none of 
                        the grounds for denying approval specified in 
                        paragraph (2) of this subsection applies; or
                            ``(ii) deny approval of the application if 
                        the Secretary finds (and sets forth the basis 
                        for such finding as part of or accompanying 
                        such denial) that one or more grounds for 
                        denial specified in paragraph (2) of this 
                        subsection apply.
                    ``(B) An order approving an application for a 
                tobacco product may require as a condition to such 
                approval that the sale and distribution of the tobacco 
                product be restricted but only to the extent that the 
                sale and distribution of a tobacco product may be 
                restricted under a regulation under section 906(d).
            ``(2) Denial of approval.--The Secretary shall deny 
        approval of an application for a tobacco product if, upon the 
        basis of the information submitted to the Secretary as part of 
        the application and any other information before the Secretary 
        with respect to such tobacco product, the Secretary finds 
        that--
                    ``(A) there is a lack of a showing that permitting 
                such tobacco product to be marketed would be 
                appropriate for the protection of the public health;
                    ``(B) the methods used in, or the facilities or 
                controls used for, the manufacture, processing, or 
                packing of such tobacco product do not conform to the 
                requirements of section 906(e);
                    ``(C) based on a fair evaluation of all material 
                facts, the proposed labeling is false or misleading in 
                any particular; or
                    ``(D) such tobacco product is not shown to conform 
                in all respects to a performance standard in effect 
                under section 907, compliance with which is a condition 
                to approval of the application, and there is a lack of 
                adequate information to justify the deviation from such 
                standard.
            ``(3) Denial information.--Any denial of an application 
        shall, insofar as the Secretary determines to be practicable, 
        be accompanied by a statement informing the applicant of the 
        measures required to place such application in approvable form 
        (which measures may include further research by the applicant 
        in accordance with one or more protocols prescribed by the 
        Secretary).
            ``(4) Basis for finding.--For purposes of this section, the 
        finding as to whether approval of a tobacco product is 
        appropriate for the protection of the public health shall be 
        determined with respect to the risks and benefits to the 
        population as a whole, including users and non-users of the 
        tobacco product, and taking into account--
                    ``(A) the increased or decreased likelihood that 
                existing users of tobacco products will stop using such 
                products; and
                    ``(B) the increased or decreased likelihood that 
                those who do not use tobacco products will start using 
                such products.
            ``(5) Basis for action.--
                    ``(A) For purposes of paragraph (2)(A), whether 
                permitting a tobacco product to be marketed would be 
                appropriate for the protection of the public health 
                shall, when appropriate, be determined on the basis of 
                well-controlled investigations, which may include one 
                or more clinical investigations by experts qualified by 
                training and experience to evaluate the tobacco 
                product.
                    ``(B) If the Secretary determines that there exists 
                valid scientific evidence (other than evidence derived 
                from investigations described in subparagraph (A)) 
                which is sufficient to evaluate the tobacco product the 
                Secretary may authorize that the determination for 
                purposes of paragraph (2)(A) be made on the basis of 
                such evidence.
    ``(d) Withdrawal and Temporary Suspension.--
            ``(1) In general.--The Secretary shall, upon obtaining, 
        where appropriate, advice on scientific matters from the 
        Tobacco Products Scientific Advisory Committee established 
        under section 915, and after due notice and opportunity for 
        informal hearing to the holder of an approved application for a 
        tobacco product, issue an order withdrawing approval of the 
        application if the Secretary finds--
                    ``(A) that the continued marketing of such tobacco 
                product no longer is appropriate for the protection of 
                the public health;
                    ``(B) that the application contained or was 
                accompanied by an untrue statement of a material fact;
                    ``(C) that the applicant--
                            ``(i) has failed to establish a system for 
                        maintaining records, or has repeatedly or 
                        deliberately failed to maintain records or to 
                        make reports, required by an applicable 
                        regulation under section 909;
                            ``(ii) has refused to permit access to, or 
                        copying or verification of, such records as 
                        required by section 704; or
                            ``(iii) has not complied with the 
                        requirements of section 905;
                    ``(D) on the basis of new information before the 
                Secretary with respect to such tobacco product, 
                evaluated together with the evidence before the 
                Secretary when the application was approved, that the 
                methods used in, or the facilities and controls used 
                for, the manufacture, processing, packing, or 
                installation of such tobacco product do not conform 
                with the requirements of section 906(e) and were not 
                brought into conformity with such requirements within a 
                reasonable time after receipt of written notice from 
                the Secretary of nonconformity;
                    ``(E) on the basis of new information before the 
                Secretary, evaluated together with the evidence before 
                the Secretary when the application was approved, that 
                the labeling of such tobacco product, based on a fair 
                evaluation of all material facts, is false or 
                misleading in any particular and was not corrected 
                within a reasonable time after receipt of written 
                notice from the Secretary of such fact; or
                    ``(F) on the basis of new information before the 
                Secretary, evaluated together with the evidence before 
                the Secretary when the application was approved, that 
                such tobacco product is not shown to conform in all 
                respects to a performance standard which is in effect 
                under section 907, compliance with which was a 
                condition to approval of the application, and that 
                there is a lack of adequate information to justify the 
                deviation from such standard.
            ``(2) Appeal.--The holder of an application subject to an 
        order issued under paragraph (1) withdrawing approval of the 
        application may, by petition filed on or before the thirtieth 
        day after the date upon which he receives notice of such 
        withdrawal, obtain review thereof in accordance with subsection 
        (e) of this section.
            ``(3) Temporary suspension.--If, after providing an 
        opportunity for an informal hearing, the Secretary determines 
        there is reasonable probability that the continuation of 
        distribution of a tobacco product under an approved application 
        would cause serious, adverse health consequences or death, that 
        is greater than ordinarily caused by tobacco products on the 
        market, the Secretary shall by order temporarily suspend the 
        approval of the application approved under this section. If the 
        Secretary issues such an order, the Secretary shall proceed 
        expeditiously under paragraph (1) to withdraw such application.
    ``(e) Service of Order.--An order issued by the Secretary under 
this section shall be served--
            ``(1) in person by any officer or employee of the 
        department designated by the Secretary; or
            ``(2) by mailing the order by registered mail or certified 
        mail addressed to the applicant at the applicant's last known 
        address in the records of the Secretary.

``SEC. 911. JUDICIAL REVIEW.

    ``(a) In General.--Not later than 30 days after--
            ``(1) the promulgation of a regulation under section 907 
        establishing, amending, or revoking a performance standard for 
        a tobacco product; or
            ``(2) a denial of an application for approval under section 
        910(c),
any person adversely affected by such regulation or order may file a 
petition with the United States Court of Appeals for the District of 
Columbia or for the circuit wherein such person resides or has his 
principal place of business for judicial review of such regulation or 
order. A copy of the petition shall be transmitted by the clerk of the 
court to the Secretary or other officer designated by the Secretary for 
that purpose. The Secretary shall file in the court the record of the 
proceedings on which the Secretary based the Secretary's regulation or 
order and each record or order shall contain a statement of the reasons 
for its issuance and the basis, on the record, for its issuance. For 
purposes of this section, the term `record' means all notices and other 
matter published in the Federal Register with respect to the regulation 
or order reviewed, all information submitted to the Secretary with 
respect to such regulation or order, proceedings of any panel or 
advisory committee with respect to such regulation or order, any 
hearing held with respect to such regulation or order, and any other 
information identified by the Secretary, in the administrative 
proceeding held with respect to such regulation or order, as being 
relevant to such regulation or order.
    ``(b) Court May Order the Secretary to Make Additional Findings.--
If the petitioner applies to the court for leave to adduce additional 
data, views, or arguments respecting the regulation or order being 
reviewed and shows to the satisfaction of the court that such 
additional data, views, or arguments are material and that there were 
reasonable grounds for the petitioner's failure to adduce such data, 
views, or arguments in the proceedings before the Secretary, the court 
may order the Secretary to provide additional opportunity for the oral 
presentation of data, views, or arguments and for written submissions. 
The Secretary may modify the Secretary's findings, or make new findings 
by reason of the additional data, views, or arguments so taken and 
shall file with the court such modified or new findings, and the 
Secretary's recommendation, if any, for the modification or setting 
aside of the regulation or order being reviewed, with the return of 
such additional data, views, or arguments.
    ``(c) Standard of Review.--Upon the filing of the petition under 
subsection (a) of this section for judicial review of a regulation or 
order, the court shall have jurisdiction to review the regulation or 
order in accordance with chapter 7 of title 5, United States Code, and 
to grant appropriate relief, including interim relief, as provided in 
such chapter. A regulation or order described in paragraph (1) or (2) 
of subsection (a) of this section shall not be affirmed if it is found 
to be unsupported by substantial evidence on the record taken as a 
whole.
    ``(d) Finality of Judgment.--The judgment of the court affirming or 
setting aside, in whole or in part, any regulation or order shall be 
final, subject to review by the Supreme Court of the United States upon 
certiorari or certification, as provided in section 1254 of title 28, 
United States Code.
    ``(e) Other Remedies.--The remedies provided for in this section 
shall be in addition to and not in lieu of any other remedies provided 
by law.
    ``(f) Regulations and Orders Must Recite Basis in Record.--To 
facilitate judicial review under this section or under any other 
provision of law of a regulation or order issued under section 906, 
907, 908, 909, 910, or 914, each such regulation or order shall contain 
a statement of the reasons for its issuance and the basis, in the 
record of the proceedings held in connection with its issuance, for its 
issuance.

``SEC. 912. POSTMARKET SURVEILLANCE.

    ``(a) Discretionary Surveillance.--The Secretary may require a 
tobacco product manufacturer to conduct postmarket surveillance for a 
tobacco product of the manufacturer if the Secretary determines that 
postmarket surveillance of the tobacco product is necessary to protect 
the public health or is necessary to provide information regarding the 
health risks and other safety issues involving the tobacco product.
    ``(b) Surveillance Approval.--Each tobacco product manufacturer 
required to conduct a surveillance of a tobacco product under 
subsection (a) of this section shall, within 30 days after receiving 
notice that the manufacturer is required to conduct such surveillance, 
submit, for the approval of the Secretary, a protocol for the required 
surveillance. The Secretary, within 60 days of the receipt of such 
protocol, shall determine if the principal investigator proposed to be 
used in the surveillance has sufficient qualifications and experience 
to conduct such surveillance and if such protocol will result in 
collection of useful data or other information necessary to protect the 
public health. The Secretary may not approve such a protocol until it 
has been reviewed by an appropriately qualified scientific and 
technical review committee established by the Secretary.

``SEC. 913. REDUCED RISK TOBACCO PRODUCTS.

    ``(a) Requirements.--
            ``(1) In general.--For purposes of this section, the term 
        `reduced risk tobacco product' means a tobacco product 
        designated by the Secretary under paragraph (2).
            ``(2) Designation.--
                    ``(A) In general.--A product may be designated by 
                the Secretary as a reduced risk tobacco product if the 
                Secretary finds that the product will significantly 
                reduce harm to individuals caused by a tobacco product 
                and is otherwise appropriate to protect public health, 
                based on an application submitted by the manufacturer 
                of the product (or other responsible person) that--
                            ``(i) demonstrates through testing on 
                        animals and short-term human testing that use 
                        of such product results in ingestion or 
                        inhalation of a substantially lower yield of 
                        toxic substances than use of conventional 
                        tobacco products in the same category as the 
                        proposed reduced risk product; and
                            ``(ii) if required by the Secretary, 
                        includes studies of the long-term health 
                        effects of the product.
                If such studies are required, the manufacturer may 
                consult with the Secretary regarding protocols for 
                conducting the studies.
                    ``(B) Basis for finding.--In making the finding 
                under subparagraph (A), the Secretary shall take into 
                account--
                            ``(i) the risks and benefits to the 
                        population as a whole, including both users of 
                        tobacco products and non-users of tobacco 
                        products;
                            ``(ii) the increased or decreased 
                        likelihood that existing users of tobacco 
                        products will stop using such products 
                        including reduced risk tobacco products;
                            ``(iii) the increased or decreased 
                        likelihood that those who do not use tobacco 
                        products will start to use such products, 
                        including reduced risk tobacco products; and
                            ``(iii) the risks and benefits to consumers 
                        from the use of a reduced risk tobacco product 
                        as compared to the use of products approved 
                        under chapter V to reduce exposure to tobacco.
            ``(3) Marketing requirements.--A tobacco product may be 
        marketed and labeled as a reduced risk tobacco product if it--
                    ``(A) has been designated as a reduced risk tobacco 
                product by the Secretary under paragraph (2);
                    ``(B) bears a label prescribed by the Secretary 
                concerning the product's contribution to reducing harm 
                to health; and
                    ``(C) complies with requirements prescribed by the 
                Secretary relating to marketing and advertising of the 
                product, and other provisions of this chapter as 
                prescribed by the Secretary.
    ``(b) Revocation of Designation.--At any time after the date on 
which a tobacco product is designated as a reduced risk tobacco product 
under this section the Secretary may, after providing an opportunity 
for an informal hearing, revoke such designation if the Secretary 
determines, based on information not available at the time of the 
designation, that--
            ``(1) the finding made under subsection (a)(2) is no longer 
        valid; or
            ``(2) the product is being marketed in violation of 
        subsection (a)(3).
    ``(c) Limitation.--A tobacco product that is designated as a 
reduced risk tobacco product that is in compliance with subsection (a) 
shall not be regulated as a drug or device.
    ``(d) Development of Reduced Risk Tobacco Product Technology.--A 
tobacco product manufacturer shall provide written notice to the 
Secretary upon the development or acquisition by the manufacturer of 
any technology that would reduce the risk of a tobacco product to the 
health of the user for which the manufacturer is not seeking 
designation as a `reduced risk tobacco product' under subsection (a).

``SEC. 914. PRESERVATION OF STATE AND LOCAL AUTHORITY.

    ``(a) Additional Requirements.--
            ``(1) In general.--Except as provided in paragraph (2), 
        nothing in this Act shall be construed as prohibiting a State 
        or political subdivision thereof from adopting or enforcing a 
        requirement applicable to a tobacco product that is in addition 
        to, or more stringent than, requirements established under this 
        chapter.
            ``(2) Preemption of certain state and local requirements.--
                    ``(A) Except as provided in subparagraph (B), no 
                State or political subdivision of a State may establish 
                or continue in effect with respect to a tobacco product 
                any requirement which is different from, or in addition 
                to, any requirement applicable under the provisions of 
                this chapter relating to performance standards, 
                premarket approval, adulteration, misbranding, 
                registration, reporting, good manufacturing standards, 
                or reduced risk products.
                    ``(B) Subparagraph (A) does not apply to 
                requirements relating to the sale, use, or distribution 
                of a tobacco product including requirements related to 
                the access to, and the advertising and promotion of, a 
                tobacco product.
    ``(b) Rule of Construction Regarding Product Liability.--No 
provision of this chapter relating to a tobacco product shall be 
construed to modify or otherwise affect any action or the liability of 
any person under the product liability law of any State.
    ``(c) Waivers.--Upon the application of a State or political 
subdivision thereof, the Secretary may, by regulation promulgated after 
notice and an opportunity for an oral hearing, exempt from subsection 
(a), under such conditions as may be prescribed in such regulation, a 
requirement of such State or political subdivision applicable to a 
tobacco product if--
            ``(1) the requirement is more stringent than a requirement 
        applicable under the provisions described in subsection (a)(3) 
        which would be applicable to the tobacco product if an 
        exemption were not in effect under this subsection; or
            ``(2) the requirement--
                    ``(A) is required by compelling local conditions; 
                and
                    ``(B) compliance with the requirement would not 
                cause the tobacco product to be in violation of any 
                applicable requirement of this chapter.

``SEC. 915. TOBACCO PRODUCTS SCIENTIFIC ADVISORY COMMITTEE.

    ``(a) Establishment.--Not later than 1 year after the date of 
enactment of the National Tobacco Policy and Youth Smoking Reduction 
Act, the Secretary shall establish a 9-member advisory committee, to be 
known as the `Tobacco Products Scientific Advisory Committee'.
    ``(b) Membership.--
            ``(1) In general.--The Secretary shall appoint as members 
        of the Tobacco Products Scientific Advisory Committee 
        individuals who are technically qualified by training and 
        experience in the medicine, medical ethics, science, or 
        technology involving the manufacture, evaluation, or use of 
        tobacco products, who are of appropriately diversified 
        professional backgrounds. The committee shall be composed of--
                    ``(A) 3 individuals who are officers or employees 
                of a State or local government, or of the Federal 
                government;
                    ``(B) 2 individuals as representatives of interests 
                of the tobacco manufacturing industry;
                    ``(C) 2 individuals as representatives of interests 
                of physicians and other healthcare professionals; and
                    ``(D) 2 individuals as representatives of the 
                general public.
            ``(2) Limitation.--The Secretary may not appoint to the 
        Advisory Committee any individual who is in the regular full-
        time employ of the Food and Drug Administration or any agency 
        responsible for the enforcement of this Act. The Secretary may 
        appoint Federal officials as ex-officio members.
            ``(3) Chairperson.--The Secretary shall designate 1 of the 
        members of the Advisory Committee to serve as chairperson.
    ``(c) Duties.--The Tobacco Products Scientific Advisory Committee 
shall provide advice, information, and recommendations to the 
Secretary--
            ``(1) as provided in this chapter;
            ``(2) on the effects of the alteration of the nicotine 
        yields from tobacco products;
            ``(3) on whether there is a threshold level below which 
        nicotine yields do not produce dependence on the tobacco 
product involved; and
            ``(4) on its review of other safety, dependence, or health 
        issues relating to tobacco products as requested by the 
        Secretary.
    ``(d) Compensation; Support; FACA.--
            ``(1) Compensation and travel.--Members of the Advisory 
        Committee who are not officers or employees of the United 
        States, while attending conferences or meetings of the 
        committee or otherwise engaged in its business, shall be 
        entitled to receive compensation at rates to be fixed by the 
        Secretary, which may not exceed the daily equivalent of the 
        rate in effect for level 4 of the Senior Executive Schedule 
        under section 5382 of title 5, United States Code, for each day 
        (including travel time) they are so engaged; and while so 
        serving away from their homes or regular places of business 
        each member may be allowed travel expenses, including per diem 
        in lieu of subsistence, as authorized by section 5703 of title 
        5, United States Code, for persons in the Government service 
        employed intermittently.
            ``(2) Administrative support.--The Secretary shall furnish 
        the Advisory Committee clerical and other assistance.
            ``(3) Nonapplication of faca.--Section 14 of the Federal 
        Advisory Committee Act (5 U.S.C. App.) does not apply to the 
        Advisory Committee.
    ``(e) Proceedings of Advisory Panels and Committees.--The Advisory 
Committee shall make and maintain a transcript of any proceeding of the 
panel or committee. Each such panel and committee shall delete from any 
transcript made under this subsection information which is exempt from 
disclosure under section 552(b) of title 5, United States Code.

``SEC. 916. EQUAL TREATMENT OF RETAIL OUTLETS.

    -``The Secretary shall issue regulations to require that retail 
establishments for which the predominant business is the sale of 
tobacco products comply with any advertising restrictions applicable to 
retail establishments accessible to individuals under the age of 18.''.

SEC. 102. CONFORMING AND OTHER AMENDMENTS TO GENERAL PROVISIONS.

    (a) Amendment of Federal Food, Drug, and Cosmetic Act.--Except as 
otherwise expressly provided, whenever in this section an amendment is 
expressed in terms of an amendment to, or repeal of, a section or other 
provision, the reference is to a section or other provision of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.).
    (b) Section 301.--Section 301 (21 U.S.C. 331) is amended--
            (1) by inserting ``tobacco product,'' in subsection (a) 
        after ``device,'';
            (2) by inserting ``tobacco product,'' in subsection (b) 
        after ``device,'';
            (3) by inserting ``tobacco product,'' in subsection (c) 
        after ``device,'';
            (4) by striking ``515(f), or 519'' in subsection (e) and 
        inserting ``515(f), 519, or 909'';
            (5) by inserting ``tobacco product,'' in subsection (g) 
        after ``device,'';
            (6) by inserting ``tobacco product,'' in subsection (h) 
        after ``device,'';
            (7) by striking ``708, or 721'' in subsection (j) and 
        inserting ``708, 721, 904, 905, 906, 907, 908, or 909'';
            (8) by inserting ``tobacco product,'' in subsection (k) 
        after ``device,'';
            (9) by striking subsection (p) and inserting the following:
    ``(p) The failure to register in accordance with section 510 or 
905, the failure to provide any information required by section 510(j), 
510(k), 905(i), or 905(j), or the failure to provide a notice required 
by section 510(j)(2) or 905(J)(2).'';
            (10) by striking subsection (q)(1) and inserting the 
        following:
    ``(q)(1) The failure or refusal--
            ``(A) to comply with any requirement prescribed under 
        section 518, 520(g), 906(f), or 908;
            ``(B) to furnish any notification or other material or 
        information required by or under section 519, 520(g), 904, 
        906(f), or 909; or
            ``(C) to comply with a requirement under section 522 or 
        912.'';
            (11) by striking ``device,'' in subsection (q)(2) and 
        inserting ``device or tobacco product,''; and
            (12) by inserting ``or tobacco product'' in subsection (r) 
        after ``device'' each time that it appears.
    (c) Section 303.--Section 303(f)(1)(A) (21 U.S.C. 333(f)(1)(A)) is 
amended by inserting ``or tobacco products'' after ``devices''.
    (d) Section 304.--Section 304 (21 U.S.C. 334) is amended--
            (1) by striking ``and'' before ``(D)'' in subsection 
        (a)(2);
            (2) by striking ``device.'' in subsection (a)(2) and 
        inserting a comma and ``(E) Any adulterated or misbranded 
        tobacco product.'';
            (3) by inserting ``tobacco product,'' in subsection (d)(1) 
        after ``device,'';
            (4) by inserting ``or tobacco product'' in subsection 
        (g)(1) after ``device'' each place it appears; and
            (5) by inserting ``or tobacco product'' in subsection 
        (g)(2)(A) after ``device'' each place it appears.
    (e) Section 702.--Section 702(a) (21 U.S.C. 372(a)) is amended--
            (1) by inserting ``(1)'' after ``(a)''; and
            (2) by adding at the end thereof the following:
    ``(2) For a tobacco product, to the extent feasible, the Secretary 
shall contract with the States in accordance with paragraph (1) to 
carry out inspections of retailers in connection with the enforcement 
of this Act.''.
    (f) Section 703.--Section 703 (21 U.S.C. 373) is amended--
            (1) by inserting ``tobacco product,'' after ``device,'' 
        each place it appears; and
            (2) by inserting ``tobacco products,'' after ``devices,'' 
        each place it appears.
    (g) Section 704.--Section 704 (21 U.S.C. 374) is amended--
            (1) by inserting ``tobacco products,'' in subsection 
        (a)(1)(A) after ``devices,'' each place it appears;
            (2) by inserting ``or tobacco products'' in subsection 
        (a)(1)(B) after ``restricted devices'' each place it appears; 
        and
            (3) by inserting ``tobacco product,'' in subsection (b) 
        after ``device,''.
    (h) Section 705.--Section 705(b) (21 U.S.C. 375(b)) is amended by 
inserting ``tobacco products,'' after ``devices,''.
    (i) Section 709.--Section 709 (21 U.S. C. 379) is amended by 
inserting ``or tobacco product'' after ``device''.
    (j) Section 801.--Section 801 (21 U.S.C. 381) is amended--
            (1) by inserting ``tobacco products,'' after ``devices,'' 
        in subsection (a) the first time it appears;
            (2) by inserting ``or subsection (j) of section 905'' in 
        subsection (a) after ``section 510''; and
            (3) by striking ``drugs or devices'' each time it appears 
        in subsection (a) and inserting ``drugs, devices, or tobacco 
        products'';
            (4) by inserting ``tobacco product,'' in subsection (e)(1) 
        after ``device,'';
            (2) by redesignating paragraph (4) of subsection (e) as 
        paragraph (5) and inserting after paragraph (3), the following:
            ``(4) Paragraph (1) does not apply to any tobacco product--
                    ``(A) which does not comply with an applicable 
                requirement of section 907 or 910; or
                    ``(B) which under section 906(f) is exempt from 
                either such section.
        This paragraph does not apply if the Secretary has determined 
        that the exportation of the tobacco product is not contrary to 
        the public health and safety and has the approval of the 
        country to which it is intended for export or the tobacco 
        product is eligible for export under section 802.''.
    (k) Section 802.--Section 802 (21 U.S.C. 382) is amended--
            (1) by striking ``device--'' in subsection (a) and 
        inserting ``device or tobacco product--'';
            (2) by striking ``and'' after the semicolon in subsection 
        (a)(1)(C);
            (3) by striking subparagraph (C) of subsection (a)(2) and 
        all that follows in that subsection and inserting the 
        following:
                    ``(C) is a banned device under section 516; or
            ``(3) which, in the case of a tobacco product--
                    ``(A) does not comply with an applicable 
                requirement of section 907 or 910; or
                    ``(B) under section 906(f) is exempt from either 
                such section,
        is adulterated, misbranded, and in violation of such sections 
        or Act unless the export of the drug, device, or tobacco 
        product is, except as provided in subsection (f), authorized 
        under subsection (b), (c), (d), or (e) of this section or 
        section 801(e)(2) or 801(e)(4). If a drug, device, or tobacco 
        product described in paragraph (1), (2), or (3) may be exported 
        under subsection (b) and if an application for such drug or 
        device under section 505, 515, or 910 of this Act or section 
        351 of the Public Health Service Act (42 U.S.C. 262) was 
        disapproved, the Secretary shall notify the appropriate public 
        health official of the country to which such drug, device, or 
        tobacco product will be exported of such disapproval.'';
            (4) by inserting ``or tobacco product'' in subsection 
        (b)(1)(A) after ``device'' each time it appears;
            (5) by inserting ``or tobacco product'' in subsection (c) 
        after ``device'' and inserting ``or section 906(f)'' after 
        ``520(g).'';
            (6) by inserting ``or tobacco product'' in subsection (f) 
        after ``device'' each time it appears; and
            (7) by inserting ``or tobacco product'' in subsection (g) 
        after ``device'' each time it appears.
    (l) Section 1003.--Section 1003(d)(2)(C) (as redesignated by 
section 101(a)) is amended--
            (1) by striking ``and'' after ``cosmetics,''; and
            (2) inserting a comma and ``and tobacco products'' after 
        ``devices''.

                        Subtitle B--Advertising

SEC. 121. ADVERTISING PROVISIONS IN PROTOCOL.

    The Protocol shall contain provisions enforceable at law under 
which tobacco product manufacturers commit to observe limitations on 
advertising that meet the requirements set forth in this subtitle.

SEC. 122. TOBACCO PRODUCT LABELING AND ADVERTISING.

    (a) In General.--The Protocol shall require that no tobacco product 
will be sold or distributed in the United States--
            (1) unless its advertising and labeling (including the 
        package)--
                    (A) contain no human image, animal image, or 
                cartoon character;
                    (B) are not outdoor advertising, including 
                advertising in enclosed stadia and advertising from 
                within a retail establishment that is directed toward 
                or visible from the outside of the establishment;
                    (C) are accompanied by a disclaimer in the 
                advertising that words such as ``light'' or ``low tar'' 
                describing the product do not render the product less 
                hazardous than any other tobacco product, in addition 
                to such other requirements as the Secretary may impose;
                    (D) at the time the advertising or labeling is 
                first used are submitted to the Secretary so that the 
                Secretary may conduct regular review of the advertising 
                and labeling;
                    (E) comply with any applicable requirement of the 
                Federal Food, Drug, and Cosmetic Act, the Federal 
                Cigarette Labeling and Advertising Act, and any 
                regulation promulgated under either of those Acts;
                    (F) do not appear on the international computer 
                network of both Federal and non-Federal interoperable 
                packet switches data networks (the ``Internet''), 
                unless such advertising is designed to be inaccessible 
                in or from the United States to all individuals under 
                the age of 18 years;
                    (G) use only black text on white background, other 
                than--
                            (i) those locations where self-service 
                        displays are permitted under subsection 123, if 
                        the advertising is not visible from outside the 
                        establishment and is affixed to a wall or 
                        fixture in the establishment; and
                            (ii) advertisements appearing in any 
                        publication which the tobacco product 
                        manufacturer, distributor, or retailer 
                        demonstrates to the Secretary is a newspaper, 
                        magazine, periodical, or other publication 
                        whose readers under the age of 18 years 
                        constitute 15 percent or less of the total 
                        readership as measured by competent and 
                        reliable survey evidence, and that is read 
by less than 2 million persons under the age of 18 years as measured by 
competent and reliable survey evidence;
                    (H) for video formats, use only static black text 
                on a white background, and any accompanying audio uses 
                only words without music or sound effects; and
                    (I) for audio formats, use only words without music 
                or sound effects;
            (2) if a logo, symbol, motto, selling message, recognizable 
        color or pattern of colors, or any other indicia of product 
        identification of the tobacco product is contained in a movie, 
        program, or video game for which a direct or indirect payment 
        has been made to ensure its placement;
            (3) if a direct or indirect payment has been made by any 
        tobacco product manufacturer, distributor, or retailer to any 
        entity for the purpose of promoting the image or use of the 
        tobacco product through print or film media that appeals to 
        individuals under the age of 18 years or through a live 
        performance by an entertainment artist that appeals to such 
        individuals;
            (4) if a logo, symbol, motto, selling message, recognizable 
        color or pattern of colors, or any other indicia or product 
        identification identical to, similar to, or identifiable with 
        the tobacco product is used for any item (other than a tobacco 
        product) or service marketed, licensed, distributed or sold or 
        caused to be marketed, licensed, distributed, or sold by the 
        tobacco product manufacturer or distributor of the tobacco 
        product;
            (5) unless its package label and advertising bear the 
        product's established name and a statement of its intended use, 
        as follows:
                    (A) ``Cigarettes-A Nicotine Delivery Device'';
                    (B) ``Cigarette Tobacco-A Nicotine Delivery 
                Device''; or
                    (C)`` Loose Leaf Chewing Tobacco'', ``Plug Chewing 
                Tobacco'', ``Twist Chewing Tobacco'', ``Moist Snuff'', 
                or ``Dry Snuff'', whichever is appropriate for the 
                product, followed by ``-A Nicotine Delivery Device''; 
                and
            (6)(A) except as provided in subparagraph (B), if 
        advertising or labeling for such product that is otherwise in 
        accordance with the requirements of this section bears a 
        tobacco product brand name (alone or in conjunction with any 
        other word) or any other indicia of tobacco product 
        identification and is disseminated in a medium other than 
        newspapers, magazines, periodicals or other publications 
        (whether periodic or limited distribution), nonpoint-of-sale 
        promotional material (including direct mail), point-of-sale 
        promotional material, or audio or video formats delivered at a 
        point-of-sale; but
            (B) notwithstanding subparagraph (A), advertising or 
        labeling for cigarettes or smokeless tobacco may be 
        disseminated in a medium that is not specified in paragraph (1) 
        if the tobacco product manufacturer, distributor, or retailer 
        notifies the Secretary not later than 30 days prior to the use 
        of such medium, and the notice describes the medium and the 
        extent to which the advertising or labeling may be seen by 
        persons under the age of 18 years.
    (b) Color Print Ads on Magazines.--The Protocol shall also provide 
that no tobacco product may be sold or distributed in the United States 
if any advertising for that product on the outside back cover of a 
magazine appears in any color or combination of colors.

SEC. 123. POINT-OF-SALE RESTRICTIONS.

    (a) In General.--Except as provided in subsection (b), the Protocol 
shall provide that no participating tobacco product manufacturer, 
distributor, or retailer shall engage in point-of-sale advertising of 
any tobacco product in any retail establishment (other than an 
establishment that sells only tobacco products) in which an individual 
under 18 years of age is present, or permitted to enter, at any time.
    (b) Permitted POS Locations.--
            (1) Placement.--A retailer may place 1 point-of-sale 
        advertisement in or at each retail establishment for its brand 
        or the contracted house retailer or private label brand of its 
        wholesaler.
            (2) Size.--The display area of any such point-of-sale 
        advertisement (either individually or in the aggregate) shall 
        not be larger than 576 square inches and shall consist of black 
        letters on white background or another recognized typography.
            (3) Proximity to candy.--Any such point-of-sale 
        advertisement shall not be attached to or located within 2 feet 
        of any display fixture on which candy is displayed for sale.
    (c) Audio or Video.--Any audio or video format permitted under 
regulations promulgated by the Secretary may be distributed at the time 
of sale of a tobacco product to individuals over the age of 18 years, 
but no such format may be played or shown in or at any location where 
tobacco products are offered for sale.
    (d) No Restrictive Covenants.--No participating tobacco product 
manufacturer or distributor of tobacco products may enter into any 
arrangement with a retailer that limits the retailer's ability to 
display any form of advertising or promotional material originating 
with another supplier and permitted by law to be displayed in a retail 
establishment.
    (e) Definitions.--As used in this section, the terms ``point-of-
sale advertisement'' and ``point-of-sale advertising'' mean all printed 
or graphical materials bearing the brand name (alone or in conjunction 
with any other word), logo, symbol, motto, selling message, or any 
other indicia of product identification identical or similar to, or 
identifiable with, those used for any brand of cigarettes or smokeless 
tobacco, which, when used for its intended purpose, can reasonably be 
anticipated to be seen by customers at a location where tobacco 
products are offered for sale.

              TITLE II--REDUCTIONS IN UNDERAGE TOBACCO USE

                        Subtitle A--Underage Use

SEC. 201. GOALS FOR REDUCING UNDERAGE TOBACCO USE.

    (a) Goals.--As part of a comprehensive national tobacco control 
policy, the Secretary, working in cooperation with State, Tribal, and 
local governments and the private sector, shall take all actions under 
this Act necessary to ensure that the required percentage reductions in 
underage use of tobacco products set forth in this title are achieved.
    (b) Required Reductions for Cigarettes.--With respect to 
cigarettes, the required percentage reduction in underage use, as set 
forth in section 202, means--

----------------------------------------------------------------------------------------------------------------
                                                                   Required Percentage Reduction as a Percentage
                Calendar Year After Date of Enactment                 of Base Incidence Percentage in Underage  
                                                                                   Cigarette Use                
----------------------------------------------------------------------------------------------------------------
Years 3 and 4                                                                                         15 percent
Years 5 and 6                                                                                         30 percent
Years 7, 8, and 9                                                                                     50 percent
Year 10 and thereafter                                                                                60 percent
----------------------------------------------------------------------------------------------------------------

    (c) Required Reductions for Smokeless Tobacco.--With respect to 
smokeless tobacco products, the required percentage reduction in 
underage use, as set forth in section 202, means--

----------------------------------------------------------------------------------------------------------------
                                                                   Required Percentage Reduction as a Percentage
                Calendar Year After Date of Enactment                 of Base Incidence Percentage in Underage  
                                                                               Smokeless Tobacco Use            
----------------------------------------------------------------------------------------------------------------
Years 3 and 4                                                                                       12.5 percent
Years 5 and 6                                                                                         25 percent
Years 7, 8, and 9                                                                                     35 percent
Year 10 and thereafter                                                                                45 percent
----------------------------------------------------------------------------------------------------------------

SEC. 202. LOOK-BACK ASSESSMENT.

    (a) Determination of Underage Use.--Upon the conclusion of the 
third calendar year after the date of enactment of this Act, and 
annually thereafter, the Secretary shall determine the percent 
incidence of underage use of cigarettes and of smokeless tobacco by 
calculating the average, weighted by relative population of such age 
groups in 1995 as determined by the Bureau of the Census, of the 
percentages of individuals in grade 12 (ages 16 and 17), in grade 10 
(ages 14 and 15), and in grade 8 (age 13) who used cigarettes or 
smokeless tobacco, as appropriate, on a daily basis during the 
preceding calendar year. The percentages used in this calculation are 
to be those measured by (1) the University of Michigan Survey, or (2) 
such comparable index using identical methodology as is chosen by the 
Secretary after notice and the opportunity for comment in accordance 
with section 553 of title 5, United States Code. If the methodology 
employed by the University of Michigan Survey is changed in a material 
manner from that employed from 1986 through 1996 (including changes in 
the States or regions on which the University of Michigan Survey is 
based), or is (in the opinion of the Secretary) no longer the best 
available data, the Secretary shall use the percentages measured by an 
index chosen by the Secretary, after notice and the opportunity for 
comment in accordance with section 553 of title 5, United States Code, 
that has a methodology identical to that employed by the University of 
Michigan Survey from 1986 through 1996. The Secretary shall make the 
data on which the results of the University of Michigan Survey or such 
other comparable index are based available to the public upon request.
    (b) Calculation of Non-Attainment Penalties.--
            (1) Secretary to determine non-attainment percentage.--The 
        Secretary shall determine the non-attainment percentage for 
        cigarettes and for smokeless tobacco for each calendar year.
            (2) Non-attainment penalty for cigarettes.--For each 
        calendar year in which the percentage reduction in underage use 
        required by section 201(b) is not attained, the Secretary shall 
        assess a penalty on cigarette manufacturers as follows:

----------------------------------------------------------------------------------------------------------------
                 If the non-attainment percentage is:                             The penalty is:               
----------------------------------------------------------------------------------------------------------------
Not more than 5 percent                                             $80,000,000 multiplied by the non-attainment
                                                                                                      percentage
More than 5% but not more than 10%                                 $400,000,000, plus $160,000,000 multiplied by
                                                                   the non-attainment percentage in excess of 5%
                                                                                        but not in excess of 10%
More than 10% but not more than 20%                                 $1,200,000,000, plus $240,000,000 multiplied
                                                                   by the non-attainment percentage in excess of
                                                                                    10% but not in excess of 20%
More than 20%                                                                                     $3,500,000,000
----------------------------------------------------------------------------------------------------------------

            (3) Non-attainment penalty for smokeless tobacco.--For each 
        year in which the percentage reduction in underage use required 
        by section 201(c) is not attained, the Secretary shall assess a 
        penalty on smokeless tobacco product manufacturers as follows:

----------------------------------------------------------------------------------------------------------------
                 If the non-attainment percentage is:                             The penalty is:               
----------------------------------------------------------------------------------------------------------------
Not more than 5 percent                                              $8,000,000 multiplied by the non-attainment
                                                                                                      percentage
More than 5% but not more than 10%                                   $40,000,000, plus $16,000,000 multiplied by
                                                                   the non-attainment percentage in excess of 5%
                                                                                        but not in excess of 10%
More than 10% but not more than 20%                                 $120,000,000, plus $24,000,000 multiplied by
                                                                      the non-attainment percentage in excess of
                                                                                    10% but not in excess of 20%
More than 20%                                                                                       $350,000,000
----------------------------------------------------------------------------------------------------------------

            (4) Penalties to be adjusted for inflation.--
                    (A) In general.--Beginning with the fourth calendar 
                year after the date of enactment of this Act, each 
                dollar amount in the tables in paragraphs (2) and (3) 
                shall be increased by the inflation adjustment.
                    (B) Inflation adjustment.--For purposes of 
                subparagraph (A), the inflation adjustment for any 
                calendar year is the percentage (if any) by which--
                            (i) the CPI for the preceding calendar 
                        year, exceeds
                            (ii) the CPI for the calendar year 1998.
                    (C) CPI.--For purposes of subparagraph (B), the CPI 
                for any calendar year is the average of the Consumer 
                Price Index for all-urban consumers published by the 
Department of Labor.
                    (D) Rounding.--If any increase determined under 
                subparagraph (A) is not a multiple of $1,000, the 
                increase shall be rounded to the nearest multiple of 
                $1,000.
    (c) Joint, Several, and Strict Obligation for Penalties.--
            (1) Cigarette manufacturers.--Any penalty due and payable 
        by cigarette manufacturers shall be the joint, several, and 
        strict obligation of such manufacturers.
            (2) Smokeless tobacco.--Any penalty payable by smokeless 
        tobacco product manufacturers shall be the joint, several, and 
        strict obligation of such manufacturers.
    (d) Exemptions for Small Manufacturers.--
            (1) Allocation by market share.--The Secretary shall make 
        such allocations according to each manufacturer's share of the 
        domestic cigarette or domestic smokeless tobacco market, as 
        appropriate, in the year for which the penalty is being 
        assessed, based on actual Federal excise tax payments.
            (2) Exemption.--In any year in which a penalty is being 
        assessed, the Secretary shall exempt from payment any tobacco 
        product manufacturer with less than 1 percent of the domestic 
        market share for a specific category of tobacco product unless 
        the Secretary finds that the manufacturer's brands used by 
        underage individuals at a rate equal to or greater than the 
        manufacturer's total market share for the type of tobacco 
        product.
    (e) Method of Penalty Assessment.--The Secretary shall assess a 
penalty for a specific calendar year on or before May 1 of the 
subsequent calendar year. Penalty payments shall be paid on or before 
July 1 of the year in which they are assessed. The Secretary may 
establish, by regulation, interest at a rate up to 3 times the 
prevailing prime rate at the time the penalty is assessed, and 
additional charges in an amount up to 3 times the penalty, for late 
payment of the penalty.
    (f) Business Expense Deduction.--Any penalty paid by a tobacco 
product manufacturer under this section shall not be deductible as an 
ordinary and necessary business expense or otherwise under the Internal 
Revenue Code of 1986.
    (g) Penalty Liability Among Manufacturers.--
            (1) In general.--The District Courts of the United States 
        shall have jurisdiction to adjudicate any claim brought under 
        this section by a tobacco product manufacturer against one or 
        more other tobacco product manufacturers--
                    (A) to recover a portion of the penalty paid by the 
                plaintiff manufacturer; or
                    (B) for a reallocation of the penalty among tobacco 
                product manufacturers.
            (2) Contribution or reimbursement liability.--A tobacco 
        product manufacturer shall be liable under this subsection to 
        one or more other manufacturers if the plaintiff tobacco 
        product manufacturer establishes by a preponderance of the 
        evidence that the defendant tobacco product manufacturer, 
        through its acts or omissions, was responsible for a 
        disproportionate share of the non-attainment penalty as 
        compared to the responsibility of the plaintiff manufacturer, 
        as contemplated in subsection (c)(3).
            (3) Responsibility for agents, etc.--In any action brought 
        under this subsection, a tobacco product manufacturer shall be 
        held responsible for any act or omission of its attorneys, 
        advertising agencies, or other agents that contributed to that 
        manufacturer's responsibility for the penalty assessed under 
        this section.

SEC. 203. SUBSTANTIAL NON-ATTAINMENT OF REQUIRED REDUCTIONS.

    (a) Action by Secretary.--
            (1) In general.--If the Secretary determines that the non-
        attainment percentage for any year is greater than 20 
        percentage points for cigarettes or smokeless tobacco, then the 
        Secretary shall determine, on a brand-by-brand basis, using 
        data that reflects a 1999 baseline, which tobacco product 
        manufacturers are responsible within the 2 categories of 
        tobacco products for the excess. The Secretary may commence an 
        action under this section against the tobacco product 
        manufacturer or manufacturers of the brand or brands of 
        cigarettes or smokeless tobacco products for which the non-
        attainment percentage exceeded 20 percentage points.
            (2) Determination.--The Secretary shall use research 
        methodology that is similar to, or the same as, that used in 
        the University of Michigan Survey, except--
                    (A) the methodology shall be adapted to determining 
                underage usage by brand; and
                    (B) the base period shall be calendar year 1999.
    (b) Procedures.--Any action under this section shall be commenced 
by the Secretary in the United States District Court for the District 
of Columbia within 90 days after publication in the Federal Register of 
the determination that the non-attainment percentage for the tobacco 
product in question is greater than 20 percentage points. Any such 
action shall be heard and determined by a 3-judge court under section 
2284 of title 28, United States Code.
    (c) Determination by Court.--In any action under this section, the 
court shall determine whether the preponderance of the evidence shows 
that a tobacco product manufacturer--
            (1) has failed to comply substantially with the provisions 
        of this Act regarding underage tobacco use, of any rules or 
        regulations promulgated thereunder, or of any Federal or State 
        laws regarding underage tobacco use;
            (2) has taken any material action to undermine the 
        achievement of the required percentage reduction for the 
        tobacco product in question; or
            (3) has failed to comply with all recommendations of the 
        Tobacco Agreement Accountability Panel established under 
        section 801.
    (d) Removal of Annual Aggregate Payment Limitation.--Except as 
provided in subsections (e) and (g), if the court determines that the 
preponderance of the evidence shows that a tobacco product manufacturer 
engaged in conduct described in subsection (c) then section 706(c) of 
this Act does not apply to the enforcement against, or the payment by, 
such tobacco product manufacturer of any judgment or settlement that 
becomes final after that determination is made. The liability 
apportionment agreement described in section 706(e) of this Act shall 
not require that other tobacco product manufacturers pay an increased 
amount in any year over the amount they would have had to pay but for 
this section.
    (e) Defense.--An action under this section shall be dismissed, and 
subsection (d) shall not apply, if the court finds that the Secretary's 
determination under subsection (a) was unlawful under subparagraph (A), 
(B), (C), or (D) of section 706(2) of title 5, United States Code. Any 
judgments paid under section 706(c) of this Act and section (1)(d)(3) 
of the Protocol prior to a final judgment determining that the 
Secretary's determination was erroneous shall be fully credited, with 
interest, under section 707(e) of this Act and section (1)(d)(3) of the 
Protocol.
    (f) Review.--Decisions of the court under this section are 
reviewable only by the Supreme Court by writ of certiorari granted upon 
the petition of any party. The applicability of subsection (d) shall be 
stayed during the pendency of any such petition or review.
    (g) Continuing Effect.--Subsection (d) shall cease to apply to a 
tobacco product manufacturer found to have engaged in conduct described 
in subsection (c) upon the later of--
            (1) a determination by the Secretary under section 201 
        after the commencement of action under subsection (a) that the 
        non-attainment percentage for the tobacco product in question 
        is 20 or fewer percentage points; or
            (2) a finding by the court in an action filed against the 
        Secretary by the manufacturer, not earlier than 2 years after 
        the determination described in subsection (c) becomes final, 
        that the preponderance of the evidence shows that, in the 
        period since that determination, the manufacturer--
                    (A) has complied with the provisions of this Act 
                regarding underage tobacco use, of any rules or 
                regulations promulgated thereunder, and of any other 
                applicable Federal, State, or local laws, rules, or 
                regulations;
                    (B) has not taken any action to undermine the 
                achievement of the required percentage reduction for 
                the tobacco product in question; and
                    (C) has pursued substantial additional measures 
                reasonably calculated to attain the required percentage 
                reduction for the tobacco product in question.
A judgment or settlement against the tobacco product manufacturer that 
becomes final after a determination or finding described in paragraph 
(1) or (2) of this subsection is not subject to subsection (d). An 
action under paragraph (2) of this subsection shall be commenced in the 
United States District Court for the District of Columbia, and shall be 
heard and determined by a 3-judge court under section 2284 of title 28, 
United States Code. A decision by the court under paragraph (2) of this 
subsection is reviewable only by the Supreme Court by writ of 
certiorari granted upon the petition of any party, and the decision 
shall be stayed during the pendency of the petition or review. A 
determination or finding described in paragraph (1) or (2) of this 
subsection does not limit the Secretary's authority to bring a 
subsequent action under this section against any tobacco product 
manufacturer or the applicability of subsection (d) with respect to any 
such subsequent action.
    (h) Definitions.--The definitions set forth in section 701 of this 
Act apply to terms used in this section. A judgment or settlement 
becomes final within the meaning of this section when it would qualify 
as a final judgment or final settlement under section 701.

SEC. 204. DEFINITIONS.

    As used in this subtitle--
            (1) The term ``base incidence percentage'' means--
                    (A) in the case of cigarettes, the average, 
                weighted by relative population of the following age 
                groups in 1995 as determined by the Bureau of the 
                Census, of (i) the average of the percentages of 
                individuals in grade 12 (ages 16 and 17) from 1986 to 
                1996 who used cigarettes on a daily basis; (ii) the 
                average of the percentages of individuals in grade 10 
                (ages 14 and 15) from 1991 to 1996 who used cigarettes 
                on a daily basis; and (iii) the average of the 
                percentages of individuals in grade 8 (age 13) from 
                1991 to 1996 who used cigarettes on a daily basis; and
                    (B) in the case of smokeless tobacco products, the 
                average, weighted by relative population of the 
                following age groups in 1995 as determined by the 
                Bureau of the Census, of the percentage of individuals 
                in grade 12 (ages 16 and 17), individuals in grade 10 
                (ages 14 and 15), and individuals in grade 8 (age 13) 
                who used smokeless tobacco products on a daily basis in 
                1996.
The percentages specified in this paragraph are those measured by the 
University of Michigan Survey or by such comparable index using 
identical methodology as is chosen by the Secretary after notice and 
the opportunity for comment in accordance with section 553 of title 5, 
United States Code.
            (2) The term ``cigarette manufacturers'' means 
        manufacturers of cigarettes sold in the United States.
            (3) The term ``non-attainment percentage for cigarettes'' 
        means the number of percentage points yielded--
                    (A) for a calendar year in which the percent 
                incidence of underage use of cigarettes is less than 
                the base incidence percentage, by subtracting--
                            (i) the percentage by which the percent 
                        incidence of underage use of cigarettes in that 
                        year is less than the base incidence 
                        percentage, from
                            (ii) the required percentage reduction 
                        applicable in that year; and
                    (B) for a calendar year in which the percent 
                incidence of underage use of cigarettes is greater than 
                the base incidence percentage, adding--
                            (i) the percentage by which the percent 
                        incidence of underage use of cigarettes in that 
                        year is greater than the base incidence 
                        percentage; and
                            (ii) the required percentage reduction 
                        applicable in that year.
            (4) The term ``non-attainment percentage for smokeless 
        tobacco products'' means the number of percentage points 
        yielded--
                    (A) for a calendar year in which the percent 
                incidence of underage use of smokeless tobacco products 
                is less than the base incidence percentage, by 
                subtracting--
                            (i) the percentage by which the percent 
                        incidence of underage use of smokeless tobacco 
                        products in that year is less than the base 
                        incidence percentage, from
                            (ii) the required percentage reduction 
                        applicable in that year; and
                    (B) for a calendar year in which the percent 
                incidence of underage use of smokeless tobacco products 
                is greater than the base incidence percentage, by 
                adding--
                            (i) the percentage by which the percent 
                        incidence of underage use of smokeless tobacco 
                        products in that year is greater than the base 
                        incidence percentage; and
                            (ii) the required percentage reduction 
                        applicable in that year.
            (5) The term ``smokeless tobacco product manufacturers'' 
        means manufacturers of smokeless tobacco products sold in the 
        United States.
            (6) The term ``University of Michigan Survey'' means the 
        University of Michigan's National High School Drug Use Survey 
        entitled ``Monitoring the Future''.

                Subtitle B--State Enforcement Incentives

SEC. 211. COMPLIANCE BONUS FUND.

    (a) Establishment.--There is established within the National 
Tobacco Settlement Trust Fund established by section 401 a separate 
account to be known as the Compliance Bonus Account for States and 
Retailers. There are authorized to be appropriated from such account 
such amounts as may be necessary to carry out the provisions of this 
subtitle.
    (b) Credits to Account.--For each fiscal year there shall be 
credited to the Account an amount equal to--
            (1) 5 percent of the amounts credited to the National 
        Tobacco Settlement Trust Fund under section 401(b)(3); and
            (2) any amounts withheld under section 213.

SEC. 212. BLOCK GRANTS.

    (a) In General.--The Secretary shall award block grants to States 
determined to be eligible under subsection (b).
    (b) Eligible States.--To be eligible to receive a grant under 
subsection (a), a State shall--
            (1) prepare and submit to the Secretary an application, at 
        such time, in such manner, and containing such information as 
        the Secretary may require; and
            (2) with respect to the year involved, demonstrate to the 
        satisfaction of the Secretary that fewer than 5 percent of all 
        individuals under 18 years of age who attempt to purchase 
        tobacco products in the State in such year are successful in 
        such purchase.
    (c) Payout; Use of Funds.--
            (1) Annual distribution.--For each fiscal year in which one 
        or more States is eligible to receive a grant under this 
        section, the Secretary shall pay out the balance in the account 
        established under section 211(a) as of the end of the preceding 
        fiscal year.
            (2) Payment to state.--If more than one State is eligible 
        to receive a grant under this section for any fiscal year, the 
        amount payable for that fiscal year shall be apportioned among 
        such eligible States on the basis of population.
            (3) Use of funds.--Each State that receives a grant under 
        this section shall distribute half of the amount received among 
        retail outlets of tobacco products that, for fiscal year for 
        which the State met the requirements of subsection (b), have 
        outstanding records of compliance with the restrictions on 
        underage sales of tobacco products.

SEC. 213. STATE ENFORCEMENT INCENTIVES.

    (a) In General.--
            (1) Activities and reports regarding enforcement.--A State 
        shall--
                    (A) conduct monthly random, unannounced inspections 
                of sales or distribution outlets in the State to ensure 
                compliance with a law prohibiting sales of tobacco 
                products to individuals under 18 years of age;
                    (B) annually submit to the Secretary a report 
                describing--
                            (i) the activities carried out by the State 
                        to enforce underage access laws during the 
                        fiscal year; and
                            (ii) the extent of success the State has 
                        achieved in reducing the availability of 
                        tobacco products to individuals under the age 
                        of 18 years; and
                    (C)(i) a detailed description of how the 
                inspections described in subparagraph (A) were 
                conducted and the methods used to identify outlets, 
                with appropriate protection for the confidentiality of 
                information regarding the timing of inspections and 
                other investigative techniques whose effectiveness 
                depends on continued confidentiality;
                    (ii) the identity of the single State agency 
                designated by the Governor of the State to be 
                responsible for the implementation of the requirements 
                of this section.
            (2) Minimum inspection schedule.--In order to meet the 
        requirements of paragraph (1)(A), inspections conducted by the 
        State shall include at least 250 random, unannounced 
        inspections of retail sale outlets annually for each 1,000,000 
        persons resident in the State, as most recently determined by 
        the Bureau of the Census. Such inspections shall cover a range 
        of outlets (not preselected on the basis of prior violations) 
        to measure overall levels of compliance as well as to identify 
        violations, and shall be conducted to provide a probability 
        sample of outlets. The sample must reflect the distribution of 
        the population under the age of 18 years throughout the State 
        and the distribution of the outlets throughout the State 
        accessible to youth. Indian tribes shall conduct such 
        inspections monthly of at least 1 retail outlet subject to 
        their jurisdiction for each 4,000 reservation residents. Except 
        as provided in this paragraph, any reports required by this 
        paragraph shall be made public. As used in this paragraph, the 
        term ``outlet'' refers to any location that sells at retail or 
        otherwise distributes tobacco products to consumers, including 
        to locations that sell such products over-the-counter.
    (b) Noncompliance.--
            (1) Inspections.--The Secretary shall withhold from any 
        State that fails to meet the requirements of subsection (a) in 
        any calendar year an amount equal to an amount equal to 5 
        percent of the amount otherwise payable under this subtitle to 
        that State for the next fiscal year.
            (2) Compliance rate.--The Secretary shall withhold from any 
        State that fails to demonstrate a compliance rate of--
                    (A) at least 75 percent in the fifth and sixth 
                fiscal years after the date of enactment of the 
                National Tobacco Policy and Youth Smoking Act;
                    (B) at least 85 percent in the seventh, eighth, and 
                ninth fiscal years after such date; and
                    (C) at least 90 percent in every fiscal year 
                beginning with the tenth fiscal year after such date,
        an amount equal to one percentage point for each percentage 
        point by which the State failed to meet the percentage set 
        forth in this subsection for that year from the amount 
        otherwise payable under this subtitle for that fiscal year.
    (c) Definition.--For the purposes of this section, the term ``first 
applicable fiscal year'' means the first fiscal year beginning after 
the fiscal year in which funding is made available to the States under 
this section.
    (f) Release and Disbursement.--
            (1) Upon notice from the Secretary that an amount payable 
        under section 202(e) has been ordered withheld under subsection 
        (b), a State may petition the Secretary for a release and 
        disbursement of up to 75 percent of the amount withheld, and 
        shall give timely written notice of such petition to the 
        attorney general of that State and to all tobacco product 
        manufacturers.
            (2) The agency shall conduct a hearing on such a petition, 
        in which the attorney general of the State and tobacco product 
        manufacturers may participate and be heard.
            (3) The burden shall be on the State to prove, by a 
        preponderance of the evidence, that the release and 
        disbursement should be made. The Secretary's decision on 
        whether to grant such a release, and the amount of any such 
        disbursement, shall be based on whether--
                    (A) the State has acted in good faith and in full 
                compliance with this Act, and any rules or regulations 
                promulgated under this Act;
                    (B) the State has pursued all reasonably available 
                measures to attain the compliance rates and required 
                percentage reductions applicable in the year for which 
                the release is being sought;
                    (C) there is evidence of any direct or indirect 
                action by the State to undermine the achievement of the 
                compliance rates, the required percentage reductions, 
                or other terms and objectives of this Act or the 
                National Tobacco Policy and Youth Smoking Reduction 
                Act; and
                    (D) any other relevant evidence.
            (4) A State shall be entitled to interest on any withheld 
        amount released at the average United States 52-Week Treasury 
        Bill rate for the period between the withholding of the amount 
        and its release.
          (5) Any State attorney general or tobacco product 
        manufacturer aggrieved by a final decision on a petition filed 
        under this subsection may seek judicial review of such decision 
        within 30 days in the United States Court of Appeals for the 
        District of Columbia Circuit. Unless otherwise specified in 
        this Act, judicial review under this section shall be governed 
        by sections 701 through 706 of title 5, United States Code.
            (6) No stay or other injunctive relief enjoining a 
        reduction in a State's allotment pending appeal or otherwise 
        may be granted by the Secretary or any court.

SEC. 214. CONFORMING CHANGE.

    Section 1926 of the Public Health Service Act (42 U.S.C. 300x--26) 
is hereby repealed.

                       Subtitle C--Other Programs

SEC. 221. NATIONAL SMOKING CESSATION PROGRAM.

    (a) Establishment.--The Secretary shall establish a program to be 
known as the ``National Smoking Cessation Program'' under which the 
Secretary may award grants to eligible public and nonprofit entities 
and individuals for tobacco product use cessation purposes.
    (b) Eligibility.--
            (1) Of entities.--To be eligible to receive a grant under 
        this section an entity shall--
                    (A) be a public or nonprofit private entity, 
                including community health centers and other community-
                based organizations with a focus on low-income 
                populations;
                    (B) prepare and submit to the Secretary an 
                application at such time, in such manner, and 
                containing such information as the Secretary may 
                require;
                    (C) provide assurances that amounts received under 
                the grant will be used in accordance with subsection 
                (c)(1); and
                    (D) meet any other requirements determined 
                appropriate by the Secretary.
            (2) Of individuals.--To be eligible to receive a grant 
        under this section an individual shall--
                    (A) prepare and submit to the Secretary an 
                application at such time, in such manner, and 
                containing such information as the Secretary may 
                require;
                    (B) provide assurances that amounts received under 
                the grant will be used only in accordance with 
                subsection (c)(2); and
                    (C) meet any other requirements determined 
                appropriate by the Secretary.
    (c) Use of Funds.--
            (1) By entities.--An entity that receives a grant under 
        this section shall use amounts provided under the grant to 
        establish or administer tobacco product use cessation programs 
        that are approved in accordance with subsection (d).
            (2) By individuals.--An individual who receives a grant 
        under this section shall use amounts provided under the grant 
        to enroll in a tobacco product use cessation program or to 
        purchase a tobacco product use cessation product that has been 
        approved in accordance with subsection (d). Grants to 
        individuals under this section may be in the form of vouchers 
        that may be used to pay the costs of enrollment in an approved 
        program or to purchase an approved product.
    (d) Approval of Cessation Program or Devices.--Using the best 
available scientific information, the Secretary shall promulgate 
regulations to provide for the approval of tobacco product use 
cessation programs and drugs, human biological products, or medical 
devices approved by the Food and Drug Administration or otherwise 
legally marketed under the Federal Food, Drug, and Cosmetic Act (21 
U.S.C. 301 et seq.) or under the Public Health Service Act (42 U.S.C. 
201 et seq.) for use as smoking cessation therapies or aids. The 
regulations shall ensure that tobacco product users--
            (1) have reasonable access upon request to such 
        comprehensive tobacco use cessation programs and drugs, human 
        biological products, or medical devices; and
            (2) have access to a broad range of cessation options that 
        are tailored to the needs of the individual tobacco user.
    (e) Minority Focus.--The Secretary shall ensure smoking cessation 
programs are directed to include minority populations in proportion to 
their prevalence in the smoking population, and are linguistically and 
culturally appropriate for such populations.
    (f) Funding.--There are authorized to be appropriated from the 
National Tobacco Settlement Trust Fund, other than from amounts in the 
State Litigation Settlement Account, such sums as may be necessary to 
carry out this section.

SEC. 222. NATIONAL TOBACCO-FREE PUBLIC EDUCATION PROGRAM.

    (a) Establishment of Board.--
            (1) In general.--The Secretary shall establish an 
        independent board to be known as the ``Tobacco-Free Education 
        Board'' (referred to in this section as the ``Board'') to enter 
        into contracts with or award grants to eligible public and 
        nonprofit private entities to carry out public informational 
        and educational activities designed to reduce the use of 
        tobacco products.
            (2) Appointment.--The Board shall be composed of 9 members 
        to be appointed by the Secretary, of whom--
                    (A) at least 3 such members shall be individuals 
                who are widely recognized by the general public for 
                achievement in the athletic, cultural, entertainment, 
                educational, business, or political field; and
                    (B) at least 3 such members shall be individuals 
                who are heads of major public health organizations.
            (3) Terms and vacancies.--The members of the Board shall 
        serve staggered terms as determined appropriate at the time of 
        appointment by the Secretary. A vacancy in the Board shall not 
        affect its powers, but shall be filled in the same manner as 
        the original appointment.
            (4) Powers.--
                    (A) Hearings.--The Board may hold such hearings, 
                sit and act at such times and places, take such 
                testimony, and receive such evidence as the Board 
                considers advisable to carry out the purposes of this 
                section.
                    (B) Information from federal agencies.--The Board 
                may secure directly from any Federal department or 
                agency such information as the Board considers 
                necessary to carry out the provisions of this section.
            (5) Personnel matters.--
                    (A) Compensation.--Each member of the Board who is 
                not an officer or employee of the Federal Government 
                shall be compensated at a rate equal to the daily 
                equivalent of the annual rate of basic pay prescribed 
                for level IV of the Executive Schedule under section 
                5315 of title 5, United States Code, for each day 
                (including travel time) during which such member is 
                engaged in the performance of the duties of the Board. 
                All members of the Board who are officers or employees 
                of the United States shall serve without compensation 
                in addition to that received for their services as 
                officers or employees of the United States.
                    (B) Travel expenses.--The members of the Board 
                shall be allowed travel expenses, including per diem in 
                lieu of subsistence, at rates authorized for employees 
                of agencies under subchapter I of chapter 57 of title 
                5, United States Code, while away from their homes or 
                regular places of business in the performance of 
                services for the Board.
    (b) Establishment of Program.--The Secretary shall establish a 
program to be known as the ``National Tobacco-Free Public Education 
Program'' under which the Board may enter into contracts with or award 
grants to eligible public and nonprofit private entities to carry out 
public informational and educational activities designed to reduce the 
use of tobacco products.
    (c) Eligibility.--To be eligible to receive a grant under this 
section an entity shall--
            (1) be a--
                    (A) public entity or a State; or
                    (B) nonprofit private entity that--
                            (i) is not affiliated with a tobacco 
                        product manufacturer or importer;
                            (ii) has a demonstrated record of working 
                        effectively to reduce tobacco product use; and
                            (iii) has expertise in conducting a multi-
                        media communications campaign, including proven 
                        effective campaigns for minority populations;
            (2) prepare and submit to the Secretary an application at 
        such time, in such manner, and containing such information as 
        the Secretary may require, including a description of the 
        activities to be conducted using amounts received under the 
        grant or contract;
            (3) provide assurances that amounts received under the 
        grant will be used in accordance with subsection (d); and
            (4) provide assurances to the Secretary that--
                    (A) the entity will annually report to the 
                Secretary on the effectiveness of the approaches 
                implemented including approaches related to high risk 
                and minority populations;
                    (B) adequate records will be maintained with 
                respect to such assistance;
                    (C) amounts provided to individuals or entities 
                will be subject to independent audit; and
                    (D) activities of private entities or individuals 
                will be coordinated with State and local public health 
                officials in the planning and implementation of the 
                program; and
            (5) meet any other requirements determined appropriate by 
        the Secretary.
    (d) Use of Funds.--An entity that receives a grant or contract 
under this section shall use amounts provided under the grant or 
contract to conduct multi-media public educational or information 
campaigns that are designed to discourage and de-glamorize the use of 
tobacco products. Such campaigns shall be designed to discourage the 
initiation of tobacco use by minors and other populations and encourage 
those using such products to quit. These campaigns shall include--
            (1) school-based programs that are focused on those regions 
        of the State with high smoking rates and targeted at 
        populations most at risk to start smoking;
            (2) Statewide college and university based education 
        program to discourage individuals between the ages of 18 and 24 
        from beginning to on colleges or universities with high smoking 
        rates; or
            (3) community-based prevention programs that are focused on 
        those populations within the community including minority 
        populations, in proportion to their prevalence in the smoking 
        population that are most at-risk to use tobacco products or 
        that have been targeted by tobacco advertising or marketing.
    (e) Needs of Certain Populations.--In awarding grants and contracts 
under this section, the Board shall take into consideration the needs 
of particular populations, including using methods that are proven and 
effective and are culturally and linguistically appropriate.
    (f) Funding.--There are authorized to be appropriated from the 
National Tobacco Settlement Trust Fund, other than from amounts in the 
State Litigation Settlement Account, such sums as may be necessary to 
carry out this section.

SEC. 223. NATIONAL COMMUNITY ACTION PROGRAM.

    (a) Establishment.--The Secretary shall establish a program to be 
known as the ``National Community Action Program'' under which the 
Secretary may award grants to eligible State and local governmental 
entities to carry out community-based tobacco control efforts that are 
designed to encourage community involvement in reducing tobacco product 
use.
    (b) Eligibility.--To be eligible to receive a grant under this 
section an entity shall--
            (1) be a State or local public entity;
            (2) prepare and submit to the Secretary an application at 
        such time, in such manner, and containing such information as 
        the Secretary may require;
            (3) provide assurances that amounts received under the 
        grant will be used in accordance with the purposes of this 
        section; and
            (4) meet any other requirements determined appropriate by 
        the Secretary.
    (c) Funding.--There are authorized to be appropriated from the 
National Tobacco Settlement Trust Fund, other than from amounts in the 
State Litigation Settlement Account, such sums as may be necessary to 
carry out this section.

SEC. 224. STATE RETAIL LICENSING PROGRAM.

    (a) General Requirements.--
            (1) Establishment of Program.--The Secretary shall provide 
        a block grant under this Act to each State that has in effect a 
        law that--
                    (A) provides for the licensing of entities engaged 
                in the sale or distribution of tobacco products 
                directly to consumers; and
                    (B) meets the standards described in this section.
            (2) State agreement required.--In order to receive a block 
        grant under this section, a State--
                    (A) shall enter into an agreement with the 
                Secretary to assume responsibilities for the 
                implementation and enforcement of a tobacco retailer 
                licensing program;
                    (B) shall ensure compliance with the Youth Access 
                Restrictions regulations promulgated by the Secretary 
                (21 C.F.R. 897.1 et seq.); and
                    (C) shall establish to the satisfaction of the 
                Secretary that it has a law or regulation that includes 
                the following:
                            (i) Licensure and notice.--A State license 
                        is required for each retail establishment 
                        involved in the sale or distribution of tobacco 
                        products to consumers. The State has a program 
                        under which notice is provided to such 
                        establishments and their employees of all 
                        licensing requirements and responsibilities 
                        under State and Federal law relating to the 
                        retail distribution of tobacco products.
                            (ii) Penalties.--
                                    (I) Criminal.--Criminal penalties 
                                are provided for the sale or 
                                distribution of tobacco products to a 
                                consumer without a license.
                                    (II) Civil.--Civil penalties are 
                                provided for the sale or distribution 
                                of tobacco products in violation of 
                                State law, that include graduated fines 
                                and suspension or revocation of 
                                licenses, for repeated violations.
                                    (III) Other.--There are other 
                                programs in place, including such 
                                measures as fines, suspension of 
                                driver's license privileges, or 
                                community service requirements, for 
                                underage youths who possess, purchase, 
                                or attempt to purchase tobacco 
                                products.
                            (iii) Judicial review.--Judicial review 
                        procedures are in place for an action of the 
                        State suspending, revoking, denying, or 
                        refusing to renew any license under its 
                        program.
    (b) Enforcement.--Each State that receives a grant under this 
section shall undertake to enforce compliance with its tobacco 
retailing licensing program in a manner that can reasonably be expected 
to reduce the sale and distribution of tobacco products to individuals 
under 18 years of age. If the Secretary determines that a State is not 
enforcing the law in accordance with such an undertaking, the Secretary 
may withhold a portion of any unobligated funds under this section 
otherwise payable to that State.
    (c) Non-participating States Licensing Requirements.--For retailers 
in States which have not established a licensing program under 
subsection (a), the Secretary may promulgate regulations establishing a 
Federal retail licensing program for retailers engaged in tobacco sales 
to consumers in those States. The Secretary may enter into agreements 
with States for the enforcement of those regulations. A State that 
enters into such an agreement shall receive a grant under this section 
to reimburse it for costs incurred in carrying out that agreement.

  TITLE III--TOBACCO PRODUCT WARNINGS AND SMOKE CONSTITUENT DISCLOSURE

          Subtitle A--Product Warnings, Labeling and Packaging

SEC. 301. CIGARETTE LABEL AND ADVERTISING WARNINGS.

    Section 4 of the Federal Cigarette Labeling and Advertising Act (15 
U.S.C. 1333) is amended to read as follows:

``SEC. 4. LABELING.

    ``(a) Label Requirements.--
            ``(1) In general.--It shall be unlawful for any person to 
        manufacture, package, or import for sale or distribution within 
        the United States any cigarettes the package of which fails to 
        bear, in accordance with the requirements of this section, one 
        of the following labels:
        ``WARNING: Cigarettes are addictive''
        ``WARNING: Tobacco smoke can harm your children''
        ``WARNING: Cigarettes cause fatal lung disease''
        ``WARNING: Cigarettes cause cancer''
        ``WARNING: Cigarettes cause strokes and heart disease''
        ``WARNING: Smoking during pregnancy can harm your baby''
        ``WARNING: Smoking can kill you''
        ``WARNING: Tobacco smoke causes fatal lung disease in non-
        smokers''
        ``WARNING: Quitting smoking now greatly reduces serious risks 
        to your health''
            ``(2) Placement; typography; etc.--
                    ``(A) In general.--Each label statement required by 
                paragraph (1) shall be located in the upper portion of 
                the front and rear panels of the package, directly on 
                the package underneath the cellophane or other clear 
                wrapping. Except as provided in subparagraph (B), each 
                label statement shall comprise at least the top 25 
                percent of the front and rear panels of the package. 
                The word ``WARNING'' shall appear in capital letters 
                and all text shall be in conspicuous and legible 17-
                point type, unless the text of the label statement 
                would occupy more than 70 percent of such area, in 
                which case the text may be in a smaller conspicuous and 
                legible type size, provided that at least 60 percent of 
                such area is occupied by required text. The text shall 
                be black on a white background, or white on a black 
                background, in a manner that contrasts, by typography, 
                layout, or color, with all other printed material on 
                the package, in an alternating fashion under the plan 
                submitted under subsection (b)(4).
                    ``(B) Flip-top boxes.--For any cigarette brand 
                package manufactured or distributed before January 1, 
                2000, which employs a flip-top style (if such packaging 
                was used for that brand in commerce prior to June 21, 
                1997), the label statement required by paragraph (1) 
                shall be located on the flip-top area of the package, 
                even if such area is less than 25 percent of the area 
                of the front panel. Except as provided in this 
                paragraph, the provisions of this subsection shall 
                apply to such packages.
            ``(3) Does not apply to foreign distribution.--The 
        provisions of this subsection do not apply to a tobacco product 
        manufacturer or distributor of cigarettes which does not 
        manufacture, package, or import cigarettes for sale or 
        distribution within the United States.
    ``(b) Advertising Requirements.--
            ``(1) In general.--It shall be unlawful for any tobacco 
        product manufacturer, importer, distributor, or retailer of 
        cigarettes to advertise or cause to be advertised within the 
        United States any cigarette unless its advertising bears, in 
        accordance with the requirements of this section, one of the 
        labels specified in subsection (a) of this section.
            ``(2) Typography, etc.--Each label statement required by 
        subsection (a) of this section in cigarette advertising shall 
        comply with the standards set forth in this paragraph. For 
        press and poster advertisements, each such statement and (where 
        applicable) any required statement relating to tar, nicotine, 
        or other constituent yield shall comprise 20 percent of the 
        area of the advertisement and shall appear in a conspicuous and 
        prominent format and location at the top of each advertisement 
        within the trim area. The Secretary may revise the required 
        type sizes in such area in such manner as the Secretary 
        determines appropriate. The word ``WARNING'' shall appear in 
        capital letters, and each label statement shall appear in 
        conspicuous and legible type. The text of the label statement 
        shall be black if the background is white and white if the 
        background is black, under the plan submitted under paragraph 
        (4) of this subsection. The label statements shall be enclosed 
        by a rectangular border that is the same color as the letters 
        of the statements and that is the width of the first downstroke 
        of the capital ``W'' of the word ``WARNING'' in the label 
        statements. The text of such label statements shall be in a 
typeface pro rata to the following requirements: 45-point type for a 
whole-page broadsheet newspaper advertisement; 39-point type for a 
half-page broadsheet newspaper advertisement; 39-point type for a 
whole-page tabloid newspaper advertisement; 27-point type for a half-
page tabloid newspaper advertisement; 31.5-point type for a double page 
spread magazine or whole-page magazine advertisement; 22.5-point type 
for a 28 centimeter by 3 column advertisement; and 15-point type for a 
20 centimeter by 2 column advertisement. The label statements shall be 
in English, except that in the case of--
                    ``(A) an advertisement that appears in a newspaper, 
                magazine, periodical, or other publication that is not 
                in English, the statements shall appear in the 
                predominant language of the publication; and
                    ``(B) in the case of any other advertisement that 
                is not in English, the statements shall appear in the 
                same language as that principally used in the 
                advertisement.
            ``(3) Adjustment by secretary.--The Secretary may, through 
        a rulemaking under section 553 of title 5, United States Code, 
        adjust the format and type sizes for the label statements 
        required by this section or the text, format, and type sizes of 
        any required tar, nicotine yield, or other constituent 
        disclosures, or to establish the text, format, and type sizes 
        for any other disclosures required under the Federal Food, 
        Drug, and Cosmetic Act (21 U.S.C. 301 et. seq.). The text of 
        any such label statements or disclosures shall be required to 
        appear only within the 20 percent area of cigarette 
        advertisements provided by paragraph (2) of this subsection. 
        The Secretary shall promulgate regulations which provide for 
        adjustments in the format and type sizes of any text required 
        to appear in such area to ensure that the total text required 
        to appear by law will fit within such area.
            ``(4) Marketing requirements.--
                    ``(A) The label statements specified in subsection 
                (a)(1) shall be randomly displayed in each 12-month 
                period, in as equal a number of times as is possible on 
                each brand of the product and be randomly distributed 
                in all areas of the United States in which the product 
                is marketed in accordance with a plan submitted by the 
                tobacco product manufacturer, importer, distributor, or 
                retailer and approved by the Secretary.
                    ``(B) The label statements specified in subsection 
                (a)(1) shall be rotated quarterly in alternating 
                sequence in advertisements for each brand of cigarettes 
                in accordance with a plan submitted by the tobacco 
                product manufacturer, importer, distributor, or 
                retailer to, and approved by, the Secretary.
                    ``(C) The Secretary shall review each plan 
                submitted under subparagraph (B) and approve it if the 
                plan--
                            ``(i) will provide for the equal 
                        distribution and display on packaging and the 
                        rotation required in advertising under this 
                        subsection; and
                            ``(ii) assures that all of the labels 
                        required under this section will be displayed 
                        by the tobacco product manufacturer, importer, 
                        distributor, or retailer at the same time.''.

SEC. 302. AUTHORITY TO REVISE CIGARETTE WARNING LABEL STATEMENTS.

    Section 4 of the Federal Cigarette Labeling and Advertising Act (15 
U.S.C. 1333), as amended by section 301 of this title, is further 
amended by adding at the end the following:
    ``(c) Change in Required Statements.--The Secretary may, by a 
rulemaking conducted under section 553 of title 5, United States Code, 
revise the text of any of the warning label statements required by 
subsection (a) of this section if the Secretary determines that such a 
change would promote greater public understanding of the risks 
associated with the use of tobacco products.''.

SEC. 303. SMOKELESS TOBACCO LABELS AND ADVERTISING WARNINGS.

    Section 3 of the Comprehensive Smokeless Tobacco Health Education 
Act of 1986 (15 U.S.C. 4402) is amended to read as follows:

``SEC. 3. SMOKELESS TOBACCO WARNING.

    ``(a) General Rule.--
            ``(1) It shall be unlawful for any person to manufacture, 
        package, or import for sale or distribution within the United 
        States any smokeless tobacco product unless the product package 
        bears, in accordance with the requirements of this Act, one of 
        the following labels:
        ``WARNING: This product can cause mouth cancer''
        ``WARNING: This product can cause gum disease and tooth loss''
        ``WARNING: This product is not a safe alternative to 
        cigarettes''
        ``WARNING: Smokeless tobacco is addictive''
            ``(2) Each label statement required by paragraph (1) shall 
        be--
                    ``(A) located on the 2 principal display panels of 
                the package, and each label statement shall comprise at 
                least 25 percent of each such display panel; and
                    ``(B) in 17-point conspicuous and legible type and 
                in black text on a white background, or white text on a 
                black background, in a manner that contrasts by 
                typography, layout, or color, with all other printed 
                material on the package, in an alternating fashion 
                under the plan submitted under subsection (b)(3), 
                except that if the text of a label statement would 
                occupy more than 70 percent of the area specified by 
                subparagraph (A), such text may appear in a smaller 
                type size, so long as at least 60 percent of such 
                warning area is occupied by the label statement.
            ``(3) The label statements required by paragraph (1) shall 
        be introduced by each tobacco product manufacturer, packager, 
        importer, distributor, or retailer of smokeless tobacco 
        products concurrently into the distribution chain of such 
        products.
            ``(4) The provisions of this subsection do not apply to a 
        tobacco product manufacturer or distributor of any smokeless 
        tobacco product that does not manufacture, package, or import 
        smokeless tobacco products for sale or distribution within the 
        United States.
    ``(b) Required Labels.--
            ``(1) It shall be unlawful for any tobacco product 
        manufacturer, packager, importer, distributor, or retailer of 
        smokeless tobacco products to advertise or cause to be 
        advertised within the United States any smokeless tobacco 
        product unless its advertising bears, in accordance with the 
        requirements of this section, one of the labels specified in 
        subsection (a).
            ``(2) Each label statement required by subsection (a) in 
        smokeless tobacco advertising shall comply with the standards 
        set forth in this paragraph. For press and poster 
        advertisements, each such statement and (where applicable) any 
        required statement relating to tar, nicotine, or other 
        constituent yield shall--
                    ``(A) comprise at least 20 percent of the area of 
                the advertisement, and the warning area shall be 
                delineated by a dividing line of contrasting color from 
                the advertisement; and
                    ``(B) the word ``WARNING'' shall appear in capital 
                letters and each label statement shall appear in 
                conspicuous and legible type. The text of the label 
                statement shall be black on a white background, or 
                white on a black background, in an alternating fashion 
                under the plan submitted under paragraph (3).
            ``(3)(A) The label statements specified in subsection 
        (a)(1) shall be randomly displayed in each 12-month period, in 
        as equal a number of times as is possible on each brand of the 
        product and be randomly distributed in all areas of the United 
        States in which the product is marketed in accordance with a 
        plan submitted by the tobacco product manufacturer, importer, 
        distributor, or retailer and approved by the Secretary.
            ``(B) The label statements specified in subsection (a)(1) 
        shall be rotated quarterly in alternating sequence in 
        advertisements for each brand of smokeless tobacco product in 
        accordance with a plan submitted by the tobacco product 
        manufacturer, importer, distributor, or retailer to, and 
        approved by, the Secretary.
            ``(C) The Secretary shall review each plan submitted under 
        subparagraph (B) and approve it if the plan--
                    ``(i) will provide for the equal distribution and 
                display on packaging and the rotation required in 
                advertising under this subsection; and
                    ``(ii) assures that all of the labels required 
                under this section will be displayed by the tobacco 
                product manufacturer, importer, distributor, or 
                retailer at the same time.''.

SEC. 304. AUTHORITY TO REVISE SMOKELESS TOBACCO PRODUCT WARNING LABEL 
              STATEMENTS.

    Section 3 of the Comprehensive Smokeless Tobacco Health Education 
Act of 1986 (15 U.S.C. 4402), as amended by section 303 of this title, 
is further amended by adding at the end the following:
    ``(c) Authority To Revise Warning Label Statements.--The Secretary 
may, by a rulemaking conducted under section 553 of title 5, United 
States Code, adjust the format, type size, and text of any of the 
warning label statements required by subsection (a) of this section, or 
establish the format, type size, and text of any other disclosures 
required under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 
et seq.), if the Secretary finds that such a change would promote 
greater public understanding of the risks associated with the use of 
smokeless tobacco products.''.

SEC. 305. TAR, NICOTINE, AND OTHER SMOKE CONSTITUENT DISCLOSURE TO THE 
              PUBLIC.

    Section 4(a) of the Federal Cigarette Labeling and Advertising Act 
(15 U.S.C. 1333 (a)), as amended by section 301 of this title, is 
further amended by adding at the end the following:
            ``(4)(A) The Secretary shall, by a rulemaking conducted 
        under section 553 of title 5, United States Code, determine (in 
        the Secretary's sole discretion) whether cigarette and other 
        tobacco product manufacturers shall be required to include in 
        the area of each cigarette advertisement specified by 
        subsection (b) of this section, or on the package label, or 
        both, the tar and nicotine yields of the advertised or packaged 
        brand. Any such disclosure shall be in accordance with the 
        methodology established under such regulations, shall conform 
        to the type size requirements of subsection (b) of this 
        section, and shall appear within the area specified in 
        subsection (b) of this section.
            ``(B) Any differences between the requirements established 
        by the Secretary under subparagraph (A) and tar and nicotine 
        yield reporting requirements established by the Federal Trade 
        Commission shall be resolved by a memorandum of understanding 
        between the Secretary and the Federal Trade Commission.
            ``(C) In addition to the disclosures required by 
        subparagraph (A) of this paragraph, the Secretary may, under a 
        rulemaking conducted under section 553 of title 5, United 
        States Code, prescribe disclosure requirements regarding the 
        level of any cigarette or other tobacco product smoke 
        constituent. Any such disclosure may be required if the 
        Secretary determines that disclosure would be of benefit to the 
        public health, or otherwise would increase consumer awareness 
        of the health consequences of the use of tobacco products, 
        except that no such prescribed disclosure shall be required on 
        the face of any cigarette package or advertisement. Nothing in 
        this section shall prohibit the Secretary from requiring such 
        prescribed disclosure through a cigarette or other tobacco 
        product package or advertisement insert, or by any other means 
        under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 
        et seq.).''.

Subtitle B--Testing and Reporting of Tobacco Product Smoke Constituents

SEC. 311. REGULATION REQUIREMENT.

    (a) Testing, Reporting, and Disclosure.--Not later than 24 months 
after the date of enactment of this Act, the Secretary, through the 
Commissioner of the Food and Drug Administration, shall promulgate 
regulations under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
301 et seq.) that meet the requirements of subsection (b) of this 
section.
    (b) Contents of Rules.--The rules promulgated under subsection (a) 
of this section shall require the testing, reporting, and disclosure of 
tobacco product smoke constituents and ingredients that the Secretary 
determines should be disclosed to the public in order to protect the 
public health. Such constituents shall include tar, nicotine, carbon 
monoxide, and such other smoke constituents or ingredients as the 
Secretary may determine to be appropriate. The rule may require that 
tobacco product manufacturers, packagers, or importers make such 
disclosures relating to tar and nicotine through labels or advertising, 
and make such disclosures regarding other smoke constituents or 
ingredients as the Secretary determines are necessary to protect the 
public health.
    (c) Authority.--The Food and Drug Administration shall have 
authority to conduct or to require the testing, reporting, or 
disclosure of tobacco product smoke constituents.

            TITLE IV--NATIONAL TOBACCO SETTLEMENT TRUST FUND

                 Subtitle A--General Payment Provisions

SEC. 401. ESTABLISHMENT OF TRUST FUND.

    (a) Creation.--
            (1) In general.--There is established in the Treasury of 
        the United States a trust fund to be known as the ``National 
        Tobacco Settlement Trust Fund'', consisting of such amounts as 
        may be appropriated or credited to the trust fund.
    (b) Transfers to National Tobacco Settlement Trust Fund.--There 
shall be credited to the trust fund the following amounts:
            (1) Amounts paid under section 403.
            (2) Amounts equivalent to the fines or penalties paid under 
        section 403, 404, or 406, including interest thereon.
            (3) Amounts equivalent to penalties paid under section 202, 
        including interest thereon.
    (c) Repayable Advances.--
            (1) Authorization.--There are authorized to be appropriated 
        to the trust fund, as repayable advances, such sums as may from 
        time to time be necessary to make the expenditures authorized 
        by this Act.
            (2) Repayment with interest.--Repayable advances made to 
        the trust fund shall be repaid, and interest on such advances 
        shall be paid, to the general fund of the Treasury when the 
        Secretary of the Treasury determines that moneys are available 
        in the trust fund for such purposes.
            (3) Rate of interest.--Interest on advances made under this 
        subsection shall be at a rate determined by the Secretary of 
        the Treasury (as of the close of the calendar month preceding 
        the month in which the advance is made) to be equal to the 
        current average market yield on outstanding marketable 
        obligations of the United States with remaining period to 
        maturity comparable to the anticipated period during which the 
        advance will be outstanding.
    (d) Expenditures From Trust Fund.--Amounts in the trust fund shall 
be available in each calendar year, as provided by appropriations Acts, 
except that distributions to the States from amounts credited to the 
State Litigation Settlement Account shall not require further 
authorization or appropriation and shall be as provided in the Master 
Settlement Agreement and this Act, and not less than 15 percent of the 
amounts shall be expended, without further appropriation, 
notwithstanding any other provision of this Act, from the trust fund 
for each fiscal year, in the aggregate, for actitivities under this Act 
related to--
            (1) the prevention of smoking;
            (2) education;
            (3) State, local, and private control of tobacco product 
        use; and
            (4) smoking cessation.
    (e) Budgetary Treatment of Trust Fund Operations.--The receipts and 
disbursements of the National Tobacco Settlement Trust Fund shall not 
be included in the totals of the budget of the United States Government 
as submitted by the President or of the congressional budget and shall 
be exempt from any general budget limitation imposed by statute on 
expenditures and net lending (budget outlays) of the United States 
Government.
    (f) Administrative Provisions.--Section 9602 of the Internal 
Revenue Code of 1986 shall apply to the trust fund to the same extent 
as if it were established by subchapter A of chapter 95 of such Code.

SEC. 402. STATE LITIGATION SETTLEMENT ACCOUNT.

    (a) In General.--There is established within the trust fund a 
separate account, to be known as the State Litigation Settlement 
Account.
    (b) Transfers to Account.--From amounts received by the trust fund 
under section 403, the State Litigation Settlement Account shall be 
credited with all settlement payments designated for allocation, 
without further appropriation, among the several States, which shall 
consist of--
            (1) the sum of $196,500,000,000, to be paid in installments 
        over a period of 25 years; and
            (2) beginning after the last installment under paragraph 
        (1), 50 percent of the total annual payments made by 
        participating tobacco product manufacturers under section 
        403(b) each year thereafter.
    (c) Reimbursement for State Expenditures.--
            (1) Payment.--Amounts credited to the account are 
        available, without further appropriation, in each fiscal year 
        to provide funds to each State to reimburse such State for 
        amounts expended by the State for the treatment of individuals 
        with tobacco-related illnesses or conditions.
            (2) Amount.--The amount for which a State is eligible for 
        under subparagraph (A) for a fiscal year shall be based on the 
        Master Settlement Agreement and its ancillary documents in 
        accordance with such agreements thereunder as may be entered 
        into after the date of enactment of this Act by the governors 
        of the several States.
            (3) Use of funds.--A State may use amounts received under 
        this subsection as the State determines appropriate.
            (4) Funds not available as medicaid reimbursement.--Funds 
        in the account shall not be available to the Secretary as 
        reimbursement of Medicaid expenditures or considered as 
        Medicaid overpayments for purposes of recoupment.
    (d) Payments To Be Transferred Promptly To States.--The Secretary 
of the Treasury shall transfer amounts available under subsection (c) 
to each State as amounts are credited to the State Litigation 
Settlement Account without undue delay.

SEC. 403. PAYMENTS BY INDUSTRY.

    (a) Initial Payment.--
            (1) Certain participating tobacco product manufacturers.--
        The following participating tobacco product manufacturers shall 
        deposit into the National Tobacco Settlement Trust Fund an 
        aggregate payment of $10,000,000,000, apportioned as follows:
                    (A) Phillip Morris Incorporated--65.8 percent;
                    (B) Brown and Williamson Tobacco Corporation--17.3 
                percent;
                    (C) Lorillard Tobacco Company--7.1 percent;
                    (D) R.J. Reynolds Tobacco Company--6.6 percent; and
                    (E) United States Tobacco Company--3.2 percent.
            (2) No contribution from other participating tobacco 
        product manufacturers.--No other participating tobacco product 
        manufacturer shall be required to contribute to the payment 
        required by this subsection.
            (3) Payment date; interest.--Each participating tobacco 
        product manufacturer required to make a payment under paragraph 
        (1) of this subsection shall make such payment within 30 days 
        after the date of enactment of this Act in accordance with the 
        terms of the Master Settlement Agreement and shall owe interest 
        on such payment at the prime rate plus 10 percent, as published 
        in the Wall Street Journal on the latest publication date on or 
        before the date of enactment of this Act, for payments made 
        after the required payment date.
    (b) Annual Payments.--Each calendar year beginning after the 
required payment date under subsection (a)(3) the participating tobacco 
product manufacturers shall make total payments into the Fund for each 
calendar year in the following applicable base amounts, subject to 
adjustment as provided in section 404:
            (1) year 1--$14,400,000,000;
            (2) year 2--$15,400,000,000;
            (3) year 3--$17,700,000,000;
            (4) year 4--$21,000,000,000;
            (5) year 5--$23,600,000,000; and
            (6) year 6 and thereafter--the adjusted applicable base 
        amount under section 404.
    (c) Payment Schedule.--Each annual payment due under subsection (b) 
shall be made in 3 equal installments due on March 1st, on June 1st, 
and on September 1st of each year.
    (d) Apportionment of Annual Payment.--
            (1) In general.--Each participating tobacco product 
        manufacturer is liable for its share of the applicable base 
        amount payment due each year under subsection (b). Any separate 
        collection of these payments among such participating tobacco 
        product manufacturers shall be set forth in accordance with an 
        appendix to the Protocol. The annual payment is the obligation 
        and responsibility of only those participating tobacco product 
        manufacturers and their affiliates that directly sell tobacco 
        products in the domestic market to wholesalers, retailers, or 
        consumers, their successors and assigns, and any subsequent 
        fraudulent transferee (but only to the extent of the interest 
        or obligation fraudulently transferred).
            (2) Determination of amount of payment due.--Each 
        participating tobacco product manufacturer is liable for its 
        share of each installment in proportion to its share of tobacco 
        products sold in the domestic market for the most recent 
        available calendar quarter, as determined by the Secretary of 
        the Treasury not more than 2 months, and not less than 1 month, 
        before the payment is due. One month before each payment is due 
        under this subsection, the Secretary shall make a final 
        determination of each tobacco product manufacturer's applicable 
        base amount payment obligation.
            (3) Calculation of participating tobacco product 
        manufacturer's share of annual payment.--The share of the 
        annual payment apportioned to a participating tobacco product 
        manufacturer shall be equal to that manufacturer's share of 
        adjusted units. A participating tobacco product manufacturer's 
        share of adjusted units shall be determined as follows:
                    (A) Units.--A participating tobacco product 
                manufacturer's number of units shall be determined by 
                counting each--
                            (i) pack of 20 cigarettes as 1 adjusted 
                        unit;
                            (ii) 1.2 ounces of moist snuff as 0.4 
                        adjusted unit; and
                            (iii) 3 ounces of other smokeless tobacco 
                        product as 0.24 adjusted units.
                    (B) Determination of adjusted units.--Except as 
                provided in subparagraph (C), a participating tobacco 
                product manufacturer's number of adjusted units shall 
                be determined under the following table:

----------------------------------------------------------------------------------------------------------------
                              For units:                                   Each unit shall be treated as:       
----------------------------------------------------------------------------------------------------------------
Not exceeding 150 million                                                                          25% of a unit
Exceeding 150 million, but not exceeding 300 milllion                                              50% of a unit
Exceeding 300 million                                                                                     1 unit
----------------------------------------------------------------------------------------------------------------

                    (C) Special rule for large manufacturers.--If a 
                participating tobacco product manufacturer has more 
                than 500 million units under subparagraph (A), then 
                that manufacturer's number of adjusted units shall be 
                equal to the total number of units, and not determined 
                under subparagraph (B).
    (e) Computations.--The determinations required by subsection (d) 
shall be made and certified by the Secretary of Treasury. The parties 
shall promptly provide the Treasury Department with information 
sufficient for it to make such determinations.
    (f) Nonapplication to Certain Manufacturers.--
            (1) Exemption.--A participating manufacturer described in 
        paragraph (3) is exempt from the payments required by 
        subsection (b).
            (2) Limitation.--Paragraph (1) applies only to assessments 
        on cigarettes to the extent that those cigarettes constitute 
        less than 3 percent of all cigarettes manufactured and 
        distributed to consumers in any calendar year.
            (3) Participating tobacco product manufacturers to which 
        subsection applies.--A participating tobacco product 
        manufacturer is described in this paragraph if it--
                    (A) resolved tobacco-related civil actions with 
                more than 25 States before January 1, 1998, through 
                written settlement agreements signed by the attorneys 
                general (or the equivalent chief legal officer if there 
                is no office of attorney general) of those States; and
                    (B) provides to all other States, not later than 
                December 31, 1998, the opportunity to enter into 
                written settlement agreements that--
                            (i) are substantially similar to the 
                        agreements entered into with those 25 States; 
                        and
                            (ii) provide the other States with annual 
                        payment terms that are equivalent to the most 
                        favorable annual payment terms of its written 
                        settlement agreements with those 25 States.

SEC. 404. ADJUSTMENTS.

    The applicable base amount under section 403(b) for a given 
calendar year shall be adjusted as follows in determining the annual 
payment for that year:
            (1) Inflation adjustment.--
                    (A) In general.--Beginning with the fourth calendar 
                year after the date of enactment of this Act, the 
                adjusted applicable base amount under section 403(b)(6) 
                is the amount of the annual payment made for the 
                preceding year increased by the greater of 3 percent or 
                the inflation adjustment, adjusted (for calendar year 
                2005 and later years) by the volume adjustment under 
                paragraph (2).
                    (B) Inflation adjustment.--For purposes of 
                subparagraph (A), the inflation adjustment for any 
                calendar year is the percentage (if any) by which--
                            (i) the CPI for the preceding calendar 
                        year, exceeds
                            (ii) the CPI for the second preceding 
                        calendar year.
                    (C) CPI.--For purposes of subparagraph (B), the CPI 
                for any calendar year is the average of the Consumer 
                Price Index for all-urban consumers published by the 
                Department of Labor.
                    (D) Rounding.--If any increase determined under 
                subparagraph (A) is not a multiple of $1,000, the 
                increase shall be rounded to the nearest multiple of 
                $1,000.
            (2) Volume adjustment.--Beginning with calendar year 2005, 
        the applicable base amount (as adjusted for inflation under 
        paragraph (1)) shall be adjusted for changes in volume of 
        domestic sales by multiplying the applicable base amount by the 
        ratio of the actual volume for the preceding year to the base 
        volume. For purposes of this paragraph, the term ``base 
        volume'' means the number of units of tobacco products sold 
        domestically by the participating tobacco product manufacturers 
        in calendar year 1996, as reported by such manufacturers to the 
        Secretary of the Treasury.

SEC. 405. PAYMENTS TO BE PASSED THROUGH TO CONSUMERS.

    (a) Target Price.--Each participating tobacco product manufacturer 
shall use its best efforts to adjust the price at which it sells each 
unit of tobacco products in the domestic market or to an importer for 
resale in the domestic market by an amount sufficient to pass through 
to each purchaser on a per-unit basis an equal share of the annual 
payments to be made by such participating tobacco product manufacturer 
under this Act and the Master Settlement agreement for the year in 
which the sale occurs.
    (b) Collection of Deficiency.--
            (1) In general.--If the Secretary determines that a 
        participating tobacco product manufacturer failed to comply 
        with subsection (a), the Secretary shall assess a penalty 
        against that manufacturer in an amount equal to--
                    (A) 110 percent of the shortfall amount; or
                    (B) if the failure to comply with subsection (a) 
                was intentional, up to 125 percent of the shortfall 
                amount.
            (2) Shortfall amount.--For purposes of paragraph (1), the 
        term ``shortfall amount'' means--
                    (A) the number of units of tobacco products sold by 
                a tobacco product manufacturer during a calendar year, 
                multiplied by--
                    (B) the excess of--
                            (i) the average adjusted price for which 
                        each such unit would have been sold during that 
                        year if the tobacco product manufacturer had 
                        met the price contemplated by subsection (a); 
                        over
                            (ii) the average adjusted price for which 
                        each such unit was sold during that year.
            (3) Sole remedy for failure to pass payment through to 
        consumers.--This subsection is the sole remedy available to any 
        person, including any State, for the failure by a participating 
        tobacco product manufacturer to pass through the payments under 
        section 403 to consumers as required by subsection (a).

SEC. 406. TAX TREATMENT OF PAYMENTS.

    All payments made under section 403 are ordinary and necessary 
business expenses for purposes of chapter 1 of the Internal Revenue 
Code of 1986, and no part thereof is either in settlement of an actual 
or potential liability for a fine or penalty (civil or criminal) or the 
cost of a tangible or intangible asset or other future benefit.

SEC. 407. ENFORCEMENT FOR NONPAYMENT.

    (a) Penalty.--Any participating tobacco product manufacturer that 
fails to make any payment required under section 403 or 405 within 60 
days after the date on which such fee is due is liable for a civil 
penalty of $100,000 for each day during the noncompliance period.
    (b) Noncompliance Period.--For purposes of this section, the term 
``noncompliance period'' means, with respect to any failure to make a 
payment required under section 403 or 405, the period--
            (1) beginning on the due date for such payment; and
            (2) ending on the date on which such payment is paid in 
        full.
    (c) Limitations.--
            (1) In general.--No penalty shall be imposed by subsection 
        (a) on any failure to make a payment under section 403 during 
        any period for which it is established to the satisfaction of 
        the Secretary of the Treasury that none of the persons 
        responsible for such failure knew or, exercising reasonable 
        diligence, should have known, that such failure existed.
            (2) Corrections.--No penalty shall be imposed under 
        subsection (a) on any failure to make a payment under section 
        403 if--
                    (A) such failure was due to reasonable cause and 
                not to willful neglect; and
                    (B) such failure is corrected during the 30-day 
                period beginning on the 1st date that any of the 
                persons responsible for such failure knew or, 
                exercising reasonable diligence, should have known, 
                that such failure existed.
            (3) Waiver.--In the case of any failure to make a payment 
        under section 403 that is due to reasonable cause and not to 
        willful neglect, the Secretary of the Treasury may waive all or 
        part of the penalty imposed under subsection (a) to the extent 
        that the Secretary determines that the payment of such penalty 
        would be excessive relative to the failure involved.
    (d) Status as Participating Tobacco Product Manufacturer.--If, at 
the end of the 1-year period beginning on the date on which a 
participating tobacco product manufacturer fails to make a timely 
payment as required under section 403, such manufacture has not fully 
paid the amount owed by such manufacturer under such section, such 
manufacturer shall be considered a nonparticipating tobacco product 
manufacturer and shall not be eligible for any protections or 
assistance provided for under this Act.

                Subtitle B--General Spending Provisions

SEC. 411. IMPLEMENTING AND ENFORCEMENT FUNDS.

    Notwithstanding section 401(d), not less than $300,000,000 of the 
amounts available in the trust fund, other than in the State Litigation 
Settlement Account, shall be made available for each fiscal year 
without further appropriation to the Commissioner of Food and Drugs as 
reimbursement for the costs incurred by the Food and Drug 
Administration in implementing and enforcing requirements relating to 
tobacco products. In order to ensure that the amounts provided by this 
section are used for the purposes for which they are made available, 
the Commissioner shall submit an account of such costs for each fiscal 
year to the Secretary of the Treasury, in such detail as the Secretary 
may require, within 60 days after the close of the fiscal year and 
transmit a copy of the report to the Congress at the same time as it is 
submitted to the Secretary.

SEC. 412. IMPROVING CHILD CARE AND EARLY CHILDHOOD DEVELOPMENT.

    (a) In General.--The Secretary of the Treasury may transfer funds 
from the National Tobacco Settlement Trust Fund for each fiscal year to 
be used by the Secretary for the following purposes:
            (1) Improving the affordability of child care through 
        increased appropriations for child care under the Child Care 
        and Development Block Grant Act of 1990 (42 U.S.C. 9859 et 
        seq.).
            (2) Enhancing the quality of child care and early childhood 
        development through the provision of grants to States under the 
        Child Care and Development Block Grant Act of 1990 (42 U.S.C. 
        9859 et seq.).
            (3) Expanding the availability and quality of school-age 
        care through the provision of grants to States under the Child 
        Care and Development Block Grant Act of 1990 (42 U.S.C. 9859 et 
        seq.).
            (4) Assisting young children by providing grants to local 
        collaboratives under the Child Care and Development Block Grant 
        Act of 1990 (42 U.S.C. 9859 et seq.) for the purpose of 
        improving parent education and supportive services, 
        strengthening the quality of child care, improving health 
        services, and improving services for children with 
        disabilities.
    (b) Supplement Not Supplant.--Amounts made available to a State 
under this section shall be used to supplement and not supplant other 
Federal, State, and local funds provided for programs that serve the 
health and developmental needs of children. Amounts provided to the 
State under any of the provisions of law referred to in this section 
shall not be reduced solely as a result of the availability of funds 
under this section.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated from the trust fund established by section 401, other than 
from amounts in the State Litigation Settlement Account, such sums as 
are necessary to carry out this section.

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

SEC. 501. DEFINITIONS.

    In this title:
            (1) Assistant secretary.--The term ``Assistant Secretary'' 
        means the Assistant Secretary of the Occupational Safety and 
        Health Administration of the Department of Labor.
            (2) Public facility.--
                    (A) In general.--The term ``public facility'' means 
                any building used for purposes that affect interstate 
                or foreign commerce that is regularly entered by 10 or 
                more individuals at least 1 day per week including any 
                building owned by or leased to an agency, independent 
                establishment, department, or branch of the United 
                States Government.
                    (B) Exclusions.--The term ``public facility'' does 
                not include a building or portion thereof which is used 
                for residential purposes or as a restaurant (other than 
                a fast food restaurant), bar, private club, hotel guest 
                room or common area, casino, bingo parlor, 
                tobacconist's shop, or prison.
                    (C) Fast food restaurant.--The term ``fast food 
                restaurant'' means any restaurant or chain of 
                restaurants that primarily distributes food through a 
                customer pick-up (either at a counter or drive-through 
                window). The Assistant Secretary may promulgate 
                regulations to clarify this subparagraph to ensure that 
                the intended inclusion of establishments catering to 
                individuals under 18 years of age is achieved.
            (3) Responsible entity.--The term ``responsible entity'' 
        means, with respect to any public facility, the owner of such 
        facility except that, in the case of any such facility or 
        portion thereof which is leased, such term means the lessee.

SEC. 502. SMOKE-FREE ENVIRONMENT POLICY.

    (a) Policy Required.--In order to protect children and adults from 
cancer, respiratory disease, heart disease, and other adverse health 
effects from breathing environmental tobacco smoke, the responsible 
entity for each public facility shall adopt and implement at such 
facility a smoke-free environment policy which meets the requirements 
of subsection (b).
    (b) Elements of Policy.--
            (1) In general.--The responsible entity for a public 
        facility shall--
                    (A) prohibit the smoking of cigarettes, cigars, and 
                pipes, and any other combustion of tobacco within the 
                facility and on facility property within the immediate 
                vicinity of the entrance to the facility; and
                    (B) post a clear and prominent notice of the 
                smoking prohibition in appropriate and visible 
                locations at the public facility.
            (2) Exception.--The responsible entity for a public 
        facility may provide an exception to the prohibition specified 
        in paragraph (1) for 1 or more specially designated smoking 
        areas within a public facility if such area or areas meet the 
        requirements of subsection (c).
    (c) Specially Designated Smoking Areas.--A specially designated 
smoking area meets the requirements of this subsection if--
            (1) the area is ventilated in accordance with 
        specifications promulgated by the Assistant Secretary that 
        ensure that air from the area is directly exhausted to the 
        outside and does not recirculate or drift to other areas within 
        the public facility;
            (2) the area is maintained at negative pressure, as 
        compared to adjoining nonsmoking areas, as determined under 
        regulations promulgated by the Assistant Secretary;
            (3) nonsmoking individuals do not have to enter the area 
        for any purpose while smoking is occurring in such area; and
            (4) cleaning and maintenance work are conducted in such 
        area only when no smoking is occurring in the area.

SEC. 503. CITIZEN ACTIONS.

    (a) In General.--An action may be brought to enforce the 
requirements of this title by any aggrieved person, any State or local 
government agency, or the Assistant Secretary.
    (b) Venue.--Any action to enforce this title may be brought in any 
United States district court for the district in which the defendant 
resides or is doing business to enjoin any violation of this title or 
to impose a civil penalty for any such violation in the amount of not 
more than $5,000 per day of violation. The district courts shall have 
jurisdiction, without regard to the amount in controversy or the 
citizenship of the parties, to enforce this title and to impose civil 
penalties under this title.
    (c) Notice.--An aggrieved person shall give any alleged violator 
notice at least 60 days prior to commencing an action under this 
section. No action may be commenced by an aggrieved person under this 
section if such alleged violator complies with the requirements of this 
title within such 60-day period and thereafter.
    (d) Costs.--The court, in issuing any final order in any action 
brought under this section, may award costs of litigation (including 
reasonable attorney and expert witness fees) to any prevailing 
plaintiff, whenever the court determines such award is appropriate.
    (e) Penalties.--The court, in any action under this section to 
apply civil penalties, shall have discretion to order that such civil 
penalties be used for projects which further the policies of this 
title. The court shall obtain the view of the Assistant Secretary in 
exercising such discretion and selecting any such projects.

SEC. 504. PREEMPTION.

    Nothing in this title shall preempt or otherwise affect any other 
Federal, State, or local law which provides greater protection from 
health hazards from environmental tobacco smoke.

SEC. 505. REGULATIONS.

    The Assistant Secretary is authorized to promulgate such 
regulations as the Assistant Secretary deems necessary to carry out 
this title.

SEC. 506. EFFECTIVE DATE.

    Except as provided in section 507, the provisions of this title 
shall take effect on the first day of January next following the next 
regularly scheduled meeting of the State legislature occurring after 
the date of enactment of this Act at which, under the procedural rules 
of that legislature, a measure under section 507 may be considered.

SEC. 507. STATE CHOICE.

    This title shall not apply to any State that, by law, provides that 
it shall not apply to that State.

                TITLE VI--APPLICATION TO INDIAN TRIBES.

SEC. 601. SHORT TITLE.

    This title may be cited as the ``Reduction in Tobacco Use and 
Regulation of Tobacco Products in Indian Country Act of 1998''.

SEC. 602. FINDINGS AND PURPOSES.

    (a) Findings.--Congress finds that Native Americans have used 
tobacco products for recreational, ceremonial, and traditional purposes 
for centuries.
    (b) Purposes.--It is the purpose of this title to--
            (1) provide for the implementation of the National Tobacco 
        Policy and Youth Smoking Reduction Act with respect to the 
        regulation of tobacco products and other tobacco-related 
        activities on Indian lands;
            (2) recognize the historic Native American traditional and 
        ceremonial use of tobacco products, and to preserve and protect 
        the cultural, religious, and ceremonial uses of tobacco by 
        members of Indian tribes;
            (3) recognize and respect Indian tribal sovereignty and 
        tribal authority to make and enforce laws regarding the 
        regulation of tobacco distributors and tobacco products on 
        Indian lands; and
            (4) ensure that the necessary funding is made available to 
        tribal governments for licensing and enforcement of tobacco 
        distributors and tobacco products on Indian lands.

SEC. 603. APPLICATION OF TOBACCO-RELATED PROVISIONS TO NATIVE 
              AMERICANS.

    (a) In General.--The provisions of this Act apply to the 
manufacture, distribution, or sale of tobacco or tobacco products in 
Indian country and on other trust lands subject to the jurisdiction of 
an Indian tribe. To the extent that an Indian tribe engages in the 
manufacture, distribution, or sale of tobacco products, the provisions 
of this Act apply to that tribe.
    (b) Traditional Use Exception.--
            (1) In general.--In recognition of the religious, 
        ceremonial, and traditional uses of tobacco and tobacco 
        products by Indian tribes and the members of such tribes, 
        nothing in this Act shall be construed to infringe upon the 
        right of such tribes or members of such tribes to acquire, 
        possess, use, or transfer any tobacco or tobacco products for 
        such purposes, or to permit an infringement upon the ability of 
        minors to participate and use tobacco products for religious, 
        ceremonial, or traditional purposes.
            (2) Application of provisions.--Paragraph (1) shall apply 
        only to those quantities of tobacco or tobacco products 
        necessary to fulfill the religious, ceremonial, or traditional 
        purposes of an Indian tribe or the members of such tribe, and 
        shall not be construed to permit the general marketing of 
        tobacco or tobacco products in a manner that is not in 
        compliance with chapter IX of the Federal Food, Drug, and 
        Cosmetic Act as added by this Act.
            (3) Limitation.--Nothing in this Act shall be construed to 
        permit an Indian tribe or member of such a tribe to acquire, 
        possess, use, or transfer any tobacco or tobacco product in 
        violation of section 2342 of title 18, United States Code, with 
        respect to the transportation of contraband cigarettes.
    (c) Payments to Tobacco Trust Fund.--Any Indian tribe that engages 
in the manufacture of tobacco products shall be subject to liability 
for any annual fee payments that are levied on other tobacco product 
manufacturers for purposes of the National Tobacco Settlement Trust 
Fund. Any Indian tribe that does not pay such fees shall be considered 
a nonparticipating tobacco product manufacturer under section 708 of 
this Act.
    (d) Application of Federal Food, Drug, and Cosmetic Act 
Requirements.--
            (1) In general.--The provisions of this Act and the 
        provisions of the Food, Drug, and Cosmetic Act (21 U.S.C. 301 
        et seq.) relating to the manufacture, distribution, and sale of 
        tobacco products shall apply in Indian country and on other 
        trust lands subject to the jurisdiction of an Indian tribe. To 
        the extent that an Indian tribe engages in the manufacture, 
        distribution, or sale of tobacco products, the provisions of 
        this Act apply to that tribe.
            (2) Jurisdiction.--With respect to tobacco-related 
        activities that take place in Indian country or on trust lands 
        within the jurisdiction of an Indian tribe, the responsibility 
        for enforcing the regulations promulgated under paragraph (1) 
        shall be vested in--
                    (A) the Indian tribe involved;
                    (B) the State within which the lands of the Indian 
                tribe are located, under a voluntary cooperative 
                agreement entered into by the State and the Indian 
                tribe or tribal organization; or
                    (C) the Secretary.
            (3) Eligibility for assistance.--Under the regulations 
        promulgated under paragraph (1), the Secretary, in consultation 
        with the Secretary of the Interior, shall provide assistance to 
        an Indian tribe in meeting and enforcing the requirements under 
        such regulations, including grant funds, if--
                    (A) the tribe or tribal organization has a 
                governing body that has powers and carries out duties 
                that are similar to the powers and duties of State or 
                local governments;
                    (B) the functions to be exercised through the use 
                of such assistance relate to activities conducted in 
                Indian country and on other trust lands subject to the 
                jurisdiction of the tribe; and
                    (C) the tribe is reasonably expected to be capable 
                of carrying out the functions required by the 
                Secretary.
            (4) Determinations.--Not later than 60 days after the date 
        on which an Indian tribe submits an application for assistance 
        under paragraph (3), the Secretary shall make a determination 
        concerning the eligibility of such tribe for such assistance.
            (5) Implementation by the secretary.--If the Secretary 
        determines that the Indian tribe is not willing or not 
        qualified to administer the requirements of the regulations 
        promulgated under this subsection, or the tribe is considered 
        to be a non-participating tobacco product manufacturer, the 
        Secretary, in consultation with the Secretary of the Interior, 
        shall implement and enforce such regulations on behalf of the 
        tribe.
            (6) Deficient applications; opportunity to cure.--If the 
        Secretary determines under paragraph (4) that a tribe is not 
        eligible for assistance under this subsection, the Secretary 
        shall--
                    (A) submit to such tribe in writing, a statement of 
                the reasons for such determination; and
                    (B) shall assist such tribe in overcoming any 
                deficiencies that resulted in the determination of 
                ineligibility.
        After an opportunity to review and cure such deficiencies, the 
        tribe may re-apply to the Secretary for assistance under this 
        subsection.
    (e) Retail Licensing Requirements.--
            (1) In general.--The requirements of the Federal Food, 
        Drug, and Cosmetic Act (21 U.S.C. 301 et seq.) and this Act 
        with respect to the licensing of tobacco retailers shall apply 
        to retailers that sell tobacco or tobacco products in Indian 
        country or on trust lands within the jurisdiction of an Indian 
        tribe.
            (2) Minimum federal standards.--
                    (A) In general.--Not later than 180 days after the 
                date of enactment of this Act, the Secretary shall 
                promulgate regulations to authorize an Indian tribe to 
                implement a tribal tobacco product licensing program in 
                Indian country or on trust lands within the 
                jurisdiction of that Indian tribe.
                    (B) Minimum standards.--In order for an Indian 
                tribe to assume responsibility for the licensing and 
                regulation of tobacco-related activities conducted in 
                Indian country or on other trust lands subject to the 
jurisdiction of an Indian tribe, the Indian tribe shall establish 
terms, conditions, and standards similar to those described in section 
224 of this Act for a State licensing law.
                    (C) Waiver.--An Indian tribe shall have the same 
                right to apply for waiver and modification of the law 
                described in subparagraph (B) as a State under the Act 
                involved.
            (3) Implementation by the secretary.--If the Secretary, in 
        consultation with the Secretary of the Interior, determines 
        that the Indian tribe is not qualified to meet the minimum 
        standards of paragraph (2)(B), or the Secretary, in 
        consultation with the Secretary of the Interior, shall 
        implement such requirements on behalf of the Indian tribe.
    (f) Eligibility for Public Health Payments.--
            (1) Grant.--For each fiscal year the Secretary shall award 
        a grant to each Indian tribe that has an approved anti-smoking 
        plan for the fiscal year involved under paragraph (2) in an 
        amount equal to the amount determined under paragraph (3).
            (2) Tribal plans.--To be eligible to receive a grant under 
        paragraph (1), an Indian tribe shall prepare and submit to the 
        Secretary an anti-smoking plan and shall otherwise meet the 
        requirements of subsection (e). The Secretary shall promulgate 
        regulations providing for the form and content of anti-smoking 
        plans to be submitted under this paragraph.
            (3) Amount determined.--Except as provided in this 
        subsection, the amount of any grant for which an Indian tribe 
        is eligible under paragraph (1) shall be determined by the 
        Secretary based on the product of--
                    (A) the ratio of the total number of individual 
                residing on or in such tribe's reservation, 
                jurisdictional lands, or the active user population, 
                relative to the total population of the State involved; 
                and
                    (B) the amount allocated under this Act to the 
                State for such public health purposes.
            (4) Use.--Amounts provided to a tribe under this subsection 
        shall be used to reimburse the tribe for smoking-related health 
        expenditures, to further the purposes of this Act and in 
        accordance with a tribal anti-smoking plan approved by the 
        Secretary. Indian tribes shall have the flexibility to utilize 
        such amounts to meet the unique health care needs of persons 
        within their service populations within the context of tribal 
        health programs if such programs meet the fundamental Federal 
        goals and purposes of Federal Indian health care law and 
        policy.
            (5) Reallotment.--Amounts set aside and not expended under 
        this subsection shall be reallotted among other eligible Indian 
        tribes.
    (g) Obligations of Tobacco Product Manufacturers.--Tobacco product 
manufacturers, including Indian tribes, participating in, or covered 
under this any Act shall not engage in any activity in Indian country 
or on other trust lands subject to the jurisdiction of an Indian tribe 
that is prohibited by this Act.
    (h) Use of Trust Fund Payments.--Amounts made available from the 
tobacco trust fund under any Indian health provisions of this Act shall 
be provided to the Indian Health Service and, through the provisions of 
the Indian Self Determination and Education Assistance Act (25 U.S.C. 
450b et seq.), to Indian tribes to be used to reduce tobacco 
consumption, promote smoking cessation, and to fund related activities 
including--
            (1) clinic and facility design, construction, repair, 
        renovation, maintenance, and improvement;
            (2) health care provider services and equipment;
            (3) domestic and community sanitation associated with 
        clinic and facility construction and improvement;
            (4) inpatient and outpatient services; and
            (5) other programs and services which have as their goal 
        raising the health status of Indians.
    (i) Preemption.--
            (1) In general.--Except as otherwise provided in this 
        section, nothing in this Act shall be construed to prohibit an 
        Indian tribe from imposing requirements, prohibitions, 
        penalties, or other measures to further the purposes of this 
        title that are in addition to the requirements, prohibitions, 
        or penalties required by this title.
            (2) Public exposure to smoke.--Nothing in this title shall 
        be construed to preempt or otherwise affect any Indian tribe 
        rule or practice that provides greater protections from the 
        health hazards of environmental tobacco smoke.

SEC. 604. STATE TOBACCO EXCISE TAX COMPLIANCE.

    An Indian tribe or tribal corporation shall collect any excise or 
sales tax imposed by a State, within the exterior borders or which the 
sale occurs, on non-members of the Indian tribe as a consequence of the 
purchase of tobacco products by the non-member from the Indian tribe or 
tribal corporation. The Indian tribe or tribal corporation shall remit 
such taxes collected to the Treasury of the United States, which shall, 
in turn, remit the taxes to the State in which they were collected.

      TITLE VII--CIVIL LIABILITY OF TOBACCO PRODUCT MANUFACTURERS

SEC. 701. DEFINITIONS

    In this title:
            (1) Addiction claim; dependence claim.--The term 
        ``addiction claim'' or ``dependence claim'' refers only to any 
        claim for relief which is predicated upon claims of addiction 
        to, or dependence on, tobacco products, but neither term 
        includes claims based upon manifestation of tobacco-related 
        diseases.
            (2) Affiliate.--The term ``affiliate'' means a person who 
        directly or indirectly owns or controls, is owned or controlled 
        by, or is under common ownership or control with, another 
        person. For purposes of this definition, ownership means 
        ownership of an equity interest, or the equivalent thereof, of 
        10 percent or more, and person means an individual, 
        partnership, committee, association, corporation, or any other 
        organization or group of persons.
            (3) Civil action.--The term ``civil action'' means any 
        action, lawsuit, or proceeding that is not a criminal action.
            (4) Compensatory damages.--The term ``compensatory 
        damages'' refers to those damages necessary to reimburse an 
        injured party, and includes actual, general, and special 
        damages.
            (5) Court.--The term ``court'' means any judicial court, 
        forum, or tribunal within the United States, including without 
        limitation any Federal, State, or tribal court.
            (6) Final judgment.--The term ``final judgment'' means a 
        judgment on which all rights of appeal or discretionary review 
        have been exhausted or waived or for which the time to appeal 
        or seek such discretionary review has expired.
            (7) Final settlement.--The term ``final settlement'' means 
        a settlement agreement that is executed and approved as 
        necessary to be fully binding on all relevant parties.
            (8) Individual.--The term ``individual'' means a human 
        being and does not include a corporation, partnership, 
        unincorporated association, trust, estate, or any other public 
        or private entity, State or local government, or Indian tribe.
            (9) Punitive damages.--The term ``punitive damages'' means 
        damages in addition to compensatory damages having the 
        character of punishment or penalty.
            (10) Reduced risk tobacco products.--The term ``reduced 
        risk tobacco product'' means a product designated as a reduced 
        risk tobacco product under section 916(a)(2) of the Federal 
        Food, Drug, and Cosmetic Act.
            (11) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury, except where the context otherwise requires.
            (12) Tobacco claim.--The term ``tobacco claim'' means a 
        claim directly or indirectly arising out of, based on, or 
        related to the health-related effects of tobacco products, 
        including without limitation a claim arising out of, based on, 
        or related to allegations regarding any conduct, statement, or 
        omission respecting the health-related effects of such 
        products.
            (13) Tobacco product.--The term ``tobacco product'' means 
        cigarettes, cigarette tobacco, smokeless tobacco, little 
        cigars, roll-your-own tobacco, and fine cut tobacco products.
            (14) Tobacco product manufacturer.--The term ``tobacco 
        product manufacturer'' means--
                    (A) a person who directly, and not through any 
                affiliate--
                            (i) manufactures tobacco products for sale 
                        in the United States after the date of 
                        enactment of this Act, including tobacco 
                        products for sale in the United States through 
                        an importer;
                            (ii) is, after the date of enactment of 
                        this Act, the first purchaser for resale in the 
                        United States of tobacco products manufactured 
                        for sale outside of the United States;
                            (iii) engaged in activities described in 
                        clause (i) or (ii) prior to the date of 
                        enactment of this Act, has not engaged in such 
                        activities after the date of enactment of this 
                        Act, and was not as of June 20, 1997, an 
                        affiliate of a participating tobacco product 
                        manufacturer in which the participating tobacco 
                        product manufacturer or its other affiliates 
                        owned a 50 percent or greater interest;
                            (iv) is a successor or assign of any of the 
                        foregoing; or
                            (v) is an entity to which any of the 
                        foregoing directly or indirectly makes, after 
                        the date of enactment of this Act, a fraudulent 
                        conveyance or a transfer that would otherwise 
                        be voidable under part 5 of title 11 of the 
                        United States Code, but only to the extent of 
                        the interest or obligation transferred; but
                    (B) does not include an affiliate of a tobacco 
                product manufacturer unless that affiliate is described 
                in clause (i), (ii), (iii), (iv), or (v) of 
                subparagraph (A).

SEC. 702. APPLICATION.

    (a) In General.--The provisions of this title shall apply to any 
civil action involving a tobacco claim, including any such claim that 
has not reached final judgment or final settlement as of the date of 
enactment of this Act, that is brought or maintained against--
            (1) a participating tobacco product manufacturer or its 
        predecessors;
            (2) any person that at any time was or is an affiliate, 
        officer, director, employee, attorney, or agent of a 
        participating tobacco product manufacturer, unless such person 
        is itself a non-participating tobacco product manufacturer;
            (3) an importer, distributor, wholesaler, or retailer of 
        tobacco products--
                    (A) that, after the date of enactment of this Act, 
                does not import, distribute, or sell tobacco products 
                made or sold by a non-participating tobacco product 
                manufacturer;
                    (B) whose business practices with respect to sales 
                or operations occurring within the United States, 
                conform to the applicable requirements of the marketing 
                and advertising provisions of the Master Settlement 
                Agreement; and
                    (C) that is not itself a non-participating tobacco 
                product manufacturer;
            (4) a supplier of component or constituent parts of tobacco 
        products--
                    (A) that, after the date of enactment of this Act, 
                does not knowingly sell any component or constituent 
                parts of tobacco products to a non- participating 
                tobacco product manufacturer;
                    (B) whose business practices with respect to sales 
                or operations occurring within the United States, 
                conform to the applicable requirements of the marketing 
                and advertisement provisions of the Master Settlement 
                Agreement; and
                    (C) that is not itself a non-participating tobacco 
                product manufacturer;
            (5) a grower of tobacco products, unless such person is 
        itself a non-participating tobacco product manufacturer; or
            (6) an insurer of any person described in paragraph (1), 
        (2), (3), (4), or (5) based on, arising out of, or related to 
        tobacco products manufactured, imported, distributed, or sold 
        (or tobacco grown) by such person (other than an action brought 
        by the insured person), unless such insurer is itself a non-
        participating tobacco product manufacturer.
    (b) Exceptions.--The provisions of this title shall not apply to 
any tobacco claim--
            (1) brought against any person other than a person 
        described in subsection (a) or to any tobacco claim that 
        reached final judgment or final settlement prior to the date of 
        enactment of this Act;
            (2) against an employer under valid workers' compensation 
        laws;
            (3) arising under the securities laws of a State or the 
        United States;
            (4) brought by the United States;
            (5) brought under this title by a State or a participating 
        tobacco product manufacturer to enforce this Act;
            (6) asserting damage to the environment from exposures 
        other than environmental smoke or second hand smoke; or
            (7) against a participating tobacco product manufacturer if 
        that manufacturer, or any of its principal officers, acting in 
        that officer's corporate capacity, is convicted of--
                    (A) manufacturing or distributing misbranded 
                tobacco products in violation of the Federal Food, 
                Drug, and Cosmetic Act;
                    (B) violating the reporting requirements of section 
                5762(a)(4) of the Internal Revenue Code of 1986 (26 
                U.S.C. 5762(a)(4));
                    (C) violating, or aiding and abetting the violation 
                of, any provision of chapter 114 of title 18, United 
                States Code; or
                    (D) violating any provision of chapter 47 or 
                chapter 63 of title 18, United States Code, in making 
                reports or disclosures under this Act.
    (c) State Option for One-Time Opt Out.--The Secretary shall 
establish procedures under which the attorney general of a State may, 
not later than 1 year after the date of enactment of this Act, elect 
not to resolve a civil action described in subsection (a) or not to 
enter into the Master Settlement Agreement. A State whose attorney 
general makes such an election shall not be eligible to receive 
payments from the trust fund established by section 401. Procedures 
under this paragraph shall permit such a State to make such an election 
on a one-time basis.

SEC. 703. PREEMPTION AND RELATIONSHIP TO OTHER LAW.

    (a) Preemption.--No civil action involving a tobacco claim to which 
this title applies shall be maintained in any court except in 
accordance with this title.
    (b) Relationship to State Law.--This title supersedes State law 
only to the extent that State law is inconsistent with this title.
    (c) Criminal Liability.--Nothing in this title shall be construed 
to limit the criminal liability of tobacco product manufacturers, 
retailers, or distributors, or their officers, directors, employees, 
successors, or assigns.

SEC. 704. GOVERNMENTAL CLAIMS AND CASTANO CIVIL ACTIONS.

    (a) In General.--Except as provided in subsection (b) and in 
section 702(c), no State, political subdivision of a State, municipal 
corporation, governmental entity or corporation, Indian tribe, or 
agency or subdivision thereof, or other entity acting in parens 
patriae, may file or maintain any civil action involving a tobacco 
claim.
    (b) Effect of Settlement Agreement or Consent Decree.--Within 30 
days after the date of enactment of this Act, any State may request 
that tobacco product manufacturers enter into the Master Settlement 
Agreement or a consent decree. If a State makes such a request and 
enters into a consent decree, it may maintain a civil action involving 
a tobacco claim only to the extent necessary to permit continuing court 
jurisdiction over the consent decree. Nothing herein shall preclude any 
State from bringing suit or seeking a court order to enforce the terms 
of the Master Settlement Agreement or a consent decree.
    (c) Castano Civil Actions.--
            (1) The rights and benefits afforded in section 221 of this 
        Act, and the various research activities envisioned by this 
        Act, are provided in settlement of, and shall constitute the 
        exclusive remedy for the purpose of determining civil liability 
        as to those claims asserted in the Castano Civil Actions, and 
        all bases for any such claim under the laws of any State are 
        preempted (including State substantive, procedural, remedial, 
        and evidentiary provisions) and settled. The Castano Civil 
        Actions shall be dismissed with full reservation of the rights 
        of individual class members to pursue claims not based on 
        addiction or dependency in civil actions in accordance with 
        this Act. For purposes of determining application of statutes 
        of limitation or repose, individual actions filed within one 
        year after the effective date of this Act by those who were 
        included within a Castano Civil Action shall be considered to 
have been filed as of the date of the Castano Civil Action applicable 
to said individual.
            (2) For purposes of awarding attorneys fees and expenses 
        for those actions subject to this subsection, the matter at 
        issue shall be submitted to arbitration before one panel of 
        arbitrators. In any such arbitration, the arbitration panel 
        shall consist of 3 persons, one of whom shall be chosen by the 
        attorneys of the Castano Plaintiffs' Litigation Committee who 
        were signatories to the Memorandum of Understanding dated June 
        20, 1997, by and between tobacco product manufacturers, the 
        Attorneys General, and private attorneys, one of whom shall be 
        chosen by the participating tobacco product manufacturers, and 
        one of whom shall be chosen jointly by those 2 arbitrators.
            (3) The participating tobacco product manufacturers shall 
        pay the arbitration award.

SEC. 705. CONCURRENT JURISDICTION; FEDERAL CAUSE OF ACTION; ACTIONS; 
              DAMAGES; LIABILITY.

    (a) In General.--Any tobacco claim in any civil action to which 
this title applies shall be deemed to arise under this section and 
shall be governed by the provisions of this title, but the substantive 
rules of decision for such claim shall be derived from the law of the 
State or Tribe that would have been applicable but for the operation of 
this section, to the extent that such law is not inconsistent with the 
provisions of this title. This Federal cause of action shall be the 
exclusive means for the purpose of determining civil liability on any 
such tobacco claim in any civil action to which this title applies, and 
all other bases for tobacco claims under State, Tribal, and local law 
are hereby preempted. District courts of the United States and tribal 
courts shall have concurrent jurisdiction with the courts of the States 
over any tobacco claim in any civil action under this section.
    (b) Permissible Defendants.--In any civil action to which this 
subtitle applies, tobacco claims may be filed or maintained only 
against--
            (1) a tobacco product manufacturer; or
            (2) a surviving entity established by a tobacco product 
        manufacturer.
    (c) Addiction and Dependence Claims Barred.--In any civil action to 
which this title applies, no addiction claim or dependence claim may be 
filed or maintained.
    (d) Requirements.--The following requirements apply to civil 
actions to which this title applies:
            (1) Future reduced-risk products.--In any civil action to 
        which this subtitle applies, no allegation or evidence relating 
        to reduced-risk tobacco products developed after the date of 
        enactment of this Act shall be admissible or discoverable in 
        any action on a tobacco claim arising out of, based on, or 
        related to any other tobacco product.
            (2) Production of documents.--All documents or other 
        records included in the document depository required to be 
        established and maintained under section 903 of this Act shall 
        be deemed produced in any civil action involving a tobacco 
        claim, and no court in such action shall require additional 
        production of any such document or record. Any such document 
        submitted to the court shall be considered authenticated with 
        the same legal status as the original.
    (e) Liability.--The following provisions regarding liability shall 
apply in civil actions to which this title applies:
            (1) A tobacco product manufacturer shall be liable for any 
        act or omission of its attorneys, advertising agencies, and 
        agents undertaken in the representation of such tobacco product 
        manufacturer.
            (2) A tobacco product manufacturer shall be liable in 
        connection with any tobacco claim for the liability, if any, of 
        any of its affiliates arising from tobacco products sold 
        directly by such affiliate in the United States or to an 
        importer for resale in the United States, unless such affiliate 
        is a participating tobacco product manufacturer or a non-
        participating tobacco product manufacturer.
            (3) Participating tobacco product manufacturers shall not 
        be jointly and severally liable on a tobacco claim with non-
        participating tobacco product manufacturers. Nothing in this 
        title prevents a participating tobacco product manufacturer 
        from being held jointly and severally liable with any other 
        person other than a non-participating tobacco product 
        manufacturer if such liability exists under the applicable 
        substantive rules of decision as determined under subsection 
        (a), except that any such imposition of joint and several 
        liability against a participating tobacco product manufacturer 
        shall be subject to the provisions of section 706.
            (4) In any civil action involving both a tobacco claim 
        against a participating tobacco product manufacturer based in 
        whole or in part upon conduct occurring prior to the date of 
        enactment of this Act and a claim against 1 or more non-
        participating tobacco product manufacturers, the court, upon 
        application of a participating tobacco product manufacturer 
        shall sever a trial so that all claims against participating 
        tobacco product manufacturers shall be tried separately from 
        any claim involving non-participating tobacco product 
        manufacturers. If such severance results in a tobacco claim 
        being submitted to more than 1 jury or to the same jury for 
        separate deliberation the participating tobacco product 
        manufacturer may not assert any claim that would prejudice the 
        dollar amount to be recovered by the holder of the tobacco 
        claim from the participating tobacco product manufacturer due 
        to the severance of the action including satisfaction by way of 
        jury verdict against the non-participating tobacco product 
        manufacturer. In any action brought against a participating 
        tobacco manufacturer and a person that is not a tobacco product 
        manufacturer, the court may sever the trial so that all claims 
        against such person may be tried separately.
            (5) In any civil action brought involving a tobacco claim, 
        there shall be a presumption that nicotine is addictive and 
        that the diseases identified as being caused by use of tobacco 
        products in the Center for Disease Control and Prevention 
        Reducing the Health Consequences of Smoking: 25 Years of 
        Progress: A Report of the Surgeon General (United States Public 
        Health Service 1989), The Health Consequences of Smoking: 
        Involuntary Smoking, (USPHS 1986); and The Health Consequences 
        of Using Smokeless Tobacco, (USPHS 1986), are caused in whole 
or in part by the use of tobacco products, (referred to elsewhere in 
this paragraph as the ``general causation presumption''), and a jury 
empaneled to hear a tobacco claim shall be so instructed. In all other 
respects, the burden of proof as to the issue of whether a plaintiff's 
specific disease or injury was caused by smoking shall be governed by 
the law of the State or Tribe in which the tobacco claim was brought. 
The general causation presumption shall in no way affect the ability of 
the defendant to introduce evidence or argument which the defendant 
would otherwise be entitled to present under the law of the State or 
Tribe in which the tobacco claim was brought to rebut the general 
causation presumption, or with respect to general causation, specific 
causation, or alternative causation, or to introduce any other evidence 
or argument which the defendant would otherwise be entitled to make.
    (f) Preservation of Insurance Claims.--
            (1) In general.--If all participating tobacco product 
        manufacturers fail to make the payments required by this Act 
        for any calendar year, then--
                    (A) beginning on the first day of the next calendar 
                year, subsection (a) does not apply to any insurance 
                claim (including a direct action claim) that is a 
                tobacco claim, regardless of when that claim arose;
                    (B) any statute of limitations or doctrine of 
                laches under applicable law shall be tolled for the 
                period--
                            (i) beginning on the date of enactment of 
                        this Act; and
                            (ii) ending on the last day of that 
                        calendar year; and
                    (C) an insurance claim (including a direct action 
                claim) that is a tobacco claim and that is pending on 
                the date of enactment of this Act shall be preserved.
            (2) Application of title 11, united states code.--For 
        purposes of this subsection, nothing in this Act shall be 
        construed to modify, suspend, or otherwise affect the 
        application of title 11, United States Code, to participating 
        tobacco manufacturers that fail to make such payments.
            (3) State law not affected.--Nothing in this subsection 
        shall be construed to expand or abridge State law.

SEC. 706. PAYMENT OF TOBACCO CLAIM SETTLEMENTS AND JUDGMENTS.

    (a) In General.--Except as provided below, any judgment or 
settlement in any civil action to which this subtitle applies shall be 
subject to the process for payment of judgments and settlements set 
forth in this section. No participating tobacco product manufacturer 
shall be obligated to pay a judgment or settlement on a tobacco claim 
in any civil action to which this title applies except in accordance 
with this section. This section shall not apply to the portion, if any, 
of a judgment that imposes punitive damages based on any conduct that--
            (1) occurs after the date of enactment of this Act; and
            (2) is other than the manufacture, development, 
        advertising, marketing, or sale of tobacco products in 
        compliance with this Act and the Master Settlement Agreement.
    (b) Registration With the Secretary of the Treasury.--
            (1) The Secretary shall maintain a record of settlements, 
        judgments, and payments in civil actions to which this title 
        applies.
            (2) Any party claiming entitlement to a monetary payment 
        under a final judgment or final settlement on a tobacco claim 
        shall register such claim with the Secretary by filing a true 
        and correct copy of the final judgment or final settlement 
        agreement with the Secretary and providing a copy of such 
        filing to all other parties to the judgment or settlement.
            (3) The Secretary shall assign a priority for payment based 
        upon the date on which a proper registration of a final 
        judgment or final settlement occurs.
            (4) Any participating tobacco product manufacturer making a 
        payment on any final judgment or final settlement to which this 
        section applies shall certify such payment to the Secretary by 
        filing a true and correct copy of the proof of payment and a 
        statement of the remaining unpaid portion, if any, of such 
        final judgment or final settlement with the Secretary and shall 
        provide a copy of such filing to all other parties to the 
        judgment or settlement.
    (c) Liability Cap.--The aggregate payments made by all 
participating tobacco product manufacturers in any calendar year may 
not exceed $6,500,000,000. The Secretary shall initiate a rulemaking 
within 30 days after the date of enactment of this Act to establish a 
mechanism for implementing this subsection in such a way that payments 
may be made from all awards payable in that year. Amounts not payable 
because of the application of this subsection, shall be carried forward 
and paid in the next year, subject to the provisions of this 
subsection.
    (d) Injunctive Relief.--A participating tobacco product 
manufacturer may commence an action to enjoin any State court 
proceeding to enforce or execute any judgment or settlement where 
payment has not been authorized under this section. Such an action 
shall arise under the laws of the United States and may be commenced in 
the district court of the United States for the district in which the 
State court proceeding is pending.
    (e) Joint and Several Liability.--All participating tobacco product 
manufacturers shall be jointly and severally liable for, and shall 
enter into an agreement to apportion among them, any amounts payable 
under judgments and settlements governed by this section arising in 
whole or in part from conduct occurring prior to the date of enactment 
of this Act. No participating tobacco product manufacturer shall cease 
operations without establishing a surviving entity against which a 
tobacco claim may be brought. Any obligation or interest of a 
participating, tobacco product manufacturer arising under such 
liability apportionment agreement shall be given priority and shall not 
be rejected, avoided, or discharged in a proceeding, under title 11, 
United States Code, or in any liquidation, reorganization, 
receivership, or other insolvency proceeding under State law.

SEC. 707. ATTORNEY'S FEES AND EXPENSES.

    (a) Arbitration Panel.--
            (1) Establishment.--For the purpose of awarding of 
        attorneys' fees and expenses relating to litigation affected 
        by, or legal services that, in whole or in part, resulted in or 
        created a model for programs in, this Act, and with respect to 
        which litigation or services the attorney involved is unable to 
        agree with the plaintiff who employed that attorney with 
        respect to any dispute that may arise between them regarding 
        the fee agreement, the matter at issue shall be submitted to 
        arbitration. In any such arbitration, the arbitration panel 
        shall consist of 3 persons, one of whom shall be chosen by the 
        plaintiff, one of whom shall be chosen by the attorney, and one 
        of whom shall be chosen jointly by those 2 arbitrators.
            (2) Operation.--Not later than 30 days after the date on 
        which all members of an arbitration panel are appointed under 
        paragraph (1), the panel shall establish the procedures under 
        which the panel will operate which shall include--
                    (A) a requirement that any finding by the 
                arbitration panel must be in writing and supported by 
                written reasons;
                    (B) procedures for the exchanging of exhibits and 
                witness lists by the various claimants for awards;
                    (C) to the maximum extent practicable, requirements 
                that proceedings before the panel be based on 
                affidavits rather than live testimony; and
                    (D) a requirement that all claims be submitted to 
                an arbitration panel not later than 3 months after the 
                date of this Act and a determination made by the panel 
                with respect to such claims not later than 7 months 
                after such date of enactment.
            (3) Right to petition.--Any individual attorney or group of 
        attorneys involved in litigation affected by this Act shall 
        have the right to petition an arbitration panel for attorneys' 
        fees and expenses.
            (4) Criteria.--In making any award under this section, an 
        arbitration panel shall consider the following criteria:
                    (A) The time and labor required by the claimant.
                    (B) The novelty and difficulty of the questions 
                involved in the action for which the claimant is making 
                a claim.
                    (C) The skill requisite to perform the legal 
                service involved properly.
                    (D) The preclusion of other employment by the 
                attorney due to acceptance of the action involved.
                    (E) Whether the fee is fixed or a percentage.
                    (F) Time limitations imposed by the client or the 
                circumstances.
                    (G) The amount involved and the results obtained.
                    (H) The experience, reputation, and ability of the 
                attorneys involved.
                    (I) The undesirability of the action.
                    (J) Such other factors as justice may require.
            (5) Appeal and enforcement.--The findings of an arbitration 
        panel shall be final, binding, nonappealable, and payable 
        within 30 days after the date on which the finding is made 
        public, except that if an award is to be paid in installments, 
        the first installment shall be payable within such 30 day 
        period and succeeding installments shall be paid annually 
        thereafter.
    (b) Validity and Enforceability of Private Agreements.--
Notwithstanding any other provision of this Act, nothing in this 
section shall be construed to abrogate or restrict in any way the 
rights of any parties to mediate, negotiate, or settle any fee or 
expense disputes or issues to which this section applies, or to enter 
into private agreements with respect to the allocation or division of 
fees among the attorneys party to any such agreement.
    (c) Offset for Amounts Already Paid.--In making a determination 
under this section with regard to a dispute between a State that 
pursued independent civil action against tobacco product manufacturers 
and its attorney, the arbitration panel shall take into account any 
amounts already paid by the State under the agreement in dispute.

SEC. 708. NON-PARTICIPATING TOBACCO PRODUCT MANUFACTURERS.

    (a) In General.--If a tobacco product manufacturer does not enter 
into a consent decree or the Protocol before the date of enactment of 
this Act, then the limitations on liability under this title do not 
apply to that manufacturer.
    (b) Imposition of Fee.--
            (1) In general.--There is hereby imposed on each tobacco 
        product manufacturer described in subsection (a) an annual fee 
        for any calendar year ending after the date of enactment of 
        this Act for which it does not enter into a consent decree or 
        sign the Protocol.
            (2) Amount.--
                    (A) Total.--The amount of the annual fee imposed by 
                paragraph (1) is equal to 150 percent of the amount 
                that would be paid under section 403 of this Act for 
                that year by that tobacco product manufacturer if it 
                were a participating tobacco product manufacturer.
                    (B) Per tobacco product manufacturer.--The 
                Secretary shall promulgate regulations--
                            (i) under which the amount of the fee 
                        imposed under paragraph (1) for any tobacco 
                        product manufacturer is to be determined; and
                            (ii) establishing procedures for the 
                        assessment and collection of any fee imposed 
                        under paragraph (1).

SEC. 709. CONFORMING AMENDMENTS.

    (a) Section 362(b) of title 11, United States Code, is amended by--
            (1) striking ``or'' after the semicolon in paragraph (17);
            (2) striking ``petition.'' in paragraph (18) and inserting 
        ``petition; or''; and
            (3) adding at the end thereof the following:
            ``(19) under subsection (a) of this section, of the 
        commencement or continuation of any action or other proceeding 
        by or against a participating tobacco product manufacturer as 
        defined in section 6(22) of the National Tobacco Policy and 
        Youth Smoking Reduction Act regarding any interest or 
        obligation arising under or directly related to the Master 
        Settlement Agreement as defined in section 6(21) of that Act or 
        the liability apportionment agreement.''.
    (b) Section 365 of title 11, United States Code, is amended by--
            (1) striking ``and (d)'' in subsection (a) and inserting 
        ``(d), and (p)''; and
            (2) adding at the end thereof the following:
    ``(p) The trustee may not reject, shall be deemed to have assumed 
as of the commencement of the case, and shall cause the debtor to 
perform on an executory contract of a participating tobacco product 
manufacturer as defined in section 6(22) of the National Tobacco Policy 
and Youth Smoking Reduction Act, to the extent such executory contract 
is, or is directly related to, the Master Settlement Agreement as 
defined in section 6(21) of that Act, or the liability apportionment 
agreement described.''.
    (c) Section 507(a) of title 11, United States Code, is amended by 
adding at the end thereof the following:
            ``(10) Tenth, any unsecured claim of or against a 
        participating tobacco product manufacturer as defined in 
        section 6(22) of the National Tobacco Policy and Youth Smoking 
        Reduction Act, regarding any interest or obligation that arises 
        under or is directly related to the Master Settlement Agreement 
        as defined in section 6(21) of that Act, or the liability 
        apportionment agreement.''.
    (d) Section 541(a) of title 11, United States Code, is amended by 
adding at the end thereof the following:
            ``(8) Any interest of the debtor in property to the extent 
        that the debtor has transferred or agreed to transfer such 
        interest under the Master Settlement Agreement as defined in 
        section 6(21) of the National Tobacco Policy and Youth Smoking 
        Reduction Act or any written agreement directly related to such 
        Master Settlement Agreement, or the liability apportionment 
        agreement, or any written agreement directly related to such 
        liability apportionment agreement.''.
    (e) Section 1141 of title 11, United States Code, is amended by--
            (1) striking ``(d)(2) and (d)(3)'' in subsection (a) and 
        inserting ``(d)(2), (d)(3), and (d)(5)'';
            (2) striking ``(d)(2) and (d)(3)'' in subsection (c) and 
        inserting ``(d)(2), (d)(3), and (d)(5)''; and
            (3) adding at the end of subsection (d) the following:
            ``(5) The confirmation of a plan does not discharge a 
        debtor from any debt or other obligation arising under or 
        directly related to the Master Settlement Agreement as defined 
        in section 6(21) of the National Tobacco Policy and Youth 
        Smoking Reduction Act, or the liability apportionment 
        agreement.''.

 TITLE VIII--TOBACCO INDUSTRY COMPLIANCE AND EMPLOYEE PROTECTION FROM 
                               REPRISALS

SEC. 801. TOBACCO INDUSTRY COMPLIANCE ACCOUNTABILITY REQUIREMENTS.

    (a) Establishment of Accountability Panel.--The Commissioner of 
Food and Drugs, in consultation with the Secretary, shall establish an 
advisory panel, to be known as the ``Tobacco Agreement Accountability 
Panel''. The panel shall consist of the Surgeon General, the Director 
of the Center for Disease Control or the Director's delegate, and the 
Director of the Health and Human Services Office of Minority Health.
    (b) Tobacco Company Plan.--Within a year after the date of 
enactment of this Act, each participating tobacco product manufacturer 
shall adopt and submit to the Commissioner a plan to achieve the 
required percentage reductions in underage use of tobacco products set 
forth in section 201, and thereafter shall update its plan no less 
frequently than annually. The Commissioner shall provide a copy of each 
such plan to the panel, which shall review the plan and submit its 
views on the plan to the Commissioner. The panel may recommend 
amendment of any plan to incorporate additional measures to reduce 
underage tobacco use that are consistent with the provisions of this 
Act.
    (c) Annual Report.--The panel shall submit a report to the 
Commissioner and to the Congress by January 31 of each year, which 
shall be published in the Federal Register. In its report, the panel 
shall--
            (1) describe in detail each tobacco product manufacturer's 
        compliance with the provisions of this Act and its plan 
        submitted under subsection (b);
            (2) report on whether each tobacco product manufacturer's 
        efforts to reduce underage smoking are likely to result in 
        attainment of smoking reduction targets under section 201;
            (3) recommend, where necessary, additional measures 
        individual tobacco companies should undertake to meet those 
        targets; and
            (4) include, where applicable, the extent to which prior 
        panel recommendations have been adopted by each tobacco product 
        manufacturer.
    (d) Public Health Emergency.--If the panel determines unanimously 
at any time that a tobacco product manufacturer's actions or inactions 
with respect to its compliance with the Act are of such a nature as to 
create a clear and present danger to the attainment of the targets for 
underage smoking reduction, it shall immediately report such acts or 
omissions to the Commissioner. If the Commissioner determines that such 
report is supported by clear and convincing evidence, the Commissioner 
may bring an action under section 203 seeking the immediate suspension 
of the tobacco product manufacturer's annual limitation cap on civil 
judgments. If the court determines that the Commissioner has proved by 
clear and convincing evidence that the subject manufacturer's actions 
or inactions are of such a nature that they present a clear and present 
danger to the attainment of the targets for underage smoking reduction, 
the court may suspend the subject manufacturer's annual limitation cap 
on civil judgments.

SEC. 802. TOBACCO PRODUCT MANUFACTURER EMPLOYEE PROTECTION.

    (a) Prohibited Acts.--No tobacco product manufacturer may 
discharge, demote, or otherwise discriminate against any employee with 
respect to compensation, terms, conditions, benefits, or privileges of 
employment because the employee (or any person acting under a request 
of the employee)--
            (1) notified the manufacturer, the Commissioner of Food and 
        Drugs, the Attorney General, or any Federal, State, or local 
        public health or law enforcement authority of an alleged 
        violation of this or any other Act;
            (2) refused to engage in any practice made unlawful by such 
        Acts, if the employee has identified the alleged illegality to 
        the manufacturer;
            (3) testified before Congress or at any Federal or State 
        proceeding regarding any provision (or proposed provision) of 
        such Acts;
            (4) commenced, caused to be commenced, or is about to 
        commence or cause to be commenced a proceeding under such Acts, 
        or a proceeding for the administration or enforcement of any 
        requirement imposed under such Acts;
            (5) testified or is about to testify in any such 
        proceeding; or
            (6) assisted or participated, or is about to assist or 
        participate, in any manner in such a proceeding or in any other 
        manner in such a proceeding or in any other action to carry out 
        the purposes of such Acts.
    (b) Employee Complaint.--
            (1) Any employee of a tobacco product manufacturer who 
        believes that he or she has been discharged, demoted, or 
        otherwise discriminated against by any person in violation of 
        subsection (a) of this section may, within 180 days after such 
        violation occurs, file (or have any person file on his or her 
        behalf) a complaint with the Secretary alleging such discharge, 
        demotion, or discrimination. Upon receipt of such a complaint, 
        the Secretary shall notify the person named in the complaint of 
        its filing.
            (2)(A) Upon receipt of a complaint under paragraph (1) of 
        this subsection, the Secretary shall conduct an investigation 
        of the violation alleged in the complaint. Within 30 days after 
        the receipt of such complaint, the Secretary shall complete 
        such investigation and shall notify in writing the complainant 
        (and any such person acting in his or her behalf) and the 
        person alleged to have committed such violation of the results 
        of the investigation conducted under this paragraph. Within 90 
        days after the receipt of such complaint, the Secretary shall 
        (unless the proceeding on the complaint is terminated by the 
        Secretary on the basis of a settlement entered into by the 
        Secretary and the person alleged to have committed such 
        violation) issue an order either providing the relief 
        prescribed in subparagraph (B) of this paragraph or denying the 
        complaint. An order of the Secretary shall be made on the 
        record after notice and the opportunity for a hearing in 
        accordance with sections 554 and 556 of title 5, United States 
        Code. Upon the conclusion of such a hearing and the issuance of 
        a recommended decision that the complaint has merit, the 
        Secretary shall issue a preliminary order providing the relief 
        prescribed in subparagraph (B) of this paragraph, but may not 
        order compensatory damages pending a final order. The Secretary 
        may not enter into a settlement terminating a proceeding on a 
        complaint without the participation and consent of the 
        complainant.
            (B) If, in response to a complaint under paragraph (1) of 
        this subsection, the Secretary determines that a violation of 
        this paragraph has occurred, the Secretary shall order the 
        person who committed such violation to (i) take affirmative 
        action to abate the violation, and (ii) reinstate the 
        complainant to his or her former position together with 
        compensation (including back pay), terms, conditions, and 
        privileges of his or her employment. The Secretary may order 
        such person to provide compensatory damages to the complainant. 
        If an order is issued under this subparagraph, the Secretary, 
        at the request of the complainant, shall assess the person 
        against whom the order is issued a sum equal to the aggregate 
        amount of all costs and expenses (including attorneys' and 
        expert witness fees) reasonably incurred (as determined by the 
        Secretary), by the complainant for, or in connection with, the 
        bringing of the complaint upon which the order is issued.
            (3)(A) The Secretary shall dismiss a complaint filed under 
        paragraph (1) of this subsection, and shall not conduct the 
        investigation required under paragraph (2) of this subsection, 
        unless the complainant has made a prima facie showing that any 
        behavior described in subsection (a) of this section was a 
        contributing factor in the unfavorable personnel action alleged 
        in the complaint.
            (B) Notwithstanding a finding by the Secretary that the 
        complainant has made the showing required by subparagraph (A) 
        of this paragraph, no investigation required under paragraph 
        (2) of this subsection shall be conducted if the manufacturer 
        demonstrates by clear and convincing evidence that it would 
        have taken the same unfavorable personnel action in the absence 
        of such behavior. Relief may not be ordered under paragraph (1) 
        of this subsection if the manufacturer demonstrates by clear 
        and convincing evidence that it would have taken the same 
        unfavorable personnel action in the absence of such behavior.
            (C) The Secretary may determine that a violation of 
        subsection (a) of this section has occurred only if the 
        complainant has demonstrated that any behavior described in 
        subsection (a) of this section was a contributing factor in 
        unfavorable personnel action alleged in the complaint.
    (c) Judicial Review.--
            (1) Any person adversely affected or aggrieved by an order 
        issued under subsection (a) of this section may obtain review 
        of the order in the United States court of appeals for the 
        circuit in which the violation, with respect to which the order 
        was issued, allegedly occurred. The petition for review must be 
        filed within 60 days after the issuance of the Secretary's 
        order. Judicial review shall be available as provided in 
        chapter 7 of title 5, United States Code. The commencement of 
        proceedings under this subsection shall not, unless ordered by 
        the court, operate as a stay of the Secretary's order.
            (2) An order of the Secretary with respect to which review 
        could have been obtained under paragraph (1) of this subsection 
        shall not be subject to judicial review in any criminal or 
        civil proceeding.
    (d) Noncompliance.--Whenever a person has failed to comply with an 
order issued under subsection (b)(2) of this section, the Secretary may 
file a civil action in the United States district court for the 
district in which the violation occurred to enforce such order. In 
actions brought under this subsection, the district courts shall have 
jurisdiction to grant all appropriate relief, including injunctive 
relief and compensatory and exemplary damages.
    (e) Action to Ensure Compliance.--
            (1) Any person on whose behalf an order was issued under 
        subsection (b)(2) of this section may commence a civil action 
        to require compliance with such order against the person to 
        whom such order was issued. The appropriate United States 
        district court shall have jurisdiction to enforce such order, 
        without regard to the amount in controversy or the citizenship 
        of the parties.
            (2) The court, in issuing any final order under this 
        subsection, may award costs of litigation (including reasonable 
        attorneys' and expert witness fees) to any party whenever the 
        court determines such award is appropriate.
    (f) Enforcement.--Any non-discretionary duty imposed by this 
section shall be enforceable in a mandamus proceeding brought under 
section 1361 of title 28, United States Code.
    (g) Applicability to Certain Employees.--Subsection (a) of this 
section shall not apply with respect to any employee who, acting 
without direction from the manufacturer (or the agent of the 
manufacturer) deliberately causes a violation of any requirement of 
this Act, the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et 
seq.), or any other law or regulation relating to tobacco products.
    (h) Effect on Other Laws.--This section shall not be construed to 
expand, diminish, or otherwise affect any right otherwise available to 
an employee under Federal or State law to redress the employee's 
discharge or other discriminatory action taken by a tobacco product 
manufacturer against the employee.
    (i) Posting.--The provisions of this section shall be prominently 
posted in any place of employment to which this section applies.

        TITLE IX--PUBLIC DISCLOSURE OF TOBACCO INDUSTRY DOCUMENTS

SEC. 901. FINDINGS.

    The Congress finds that--
            (1) the American tobacco industry has made claims of 
        attorney-client privilege, attorney work product, and trade 
        secrets to protect from public disclosure thousands of internal 
        documents sought by civil litigants;
            (2) a number of courts have found that these claims of 
        privilege were not made in good faith; and
            (3) a prompt and full exposition of tobacco documents 
        will--
                    (A) promote understanding by the public of the 
                tobacco industry's research and practices; and
                    (B) further the purposes of this Act.

SEC. 902. APPLICABILITY.

    This title shall apply to all participating tobacco product 
manufacturers.

SEC. 903. NATIONAL TOBACCO DOCUMENT DEPOSITORY.

    (a) Establishment.--Participating tobacco product manufacturers 
shall, within 180 days after the enactment of this Act, establish a 
National Tobacco Document Depository in the Washington, D.C., area. The 
cost of establishing and operating the Depository shall be allocated 
among such manufacturers on the basis of market share or as otherwise 
agreed among them.
    (b) Document Categories.--Within 30 days after the establishment of 
the Depository, each participating tobacco product manufacturer shall 
submit to the Depository--
            (1) all original laboratory research conducted or funded, 
        directly or indirectly, by any participating tobacco product 
        manufacturers, the Center for Tobacco Research and Tobacco 
        Institute relating to the health effects or safety of tobacco 
        products, including without limitation all original laboratory 
        research relating to any method or means of making tobacco 
        products less hazardous to consumers;
            (2) all documents produced by any participating tobacco 
        product manufacturer, the Center of Tobacco Research or Tobacco 
        Institute to the Attorney General of any State during discovery 
        in any action brought on behalf of any State and commenced 
        after January 1, 1994;
            (3) all documents produced by any participating tobacco 
        product manufacturer, Center for Tobacco Research or Tobacco 
        Institute to the Federal Trade Commission in connection with 
        its investigation into the ``Joe Camel'' advertising campaign 
        and any underage marketing of tobacco products to minors;
            (4) all documents produced by any participating tobacco 
        product manufacturers, the Center for Tobacco Research or the 
        Tobacco Institute to litigation adversaries during discovery in 
        any private litigation matters;
            (5) all documents produced by any participating tobacco 
        product manufacturer, the Center for Tobacco Research, or the 
        Tobacco Institute in any of the following private litigation 
        matters:
                    (A) Philip Morris v. American Broadcasting Co., Law 
                No. 7609CL94x00181-00 (Cir. Ct. Va. filed Mar. 26, 
                1994);
                    (B) Estate of Butler v. R.J. Reynolds Tobacco Co., 
                Civ. A. No. 94-5-53 (Cir. Ct. Miss., filed May 12, 
                1994);
                    (C) Haines v. Liggett Group, No. 84-CV-678 (D.N.J., 
                filed Feb. 22, 1984); and
                    (D) Cipollone v. Liggett Group, No. 83-CV-284 
                (D.N.J., filed Aug. 1, 1983);
            (6) any document produced as evidence or potential evidence 
        or submitted to the court by participating tobacco product 
        manufacturers in any of the actions described in paragraph (5), 
        including briefs and other pleadings, memoranda, 
        interrogatories, transcripts of depositions, and expert 
        witnesses and consultants materials, including correspondence, 
        reports, and testimony;
            (7) any additional documents that any participating tobacco 
        product manufacturer, the Center for Tobacco Research, or the 
        Tobacco Institute have agreed or been required by any court to 
        produce to litigation adversaries as part of discovery in any 
        action listed in paragraph (2), (3), (4), or (5) but have not 
        yet completed producing as of the date of enactment of this 
        Act;
            (8) all indices of documents relating to tobacco products 
        and health, with any such indices that are maintained in 
        computerized form placed into the depository in both a 
        computerized and hard-copy form;
            (9) a privilege log describing each document or portion of 
        a document otherwise subject to production in the actions 
        enumerated in this subsection that any participating tobacco 
        product manufacturer, the Center for Tobacco Research, or the 
        Tobacco Institute maintains, based upon a good faith de novo 
        re-review conducted after June 20, 1997, is exempt from public 
        disclosure under this title; and
            (10) a trade secrecy log describing each document or 
        portion of a document that any participating tobacco product 
        manufacturer, the Center for Tobacco Research, or the Tobacco 
        Institute maintains is exempt from public disclosure under this 
        title.
    (c) Future Documents.--With respect to documents created after the 
date of enactment of this Act, the participating tobacco product 
manufacturers and their trade associations shall place into the 
depository in accordance with a schedule established by the Board the 
following documents:
            (1) All original laboratory research conducted or funded, 
        directly or indirectly, by any participating tobacco product 
        manufacturer relating to the health effects or safety of 
        tobacco products, including without limitation all original 
        laboratory research relating to any methods or means of making 
        tobacco products less hazardous to consumers.
            (2) All studies conducted or funded, directly or 
        indirectly, by any participating tobacco product manufacturer, 
        relating to tobacco product use by minors.
            (3) All documents discussing or referring to the 
        relationship, if any, between advertising and promotion and the 
        use of tobacco products by minors.
            (4) A privilege log describing each document or each 
        portion of a document otherwise subject to public disclosure 
        under this subsection that any participating tobacco product 
        manufacturer maintains is exempt from public disclosure under 
        this title.
            (5) A trade secrecy log describing each document or each 
        portion of a document otherwise subject to public disclosure 
        under this subsection that any participating tobacco product 
        manufacturer, the Center for Tobacco Research, or the Tobacco 
        Institute maintains is exempt from public disclosure under this 
        Act.
    (d) Document Identification and Index.--Documents submitted to the 
Depository under this section shall be sequentially numbered and marked 
to identify the participating tobacco product manufacturer. Within 15 
days after submission of documents to the Depository, each tobacco 
product manufacturer shall supply the Depository with a comprehensive 
document index which references the applicable document categories 
contained in subsection (b).

SEC. 904. PRIVILEGE AND TRADE SECRET CLAIMS.

    (a) Separate Submission of Documents.--Any document that is subject 
to a claim by a participating tobacco product manufacturer of attorney-
client privilege, attorney work product, or trade secret protection 
shall be so marked and shall be submitted separately to the Depository. 
Compliance with this subsection shall not be deemed to be a waiver of 
any applicable claim of privilege or trade secret protection.
    (b) Confidentiality.--Notwithstanding the provisions of section 552 
of title 5 of the United States Code or the provisions of any State 
law, documents, and information provided to the United States 
Department of Justice or to State antitrust authorities under the 
Protocol shall be kept confidential by and among the United States 
Department of Justice and such authorities and shall be used only for 
the governmental purposes of enforcing this Act, the Protocol, and the 
consent decrees. The inspection and discovery rights provided to the 
States under the Protocol and this section shall be exercised by each 
State but coordinated through a multi-state States' Attorneys General 
oversight committee.
    (c) Privilege and Trade Secret Logs.--
            (1) In general.--Within 15 days after submitting documents 
        to the Depository under subsection (a), each participating 
        tobacco product manufacturer shall submit to the Depository a 
        comprehensive log which identifies on a document-by-document 
        basis all documents produced to the Depository for which the 
        manufacturer asserts attorney-client privilege, attorney work-
        product, or trade secrecy. With respect to documents for which 
        the manufacturer previously has asserted one or more of the 
        aforementioned privileges or trade secret protection, the 
        manufacturer shall conduct a good faith de novo review of such 
        documents to determine whether such privilege or trade secret 
        protection is appropriate.
            (2) Organization of log.--The log shall be organized in 
        numerical order based upon the document identifier assigned to 
        each document. For each document, the log shall contain--
                    (A) a description of the document, including type 
                of document, title of document, name and position or 
                title of each author, addressee, and other recipient 
                who was intended to receive a copy, document date, 
                document purpose, and general subject matter;
                    (B) an explanation why the document or a portion of 
                the document is privileged or subject to trade secret 
                protection; and
                    (C) a statement whether any previous claim of 
                privilege or trade secret was denied and, if so, in 
                what proceeding.
            (3) Public inspection.--Within 5 days of receipt of such a 
        log, the Depository shall make it available for public 
        inspection and review.
    (d) Declaration of Compliance.--Each participating tobacco product 
manufacturer shall submit to the Board a declaration, in accordance 
with the requirements of section 1746 of title 28, United States Code, 
by an individual with responsibility for the de novo review of 
documents, preparation of the privilege log, and knowledge of its 
contents. The declarant shall attest to the manufacturer's compliance 
with the requirements of this title pertaining to the review of 
documents and preparation of a privilege log.

SEC. 905. DISCLOSURE BY THE DEPOSITORY.

    (a) In General.--Within 30 days after receipt of a document that is 
not subject to a claim of attorney-client privilege, attorney work 
product, or trade secret protection, the Depository shall make the 
document available to the public using the Internet and other means.
    (b) Evidentiary Status.--The provisions of section 2116(a) and (b) 
of title 44, United States Code, apply to records and documents 
submitted to the Depository in the same manner and to the same extent 
as if they were records submitted to the National Archives of the 
United States required by statute to be retained indefinitely.
    (c) Application of Confidentiality Law.--The release by the 
National Tobacco Documents Review Board established under section 906 
or any employee of the Depository of any document recognized by the 
Depository as protected as a trade secret is a violation of section 
1905 of title 18, United States Code.

SEC. 906. NATIONAL TOBACCO DOCUMENTS REVIEW BOARD.

    (a) Establishment.--There shall be a National Tobacco Documents 
Review Board consisting of 5 members, qualified by training and 
experience to carry out the functions of the Board, each of whom shall 
be appointed by the President and with the advice and consent of the 
Senate. Any person who is a citizen of the United States shall be 
eligible to serve as a member of the Board. Each Board member shall be 
appointed for a term of 7 years and shall be eligible for 
reappointment. The Board shall have the power to hire such staff and 
establish such operating procedures as it deems necessary to carry out 
its functions as specified hereunder.
    (b) Responsibility for Depository.--The Board shall have the 
responsibility of maintaining the Depository and shall, in consultation 
with the General Services Administration, establish guidelines and 
procedures for the establishment and operation of the Depository, 
including guidelines for the immediate disclosure of documents that are 
not subject to unresolved claims of privilege or trade secrecy. The 
Depository shall be open to the public and maintained in a manner that 
permits it to be used as a resource for litigants, public health 
groups, and persons with an interest in tobacco industry records and 
research concerning smoking and health, addiction or nicotine 
dependency, safer or less hazardous cigarettes, and underage tobacco 
use and marketing. The Board may grant reasonable extensions of time 
for compliance upon a showing of good cause.
    (c) Privilege.--The Board shall apply the attorney-client privilege 
and the attorney work-product doctrine in a manner consistent with 
Federal law.

SEC. 907. RESOLUTION OF DISPUTED PRIVILEGE AND TRADE SECRET CLAIMS.

    (a) In General.--The Board shall determine whether to uphold or 
reject disputed claims of attorney client privilege, attorney work 
product, or trade secret protection with respect to documents submitted 
to the Depository. Any person may petition the Board to resolve a claim 
that a document submitted to the Depository may not be disclosed to the 
public. Such a determination shall be made by a majority of the Board, 
in writing, and shall be subject to judicial review as specified in 
this title. All such determinations shall be made solely on 
consideration of the subject document and written submissions from the 
person claiming that the document is privileged or protected by trade 
secrecy and from any person seeking disclosure of the document. The 
Board shall cause notice of the petition and the Board's decision to be 
published in the Federal Register.
    (b) Final Decision.--The Board may uphold a claim of privilege or 
protection in its entirety or, in its sole discretion, it may redact 
that portion of a document that it determines is protected from public 
disclosure under subsection (a). Any decision of the Board shall be 
final unless judicial review is sought under section 908. In the event 
that judicial review is so sought, the Board's decision shall be stayed 
pending a final judicial decision.

SEC. 908. APPEAL OF BOARD DECISION.

    (a) Petition; Right of Appeal.--Any person may obtain judicial 
review of a final decision of the Board by filing a petition for review 
with the United States Court of Appeals for the Federal Circuit within 
60 days after the publication of such decision in the Federal Register. 
A copy of the petition shall be transmitted by the Clerk of the Court 
to the Board. The Board shall file in the court the record of the 
proceedings on which the Board based its decision (including any 
documents reviewed by the Board in camera) as provided in section 2112 
of title 28, United States Code. Upon the filing of such petition, the 
court shall have exclusive jurisdiction to affirm or set aside the 
Board's decision, except that until the filing of the record the Board 
may modify or set aside its decision.
    (b) Additional Evidence and Arguments.--If the any party applies to 
the court for leave to adduce additional evidence respecting the 
decision being reviewed and shows to the satisfaction of the court that 
such additional evidence or arguments are material and that there were 
reasonable grounds for the failure to adduce such evidence or arguments 
in the proceedings before the Board, the court may order the Board to 
provide additional opportunity for the presentation of evidence or 
arguments in such manner and upon such terms as the court deems proper. 
The Board may modify its findings or make new findings by reason of the 
additional evidence or arguments and shall file with the court such 
modified or new findings, and its recommendation, if any, for the 
modification or setting aside of the decision being reviewed.
    (c) Standard of Review; Finality of Judgments.--The Board's 
findings of fact, if supported by substantial evidence on the record 
taken as a whole, shall be conclusive. The court shall review the 
Board's legal conclusions de novo. The judgment of the court affirming 
or setting aside the Board's decision shall be final, subject to review 
by the Supreme Court of the United States upon certiorari or 
certification, as provided in section 1254 of title 28, United States 
Code.
    (d) Public Disclosure After Final Decision.--Within 30 days after a 
final decision that a document, as redacted by the Board or in its 
entirety, is not protected from disclosure by a claim of attorney-
client privilege, attorney work product, or trade secret protection, 
the Board shall direct the Depository to make the document available to 
the public. No Federal, Tribal, or State court shall have jurisdiction 
to review a claim of attorney-client privilege, attorney work product, 
or trade secret protection for a document that has lawfully been made 
available to the public under this subsection.
    (e) Effect of Non-Disclosure Decision on Judicial Proceedings.--The 
Board's decision that a document is protected by attorney-client 
privilege, attorney work product, or trade secret protection is binding 
only for the purpose of protecting the document from disclosure by the 
Depository. The decision by the Board shall not be construed to prevent 
a document from being disclosed in a judicial proceeding.
    (f) Disclosure to the Food and Drug Administration.--Within 240 
days after the date of enactment of this Act, each participating 
tobacco product manufacturer shall submit to the Food and Drug 
Administration the documents identified in section 903(b) or 903(c), 
including documents for which trade secret protection is claimed, with 
the exception of any document for which privilege is claimed, and 
identified in accordance with section 904(a). Each such manufacturer 
shall provide the Administration with the privilege and trade secret 
logs identified under section 904(b). With respect to documents that 
are claimed to contain trade secret material, unless and until it is 
finally determined under this title, either through judicial review or 
because time for judicial review has expired, that such a document does 
not constitute or contain trade secret material, the Administration 
shall treat the document as a trade secret in accordance with section 
708 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 379) and the 
regulations promulgated thereunder. Nothing herein shall limit the 
authority of the Administration to obtain and use, in accordance with 
any provision of the Federal Food, Drug, and Cosmetic Act and the 
regulations promulgated thereunder, any document constituting or 
containing trade secret material. Documents and materials received by 
the Administration under this provision shall not be obtainable by or 
releasable to the public through section 552 of title 5, United States 
Code, or any other provision of law, and the only recourse to obtain 
these documents shall be through the Board and Depository.

SEC. 909. MISCELLANEOUS.

    The disclosure process in this title is not intended to affect the 
Federal Rules of Civil or Criminal Procedure or any Federal law which 
requires the disclosure of documents or which deals with attorney-
client privilege, attorney work product, or trade secret protection.

SEC. 910. PENALTIES.

    (a) Good Faith Requirement.--Each participating tobacco product 
manufacturer must act in good faith in asseting claims of privilege or 
trade secret protection based on fact and law. If the Board determines 
that a participating tobacco product manufacturer has not acted in good 
faith with full knowledge of the truth of the facts asserted and with a 
reasonable basis under existing law, the manufacturer shall be assessed 
costs, which shall include the full administrative costs of handling 
the claim of privilege, and all attorneys' fees incurred by the Board 
and any party contesting the privilege. The Board may also impose civil 
penalties of up to $10,000 per violation if it determines that the 
manufacturer acted in bad faith in asserting a privilege, or knowingly 
acted with the intent to delay, frustrate, defraud, or obstruct the 
Board's determination of privilege or trade secret protection claims.
    (b) Failure to Produce Document.--A failure by a participating 
tobacco product manufacturer to produce indexes and documents in 
compliance with the schedule set forth in this title, or with such 
extension as may be granted by the Board, shall be punished by a civil 
penalty of up to $500 per violation. A separate violation occurs for 
each document the manufacturer has failed to produce in a timely 
manner. The maximum penalty under this subsection for a related series 
of violations is $10,000. In determining the amount of any civil 
penalty, the Board shall consider the number of documents, length of 
delay, any history of prior violations, the ability to pay, and such 
other matters as justice requires. Nothing in this title shall replace 
or supersede any criminal sanction under title 18, United States Code, 
or any other provision of law.

SEC. 911. DEFINITIONS.

    For the purposes of this title--
            (1) Document.--The term ``document'' includes originals and 
        drafts of any kind of written or graphic matter, regardless of 
        the manner of production or reproduction, of any kind or 
        description, whether sent or received or neither, and all 
        copies thereof that are different in any way from the original 
        (whether by interlineation, receipt stamp, notation, indication 
        of copies sent or received or otherwise) regardless of whether 
        confidential, privileged, or otherwise, including any paper, 
        book, account, photograph, blueprint, drawing, agreement, 
        contract, memorandum, advertising material, letter, telegram, 
        object, report, record, transcript, study, note, notation, 
        working paper, intra-office communication, intra-department 
        communication, chart, minute, index sheet, routing sheet, 
        computer software, computer data, delivery ticket, flow sheet, 
        price list, quotation, bulletin, circular, manual, summary, 
        recording of telephone or other conversation or of interviews, 
        or of conferences, or any other written, recorded, transcribed, 
        punched, taped, filmed, or graphic matter, regardless of the 
        manner produced or reproduced. Such term also includes any 
        tape, recording, videotape, computerization, or other 
        electronic recording, whether digital or analog or a 
        combination thereof.
            (2) Trade secret.--The term ``trade secret'' means any 
        commercially valuable plan, formula, process, or device that is 
        used for making, compounding, processing, or preparing trade 
commodities and that can be said to be the end-product of either 
innovation or substantial effort, for which there is a direct 
relationship between the plan, formula, process, or device and the 
productive process.
            (3) Certain actions deemed to be proceedings.--Any action 
        undertaken under this title, including the search, indexing, 
        and production of documents, is deemed to be a ``proceeding'' 
        before the executive branch of the United States.
            (4) Other terms.--Any term used in this title that is 
        defined in section 701 has the meaning given to it by that 
        section.

           TITLE X--LONG-TERM ECONOMIC ASSISTANCE FOR FARMERS

SEC. 1001. SHORT TITLE.

    This title may be cited as the ``Long-Term Economic Assistance for 
Farmers Act'' or the ``LEAF Act''.

SEC. 1002. DEFINITIONS.

    In this title:
            (1) Participating tobacco producer.--The term 
        ``participating tobacco producer'' means a quota holder, quota 
        lessee, or quota tenant.
            (2) Quota holder.--The term ``quota holder'' means a 
        producer that owns a farm for which a tobacco farm marketing 
        quota or farm acreage allotment was established under the 
        Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.) for 
        any of the 1995, 1996, or 1997 crop years.
            (3) Quota lessee.--The term ``quota lessee'' means--
                    (A) a producer that owns a farm that produced 
                tobacco pursuant to a lease and transfer to that farm 
                of all or part of a tobacco farm marketing quota or 
                farm acreage allotment established under the 
                Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et 
                seq.) for any of the 1995, 1996, or 1997 crop years; or
                    (B) a producer that rented land from a farm 
                operator to produce tobacco under a tobacco farm 
                marketing quota or farm acreage allotment established 
                under the Agricultural Adjustment Act of 1938 (7 U.S.C. 
                1281 et seq.) for any of the 1995, 1996, or 1997 crop 
                years.
            (4) Quota tenant.--The term ``quota tenant'' means a 
        producer that--
                    (A) is the principal producer, as determined by the 
                Secretary, of tobacco on a farm where tobacco is 
                produced pursuant to a tobacco farm marketing quota or 
                farm acreage allotment established under the 
                Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et 
                seq.) for any of the 1995, 1996, or 1997 crop years; 
                and
                    (B) is not a quota holder or quota lessee.
            (5) Secretary.--The term ``Secretary'' means--
                    (A) in subtitles A and B, the Secretary of 
                Agriculture; and
                    (B) in section 1031, the Secretary of Labor.
            (6) Tobacco product importer.--The term ``tobacco product 
        importer'' has the meaning given the term ``importer'' in 
        section 5702 of the Internal Revenue Code of 1986.
            (7) Tobacco product manufacturer.--
                    (A) In general.--The term ``tobacco product 
                manufacturer'' has the meaning given the term 
                ``manufacturer of tobacco products'' in section 5702 of 
                the Internal Revenue Code of 1986.
                    (B) Exclusion.--The term ``tobacco product 
                manufacturer'' does not include a person that 
                manufactures cigars or pipe tobacco.
            (8) Tobacco warehouse owner.--The term ``tobacco warehouse 
        owner'' means a warehouseman that participated in an auction 
        market (as defined in the first section of the Tobacco 
        Inspection Act (7 U.S.C. 511)) during the 1998 marketing year.
            (9) Trust fund.--The term ``Trust Fund'' means the Tobacco 
        Community Revitalization Trust Fund established under section 
        1011.

        Subtitle A--Tobacco Community Revitalization Trust Fund

SEC. 1011. ESTABLISHMENT OF TRUST FUND.

    (a) In General.--There is established in the Treasury of the United 
States a trust fund to be known as the ``Tobacco Community 
Revitalization Trust Fund'', consisting of such amounts as may be 
appropriated or credited to the Trust Fund. The Trust Fund shall be 
administered by the Secretary.
    (b) Transfers to Trust Fund.--There are appropriated and 
transferred to the Trust Fund for each fiscal year--
            (1) amounts contributed by tobacco product manufacturers 
        and tobacco product importers under section 1012; and
            (2) an amount from the National Tobacco Settlement Trust 
        Fund established by section 401 equal to the aggregate amount 
        of assessments under section 1012 against participating tobacco 
        manufacturers for that fiscal year.
    (c) Repayable Advances.--
            (1) Authorization.--There are authorized to be appropriated 
        to the Trust Fund, as repayable advances, such sums as may from 
        time to time be necessary to make expenditures under subsection 
        (d).
            (2) Repayment with interest.--Repayable advances made to 
        the Trust Fund shall be repaid, and interest on the advances 
        shall be paid, to the general fund of the Treasury when the 
        Secretary of the Treasury determines that moneys are available 
        in the Trust Fund to make the payments.
            (3) Rate of interest.--Interest on an advance made under 
        this subsection shall be at a rate determined by the Secretary 
        of Treasury (as of the close of the calendar month preceding 
        the month in which the advance is made) that is equal to the 
        current average market yield on outstanding marketable 
        obligations of the United States with remaining period to 
        maturity comparable to the anticipated period during which the 
        advance will be outstanding.
    (d) Expenditures From Trust Fund.--Amounts in the Trust Fund shall 
be available for making expenditures after October 1, 1998, to meet 
those necessary obligations of the Federal Government that are 
authorized to be paid under--
            (1) section 1021 for payments for lost tobacco quota for 
        each of fiscal years 1999 through 2023, but not to exceed 
        $1,650,000,000 for any fiscal year except to the extent the 
        payments are made in accordance with subsection (d)(12) or 
        (e)(9) of section 1021;
            (2) section 1022 for industry payments for all costs of the 
        Department of Agriculture associated with the production of 
        tobacco;
            (3) section 1023 for tobacco community economic development 
        grants, but not to exceed--
                    (A) $375,000,000 for each of fiscal years 1999 
                through 2008, less any amount required to be paid under 
                section 1022 for the fiscal year; and
                    (B) $450,000,000 for each of fiscal year 2009 
                through 2023, less any amount required to be paid under 
                section 1022 during the fiscal year;
            (4) section 1031 for assistance provided under the tobacco 
        worker transition program, but not to exceed $25,000,000 for 
        any fiscal year; and
            (5) subpart 9 of part A of title IV of the Higher Education 
        Act of 1965 for farmer opportunity grants, but not to exceed--
                    (A) $42,500,000 for each of the academic years 
                1999-2000 through 2003-2004;
                    (B) $50,000,000 for each of the academic years 
                2004-2005 through 2008-2009;
                    (C) $57,500,000 for each of the academic years 
                2009-2010 through 2013-2014;
                    (D) $65,000,000 for each of the academic years 
                2014-2015 through 2018-2019; and
                    (E) $72,500,000 for each of the academic years 
                2019-2020 through 2023-2024.
    (e) Budgetary Treatment.--This section constitutes budget authority 
in advance of appropriations Acts and represents the obligation of the 
Federal Government to provide payments to States and eligible persons 
in accordance with this title.

SEC. 1012. CONTRIBUTIONS BY TOBACCO PRODUCT MANUFACTURERS AND 
              IMPORTERS.

    (a) Definition of Market Share.--In this section, the term ``market 
share'' means the ratio of--
            (1) the tax liability of a tobacco product manufacturer or 
        tobacco product importer for a calendar year under section 5703 
        of the Internal Revenue Code of 1986; to
            (2) the tax liability of all tobacco product manufacturers 
        or tobacco product importers for the calendar year under 
        section 5703 of the Internal Revenue Code of 1986.
    (b) Determinations.--Not later than September 30 of each fiscal 
year, the Secretary of the Treasury shall--
            (1) determine--
                    (A) the market share of each tobacco product 
                manufacturer or tobacco product importer during the 
                most recent calendar year;
                    (B) the total amount of assessments payable for the 
                subsequent fiscal year under subsection (c); and
                    (C) the amount of an assessment payable by the 
                tobacco product manufacturer or tobacco product 
                importer for the fiscal year under subsection (d); and
            (2) notify each tobacco product manufacturer and tobacco 
        product importer of the determinations made under paragraph (1) 
        with respect to the manufacturer or importer.
    (c) Total Amount of Assessments.--
            (1) In general.--The total amount of assessments payable by 
        all tobacco product manufacturers and tobacco product importers 
        into the Trust Fund for a fiscal year shall be equal to--
                    (A) the amount of the contribution to the Trust 
                Fund for the fiscal year required under paragraph (2); 
                less
                    (B) any amount made available during the preceding 
                fiscal year to the Trust Fund out of funds transferred 
                from National Tobacco Settlement Trust Fund under 
                section 1011(b)(2).
            (2) Trust fund contributions.--The amount of the 
        contribution to the Trust Fund shall be--
                    (A) $2,100,000,000 for each of fiscal years 1999 
                through 2008;
                    (B) $500,000,000 for each of fiscal years 2009 
                through 2023; and
                    (C) for fiscal year 2024 and each subsequent fiscal 
                year, the amount payable under section 1022.
    (d) Individual Amount of Assessments.--The amount of an assessment 
payable by each tobacco product manufacturer and tobacco product 
importer into the Trust Fund for a fiscal year shall be equal to the 
product obtained by multiplying--
            (1) the total amount of assessments payable by all tobacco 
        product manufacturers and tobacco product importers for the 
        fiscal year under subsection (c); and
            (2) the market share of the tobacco product manufacturer or 
        tobacco product importer during the most recent calendar year 
        determined under subsection (b)(1)(A).
    (e) Credit for Payments by Participating Tobacco Product 
Manufacturers.--There shall be allowed as a credit against the amount 
of any assessment under this section for a participating tobacco 
product manufacturer an amount equal to the amount paid by that 
manufacturer under section 403 of this Act (other than as penalty or 
interest) for the calendar year ending in that fiscal year.

            Subtitle B--Tobacco Market Transition Assistance

SEC. 1021. PAYMENTS FOR LOST TOBACCO QUOTA.

    (a) In General.--Beginning with the 1999 marketing year, the 
Secretary shall make payments for lost tobacco quota to eligible quota 
holders, quota lessees, and quota tenants as reimbursement for lost 
tobacco quota as a result of a decrease in demand for domestically 
produced tobacco.
    (b) Eligibility.--To be eligible to receive payments under this 
section, a quota holder, quota lessee, or quota tenant shall--
            (1) prepare and submit to the Secretary an application at 
        such time, in such manner, and containing such information as 
        the Secretary may require, including information sufficient to 
        make the demonstration required under paragraph (2); and
            (2) demonstrate to the satisfaction of the Secretary that, 
        with respect to the 1997 marketing year--
                    (A) the producer was a quota holder and realized 
                income from the production of tobacco through--
                            (i) the active production of tobacco;
                            (ii) the lease and transfer of tobacco 
                        quota to another farm;
                            (iii) the rental of all or part of the farm 
                        of the quota holder, including the right to 
                        produce tobacco, to another tobacco producer; 
                        or
                            (iv) the hiring of a quota tenant to 
                        produce tobacco;
                    (B) the producer was a quota lessee; or
                    (C) the producer was a quota tenant.
    (c) Base Quota Level.--
            (1) In general.--The Secretary shall determine, for each 
        quota holder, quota lessee, and quota tenant, the base quota 
        level for the 1995 through 1997 marketing years.
            (2) Quota holders.--The base quota level for a quota holder 
        shall be equal to the average tobacco farm marketing quota 
        established for the farm owned by the quota holder for the 1995 
        through 1997 marketing years.
            (3) Quota lessees.--The base quota level for a quota lessee 
        shall be equal to--
                    (A) 50 percent of the average number of pounds of 
                tobacco quota established for a farm for the 1995 
                through 1997 marketing years--
                            (i) that was leased and transferred to a 
                        farm owned by the quota lessee; or
                            (ii) for which the rights to produce the 
                        tobacco were rented to the quota lessee; less
                    (B) 25 percent of the average number of pounds of 
                tobacco quota described in subparagraph (A) for which a 
                quota tenant was the principal producer of the tobacco 
                quota.
            (4) Quota tenants.--The base quota level for a quota tenant 
        shall be equal to the sum of--
                    (A) 50 percent of the average number of pounds of 
                tobacco quota established for a farm for the 1995 
                through 1997 marketing years--
                            (i) that was owned by a quota holder; and
                            (ii) for which the quota tenant was the 
                        principal producer of the tobacco on the farm; 
                        and
                    (B) 25 percent of the average number of pounds of 
                tobacco quota for the 1995 through 1997 marketing 
                years--
                            (i)(I) that was leased and transferred to a 
                        farm owned by the quota lessee; or
                            (II) for which the rights to produce the 
                        tobacco were rented to the quota lessee; and
                            (ii) for which the quota tenant was the 
                        principal producer of the tobacco on the farm.
            (5) Marketing quotas other than poundage quotas.--
                    (A) In general.--For each type of tobacco for which 
                there is a marketing quota or allotment (on an acreage 
                basis), the base quota level for each quota holder, 
                quota lessee, or quota tenant shall be determined in 
                accordance with this subsection (based on a poundage 
                conversion) by multiplying--
                            (i) the average tobacco farm marketing 
                        quota or allotment for the 1995 through 1997 
                        marketing years; and
                            (ii) the average yield per acre for the 
                        farm for the type of tobacco for the marketing 
                        years.
                    (B) Yields not available.--If the average yield per 
                acre is not available for a farm, the Secretary shall 
                calculate the base quota for the quota holder, quota 
                lessee, or quota tenant (based on a poundage 
                conversion) by determining the amount equal to the 
                product obtained by multiplying--
                            (i) the average tobacco farm marketing 
                        quota or allotment for the 1995 through 1997 
                        marketing years; and
                            (ii) the average county yield per acre for 
                        the county in which the farm is located for the 
                        type of tobacco for the marketing years.
    (d) Payments for Lost Tobacco Quota for Types of Tobacco Other Than 
Flue-Cured Tobacco.--
            (1) Allocation of funds.--Of the amounts made available 
        under section 1011(d)(1) for payments for lost tobacco quota, 
        the Secretary shall make available for payments under this 
        subsection an amount that bears the same ratio to the amounts 
        made available as--
                    (A) the sum of all national marketing quotas for 
                all types of tobacco other than flue-cured tobacco 
                during the 1995 through 1997 marketing years; bears to
                    (B) the sum of all national marketing quotas for 
                all types of tobacco during the 1995 through 1997 
                marketing years.
            (2) Option to relinquish quota.--
                    (A) In general.--Each quota holder shall be given 
                the option to relinquish the farm marketing quota or 
                farm acreage allotment of the quota holder in exchange 
                for a payment made under paragraph (3).
                    (B) Notification.--A quota holder shall give 
                notification of the intention of the quota holder to 
                exercise the option at such time and in such manner as 
                the Secretary may require, but not later than January 
                15, 1999.
            (3) Payments for lost tobacco quota to quota holders 
        exercising options to relinquish quota.--
                    (A) In general.--Subject to subparagraph (E), for 
                each of fiscal years 1999 through 2008, the Secretary 
                shall make annual payments for lost tobacco quota to 
                each quota holder that has relinquished the farm 
                marketing quota or farm acreage allotment of the quota 
                holder under paragraph (2).
                    (B) Amount.--The amount of a payment made to a 
                quota holder described in subparagraph (A) for a 
                marketing year shall equal \1/10\ of the lifetime 
                limitation established under subparagraph (E).
                    (C) Timing.--The Secretary shall begin making 
                annual payments under this paragraph for the marketing 
                year in which the farm marketing quota or farm acreage 
                allotment is relinquished.
                    (D) Additional payments.--The Secretary may 
                increase annual payments under this paragraph in 
                accordance with paragraph (7)(E) to the extent that 
                funding is available.
                    (E) Lifetime limitation on payments.--The total 
                amount of payments made under this paragraph to a quota 
                holder shall not exceed the product obtained by 
                multiplying the base quota level for the quota holder 
                by $8 per pound.
            (4) Reissuance of quota.--
                    (A) Reallocation to lessee or tenant.--If a quota 
                holder exercises an option to relinquish a tobacco farm 
                marketing quota or farm acreage allotment under 
                paragraph (2), a quota lessee or quota tenant that was 
                the primary producer during the 1997 marketing year of 
                tobacco pursuant to the farm marketing quota or farm 
                acreage allotment, as determined by the Secretary, 
                shall be given the option of having an allotment of the 
                farm marketing quota or farm acreage allotment 
                reallocated to a farm owned by the quota lessee or 
                quota tenant.
                    (B) Conditions for reallocation.--
                            (i) Timing.--A quota lessee or quota tenant 
                        that is given the option of having an allotment 
                        of a farm marketing quota or farm acreage 
                        allotment reallocated to a farm owned by the 
                        quota lessee or quota tenant under subparagraph 
                        (A) shall have 1 year from the date on which a 
                        farm marketing quota or farm acreage allotment 
                        is relinquished under paragraph (2) to exercise 
                        the option.
                            (ii) Limitation on acreage allotment.--In 
                        the case of a farm acreage allotment, the 
                        acreage allotment determined for any farm 
                        subsequent to any reallocation under 
subparagraph (A) shall not exceed 50 percent of the acreage of cropland 
of the farm owned by the quota lessee or quota tenant.
                            (iii) Limitation on marketing quota.--In 
                        the case of a farm marketing quota, the 
                        marketing quota determined for any farm 
                        subsequent to any reallocation under 
                        subparagraph (A) shall not exceed an amount 
                        determined by multiplying--
                                    (I) the average county farm yield, 
                                as determined by the Secretary; and
                                    (II) 50 percent of the acreage of 
                                cropland of the farm owned by the quota 
                                lessee or quota tenant.
                    (C) Eligibility of lessee or tenant for payments.--
                If a farm marketing quota or farm acreage allotment is 
                reallocated to a quota lessee or quota tenant under 
                subparagraph (A)--
                            (i) the quota lessee or quota tenant shall 
                        not be eligible for any additional payments 
                        under paragraph (5) or (6) as a result of the 
                        reallocation; and
                            (ii) the base quota level for the quota 
                        lessee or quota tenant shall not be increased 
                        as a result of the reallocation.
                    (D) Reallocation to quota holders within same 
                county or state.--
                            (i) In general.--Except as provided in 
                        clause (ii), if there was no quota lessee or 
                        quota tenant for the farm marketing quota or 
                        farm acreage allotment for a type of tobacco, 
                        or if no quota lessee or quota tenant exercises 
                        an option of having an allotment of the farm 
                        marketing quota or farm acreage allotment for a 
                        type of tobacco reallocated, the Secretary 
                        shall reapportion the farm marketing quota or 
                        farm acreage allotment among the remaining 
                        quota holders for the type of tobacco within 
                        the same county.
                            (ii) Cross-county leasing.--In a State in 
                        which cross-county leasing is authorized 
                        pursuant to section 319(l) of the Agricultural 
                        Adjustment Act of 1938 (7 U.S.C. 1314e(l)), the 
                        Secretary shall reapportion the farm marketing 
                        quota among the remaining quota holders for the 
                        type of tobacco within the same State.
                            (iii) Eligibility of quota holder for 
                        payments.--If a farm marketing quota is 
                        reapportioned to a quota holder under this 
                        subparagraph--
                                    (I) the quota holder shall not be 
                                eligible for any additional payments 
                                under paragraph (5) or (6) as a result 
                                of the reapportionment; and
                                    (II) the base quota level for the 
                                quota holder shall not be increased as 
                                a result of the reapportionment.
                    (E) Special rule for tenant of leased tobacco.--If 
                a quota holder exercises an option to relinquish a 
                tobacco farm marketing quota or farm acreage allotment 
                under paragraph (2), the farm marketing quota or farm 
                acreage allotment shall be divided evenly between, and 
                the option of reallocating the farm marketing quota or 
                farm acreage allotment shall be offered in equal 
                portions to, the quota lessee and to the quota tenant, 
                if--
                            (i) during the 1997 marketing year, the 
                        farm marketing quota or farm acreage allotment 
                        was leased and transferred to a farm owned by 
                        the quota lessee; and
                            (ii) the quota tenant was the primary 
                        producer, as determined by the Secretary, of 
                        tobacco pursuant to the farm marketing quota or 
                        farm acreage allotment.
            (5) Payments for lost tobacco quota to quota holders.--
                    (A) In general.--Except as otherwise provided in 
                this subsection, during any marketing year in which the 
                national marketing quota for a type of tobacco is less 
                than the average national marketing quota for the 1995 
                through 1997 marketing years, the Secretary shall make 
                payments for lost tobacco quota to each quota holder 
                that is eligible under subsection (b), and has not 
                exercised an option to relinquish a tobacco farm 
                marketing quota or farm acreage allotment under 
                paragraph (2), in an amount that is equal to the 
                product obtained by multiplying--
                            (i) the number of pounds by which the basic 
                        farm marketing quota (or poundage conversion) 
                        is less than the base quota level for the quota 
                        holder; and
                            (ii) $4 per pound.
                    (B) Poundage conversion for marketing quotas other 
                than poundage quotas.--
                            (i) In general.--For each type of tobacco 
                        for which there is a marketing quota or 
                        allotment (on an acreage basis), the poundage 
                        conversion for each quota holder during a 
                        marketing year shall be determined by 
                        multiplying--
                                    (I) the basic farm acreage 
                                allotment for the farm for the 
                                marketing year; and
                                    (II) the average yield per acre for 
                                the farm for the type of tobacco.
                            (ii) Yield not available.--If the average 
                        yield per acre is not available for a farm, the 
                        Secretary shall calculate the poundage 
                        conversion for each quota holder during a 
                        marketing year by multiplying--
                                    (I) the basic farm acreage 
                                allotment for the farm for the 
                                marketing year; and
                                    (II) the average county yield per 
                                acre for the county in which the farm 
                                is located for the type of tobacco.
            (6) Payments for lost tobacco quota to quota lessees and 
        quota tenants.--Except as otherwise provided in this 
        subsection, during any marketing year in which the national 
        marketing quota for a type of tobacco is less than the average 
        national marketing quota for the type of tobacco for the 1995 
        through 1997 marketing years, the Secretary shall make payments 
        for lost tobacco quota to each quota lessee and quota tenant 
        that is eligible under subsection (b) in an amount that is 
        equal to the product obtained by multiplying--
                    (A) the percentage by which the national marketing 
                quota for the type of tobacco is less than the average 
                national marketing quota for the type of tobacco for 
                the 1995 through 1997 marketing years;
                    (B) the base quota level for the quota lessee or 
                quota tenant; and
                    (C) $4 per pound.
            (7) Lifetime limitation on payments.--Except as otherwise 
        provided in this subsection, the total amount of payments made 
        under this subsection to a quota holder, quota lessee, or quota 
        tenant during the lifetime of the quota holder, quota lessee, 
        or quota tenant shall not exceed the product obtained by 
        multiplying--
                    (A) the base quota level for the quota holder, 
                quota lessee, or quota tenant; and
                    (B) $8 per pound.
            (8) Limitations on aggregate annual payments.--
                    (A) In general.--Except as otherwise provided in 
                this paragraph, the total amount payable under this 
                subsection for any marketing year shall not exceed the 
                amount made available under paragraph (1).
                    (B) Accelerated payments.--Paragraph (1) shall not 
                apply if accelerated payments for lost tobacco quota 
                are made in accordance with paragraph (12).
                    (C) Reductions.--If the sum of the amounts 
                determined under paragraphs (3), (5), and (6) for a 
                marketing year exceeds the amount made available under 
                paragraph (1), the Secretary shall make a pro rata 
                reduction in the amounts payable under paragraphs (5) 
                and (6) to quota holders, quota lessees, and quota 
                tenants under this subsection to ensure that the total 
                amount of payments for lost tobacco quota does not 
                exceed the amount made available under paragraph (1).
                    (D) Rollover of payments for lost tobacco quota.--
                Subject to subparagraph (A), if the Secretary makes a 
                reduction in accordance with subparagraph (C), the 
                amount of the reduction shall be applied to the next 
                marketing year and added to the payments for lost 
                tobacco quota for the marketing year.
                    (E) Additional payments to quota holders exercising 
                option to relinquish quota.--If the amount made 
                available under paragraph (1) exceeds the sum of the 
                amounts determined under paragraphs (3), (5), and (6) 
                for a marketing year, the Secretary shall distribute 
                the amount of the excess pro rata to quota holders that 
                have exercised an option to relinquish a tobacco farm 
                marketing quota or farm acreage allotment under 
                paragraph (2) by increasing the amount payable to each 
                such holder under paragraph (3).
            (9) Subsequent sale and transfer of quota.--Effective 
        beginning with the 1999 marketing year, on the sale and 
        transfer of a farm marketing quota or farm acreage allotment 
        under section 316(g) or 319(g) of the Agricultural Adjustment 
        Act of 1938 (7 U.S.C. 1314b(g), 1314e(g))--
                    (A) the person that sold and transferred the quota 
                or allotment shall have--
                            (i) the base quota level attributable to 
                        the person reduced by the base quota level 
                        attributable to the quota that is sold and 
                        transferred; and
                            (ii) the lifetime limitation on payments 
                        established under paragraph (7) attributable to 
                        the person reduced by the product obtained by 
                        multiplying--
                                    (I) the base quota level 
                                attributable to the quota; and
                                    (II) $8 per pound; and
                    (B) if the quota or allotment has never been 
                relinquished by a previous quota holder under paragraph 
                (2), the person that acquired the quota shall have--
                            (i) the base quota level attributable to 
                        the person increased by the base quota level 
                        attributable to the quota that is sold and 
                        transferred; and
                            (ii) the lifetime limitation on payments 
                        established under paragraph (7) attributable to 
                        the person--
                                    (I) increased by the product 
                                obtained by multiplying--
                                            (aa) the base quota level 
                                        attributable to the quota; and
                                            (bb) $8 per pound; but
                                    (II) decreased by any payments 
                                under paragraph (5) for lost tobacco 
                                quota previously made that are 
                                attributable to the quota that is sold 
                                and transferred.
            (10) Sale or transfer of farm.--On the sale or transfer of 
        ownership of a farm that is owned by a quota holder, the base 
        quota level established under subsection (c), the right to 
        payments under paragraph (5), and the lifetime limitation on 
        payments established under paragraph (7) shall transfer to the 
        new owner of the farm to the same extent and in the same manner 
        as those provisions applied to the previous quota holder.
            (11) Death of quota lessee or quota tenant.--If a quota 
        lessee or quota tenant that is entitled to payments under this 
        subsection dies and is survived by a spouse or 1 or more 
        dependents, the right to receive the payments shall transfer to 
        the surviving spouse or, if there is no surviving spouse, to 
        the surviving dependents in equal shares.
            (12) Acceleration of payments.--
                    (A) In general.--On the occurrence of any of the 
                events described in subparagraph (B), the Secretary 
                shall make an accelerated lump sum payment for lost 
                tobacco quota as established under paragraphs (5) and 
                (6) to each quota holder, quota lessee, and quota 
                tenant for any affected type of tobacco in accordance 
                with subparagraph (C).
                    (B) Triggering events.--The Secretary shall make 
                accelerated payments under subparagraph (A) if after 
                the date of enactment of this Act--
                            (i) subject to subparagraph (D), for 3 
                        consecutive marketing years, the national 
                        marketing quota or national acreage allotment 
                        for a type of tobacco is less than 50 percent 
                        of the national marketing quota or national 
                        acreage allotment for the type of tobacco for 
                        the 1998 marketing year; or
                            (ii) Congress repeals or makes ineffective, 
                        directly or indirectly, any provision of--
                                    (I) section 316 of the Agricultural 
                                Adjustment Act of 1938 (7 U.S.C. 
                                1314b);
                                    (II) section 319 of the 
                                Agricultural Adjustment Act of 1938 (7 
                                U.S.C. 1314e);
                                    (III) section 106 of the 
                                Agricultural Act of 1949 (7 U.S.C. 
                                1445);
                                    (IV) section 106A of the 
                                Agricultural Act of 1949 (7 U.S.C. 
                                1445-1); or
                                    (V) section 106B of the 
                                Agricultural Act of 1949 (7 U.S.C. 
                                1445-2).
                    (C) Amount.--The amount of the accelerated payments 
                made to each quota holder, quota lessee, and quota 
                tenant under this subsection shall be equal to--
                            (i) the amount of the lifetime limitation 
                        established for the quota holder, quota lessee, 
                        or quota tenant under paragraph (7); less
                            (ii) any payments for lost tobacco quota 
                        received by the quota holder, quota lessee, or 
                        quota tenant before the occurrence of any of 
                        the events described in subparagraph (B).
                    (D) Referendum vote not a triggering event.--A 
                referendum vote of producers for any type of tobacco 
                that results in the national marketing quota or 
                national acreage allotment not being in effect for the 
                type of tobacco shall not be considered a triggering 
                event under this paragraph.
            (13) Ban on subsequent sale or leasing of farm marketing 
        quota or farm acreage allotment to quota holders exercising 
        option to relinquish quota.--No quota holder that exercises the 
        option to relinquish a farm marketing quota or farm acreage 
        allotment for any type of tobacco under paragraph (2) shall be 
        eligible to acquire a farm marketing quota or farm acreage 
        allotment for the type of tobacco, or to obtain the lease or 
        transfer of a farm marketing quota or farm acreage allotment 
        for the type of tobacco, for a period of 25 crop years after 
        the date on which the quota or allotment was relinquished.
    (e) Payments for Lost Tobacco Quota for Flue-Cured Tobacco.--
            (1) Allocation of funds.--Of the amounts made available 
        under section 1011(d)(1) for payments for lost tobacco quota, 
        the Secretary shall make available for payments under this 
        subsection an amount that bears the same ratio to the amounts 
        made available as--
                    (A) the sum of all national marketing quotas for 
                flue-cured tobacco during the 1995 through 1997 
                marketing years; bears to
                    (B) the sum of all national marketing quotas for 
                all types of tobacco during the 1995 through 1997 
                marketing years.
            (2) Relinquishment of quota.--
                    (A) In general.--Each quota holder of flue-cured 
                tobacco during the 1998 marketing year shall relinquish 
                the farm marketing quota or farm acreage allotment in 
                exchange for a payment made under paragraph (3) or (4).
                    (B) Notification.--The Secretary shall notify the 
                quota holders of the relinquishment of their quota or 
                allotment at such time and in such manner as the 
                Secretary may require, but not later than November 15, 
                1998.
            (3) Payments for lost flue-cured tobacco quota to quota 
        holders that relinquish quota.--
                    (A) In general.--For each of fiscal years 1999 
                through 2008, the Secretary shall make annual payments 
                for lost flue-cured tobacco to each quota holder that 
                has relinquished the farm marketing quota or farm 
                acreage allotment of the quota holder under paragraph 
                (2).
                    (B) Amount.--The amount of a payment made to a 
                quota holder described in subparagraph (A) for a 
                marketing year shall equal \1/10\ of the lifetime 
                limitation established under paragraph (6).
                    (C) Timing.--The Secretary shall begin making 
                annual payments under this paragraph for the marketing 
                year in which the farm marketing quota or farm acreage 
                allotment is relinquished.
                    (D) Additional payments.--The Secretary may 
                increase annual payments under this paragraph in 
                accordance with paragraph (7)(E) to the extent that 
                funding is available.
            (4) Payments for lost flue-cured tobacco quota to quota 
        lessees and quota tenants that have not relinquished permits.--
                    (A) In general.--Except as otherwise provided in 
                this subsection, during any marketing year in which the 
                national marketing quota for flue-cured tobacco is less 
                than the average national marketing quota for the 1995 
                through 1997 marketing years, the Secretary shall make 
                payments for lost tobacco quota to each quota lessee or 
                quota tenant that--
                            (i) is eligible under subsection (b);
                            (ii) has been issued an individual tobacco 
                        production permit under section 317A(b) of the 
                        Agricultural Adjustment Act of 1938; and
                            (iii) has not exercised an option to 
                        relinquish the permit.
                    (B) Amount.--The amount of a payment made to a 
                quota holder described in subparagraph (A) for a 
                marketing year shall be equal to the product obtained 
                by multiplying--
                            (i) the number of pounds by which the 
                        individual marketing limitation established for 
                        the permit is less than twice the base quota 
                        level for the quota holder; and
                            (ii) $2 per pound.
            (5) Payments for lost flue-cured tobacco quota to quota 
        lessees and quota tenants that have relinquished permits.--
                    (A) In general.--For each of fiscal years 1999 
                through 2008, the Secretary shall make annual payments 
                for lost flue-cured tobacco quota to each quota lessee 
                and quota tenant that has relinquished an individual 
                tobacco production permit under section 317A(b)(5) of 
                the Agricultural Adjustment Act of 1938.
                    (B) Amount.--The amount of a payment made to a 
                quota holder described in subparagraph (A) for a 
                marketing year shall be equal to \1/10\ of the lifetime 
                limitation established under paragraph (6).
                    (C) Timing.--The Secretary shall begin making 
                annual payments under this paragraph for the marketing 
                year in which the individual tobacco production permit 
                is relinquished.
                    (D) Additional payments.--The Secretary may 
                increase annual payments under this paragraph in 
accordance with paragraph (7)(E) to the extent that funding is 
available.
                    (E) Prohibition against permit expansion.--A quota 
                lessee or quota tenant that receives a payment under 
                this paragraph shall be ineligible to receive any new 
                or increased tobacco production permit from the county 
                production pool established under section 317A(b)(8) of 
                the Agricultural Adjustment Act of 1938.
            (6) Lifetime limitation on payments.--Except as otherwise 
        provided in this subsection, the total amount of payments made 
        under this subsection to a quota holder, quota lessee, or quota 
        tenant during the lifetime of the quota holder, quota lessee, 
        or quota tenant shall not exceed the product obtained by 
        multiplying--
                    (A) the base quota level for the quota holder, 
                quota lessee, or quota tenant; and
                    (B) $8 per pound.
            (7) Limitations on aggregate annual payments.--
                    (A) In general.--Except as otherwise provided in 
                this paragraph, the total amount payable under this 
                subsection for any marketing year shall not exceed the 
                amount made available under paragraph (1).
                    (B) Accelerated payments.--Paragraph (1) shall not 
                apply if accelerated payments for lost flue-cured 
                tobacco quota are made in accordance with paragraph 
                (9).
                    (C) Reductions.--If the sum of the amounts 
                determined under paragraphs (3), (4), and (5) for a 
                marketing year exceeds the amount made available under 
                paragraph (1), the Secretary shall make a pro rata 
                reduction in the amounts payable under paragraph (4) to 
                quota lessees and quota tenants under this subsection 
                to ensure that the total amount of payments for lost 
                flue-cured tobacco quota does not exceed the amount 
                made available under paragraph (1).
                    (D) Rollover of payments for lost flue-cured 
                tobacco quota.--Subject to subparagraph (A), if the 
                Secretary makes a reduction in accordance with 
                subparagraph (C), the amount of the reduction shall be 
                applied to the next marketing year and added to the 
                payments for lost flue-cured tobacco quota for the 
                marketing year.
                    (E) Additional payments to quota holders exercising 
                option to relinquish quotas or permits, or to quota 
                lessees or quota tenants relinquishing permits.--If the 
                amount made available under paragraph (1) exceeds the 
                sum of the amounts determined under paragraphs (3), 
                (4), and (5) for a marketing year, the Secretary shall 
                distribute the amount of the excess pro rata to quota 
                holders by increasing the amount payable to each such 
                holder under paragraphs (3) and (5).
            (8) Death of quota holder, quota lessee, or quota tenant.--
        If a quota holder, quota lessee or quota tenant that is 
        entitled to payments under paragraph (4) or (5) dies and is 
        survived by a spouse or 1 or more descendants, the right to 
        receive the payments shall transfer to the surviving spouse or, 
        if there is no surviving spouse, to the surviving descendants 
        in equal shares.
            (9) Acceleration of payments.--
                    (A) In general.--On the occurrence of any of the 
                events described in subparagraph (B), the Secretary 
                shall make an accelerated lump sum payment for lost 
                flue-cured tobacco quota as established under 
                paragraphs (3), (4), and (5) to each quota holder, 
                quota lessee, and quota tenant for flue-cured tobacco 
                in accordance with subparagraph (C).
                    (B) Triggering events.--The Secretary shall make 
                accelerated payments under subparagraph (A) if after 
                the date of enactment of this Act--
                            (i) subject to subparagraph (D), for 3 
                        consecutive marketing years, the national 
                        marketing quota or national acreage allotment 
                        for flue-cured tobacco is less than 50 percent 
                        of the national marketing quota or national 
                        acreage allotment for flue-cured tobacco for 
                        the 1998 marketing year; or
                            (ii) Congress repeals or makes ineffective, 
                        directly or indirectly, any provision of--
                                    (I) section 316 of the Agricultural 
                                Adjustment Act of 1938 (7 U.S.C. 
                                1314b);
                                    (II) section 319 of the 
                                Agricultural Adjustment Act of 1938 (7 
                                U.S.C. 1314e);
                                    (III) section 106 of the 
                                Agricultural Act of 1949 (7 U.S.C. 
                                1445);
                                    (IV) section 106A of the 
                                Agricultural Act of 1949 (7 U.S.C. 
                                1445-1);
                                    (V) section 106B of the 
                                Agricultural Act of 1949 (7 U.S.C. 
                                1445-2); or
                                    (VI) section 317A of the 
                                Agricultural Adjustment Act of 1938.
                    (C) Amount.--The amount of the accelerated payments 
                made to each quota holder, quota lessee, and quota 
                tenant under this subsection shall be equal to--
                            (i) the amount of the lifetime limitation 
                        established for the quota holder, quota lessee, 
                        or quota tenant under paragraph (6); less
                            (ii) any payments for lost flue-cured 
                        tobacco quota received by the quota holder, 
                        quota lessee, or quota tenant before the 
                        occurrence of any of the events described in 
                        subparagraph (B).
                    (D) Referendum vote not a triggering event.--A 
                referendum vote of producers for flue-cured tobacco 
                that results in the national marketing quota or 
                national acreage allotment not being in effect for 
                flue-cured tobacco shall not be considered a triggering 
                event under this paragraph.

SEC. 1022. INDUSTRY PAYMENTS FOR ALL DEPARTMENT COSTS ASSOCIATED WITH 
              TOBACCO PRODUCTION.

    (a) In General.--The Secretary shall use such amounts as are 
necessary from the Trust Fund at the end of each fiscal year to 
reimburse the Secretary for--
            (1) costs associated with the administration of programs 
        established under this title and amendments made by this title;
            (2) costs associated with the administration of the tobacco 
        quota and price support programs administered by the Secretary;
            (3) costs to the Federal Government of carrying out crop 
        insurance programs for tobacco;
            (4) costs associated with all agricultural research, 
        extension, or education activities associated with tobacco;
            (5) costs associated with the administration of loan 
        association and cooperative programs for tobacco producers, as 
        approved by the Secretary; and
            (6) any other costs incurred by the Department of 
        Agriculture associated with the production of tobacco.
    (b) Limitations.--Amounts made available under subsection (a) may 
not be used--
            (1) to provide direct benefits to quota holders, quota 
        lessees, or quota tenants; or
            (2) in a manner that results in a decrease, or an increase 
        relative to other crops, in the amount of the crop insurance 
        premiums assessed to participating tobacco producers under the 
        Federal Crop Insurance Act (7 U.S.C. 1501 et seq.).
    (c) Determinations.--Not later than September 30, 1998, and each 
fiscal year thereafter, the Secretary shall determine--
            (1) the amount of costs described in subsection (a); and
            (2) the amount that will be provided under this section as 
        reimbursement for the costs.

SEC. 1023. TOBACCO COMMUNITY ECONOMIC DEVELOPMENT GRANTS.

    (a) Authority.--The Secretary shall make grants to tobacco-growing 
States in accordance with this section to enable the States to carry 
out economic development initiatives in tobacco-growing communities.
    (b) Application.--To be eligible to receive payments under this 
section, a State shall prepare and submit to the Secretary an 
application at such time, in such manner, and containing such 
information as the Secretary may require, including--
            (1) a description of the activities that the State will 
        carry out using amounts received under the grant;
            (2) a designation of an appropriate State agency to 
        administer amounts received under the grant; and
            (3) a description of the steps to be taken to ensure that 
        the funds are distributed in accordance with subsection (e).
    (c) Amount of Grant.--
            (1) In general.--From the amounts available to carry out 
        this section for a fiscal year, the Secretary shall allot to 
        each State an amount that bears the same ratio to the amounts 
        available as the total farm income of the State derived from 
        the production of tobacco during the 1995 through 1997 
        marketing years (as determined under paragraph (2)) bears to 
        the total farm income of all States derived from the production 
        of tobacco during the 1995 through 1997 marketing years.
            (2) Tobacco income.--For the 1995 through 1997 marketing 
        years, the Secretary shall determine the amount of farm income 
        derived from the production of tobacco in each State and in all 
        States.
    (d) Payments.--
            (1) In general.--A State that has an application approved 
        by the Secretary under subsection (b) shall be entitled to a 
        payment under this section in an amount that is equal to its 
        allotment under subsection (c).
            (2) Form of payments.--The Secretary may make payments 
        under this section to a State in installments, and in advance 
        or by way of reimbursement, with necessary adjustments on 
        account of overpayments or underpayments, as the Secretary may 
        determine.
            (3) Reallotments.--Any portion of the allotment of a State 
        under subsection (c) that the Secretary determines will not be 
        used to carry out this section in accordance with an approved 
        State application required under subsection (b), shall be 
        reallotted by the Secretary to other States in proportion to 
        the original allotments to the other States.
    (e) Use and Distribution of Funds.--
            (1) In general.--Amounts received by a State under this 
        section shall be used to carry out economic development 
        activities, including--
                    (A) rural business enterprise activities described 
                in subsections (c) and (e) of section 310B of the 
                Consolidated Farm and Rural Development Act (7 U.S.C. 
                1932);
                    (B) down payment loan assistance programs that are 
                similar to the program described in section 310E of the 
                Consolidated Farm and Rural Development Act (7 U.S.C. 
                1935);
                    (C) activities designed to help create productive 
                farm or off-farm employment in rural areas to provide a 
                more viable economic base and enhance opportunities for 
                improved incomes, living standards, and contributions 
                by rural individuals to the economic and social 
                development of tobacco communities;
                    (D) activities that expand existing infrastructure, 
                facilities, and services to capitalize on opportunities 
                to diversify economies in tobacco communities and that 
                support the development of new industries or commercial 
                ventures;
                    (E) activities by agricultural organizations that 
                provide assistance directly to participating tobacco 
                producers to assist in developing other agricultural 
                activities that supplement tobacco-producing 
                activities;
                    (F) initiatives designed to create or expand 
                locally owned value-added processing and marketing 
                operations in tobacco communities;
                    (G) technical assistance activities by persons to 
                support farmer-owned enterprises, or agriculture-based 
                rural development enterprises, of the type described in 
                section 252 or 253 of the Trade Act of 1974 (19 U.S.C. 
                2342, 2343); and
                    (H) initiatives designed to partially compensate 
                tobacco warehouse owners for lost revenues and assist 
                the tobacco warehouse owners in establishing successful 
                business enterprises.
            (2) Tobacco-growing counties.--Assistance may be provided 
        by a State under this section only to assist a county in the 
        State that has been determined by the Secretary to have in 
        excess of $100,000 in income derived from the production of 
        tobacco during 1 or more of the 1995 through 1997 marketing 
        years.
            (3) Distribution.--
                    (A) Economic development activities.--Not less than 
                20 percent of the amounts received by a State under 
                this section shall be used to carry out--
                            (i) economic development activities 
                        described in subparagraph (E) or (F) of 
                        paragraph (1); or
                            (ii) agriculture-based rural development 
                        activities described in paragraph (1)(G).
                    (B) Technical assistance activities.--Not less than 
                4 percent of the amounts received by a State under this 
                section shall be used to carry out technical assistance 
                activities described in paragraph (1)(G).
                    (C) Tobacco warehouse owner initiatives.--
                            (i) In general.--Not less than 6 percent of 
                        the amounts received by a State under this 
                        section during each of fiscal years 1999 
                        through 2008 shall be used to carry out 
                        initiatives described in paragraph (1)(H).
                            (ii) Direct payments.--Of the amount made 
                        available under clause (i), not less than 80 
                        percent of the amount shall be used to provide 
                        direct payments to tobacco warehouse owners 
                        based on any decline in the annual volume of 
                        tobacco sales as compared to the volume of 
                        tobacco sales during the 1998 marketing year.
                    (D) Tobacco-growing counties.--To be eligible to 
                receive payments under this section, a State shall 
                demonstrate to the Secretary that funding will be 
                provided, during each 5-year period for which funding 
                is provided under this section, for activities in each 
                county in the State that has been determined under 
                paragraph (2) to have in excess of $100,000 in income 
                derived from the production of tobacco, in amounts that 
                are at least equal to the product obtained by 
                multiplying--
                            (i) the ratio that the tobacco production 
                        income in the county determined under paragraph 
                        (2) bears to the total tobacco production 
                        income for the State determined under 
                        subsection (c); and
                            (ii) 50 percent of the total amounts 
                        received by a State under this section during 
                        the 5-year period.
    (f) Preferences in Hiring.--A State may require recipients of funds 
under this section to provide a preference in employment to--
            (1) an individual who--
                    (A) during the 1998 calendar year, was employed in 
                the manufacture, processing, or warehousing of tobacco 
                or tobacco products, or resided, in a county described 
                in subsection (e)(2); and
                    (B) is eligible for assistance under the tobacco 
                worker transition program established under section 
                1031; or
            (2) an individual who--
                    (A) during the 1998 marketing year, carried out 
                tobacco quota or relevant tobacco production activities 
                in a county described in subsection (e)(2);
                    (B) is eligible for a farmer opportunity grant 
                under subpart 9 of part A of title IV of the Higher 
                Education Act of 1965; and
                    (C) has successfully completed a course of study at 
                an institution of higher education.
    (g) Maintenance of Effort.--
            (1) In general.--Subject to paragraph (2), a State shall 
        provide an assurance to the Secretary that the amount of funds 
        expended by the State and all counties in the State described 
        in subsection (e)(2) for any activities funded under this 
        section for a fiscal year is not less than 90 percent of the 
        amount of funds expended by the State and counties for the 
        activities for the preceding fiscal year.
            (2) Reduction of grant amount.--If a State does not provide 
        an assurance described in paragraph (1), the Secretary shall 
        reduce the amount of the grant determined under subsection (c) 
        by an amount equal to the amount by which the amount of funds 
        expended by the State and counties for the activities is less 
        than 90 percent of the amount of funds expended by the State 
        and counties for the activities for the preceding fiscal year, 
        as determined by the Secretary.
            (3) Federal funds.--For purposes of this subsection, the 
        amount of funds expended by a State or county shall not include 
        any amounts made available by the Federal Government.

SEC. 1024. FLUE-CURED TOBACCO PRODUCTION PERMITS.

    The Agricultural Adjustment Act of 1938 is amended by inserting 
after section 317 (7 U.S.C. 1314c) the following:

``SEC. 317A. FLUE-CURED TOBACCO PRODUCTION PERMITS.

    ``(a) Definitions.--In this section:
            ``(1) Individual acreage limitation.--The term `individual 
        acreage limitation' means the number of acres of flue-cured 
        tobacco that may be planted by the holder of a permit during a 
        marketing year, calculated--
                    ``(A) prior to--
                            ``(i) any increase or decrease in the 
                        number due to undermarketings or 
                        overmarketings; and
                            ``(ii) any reduction under subsection (i); 
                        and
                    ``(B) in a manner that ensures that--
                            ``(i) the total of all individual acreage 
                        limitations is equal to the national acreage 
                        allotment, less the reserve provided under 
                        subsection (h); and
                            ``(ii) the individual acreage limitation 
                        for a marketing year bears the same ratio to 
                        the individual acreage limitation for the 
                        previous marketing year as the ratio that the 
                        national acreage allotment for the marketing 
                        year bears to the national acreage allotment 
                        for the previous marketing year, subject to 
                        adjustments by the Secretary to account for any 
                        reserve provided under subsection (h).
            ``(2) Individual marketing limitation.--The term 
        `individual marketing limitation' means the number of pounds of 
        flue-cured tobacco that may be marketed by the holder of a 
        permit during a marketing year, calculated--
                    ``(A) prior to--
                            ``(i) any increase or decrease in the 
                        number due to undermarketings or 
                        overmarketings; and
                            ``(ii) any reduction under subsection (i); 
                        and
                    ``(B) in a manner that ensures that--
                            ``(i) the total of all individual marketing 
                        limitations is equal to the national marketing 
                        quota, less the reserve provided under 
                        subsection (h); and
                            ``(ii) the individual marketing limitation 
                        for a marketing year is obtained by multiplying 
                        the individual acreage limitation by the permit 
                        yield, prior to any adjustment for 
                        undermarketings or overmarketings.
            ``(3) Individual tobacco production permit.--The term 
        `individual tobacco production permit' means a permit issued by 
        the Secretary to a person authorizing the production of flue-
        cured tobacco for any marketing year during which this section 
        is effective.
            ``(4) National acreage allotment.--The term `national 
        acreage allotment' means the quantity determined by dividing--
                    ``(A) the national marketing quota; by
                    ``(B) the national average yield goal.
            ``(5) National average yield goal.--The term `national 
        average yield goal' means the national average yield for flue-
        cured tobacco during the 5 marketing years immediately 
        preceding the marketing year for which the determination is 
        being made.
            ``(6) National marketing quota.--For the 1999 and each 
        subsequent crop of flue-cured tobacco, the term `national 
        marketing quota' for a marketing year means the quantity of 
        flue-cured tobacco, as determined by the Secretary, that is not 
        more than 103 percent nor less than 97 percent of the total 
        of--
                    ``(A) the aggregate of the quantities of flue-cured 
                tobacco that domestic manufacturers of cigarettes 
                estimate that the manufacturers intend to purchase on 
                the United States auction markets or from producers 
                during the marketing year, as compiled and determined 
                under section 320A;
                    ``(B) the average annual quantity of flue-cured 
                tobacco exported from the United States during the 3 
                marketing years immediately preceding the marketing 
                year for which the determination is being made; and
                    ``(C) the quantity, if any, of flue-cured tobacco 
                that the Secretary, in the discretion of the Secretary, 
                determines is necessary to increase or decrease the 
                inventory of the producer-owned cooperative marketing 
                association that has entered into a loan agreement with 
                the Commodity Credit Corporation to make price support 
                available to producers of flue-cured tobacco to 
                establish or maintain the inventory at the reserve 
                stock level for flue-cured tobacco.
            ``(7) Permit yield.--The term `permit yield' means the 
        yield of tobacco per acre for an individual tobacco production 
        permit holder that is--
                    ``(A) based on a preliminary permit yield that is 
                equal to the average yield during the 5 marketing years 
                immediately preceding the marketing year for which the 
                determination is made in the county where the holder of 
                the permit is authorized to plant flue-cured tobacco, 
                as determined by the Secretary, on the basis of actual 
                yields of farms in the county; and
                    ``(B) adjusted by a weighted national yield factor 
                calculated by--
                            ``(i) multiplying each preliminary permit 
                        yield by the individual acreage limitation, 
                        prior to adjustments for overmarketings, 
                        undermarketings, or reductions required under 
                        subsection (i); and
                            ``(ii) dividing the sum of the products 
                        under clause (i) for all flue-cured individual 
                        tobacco production permit holders by the 
                        national acreage allotment.
    ``(b) Initial Issuance of Permits.--
            ``(1) Termination of flue-cured marketing quotas.--On 
        approval through referendum under subsection (c), farm 
        marketing quotas as provided under section 317 shall no longer 
        be in effect for flue-cured tobacco.
            ``(2) Issuance of permits to quota holders that were 
        principal producers.--
                    ``(A) In general.--On approval through a referendum 
                under subsection (c), each individual quota holder 
                under section 317 that was a principal producer of 
                flue-cured tobacco during the 1998 marketing year, as 
                determined by the Secretary, shall be issued an 
                individual tobacco production permit under this 
                section.
                    ``(B) Notification.--The Secretary shall notify the 
                holder of each permit of the individual acreage 
                limitation and the individual marketing limitation 
                applicable to the holder for each marketing year.
                    ``(C) Individual acreage limitation for 1999 
                marketing year.--In establishing the individual acreage 
                limitation for the 1999 marketing year under this 
                section, the farm acreage allotment that was allotted 
                to a farm owned by the quota holder during the 1997 
                marketing year shall be considered the individual 
                acreage limitation for the previous marketing year.
                    ``(D) Individual marketing limitation for 1999 
                marketing year.--In establishing the individual 
                marketing limitation for the 1999 marketing year under 
                this section, the farm marketing quota that was 
                allotted to a farm owned by the quota holder during the 
                1997 marketing year shall be considered the individual 
                marketing limitation for the previous marketing year.
            ``(3) Quota holders that were not principal producers.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), on approval through a referendum 
                under subsection (c)--
                            ``(i) each person that was a quota holder 
                        under section 317 but that was not a principal 
                        producer of flue-cured tobacco during the 1997 
                        marketing year, as determined by the Secretary, 
                        shall not be eligible to own a permit; and
                            ``(ii) the Secretary shall not issue any 
                        permit during the 25-year period beginning on 
                        the date of enactment of this Act to any person 
                        that was a quota holder and was not the 
                        principal producer of flue-cured tobacco during 
                        the 1997 marketing year.
                    ``(B) Medical hardships and crop disasters.--
                Subparagraph (A) shall not apply to a person that would 
                have been the principal producer of flue-cured tobacco 
                during the 1997 marketing year but for a medical 
                hardship or crop disaster that occurred during the 1997 
                marketing year.
                    ``(C) Administration.--The Secretary shall issue 
                regulations--
                            ``(i) defining the term `person' for the 
                        purpose of this paragraph; and
                            ``(ii) prescribing such rules as the 
                        Secretary determines are necessary to ensure a 
                        fair and reasonable application of the 
                        prohibition established under this paragraph.
            ``(4) Issuance of permits to principal producers of flue-
        cured tobacco.--
                    ``(A) In general.--On approval through a referendum 
                under subsection (c), each individual quota lessee or 
                quota tenant (as defined in section 1002 of the LEAF 
                Act) that was the principal producer of flue-cured 
                tobacco during the 1997 marketing year, as determined 
                by the Secretary, shall be issued an individual tobacco 
                production permit under this section.
                    ``(B) Individual acreage limitations.--In 
                establishing the individual acreage limitation for the 
                1999 marketing year under this section, the farm 
                acreage allotment that was allotted to a farm owned by 
                a quota holder for whom the quota lessee or quota 
                tenant was the principal producer of flue-cured tobacco 
                during the 1997 marketing year shall be considered the 
                individual acreage limitation for the previous 
                marketing year.
                    ``(C) Individual marketing limitations.--In 
                establishing the individual marketing limitation for 
                the 1999 marketing year under this section, the 
                individual marketing limitation for the previous year 
                for an individual described in this paragraph shall be 
                calculated by multiplying--
                            ``(i) the farm marketing quota that was 
                        allotted to a farm owned by a quota holder for 
                        whom the quota lessee or quota holder was the 
                        principal producer of flue-cured tobacco during 
                        the 1997 marketing year, by
                            ``(ii) the ratio that--
                                    ``(I) the sum of all flue-cured 
                                tobacco farm marketing quotas for the 
                                1997 marketing year prior to adjusting 
                                for undermarketing and overmarketing; 
                                bears to
                                    ``(II) the sum of all flue-cured 
                                tobacco farm marketing quotas for the 
                                1998 marketing year, after adjusting 
                                for undermarketing and overmarketing.
                    ``(D) Special rule for tenant of leased flue-cured 
                tobacco.--If the farm marketing quota or farm acreage 
                allotment of a quota holder was produced pursuant to an 
                agreement under which a quota lessee rented land from a 
                quota holder and a quota tenant was the primary 
                producer, as determined by the Secretary, of flue-cured 
                tobacco pursuant to the farm marketing quota or farm 
                acreage allotment, the farm marketing quota or farm 
                acreage allotment shall be divided proportionately 
                between the quota lessee and quota tenant for purposes 
                of issuing individual tobacco production permits under 
                this paragraph.
            ``(5) Option of quota lessee or quota tenant to relinquish 
        permit.--
                    ``(A) In general.--Each quota lessee or quota 
                tenant that is issued an individual tobacco production 
                permit under paragraph (4) shall be given the option of 
                relinquishing the permit in exchange for payments made 
                under section 1021(e)(5) of the LEAF Act.
                    ``(B) Notification.--A quota lessee or quota tenant 
                that is issued an individual tobacco production permit 
                shall give notification of the intention to exercise 
                the option at such time and in such manner as the 
                Secretary may require, but not later than 30 days after 
                the permit is issued.
                    ``(C) Reallocation of permit.--The Secretary shall 
                add the authority to produce flue-cured tobacco under 
                the individual tobacco production permit relinquished 
                under this paragraph to the county production pool 
                established under paragraph (8) for reallocation by the 
                appropriate county committee.
            ``(6) Active producer requirement.--
                    ``(A) Requirement for sharing risk.--No individual 
                tobacco production permit shall be issued to, or 
                maintained by, a person that does not fully share in 
                the risk of producing a crop of flue-cured tobacco.
                    ``(B) Criteria for sharing risk.--For purposes of 
                this paragraph, a person shall be considered to have 
                fully shared in the risk of production of a crop if--
                            ``(i) the investment of the person in the 
                        production of the crop is not less than 100 
                        percent of the costs of production associated 
                        with the crop;
                            ``(ii) the amount of the person's return on 
                        the investment is dependent solely on the sale 
                        price of the crop; and
                            ``(iii) the person may not receive any of 
                        the return before the sale of the crop.
                    ``(C) Persons not sharing risk.--
                            ``(i) Forfeiture.--Any person that fails to 
                        fully share in the risks of production under 
                        this paragraph shall forfeit an individual 
                        tobacco production permit if, after notice and 
                        opportunity for a hearing, the appropriate 
                        county committee determines that the conditions 
                        for forfeiture exist.
                            ``(ii) Reallocation.--The Secretary shall 
                        add the authority to produce flue-cured tobacco 
                        under the individual tobacco production permit 
                        forfeited under this subparagraph to the county 
                        production pool established under paragraph (8) 
                        for reallocation by the appropriate county 
                        committee.
                    ``(D) Notice.--Notice of any determination made by 
                a county committee under subparagraph (C) shall be 
                mailed, as soon as practicable, to the person involved.
                    ``(E) Review.--If the person is dissatisfied with 
                the determination, the person may request, not later 
                than 15 days after notice of the determination is 
                received, a review of the determination by a local 
                review committee under the procedures established under 
                section 363 for farm marketing quotas.
            ``(7) County of origin requirement.--For the 1999 and each 
        subsequent crop of flue-cured tobacco, all tobacco produced 
        pursuant to an individual tobacco production permit shall be 
        produced in the same county in which was produced the tobacco 
        produced during the 1997 marketing year pursuant to the farm 
        marketing quota or farm acreage allotment on which the 
        individual tobacco production permit is based.
            ``(8) County production pool.--
                    ``(A) In general.--The authority to produce flue-
                cured tobacco under an individual tobacco production 
                permit that is forfeited, relinquished, or surrendered 
                within a county may be reallocated by the appropriate 
                county committee to tobacco producers located in the 
                same county that apply to the committee to produce 
                flue-cured tobacco under the authority.
                    ``(B) Priority.--In reallocating individual tobacco 
                production permits under this paragraph, a county 
                committee shall provide a priority to--
                            ``(i) an active tobacco producer that 
                        controls the authority to produce a quantity of 
                        flue-cured tobacco under an individual tobacco 
                        production permit that is equal to or less than 
                        the average number of pounds of flue-cured 
                        tobacco that was produced by the producer 
                        during each of the 1995 through 1997 marketing 
                        years, as determined by the Secretary; and
                            ``(ii) a new tobacco producer.
                    ``(C) Criteria.--Individual tobacco production 
                permits shall be reallocated by the appropriate county 
                committee under this paragraph in a fair and equitable 
                manner after taking into consideration--
                            ``(i) the experience of the producer;
                            ``(ii) the availability of land, labor, and 
                        equipment for the production of tobacco;
                            ``(iii) crop rotation practices; and
                            ``(iv) the soil and other physical factors 
                        affecting the production of tobacco.
                    ``(D) Medical hardships and crop disasters.--
                Notwithstanding any other provision of this Act, the 
                Secretary may issue an individual tobacco production 
                permit under this paragraph to a producer that is 
                otherwise ineligible for the permit due to a medical 
                hardship or crop disaster that occurred during the 1997 
                marketing year.
    ``(c) Referendum.--
            ``(1) Announcement of quota and allotment.--Not later than 
        December 15, 1998, the Secretary pursuant to subsection (b) 
        shall determine and announce--
                    ``(A) the quantity of the national marketing quota 
                for flue-cured tobacco for the 1999 marketing year; and
                    ``(B) the national acreage allotment and national 
                average yield goal for the 1999 crop of flue-cured 
                tobacco.
            ``(2) Special referendum.--Not later than 30 days after the 
        announcement of the quantity of the national marketing quota, 
        the Secretary shall conduct a special referendum of the 
        producers that were the principal producers of flue-cured 
        tobacco of the 1997 crop to determine whether the producers 
        approve or oppose the establishment of individual tobacco 
        production permits on an acreage-poundage basis as provided in 
        this section for the 1999 through 2001 marketing years.
            ``(3) Approval of permits.--If the Secretary determines 
        that more than 66\2/3\ percent of the producers voting in the 
        special referendum approve the establishment of individual 
        tobacco production permits on an acreage-poundage basis--
                    ``(A) individual tobacco production permits on an 
                acreage-poundage basis as provided in this section 
                shall be in effect for the 1999 through 2001 marketing 
                years; and
                    ``(B) marketing quotas on an acreage-poundage basis 
                shall cease to be in effect for the 1999 through 2001 
                marketing years.
            ``(4) Disapproval of permits.--If individual tobacco 
        production permits on an acreage-poundage basis are not 
        approved by more than 66\2/3\ percent of the producers voting 
        in the referendum, no marketing quotas on an acreage-poundage 
        basis shall continue in effect that were proclaimed under 
        section 317 prior to the referendum.
            ``(5) Applicable marketing years.--If individual tobacco 
        production permits have been made effective for flue-cured 
        tobacco on an acreage-poundage basis pursuant to this 
        subsection, the Secretary shall, not later than December 15 of 
        any future marketing year, announce a national marketing quota 
        for that type of tobacco for the next 3 succeeding marketing 
        years if the marketing year is the last year of 3 consecutive 
        years for which individual tobacco production permits 
        previously proclaimed will be in effect.
    ``(d) Annual Announcement of National Marketing Quota.--The 
Secretary shall determine and announce the national marketing quota, 
national acreage allotment, and national average yield goal for the 
second and third marketing years of any 3-year period for which 
individual tobacco production permits are in effect on or before the 
December 15 immediately preceding the beginning of the marketing year 
to which the quota, allotment, and goal apply.
    ``(e) Annual Announcement of Individual Tobacco Production 
Permits.--If a national marketing quota, national acreage allotment, 
and national average yield goal are determined and announced, the 
Secretary shall provide for the determination of individual tobacco 
production permits, individual acreage limitations, and individual 
marketing limitations under this section for the crop and marketing 
year covered by the determinations.
    ``(f) Assignment of Tobacco Production Permits.--
            ``(1) Limitation to same county.--Each individual tobacco 
        production permit holder shall assign the individual acreage 
        limitation and individual marketing limitation to 1 or more 
        farms located within the county of origin of the individual 
        tobacco production permit.
            ``(2) Filing with county committee.--The assignment of an 
        individual acreage limitation and individual marketing 
        limitation shall not be effective until evidence of the 
        assignment, in such form as required by the Secretary, is filed 
        with and determined by the county committee for the county in 
        which the farm involved is located.
            ``(3) Limitation on tillable cropland.--The total acreage 
        assigned to any farm under this subsection shall not exceed the 
        acreage of cropland on the farm.
    ``(g) Prohibition on Sale or Leasing of Individual Tobacco 
Production Permits.--
            ``(1) In general.--Except as provided in paragraphs (2) and 
        (3), the Secretary shall not permit the sale and transfer, or 
        lease and transfer, of an individual tobacco production permit 
        issued under this section.
            ``(2) Transfer to descendants.--
                    ``(A) Death.--In the case of the death of a person 
                to whom an individual tobacco production permit has 
                been issued under this section, the permit shall 
                transfer to the surviving spouse of the person or, if 
                there is no surviving spouse, to surviving direct 
                descendants of the person.
                    ``(B) Temporary inability to farm.--In the case of 
                the death of a person to whom an individual tobacco 
                production permit has been issued under this section 
                and whose descendants are temporarily unable to produce 
                a crop of tobacco, the Secretary may hold the license 
                in the name of the descendants for a period of not more 
                than 18 months.
            ``(3) Voluntary transfers.--A person that is eligible to 
        obtain an individual tobacco production permit under this 
        section may at any time transfer all or part of the permit to 
        the person's spouse or direct descendants that are actively 
        engaged in the production of tobacco.
    ``(h) Reserve.--
            ``(1) In general.--For each marketing year for which 
        individual tobacco production permits are in effect under this 
        section, the Secretary may establish a reserve from the 
        national marketing quota in a quantity equal to not more than 1 
        percent of the national marketing quota to be available for--
                    ``(A) making corrections of errors in individual 
                acreage limitations and individual marketing 
                limitations;
                    ``(B) adjusting inequities; and
                    ``(C) establishing individual tobacco production 
                permits for new tobacco producers (except that not less 
                than two-thirds of the reserve shall be for 
                establishing such permits for new tobacco producers).
            ``(2) Eligible persons.--To be eligible for a new 
        individual tobacco production permit, a producer must have 
        owned a farm on which tobacco was not produced or considered 
        produced during the immediately preceding 5 years.
            ``(3) Apportionment for new producers.--The part of the 
        reserve held for apportionment to new individual tobacco 
        producers shall be allotted on the basis of--
                    ``(A) land, labor, and equipment available for the 
                production of tobacco;
                    ``(B) crop rotation practices;
                    ``(C) soil and other physical factors affecting the 
                production of tobacco; and
                    ``(D) the past tobacco-producing experience of the 
                producer.
            ``(4) Permit yield.--The permit yield for any producer for 
        which a new individual tobacco production permit is established 
        shall be determined on the basis of available productivity data 
        for the land involved and yields for similar farms in the same 
        county.
    ``(i) Penalties.--
            ``(1) Production on other farms.--If any quantity of 
        tobacco is marketed as having been produced under an individual 
        acreage limitation or individual marketing limitation assigned 
        to a farm but was produced on a different farm, the individual 
        acreage limitation or individual marketing limitation for the 
        following marketing year shall be forfeited.
            ``(2) False report.--If a person to which an individual 
        tobacco production permit is issued files, or aids or 
        acquiesces in the filing of, a false report with respect to the 
        assignment of an individual acreage limitation or individual 
        marketing limitation for a quantity of tobacco, the individual 
        acreage limitation or individual marketing limitation for the 
        following marketing year shall be forfeited.
    ``(j) Marketing Penalties.--
            ``(1) In general.--When individual tobacco production 
        permits under this section are in effect, provisions with 
        respect to penalties for the marketing of excess tobacco and 
        the other provisions contained in section 314 shall apply in 
        the same manner and to the same extent as they would apply 
        under section 317(g) if farm marketing quotas were in effect.
            ``(2) Production on other farms.--If a producer falsely 
        identifies tobacco as having been produced on or marketed from 
        a farm to which an individual acreage limitation or individual 
        marketing limitation has been assigned, future individual 
        acreage limitations and individual marketing limitations shall 
        be forfeited.''.

SEC. 1025. MODIFICATIONS IN FEDERAL TOBACCO PROGRAMS.

    (a) Program Referenda.--Section 312(c) of the Agricultural 
Adjustment Act of 1938 (7 U.S.C. 1312(c)) is amended--
            (1) by striking ``(c) Within thirty'' and inserting the 
        following:
    ``(c) Referenda on Quotas.--
            ``(1) In general.--Not later than 30''; and
            (2) by adding at the end the following:
            ``(2) Referenda on program changes.--
                    ``(A) In general.--In the case of any type of 
                tobacco for which marketing quotas are in effect, on 
                the receipt of a petition from more than 5 percent of 
                the producers of that type of tobacco in a State, the 
                Secretary shall conduct a statewide referendum on any 
                proposal related to the lease and transfer of tobacco 
                quota within a State requested by the petition that is 
                authorized under this part.
                    ``(B) Approval of proposals.--If a majority of 
                producers of the type of tobacco in the State approve a 
                proposal in a referendum conducted under subparagraph 
                (A), the Secretary shall implement the proposal in a 
                manner that applies to all producers and quota holders 
                of that type of tobacco in the State.''.
    (b) Purchase Requirements.--Section 320B of the Agricultural 
Adjustment Act of 1938 (7 U.S.C. 1314h) is amended--
            (1) in subsection (c)--
                    (A) by striking ``(c) The amount'' and inserting 
                ``(c) Amount of Penalty.--For the 1998 and subsequent 
                marketing years, the amount''; and
                    (B) by striking paragraph (1) and inserting the 
                following:
            ``(1) 105 percent of the average market price for the type 
        of tobacco involved during the preceding marketing year; and''; 
        and
            (2) by striking subsection (d) and inserting the following:
    ``(d) Use of Penalty Payments.--An amount equivalent to each 
penalty collected by the Secretary under this section shall be 
transmitted by the Secretary to the Secretary of the Treasury for 
deposit in the Tobacco Community Revitalization Trust Fund established 
under section 1011 of the LEAF Act.''.
    (c) Elimination of Tobacco Marketing Assessment.--
            (1) In general.--Section 106 of the Agricultural Act of 
        1949 (7 U.S.C. 1445) is amended by striking subsection (g).
            (2) Conforming amendment.--Section 422(c) of the Uruguay 
        Round Agreements Act (Public Law 103-465; 7 U.S.C. 1445 note) 
        is amended by striking ``section 106(g), 106A, or 106B of the 
        Agricultural Act of 1949 (7 U.S.C. 1445(g), 1445-1, or 1445-
        2)'' and inserting ``section 106A or 106B of the Agricultural 
        Act of 1949 (7 U.S.C. 1445-1, 1445-2)''.
    (d) Adjustment for Land Rental Costs.--Section 106 of the 
Agricultural Act of 1949 (7 U.S.C. 1445) is amended by adding at the 
end the following:
    ``(h) Adjustment for Land Rental Costs.--For each of the 1999 and 
2000 marketing years for flue-cured tobacco, after consultation with 
producers, State farm organizations and cooperative associations, the 
Secretary shall make an adjustment in the price support level for flue-
cured tobacco equal to the annual change in the average cost per pound 
to flue-cured producers, as determined by the Secretary, under 
agreements through which producers rent land to produce flue-cured 
tobacco.''.
    (e) Fire-Cured and Dark Air-Cured Tobacco Programs.--
            (1) Limitation on transfers.--Section 318(g) of the 
        Agricultural Adjustment Act of 1938 (7 U.S.C. 13l4d(g)) is 
        amended--
                    (A) by striking ``ten'' and inserting ``30''; and
                    (B) by inserting ``during any crop year'' after 
                ``transferred to any farm''.
            (2) Loss of allotment or quota through underplanting.--
        Section 318 of the Agricultural Adjustment Act of 1938 (7 
        U.S.C. 1314d) is amended by adding at the end the following:
    ``(k) Loss of Allotment or Quota Through Underplanting.--Effective 
for the 1999 and subsequent marketing years, no acreage allotment or 
acreage-poundage quota, other than a new marketing quota, shall be 
established for a farm on which no fire-cured or dark air-cured tobacco 
was planted or considered planted during at least 2 of the 3 crop years 
immediately preceding the crop year for which the acreage allotment or 
acreage-poundage quota would otherwise be established.''.
    (f) Expansion of Types of Tobacco Subject to No Net Cost 
Assessment.--
            (1) No net cost tobacco fund.--Section 106A(d)(1)(A) of the 
        Agricultural Act of 1949 (7 U.S.C. 1445-1(d)(1)(A)) is 
        amended--
                    (A) in clause (ii), by inserting after ``Burley 
                quota tobacco'' the following: ``and fire-cured and 
                dark air-cured quota tobacco''; and
                    (B) in clause (iii)--
                            (i) in the matter preceding subclause (I), 
                        by striking ``Flue-cured or Burley tobacco'' 
                        and inserting ``each kind of tobacco for which 
                        price support is made available under this Act, 
                        and each kind of like tobacco,''; and
                            (ii) by striking subclause (II) and 
                        inserting the following:
                                    ``(II) the sum of the amount of the 
                                per pound producer contribution and 
                                purchaser assessment (if any) for the 
                                kind of tobacco payable under clauses 
                                (i) and (ii); and''.
            (2) No net cost tobacco account.--Section 106B(d)(1) of the 
        Agricultural Act of 1949 (7 U.S.C. 1445-2(d)(1)) is amended--
                    (A) in subparagraph (B), by inserting after 
                ``Burley quota tobacco'' the following: ``and fire-
                cured and dark air-cured tobacco''; and
                    (B) in subparagraph (C), by striking ``Flue-cured 
                and Burley tobacco'' and inserting ``each kind of 
                tobacco for which price support is made available under 
                this Act, and each kind of like tobacco,''.

          Subtitle C--Farmer and Worker Transition Assistance

SEC. 1031. TOBACCO WORKER TRANSITION PROGRAM.

    (a) Group Eligibility Requirements.--
            (1) Criteria.--A group of workers (including workers in any 
        firm or subdivision of a firm involved in the manufacture, 
        processing, or warehousing of tobacco or tobacco products) 
        shall be certified as eligible to apply for adjustment 
        assistance under this section pursuant to a petition filed 
        under subsection (b) if the Secretary of Labor determines that 
        a significant number or proportion of the workers in the 
        workers' firm or an appropriate subdivision of the firm have 
        become totally or partially separated, or are threatened to 
        become totally or partially separated, and--
                    (A) the sales or production, or both, of the firm 
                or subdivision have decreased absolutely; and
                    (B) the implementation of the national tobacco 
                settlement contributed importantly to the workers' 
                separation or threat of separation and to the decline 
                in the sales or production of the firm or subdivision.
            (2) Definition of contributed importantly.--In paragraph 
        (1)(B), the term ``contributed importantly'' means a cause that 
        is important but not necessarily more important than any other 
        cause.
            (3) Regulations.--The Secretary shall issue regulations 
        relating to the application of the criteria described in 
        paragraph (1) in making preliminary findings under subsection 
        (b) and determinations under subsection (c).
    (b) Preliminary Findings and Basic Assistance.--
            (1) Filing of petitions.--A petition for certification of 
        eligibility to apply for adjustment assistance under this 
        section may be filed by a group of workers (including workers 
        in any firm or subdivision of a firm involved in the 
        manufacture, processing, or warehousing of tobacco or tobacco 
        products) or by their certified or recognized union or other 
        duly authorized representative with the Governor of the State 
        in which the workers' firm or subdivision thereof is located.
            (2) Findings and assistance.--On receipt of a petition 
        under paragraph (1), the Governor shall--
                    (A) notify the Secretary that the Governor has 
                received the petition;
                    (B) within 10 days after receiving the petition--
                            (i) make a preliminary finding as to 
                        whether the petition meets the criteria 
                        described in subsection (a)(1); and
                            (ii) transmit the petition, together with a 
                        statement of the finding under clause (i) and 
                        reasons for the finding, to the Secretary for 
                        action under subsection (c); and
                    (C) if the preliminary finding under subparagraph 
                (B)(i) is affirmative, ensure that rapid response and 
                basic readjustment services authorized under other 
                Federal laws are made available to the workers.
    (c) Review of Petitions by Secretary; Certifications.--
            (1) In general.--The Secretary, within 30 days after 
        receiving a petition under subsection (b)(2)(B)(ii), shall 
        determine whether the petition meets the criteria described in 
        subsection (a)(1). On a determination that the petition meets 
        the criteria, the Secretary shall issue to workers covered by 
        the petition a certification of eligibility to apply for the 
        assistance described in subsection (d).
            (2) Denial of certification.--On the denial of a 
        certification with respect to a petition under paragraph (1), 
        the Secretary shall review the petition in accordance with the 
        requirements of other applicable assistance programs to 
        determine if the workers may be certified under the other 
        programs.
    (d) Comprehensive Assistance.--
            (1) In general.--Workers covered by a certification issued 
        by the Secretary under subsection (c)(1) shall be provided with 
        benefits and services described in paragraph (2) in the same 
        manner and to the same extent as workers covered under a 
        certification under subchapter A of title II of the Trade Act 
        of 1974 (19 U.S.C. 2271 et seq.), except that the total amount 
        of payments under this section for any fiscal year shall not 
        exceed $25,000,000.
            (2) Benefits and services.--The benefits and services 
        described in this paragraph are the following:
                    (A) Employment services of the type described in 
                section 235 of the Trade Act of 1974 (19 U.S.C. 2295).
                    (B) Training described in section 236 of the Trade 
                Act of 1974 (19 U.S.C. 2296), except that 
                notwithstanding the provisions of section 236(a)(2)(A) 
                of that Act, the total amount of payments for training 
                under this section for any fiscal year shall not exceed 
                $12,500,000.
                    (C) Tobacco worker readjustment allowances, which 
                shall be provided in the same manner as trade 
                readjustment allowances are provided under part I of 
                subchapter B of chapter 2 of title II of the Trade Act 
                of 1974 (19 U.S.C. 2291 et seq.), except that--
                            (i) the provisions of sections 231(a)(5)(C) 
                        and 231(c) of that Act (19 U.S.C. 
                        2291(a)(5)(C), 2291(c)), authorizing the 
                        payment of trade readjustment allowances on a 
                        finding that it is not feasible or appropriate 
                        to approve a training program for a worker, 
                        shall not be applicable to payment of 
                        allowances under this section; and
                            (ii) notwithstanding the provisions of 
                        section 233(b) of that Act (19 U.S.C. 2293(b)), 
                        in order for a worker to qualify for tobacco 
                        readjustment allowances under this section, the 
                        worker shall be enrolled in a training program 
                        approved by the Secretary of the type described 
                        in section 236(a) of that Act (19 U.S.C. 
                        2296(a)) by the later of--
                                    (I) the last day of the 16th week 
                                of the worker's initial unemployment 
                                compensation benefit period; or
                                    (II) the last day of the 6th week 
                                after the week in which the Secretary 
                                issues a certification covering the 
                                worker.
                        In cases of extenuating circumstances relating 
                        to enrollment of a worker in a training program 
                        under this section, the Secretary may extend 
                        the time for enrollment for a period of not to 
                        exceed 30 days.
                    (D) Job search allowances of the type described in 
                section 237 of the Trade Act of 1974 (19 U.S.C. 2297).
                    (E) Relocation allowances of the type described in 
                section 238 of the Trade Act of 1974 (19 U.S.C. 2298).
    (e) Ineligibility of Individuals Receiving Payments for Lost 
Tobacco Quota.--No benefits or services may be provided under this 
section to any individual who has received payments for lost tobacco 
quota under section 1021.
    (f) Funding.--Of the amounts in the Trust Fund, the Secretary may 
use not to exceed $25,000,000 for each of fiscal years 1999 through 
2008 to provide assistance under this section.
    (g) Effective Date.--This section shall take effect on the date 
that is the later of--
            (1) October l, 1998; or
            (2) the date of enactment of this Act.
    (h) Termination Date.--No assistance, vouchers, allowances, or 
other payments may be provided under this section after the date that 
is the earlier of--
            (1) the date that is 10 years after the effective date of 
        this section under subsection (g); or
            (2) the date on which legislation establishing a program 
        providing dislocated workers with comprehensive assistance 
        substantially similar to the assistance provided by this 
        section becomes effective.

SEC. 1032. FARMER OPPORTUNITY GRANTS.

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

                 ``Subpart 9--Farmer Opportunity Grants

``SEC. 420D. STATEMENT OF PURPOSE.

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

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

    ``(a) Program Authority and Method of Distribution.--
            ``(1) Program authority.--From amounts made available under 
        section 1011(d)(5) of the LEAF Act, the Secretary, during the 
        period beginning July 1, 1999, and ending September 30, 2024, 
        shall pay to each eligible institution such sums as may be 
        necessary to pay to each eligible student (determined in 
        accordance with section 420F) for each academic year during 
        which that student is in attendance at an institution of higher 
        education, as an undergraduate, a farmer opportunity grant in 
        the amount for which that student is eligible, as determined 
        pursuant to subsection (b). Not less than 85 percent of the 
        sums shall be advanced to eligible institutions prior to the 
        start of each payment period and shall be based on an amount 
        requested by the institution as needed to pay eligible 
        students, except that this sentence shall not be construed to 
        limit the authority of the Secretary to place an institution on 
        a reimbursement system of payment.
            ``(2) Construction.--Nothing in this section shall be 
        construed to prohibit the Secretary from paying directly to 
        students, in advance of the beginning of the academic term, an 
        amount for which the students are eligible, in cases where the 
        eligible institution elects not to participate in the 
        disbursement system required by paragraph (1).
            ``(3) Designation.--Grants made under this subpart shall be 
        known as `farmer opportunity grants'.
    ``(b) Amount of Grants.--
            ``(1) Amounts.--
                    ``(A) In general.--The amount of the grant for a 
                student eligible under this subpart shall be--
                            ``(i) $1,700 for each of the academic years 
                        1999-2000 through 2003-2004;
                            ``(ii) $2,000 for each of the academic 
                        years 2004-2005 through 2008-2009;
                            ``(iii) $2,300 for each of the academic 
                        years 2009-2010 through 2013-2014;
                            ``(iv) $2,600 for each of the academic 
                        years 2014-2015 through 2018-2019; and
                            ``(v) $2,900 for each of the academic years 
                        2019-2020 through 2023-2024.
                    ``(B) Part-time rule.--In any case where a student 
                attends an institution of higher education on less than 
                a full-time basis (including a student who attends an 
                institution of higher education on less than a half-
                time basis) during any academic year, the amount of the 
                grant for which that student is eligible shall be 
                reduced in proportion to the degree to which that 
                student is not so attending on a full-time basis, in 
                accordance with a schedule of reductions established by 
                the Secretary for the purposes of this subparagraph, 
                computed in accordance with this subpart. The schedule 
                of reductions shall be established by regulation and 
                published in the Federal Register.
            ``(2) Maximum.--No grant under this subpart shall exceed 
        the cost of attendance (as described in section 472) at the 
        institution at which that student is in attendance. If, with 
        respect to any student, it is determined that the amount of a 
        grant exceeds the cost of attendance for that year, the amount 
        of the grant shall be reduced to an amount equal to the cost of 
        attendance at the institution.
            ``(3) Prohibition.--No grant shall be awarded under this 
        subpart to any individual who is incarcerated in any Federal, 
        State, or local penal institution.
    ``(c) Period of Eligibility for Grants.--
            ``(1) In general.--The period during which a student may 
        receive grants shall be the period required for the completion 
        of the first undergraduate baccalaureate course of study being 
        pursued by that student at the institution at which the student 
        is in attendance, except that any period during which the 
        student is enrolled in a noncredit or remedial course of study 
        as described in paragraph (2) shall not be counted for the 
        purpose of this paragraph.
            ``(2) Construction.--Nothing in this section shall be 
        construed to--
                    ``(A) exclude from eligibility courses of study 
                that are noncredit or remedial in nature and that are 
                determined by the institution to be necessary to help 
                the student be prepared for the pursuit of a first 
                undergraduate baccalaureate degree or certificate or, 
                in the case of courses in English language instruction, 
                to be necessary to enable the student to utilize 
                already existing knowledge, training, or skills; and
                    ``(B) exclude from eligibility programs of study 
                abroad that are approved for credit by the home 
                institution at which the student is enrolled.
            ``(3) Prohibition.--No student is entitled to receive 
        farmer opportunity grant payments concurrently from more than 1 
        institution or from the Secretary and an institution.
    ``(d) Applications for Grants.--
            ``(1) In general.--The Secretary shall from time to time 
        set dates by which students shall file applications for grants 
        under this subpart. The filing of applications under this 
        subpart shall be coordinated with the filing of applications 
        under section 401(c).
            ``(2) Information and assurances.--Each student desiring a 
        grant for any year shall file with the Secretary an application 
        for the grant containing such information and assurances as the 
        Secretary may deem necessary to enable the Secretary to carry 
        out the Secretary's functions and responsibilities under this 
        subpart.
    ``(e) Distribution of Grants to Students.--Payments under this 
section shall be made in accordance with regulations promulgated by the 
Secretary for such purpose, in such manner as will best accomplish the 
purpose of this section. Any disbursement allowed to be made by 
crediting the student's account shall be limited to tuition and fees 
and, in the case of institutionally owned housing, room and board. The 
student may elect to have the institution provide other such goods and 
services by crediting the student's account.
    ``(f) Insufficient Funding.--If, for any fiscal year, the funds 
made available to carry out this subpart from the Tobacco Community 
Revitalization Trust Fund are insufficient to satisfy fully all grants 
for students determined to be eligible under section 420F, the amount 
of the grant provided under subsection (b) shall be reduced on a pro 
rata basis among all eligible students.
    ``(g) Treatment of Institutions and Students Under Other Laws.--Any 
institution of higher education that enters into an agreement with the 
Secretary to disburse to students attending that institution the 
amounts those students are eligible to receive under this subpart shall 
not be deemed, by virtue of the agreement, to be a contractor 
maintaining a system of records to accomplish a function of the 
Secretary. Recipients of farmer opportunity grants shall not be 
considered to be individual grantees for purposes of the Drug-Free 
Workplace Act of 1988 (41 U.S.C. 701 et seq.).

``SEC. 420F. STUDENT ELIGIBILITY.

    ``(a) In General.--In order to receive any grant under this 
subpart, a student shall--
            ``(1) be a member of a tobacco farm family in accordance 
        with subsection (b);
            ``(2) be enrolled or accepted for enrollment in a degree, 
        certificate, or other program (including a program of study 
        abroad approved for credit by the eligible institution at which 
        the student is enrolled) leading to a recognized educational 
        credential at an institution of higher education that is an 
        eligible institution in accordance with section 487, and not be 
        enrolled in an elementary or secondary school;
            ``(3) if the student is presently enrolled at an 
        institution of higher education, be maintaining satisfactory 
        progress in the course of study the student is pursuing in 
        accordance with subsection (c);
            ``(4) not owe a refund on grants previously received at any 
        institution of higher education under this title, or be in 
        default on any loan from a student loan fund at any institution 
        provided for in part D, or a loan made, insured, or guaranteed 
        by the Secretary under this title for attendance at any 
        institution;
            ``(5) file with the institution of higher education that 
        the student intends to attend, or is attending, a document, 
        that need not be notarized, but that shall include--
                    ``(A) a statement of educational purpose stating 
                that the money attributable to the grant will be used 
                solely for expenses related to attendance or continued 
                attendance at the institution; and
                    ``(B) the student's social security number; and
            ``(6) be a citizen of the United States.
    ``(b) Tobacco Farm Families.--
            ``(1) In general.--For the purpose of subsection (a)(1), a 
        student is a member of a tobacco farm family if during calendar 
        year 1998 the student was--
                    ``(A) an individual who--
                            ``(i) is a participating tobacco producer 
                        (as defined in section 1002 of the LEAF Act); 
                        or
                            ``(ii) is otherwise actively engaged in the 
                        production of tobacco;
                    ``(B) a spouse, son, daughter, stepson, or 
                stepdaughter of an individual described in subparagraph 
                (A);
                    ``(C) an individual--
                            ``(i) who was a brother, sister, 
                        stepbrother, stepsister, son-in-law, or 
                        daughter-in-law of an individual described in 
                        subparagraph (A); and
                            ``(ii) whose principal place of residence 
                        was the home of the individual described in 
                        subparagraph (A); or
                    ``(D) an individual who was a dependent (within the 
                meaning of section 152 of the Internal Revenue Code of 
                1986) of an individual described in subparagraph (A).
            ``(2) Administration.--On request, the Secretary of 
        Agriculture shall provide to the Secretary such information as 
        is necessary to carry out this subsection.
    ``(c) Satisfactory Progress.--
            ``(1) In general.--For the purpose of subsection (a)(3), a 
        student is maintaining satisfactory progress if--
                    ``(A) the institution at which the student is in 
                attendance reviews the progress of the student at the 
                end of each academic year, or its equivalent, as 
                determined by the institution; and
                    ``(B) the student has at least a cumulative C 
                average or its equivalent, or academic standing 
                consistent with the requirements for graduation, as 
                determined by the institution, at the end of the second 
                such academic year.
            ``(2) Special rule.--Whenever a student fails to meet the 
        eligibility requirements of subsection (a)(3) as a result of 
        the application of this subsection and subsequent to that 
        failure the student has academic standing consistent with the 
        requirements for graduation, as determined by the institution, 
        for any grading period, the student may, subject to this 
        subsection, again be eligible under subsection (a)(3) for a 
        grant under this subpart.
            ``(3) Waiver.--Any institution of higher education at which 
        the student is in attendance may waive paragraph (1) or (2) for 
        undue hardship based on--
                    ``(A) the death of a relative of the student;
                    ``(B) the personal injury or illness of the 
                student; or
                    ``(C) special circumstances as determined by the 
                institution.
    ``(d) Students Who Are Not Secondary School Graduates.--In order 
for a student who does not have a certificate of graduation from a 
school providing secondary education, or the recognized equivalent of 
the certificate, to be eligible for any assistance under this subpart, 
the student shall meet either 1 of the following standards:
            ``(1) Examination.--The student shall take an independently 
        administered examination and shall achieve a score, specified 
        by the Secretary, demonstrating that the student can benefit 
        from the education or training being offered. The examination 
        shall be approved by the Secretary on the basis of compliance 
        with such standards for development, administration, and 
        scoring as the Secretary may prescribe in regulations.
            ``(2) Determination.--The student shall be determined as 
        having the ability to benefit from the education or training in 
        accordance with such process as the State shall prescribe. Any 
        such process described or approved by a State for the purposes 
        of this section shall be effective 6 months after the date of 
        submission to the Secretary unless the Secretary disapproves 
        the process. In determining whether to approve or disapprove 
        the process, the Secretary shall take into account the 
        effectiveness of the process in enabling students without 
        secondary school diplomas or the recognized equivalent to 
        benefit from the instruction offered by institutions utilizing 
        the process, and shall also take into account the cultural 
        diversity, economic circumstances, and educational preparation 
        of the populations served by the institutions.
    ``(e) Special Rule for Correspondence Courses.--A student shall not 
be eligible to receive a grant under this subpart for a correspondence 
course unless the course is part of a program leading to an associate, 
bachelor, or graduate degree.
    ``(f) Courses Offered Through Telecommunications.--
            ``(1) Relation to correspondence courses.--A student 
        enrolled in a course of instruction at an eligible institution 
        of higher education (other than an institute or school that 
        meets the definition in section 521(4)(C) of the Carl D. 
        Perkins Vocational and Applied Technology Education Act (20 
        U.S.C. 2471(4)(C))) that is offered in whole or in part through 
        telecommunications and leads to a recognized associate, 
        bachelor, or graduate degree conferred by the institution shall 
        not be considered to be enrolled in correspondence courses 
        unless the total amount of telecommunications and 
        correspondence courses at the institution equals or exceeds 50 
        percent of the courses.
            ``(2) Restriction or reductions of financial aid.--A 
        student's eligibility to receive a grant under this subpart may 
be reduced if a financial aid officer determines under the 
discretionary authority provided in section 479A that 
telecommunications instruction results in a substantially reduced cost 
of attendance to the student.
            ``(3) Definition.--For the purposes of this subsection, the 
        term `telecommunications' means the use of television, audio, 
        or computer transmission, including open broadcast, closed 
        circuit, cable, microwave, or satellite, audio conferencing, 
        computer conferencing, or video cassettes or discs, except that 
        the term does not include a course that is delivered using 
        video cassette or disc recordings at the institution and that 
        is not delivered in person to other students of that 
        institution.
    ``(g) Study Abroad.--Nothing in this subpart shall be construed to 
limit or otherwise prohibit access to study abroad programs approved by 
the home institution at which a student is enrolled. An otherwise 
eligible student who is engaged in a program of study abroad approved 
for academic credit by the home institution at which the student is 
enrolled shall be eligible to receive a grant under this subpart, 
without regard to whether the study abroad program is required as part 
of the student's degree program.
    ``(h) Verification of Social Security Number.--The Secretary, in 
cooperation with the Commissioner of Social Security, shall verify any 
social security number provided by a student to an eligible institution 
under subsection (a)(5)(B) and shall enforce the following conditions:
            ``(1) Pending verification.--Except as provided in 
        paragraphs (2) and (3), an institution shall not deny, reduce, 
        delay, or terminate a student's eligibility for assistance 
        under this subpart because social security number verification 
        is pending.
            ``(2) Denial or termination.--If there is a determination 
        by the Secretary that the social security number provided to an 
        eligible institution by a student is incorrect, the institution 
        shall deny or terminate the student's eligibility for any grant 
        under this subpart until such time as the student provides 
        documented evidence of a social security number that is 
        determined by the institution to be correct.
            ``(3) Construction.--Nothing in this subsection shall be 
        construed to permit the Secretary to take any compliance, 
        disallowance, penalty, or other regulatory action against--
                    ``(A) any institution of higher education with 
                respect to any error in a social security number, 
                unless the error was a result of fraud on the part of 
                the institution; or
                    ``(B) any student with respect to any error in a 
                social security number, unless the error was a result 
                of fraud on the part of the student.''.

                          Subtitle D--Immunity

SEC. 1041. GENERAL IMMUNITY FOR TOBACCO PRODUCERS AND TOBACCO WAREHOUSE 
              OWNERS.

    Notwithstanding any other provision of this title, a participating 
tobacco producer, tobacco-related growers association, or tobacco 
warehouse owner or employee may not be subject to liability in any 
Federal or State court for any cause of action resulting from the 
failure of any tobacco product manufacturer, distributor, or retailer 
to comply with the National Tobacco Policy and Youth Smoking Reduction 
Act.

                        TITLE XI--MISCELLANEOUS

   Subtitle A--Prohibitions Relating to Tobacco Products and Children

SEC. 1101. SHORT TITLE.

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

SEC. 1102. PROHIBITIONS RELATING TO TOBACCO PRODUCTS AND CHILDREN.

    Chapter VIII of the Federal Food, Drug, and Cosmetic Act is amended 
by adding at the end the following:

``SEC. 804. PROHIBITION ON SALE OR DISTRIBUTION OF TOBACCO PRODUCTS TO 
              CHILDREN.

    ``(a) General Rule.--It shall be unlawful for any domestic concern 
or any officer, director, employee, or agent of such concern to make 
use of the mails or any means or instrumentality of interstate commerce 
to cause or contribute, either directly or through a foreign 
subsidiary, joint venture, affiliate, or licensee, to--
            ``(1) the sale or distribution of tobacco products in a 
        foreign country to children; or
            ``(2) the advertising or promotion of tobacco products in a 
        foreign country in a manner that does not comply with Federal 
        requirements for the advertisement or promotion of tobacco 
        products in the United States
    ``(b) Defense.--In an action brought to enforce subsection (a), it 
shall be an affirmative defense that the tobacco products involved were 
sold, distributed, advertised, or promoted in the foreign country 
involved in a manner that would be lawful if such conduct occurred in 
the United States.

``SEC. 805. LABELING.

    ``It shall be unlawful for any domestic concern or any officer, 
director, employee, or agent of such concern, either directly or 
through a foreign subsidiary, joint venture, affiliate, or licensee, to 
make use of the mails or any means or instrumentality of interstate 
commerce to cause or contribute to the export from the United States or 
the sale or distribution in, or export from, any other country any 
tobacco product the package of which does not contain a warning label 
that--
            ``(1) is in the primary language or languages of the 
        country in which the tobacco product is sold or distributed to 
        consumers; and
            ``(2) except for the requirement of paragraph (1)--
                    ``(A) complies with Federal requirements for 
                labeling of similar tobacco products manufactured, 
                imported, or packaged for sale or distribution in the 
                United States; or
                    ``(B) complies with the labeling requirements of 
                the foreign country in which the product is sold or 
                distributed to consumers and which labeling 
                requirements the Secretary determines are substantially 
                similar to Federal requirements and are adequately 
                enforced by such country.''.

SEC. 1103. ENFORCEMENT.

    Section 301 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
331) is amended by adding at the end the following:
    ``(aa) To carry out an act made unlawful by section 804 or 805.''.

SEC. 1104. REWARD.

    Section 303(b)(5) of the Federal Food, Drug, and Cosmetic Act (21 
U.S.C. 333(b)(5)) is amended by adding at the end the following: ``If a 
person provides information leading to the institution of a criminal 
proceeding against, and conviction of, a person for a violation of 
section 301(aa), such person shall be entitled to one-half of the 
criminal fine imposed and collected for such violation but not more 
than $125,000.''.

SEC. 1105. DEFINITIONS.

    Section 201 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
321), as amended by section 101(a) of this Act is amended by adding at 
the end the following:
    ``(ll) The term `domestic concern' means--
            ``(1) any individual who is a citizen, national, or 
        resident of the United States; and
            ``(2) any corporation, partnership, association, joint-
        stock company, business trust, unincorporated organization, or 
        sole proprietorship which has its principal place of business 
        in the United States or which is organized under the laws of a 
        State of the United States or a territory, possession, or 
        commonwealth of the United States.
    ``(mm) The term `children' means individuals under the age of 
18.''.

SEC. 1106. AMENDMENTS TO PUBLIC HEALTH SERVICE ACT.

    (a) In General.--The Public Health Service Act (42 U.S.C. 201 et 
seq.) is amended by adding at the end the following:

        ``TITLE XXVIII--NATIONAL EFFORTS TO REDUCE YOUTH SMOKING

   ``Subtitle E--Reducing Youth Smoking and Tobacco-Related Diseases 
                            Through Research

``SEC. 2801. STUDY BY THE INSTITUTE OF MEDICINE.

    ``(a) Contract.--Not later than 60 days after the date of enactment 
of the National Tobacco Policy and Youth Smoking Reduction Act, the 
Secretary shall enter into a contract with the Institute of Medicine 
for the conduct of a study on the framework for a research agenda and 
research priorities to be used by the National Tobacco Task Force 
established under section 2802.
    ``(b) Considerations.--
            ``(1) In general.--In developing the framework for the 
        research agenda and research priorities under subsection (a) 
        the Institute of Medicine shall focus on increasing knowledge 
        concerning the biological, social, behavioral, public health, 
        and community factors involved in the prevention of tobacco 
        use, reduction of tobacco use, and health consequences of 
        tobacco use.
            ``(2) Specific considerations.--In the study conducted 
        under subsection (a), the Institute of Medicine shall 
        specifically consider--
                    ``(A) public health and community research relating 
                to tobacco use prevention methods, including public 
                education, media, community strategies;
                    ``(B) behavioral research relating to addiction and 
                tobacco use;
                    ``(C) health services research relating to tobacco 
                product prevention and cessation treatment 
                methodologies;
                    ``(D) surveillance and epidemiology research 
                relating to tobacco;
                    ``(E) biomedical, including clinical, research 
                relating to prevention and treatment of tobacco-related 
                diseases; and
                    ``(F) economic research relating to the 
                responsiveness of youth smoking to price and other 
                economic factors.
    ``(c) Report.--Not later than 10 months after the date on which the 
Secretary enters into the contract under subsection (a), the Institute 
of Medicine shall prepare and submit to the Secretary, the National 
Task Force, the Committee on Labor and Human Resources of the Senate, 
and the Committee on Commerce of the House of Representatives, a report 
that shall contain the findings and recommendations of the Institute 
for the purposes described in subsection (b).
    ``(d) Authorization of Appropriations.--There are authorized to be 
appropriated $750,000 to carry out this section.

``SEC. 2802. NATIONAL TOBACCO TASK FORCE.

    ``(a) Establishment.--The Secretary shall establish a National 
Tobacco Task Force (referred to in this subtitle as the `National Task 
Force') to foster coordination among public health agencies, academic 
bodies, and community groups that conduct or support tobacco-related 
biomedical, clinical, behavioral, health services, public health and 
community, and surveillance and epidemiology research activities.
    ``(b) Composition.--The National Task Force shall be composed of--
            ``(1) the Surgeon General;
            ``(2) the Director of the Office of Smoking and Health of 
        the Centers for Disease Control and Prevention;
            ``(3) the Administrator of the Agency for Health Care 
        Policy and Research;
            ``(4) the Director of the National Institutes of Health;
            ``(5) two representatives from non-governmental public 
        health or tobacco control organizations; and
            ``(6) two representatives from State or local government 
        public health agencies and offices.
    ``(c) Chair.--The National Task Force shall be chaired by the 
Secretary, and shall be staffed by the Centers for Disease Control and 
Prevention.
    ``(d) Duties.--The Task Force shall--
            ``(1) in accordance with research agenda recommended under 
        section 2801, coordinate and advise tobacco-related research 
        activities among Federal public health service agencies;
            ``(2) collect and make available to States and communities, 
        through publication and other appropriate means, evidence-based 
        tobacco-related research results and recommendations and the 
        practical application of such results; and
            ``(3) report on a biennial basis to the Secretary and the 
        Committee on Labor and Human Resources of the Senate, and the 
        Committee on Commerce of the House of Representatives on the 
        current and planned activities of participating Federal 
        agencies;
    ``(e) Research Activities.--The research activities referred to in 
subsection (a) shall be designed to address tobacco-related research 
priorities, and shall include--
            ``(1) the development of effective strategies to prevent 
        the use of tobacco products among youth;
            ``(2) an outline of cost-effective, accessible, and 
        successful methods for tobacco use cessation among adults and 
        youths who want to quit;
            ``(3) the development of breakthroughs in the understanding 
        of the effects on the human body of nicotine and other non-
        tobacco constituents of tobacco products; and
            ``(4) the development of an enhanced ability to prevent and 
        treat tobacco-related diseases.

``SEC. 2803. RESEARCH ACTIVITIES OF THE CENTERS FOR DISEASE CONTROL AND 
              PREVENTION.

    ``(a) Funding.--There are authorized to be appropriated from the 
National Tobacco Settlement Trust Fund established by section 401 of 
the National Tobacco Policy and Youth Smoking Reduction Act, other than 
from amounts in the State Litigation Settlement Account, the following 
amounts to carry out this section--
            ``(1) $450,000,000 for each of the first 3 fiscal years 
        after the date of enactment of the National Tobacco Policy and 
        Youth Smoking Reduction Act;
            ``(2) $505,000,000 for each of the 4th and 5th fiscal years 
        after that date;
            ``(3) $405,000,000 for each of the 6th and 7th fiscal years 
        after that date;
            ``(4) $360,000,000 for each of the 8th and 9th fiscal years 
        after that date; and
            ``(5) $305,000,000 for the 10th fiscal year after that 
        date.
    ``(b) Duties.--The Director of the Centers for Disease Control and 
Prevention, working in consultation with National Task Force, shall 
carry out tobacco-related surveillance and epidemiologic studies and 
develop tobacco control and prevention strategies under this section.
    ``(c) Trigger.--No expenditures shall be made under this section 
during any fiscal year in which the annual amount appropriated for the 
Centers for Disease Control and Prevention is less than the amount so 
appropriated for the prior fiscal year.

``SEC. 2804. RESEARCH ACTIVITIES OF THE NATIONAL INSTITUTES OF HEALTH.

    ``(a) Funding.--There are authorized to be appropriated, from 
amounts in the National Tobacco Settlement Trust Fund established by 
section 401 of the National Tobacco Policy and Youth Smoking Reduction 
Act, other than from amounts in the State Litigation Settlement 
Account, to carry out this section $2,500,000,000 for each of the 
fiscal years 1999 through 2008.
    ``(b) Establishment.--The Secretary shall establish, within the 
Office of the Director of the National Institutes of Health, a Tobacco-
Related Research Initiative (referred to in this section as the 
`tobacco initiative') to be headed by the Director.
    ``(c) Expenditure of Funds.--The Director of the National 
Institutes of Health acting through the tobacco initiative, and in 
consultation with the National Tobacco Task Force, shall provide funds 
to conduct or support epidemiological, behavioral, biomedical, and 
social science research (including the training of researchers) related 
to the prevention and treatment of tobacco addiction, and the 
prevention and treatment of diseases associated with tobacco use.
    ``(d) Guaranteed Minimum.--Of the funds made available to the 
National Institutes of Health under this section, not less than 33 
percent of such funds shall be used to support epidemiological, 
behavioral, and social science research related to the prevention and 
treatment of tobacco addiction.
    ``(e) Limitation.--Except as may be necessary to study one of the 
specific purposes described in subsection (f), funds made available 
under subsection (d) shall not be used to support neurobiological 
research, or research in which the behavior of an organism is observed 
for the purpose of determining activity at the cellular or molecular 
level.
    ``(f) Nature of Research.--Funds made available under subsection 
(d) shall be used to conduct or support research with respect to one or 
more of the following--
            ``(1) the epidemiology of tobacco use;
            ``(2) the etiology of tobacco use;
            ``(3) risk factors for tobacco use by children;
            ``(4) prevention of tobacco use by children, including 
        school and community-based programs, and alternative 
        activities;
            ``(5) the relationship between tobacco use, alcohol abuse 
        and illicit drug abuse;
            ``(6) behavioral and pharmacological smoking cessation 
        methods and technologies, including relapse prevention;
            ``(7) the toxicity of tobacco products and their 
        ingredients;
            ``(8) the relative harmfulness of different tobacco 
        products;
            ``(9) environmental exposure to tobacco smoke;
            ``(10) the impact of tobacco use by pregnant women on their 
        fetuses; and
            ``(11) the redesign of tobacco products to reduce risks to 
        public health and safety.
    ``(g) Coordination.--In carrying out tobacco-related research under 
this section, the Director of the National Institutes of Health, in 
coordination with the National Tobacco Task Force, shall ensure 
appropriate coordination with the research of other agencies, and shall 
avoid duplicative efforts through all appropriate means, including 
through the establishment of an Office of Tobacco-Related Research.
    ``(h) Office of Tobacco-Related Research.--
            ``(1) Establishment.--There is established within the 
        National Institutes of Health and Office of Tobacco-Related 
        Research (referred to in this subsection as the `Office'). The 
        Office shall be headed by a director to be appointed by the 
        Secretary.
            ``(2) Duties.--The director of the Office shall--
                    ``(A) in coordination with the National Tobacco 
                Task Force, identify tobacco-related research projects 
                that should be conducted or supported by the research 
                institutes, and develop such projects in cooperation 
                with such institutes;
                    ``(B) coordinate tobacco-related research that is 
                conducted or supported by the National Institutes of 
                Health;
                    ``(C) through the activities of the National 
                Tobacco Task Force, take steps to further cooperation 
                and collaboration between the institutes of the 
                National Institutes of Health and other Federal 
                agencies with respect to tobacco-related research 
                conducted or supported by such agencies;
                    ``(D) ensure compliance with the funding levels 
                described in subsection (d) and the limitation 
                described in subsection (e);
                    ``(E) annually recommend to Congress the allocation 
                of anti-tobacco research funds among the national 
                research institutes; and
                    ``(F) establish a clearinghouse for information 
                about tobacco-related research conducted by 
                governmental and non-governmental bodies.
            ``(3) Administration.--The Director of the National 
        Institutes of Health shall set-aside not less than 1 percent 
        and not more than 3 percent of the funds made available under 
        subsection (d) to administer the Office.
    ``(i) Trigger.--No expenditure shall be made under subsection (a) 
during any fiscal year in which the annual amount appropriated for the 
National Institutes of Health is less than the amount so appropriated 
for the prior fiscal year.''.
    (b) Research on Minority Smoking and Tobacco-Related Diseases.--
    Section 1707(b) of the Public Health Service Act (42 U.S.C. 300u-
6(b)) is amended by striking ``(b) Duties.--The Secretary'' and 
inserting the following:
    ``(b) Duties.--
            ``(1) In general.--
                    ``(A) Interagency coordination.--With respect to 
                minority health activities of the Public Health 
                Service, and the National Institutes of Health, a 
                representative of the Office of Minority Health within 
                the Department of Health and Human Services, a 
                representative of the Office of Minority Health within 
                the National Institutes of Health, and a representative 
                of the Surgeon General shall--
                            ``(i) seek to assure coordination of 
                        research, service delivery and inclusion of 
                        community-based organizations related to 
                        tobacco-related diseases, prevention, and 
                        cessation programs for ethnic, socio-economic 
                        and culturally-diverse populations;
                            ``(ii) monitor and report to Congress 
                        biannually the amount of Federal funds targeted 
                        for research related to minority tobacco-
                        related diseases, research into effective 
                        smoking cessation programs that are culturally 
                        and linguistically appropriate, health service 
                        delivery, and for community-based organizations 
                        providing smoking prevention and cessation 
                        services, and report biannually to the Congress 
                        the demonstrated effectiveness of these 
                        programs.''.
    (c) Medicaid Coverage of Outpatient Smoking Cessation Agents.--
Paragraph (2) of section 1927(d) of the Public Health Service Act (42 
U.S.C. 1396r-8(d)) is amended--
            (1) by striking subparagraph (E) and redesignating 
        subparagraphs (F) through (J) as subparagraphs (E) through (I); 
        and
            (2) by striking ``drugs.'' in subparagraph (F), as 
        redesignated, and inserting ``drugs, except agents, approved by 
        the Food and Drug Administration, when used to promote smoking 
        cessation.''.

SEC. 1107. BAN ON DISTRIBUTION OF TOBACCO PRODUCTS PRODUCED BY CHILD 
              LABOR.

    Section 307 of the Tariff Act of 1930 (19 U.S.C. 1307) is amended 
by inserting after ``United States.'' the following: ``The provisions 
of this section apply with equal force to tobacco products produced or 
manufactured wholly or in part in any foreign country by child 
labor.''.

     Subtitle B--Federal Licensing of Tobacco Product Distribution

SEC. 1121. LICENSING OF TOBACCO PRODUCT DISTRIBUTION.

    (a) In General.--Except for any retailer licensed under section 224 
of this Act, no domestic concern may engage in the manufacture, or 
distribution of tobacco products for sale, in the United States more 
than 1 year after the date of enactment of this Act, either directly or 
through its foreign subsidiaries, affiliates, joint ventures, or 
licensees, unless it is licensed to do so by the Secretary.
    (b) Fee.--
            (1) In general.--The annual license fee shall be $1 per 
        every 1000 cigarettes manufactured, or distributed for sale, by 
        a domestic concern either directly or through its foreign 
        subsidiaries, affiliates, joint ventures, or licensees and an 
        equivalent amount, as established by the Secretary, for other 
        tobacco products.
            (2) Credit.--In any year, a domestic concern shall receive 
        as a credit towards that portion of its license fee under 
        clause (i) which is attributable to the manufacture of tobacco 
        products subject to the Federal excise tax under section 5701 
        of the Internal Revenue Code of 1986 the amount of tax it paid 
        under that section.
    (c) Regulations.--Within 6 months after the date of the enactment 
of this Act, the Secretary shall promulgate regulations to implement 
the requirements of this section.
    (d) Penalty.--Any domestic concern which engages in the manufacture 
of cigarettes or other tobacco products either directly or through its 
foreign subsidiaries, affiliates, joint ventures, or licensees without 
the license required by subsection (a) shall be considered to have 
committed a prohibited act under section 301 of the Federal Food, Drug, 
and Cosmetic Act (21 U.S.C. 331).
    (e) Domestic Concern Defined.--For purposes of this section, the 
term ``domestic concern'' means--
            (1) any individual who is a citizen, national, or resident 
        of the United States;
            (2) any corporation, partnership, association, joint-stock 
        company, business trust, unincorporated organization, or sole 
        proprietorship which has its principal place of business in the 
        United States or which is organized under the laws of a State 
        of the United States or a territory, possession, or 
        commonwealth of the United States; and
            (3) includes any person engaged in the manufacture, or 
        distribution for sale, of cigarettes or other tobacco products 
        on Indian lands.

                  Subtitle C--International Provisions

SEC. 1131. INTERNATIONAL TOBACCO CONTROL TRUST FUND.

    (a) Establishment.--There is established in the Treasury an 
International Tobacco Control Trust Fund (referred to as the 
``International Trust Fund'') which shall be funded by the license fees 
collected under section 1121.
    (b) Use of International Trust Fund.--Funds from the International 
Trust Fund shall be available for use as follows:
            (1) American center on global health and tobacco.--Annual 
        funds of $150,000,000 may be used from the International Trust 
        Fund for the American Center on Global Health and Tobacco as 
        provided in appropriation Acts.
            (2) Health and human services.--The Secretary of Health and 
        Human Services may use the funds deposited in the International 
        Trust Fund for grants and other forms of assistance to foreign 
        governments, nongovernmental organizations, and international 
        organizations to support tobacco control activities in foreign 
        countries as provided in appropriation Acts.
            (3) Enforcement.--The Secretary may use funds deposited in 
        the International Trust Fund for enforcement of any 
        requirements related to the sale, distribution, marketing, or 
        promotion of tobacco products internationally as provided in 
        appropriation Acts.

SEC. 1132. AMERICAN CENTER ON GLOBAL HEALTH AND TOBACCO.

    (a) Findings and Purpose.--
            (1) Findings.--Congress makes the following findings:
                    (A) Tobacco use is estimated to have caused nearly 
                3,000,000 deaths a year worldwide in the early 1990's, 
                and is projected to cause in excess of 10,000,000 
                additional deaths a year globally by 2030, more than 
                any single disease. More than 70 percent of those 
                deaths are expected in developing countries.
                    (B) Many countries are unprepared to address 
                increases in tobacco deaths, including the impact on 
                health systems and health costs. While tobacco 
                consumption in the United States and other established 
                market economies has fallen over the last decade, 
                consumption is rising in China, India, East Asia, and 
                former socialist economies. Tobacco companies in the 
                United States and elsewhere have increasingly targeted 
                those markets.
                    (C) Tobacco use markedly reduces good health and 
                threatens to erode the major health gains in life 
                expectancy of the last century. Only HIV/AIDS infection 
                and tobacco are large and growing causes of death and 
                disease worldwide. The total projected deaths from 
                tobacco over the next 10 years likely will exceed 
                deaths from HIV/AIDS, maternal and childhood 
                conditions, and tuberculosis combined.
                    (D) The United States consistently has provided 
                leadership and funding to address the world's most 
                pressing public health needs, including HIV/AIDS, 
                hunger, maternal and child health, and immunization.
                    (E) Through exports and overseas operations, United 
                States tobacco companies sell more cigarettes overseas 
                than they do in the United States. Foreign sales now 
                account for more than half of all sales for the 2 
                leading United States tobacco product manufacturers.
                    (F) United States companies spend billions of 
                dollars on aggressive tobacco marketing campaigns 
                overseas that associate smoking with the United States, 
                affluence, freedom, and liberation. In many markets, 
                American companies reach youthful audiences through 
                television and radio advertising, free samples, and 
                other methods that are outlawed in the United States.
                    (G) In light of the role the United States tobacco 
                companies have played in spreading tobacco use 
                globally, and in light of the large financial benefits 
                they continue to enjoy from tobacco exports, it is 
                appropriate that this section be enacted in order to 
                provide assistance and funding for international public 
                education and mass media programs to inform the public 
                about the hazards of tobacco use.
                    (H) Smoking in United States films is pervasive and 
                influences persons in other countries who seek to 
                emulate ``American activities'' depicted in motion 
                pictures. According to one study, more than half of the 
                top-grossing United States films released between 1991 
                and 1996 exhibited smoking. In these films, 80 percent 
                of the male lead characters and 27 percent of the 
                female characters smoked. The motion picture industry 
                is painting a distorted picture that smoking is a truly 
                American activity.
            (2) Purpose.--The purpose of this section is to establish 
        the American Center on Global Health and Tobacco (herein after 
        referred to as ``ACT''). ACT shall assist organizations in 
        other countries to reduce and prevent the use of tobacco. 
        Activities ACT shall support include--
                    (A) public education programs that inform the 
                public about the hazards of tobacco use and of 
                environmental tobacco smoke;
                    (B) mass media campaigns, including paid counter-
                tobacco advertisements, to reverse the image appeal of 
                pro-tobacco messages, especially those that glamorize 
                and ``Westernize'' tobacco use to young people; and
                    (C) education about the economic and societal costs 
                of tobacco use, and effective tobacco use prevention 
                and cessation strategies that are appropriate for the 
                country involved.
    (b) Establishment.--
            (1) In general.--There is hereby established in the 
        District of Columbia a private, nonprofit corporation to be 
        known as the American Center on Global Health and Tobacco. ACT 
        shall--
                    (A) not be an agency or establishment of the United 
                States; and
                    (B) except as otherwise provided in this section, 
                be subject to, and have all the powers conferred upon a 
                nonprofit corporation by the District of Columbia 
                Nonprofit Corporation Act (D.C. Code section 29-501 et 
                seq.).
            (2) Relation to united states.--Nothing in this section 
        shall be construed as making ACT an agency or establishment of 
        the United States, or as making the members of the Board of 
        ACT, or its employees, officers or employees of the United 
        States.
            (3) Relation to nongovernmental organizations.--ACT shall 
        have a limited staff, and, to the maximum extent practicable, 
        utilize the available experience and talents of nongovernmental 
        organizations with specialized experience in health, education, 
        media, and tobacco.
            (4) Governing board.--ACT shall be governed by a board of 
        up to 25 members including--
                    (A) on a bipartisan basis, Members of the Senate 
                and of the House of Representatives;
                    (B) the heads of American public health 
                organizations;
                    (C) the heads of American media, marketing, and 
                other nongovernment institutions and corporations; and
                    (D) individuals active in education, public health, 
                and other relevant activities.
            (5) International advisory council.--An International 
        Advisory Council consisting of representatives from key global, 
        regional, and national public health organizations, and leading 
        individual educators and health professionals shall provide 
        advisory assistance to ACT.
    (c) Funding.--
            (1) Definition of trust fund.--In this section, the term 
        ``Trust Fund'' means the National Tobacco Settlement Trust Fund 
        established by section 401 of this Act, other than amounts in 
        the State Litigation Settlement Account.
            (2) Establishment of global public health and education 
        resource account.--There is established within the Trust Fund 
        the Global Public Health and Education Resource Account that 
        shall be credited with $150,000,000 for each fiscal year.
            (3) Transfer authority.--The Secretary of the Treasury 
        shall on October 1 of each fiscal year beginning after the date 
        of enactment of this section, transfer $150,000,000 from the 
        Global Public Health and Education Resource Account of the 
        Trust Fund to the account of ACT to carry out the activities 
        authorized under this section.
            (4) Termination of transfer authority.--The authority of 
        the Secretary of the Treasury to transfer funds from the Trust 
        Fund shall expire with the expiration of the Trust Fund.
    (d) Requirements for Eligibility for Annual Transfers From the 
Trust Fund.--
            (1) Oversight.--ACT and its grantees shall be subject to 
        the oversight and supervision of Congress, and shall annually 
        submit a report of its activities to Congress in accordance 
        with paragraph (5)(A)(iii).
            (2) Compliance.--
                    (A) Funding contingent on compliance.--Annual 
                payments from the Trust Fund may be made to ACT under 
                this section only if ACT complies with the requirements 
                specified in this section.
                    (B) Use of funds.--ACT may only fund programs for 
                private sector groups, and may not carry out programs 
                directly. ACT may provide funding only for programs 
                which are consistent with the purposes of this section.
            (3) Salaries and compensation.--
                    (A) No other source of compensation.--Officers and 
                employees of ACT may not receive any salary or other 
                compensation from any source other than ACT for 
                services performed for ACT.
                    (B) United states officers and employees.--An 
                individual who is an officer or employee of the United 
                States who also serves on the Board of Directors or as 
                an officer or employee of ACT, may not receive any 
                compensation or travel expenses in connection with 
                services performed for ACT.
            (4) Stocks and dividends.--ACT shall not issue any shares 
        of stock or declare or pay any dividends.
            (5) Audits.--
                    (A) Independent public accountants.--
                            (i) In general.--The accounts of ACT shall 
                        be audited annually in accordance with 
                        generally accepted auditing standards by 
                        independent certified public accountants or 
                        independent licensed public accountants 
                        certified or licensed by a regulatory authority 
                        of a State or other political subdivision of 
                        the United States. The audits shall be 
                        conducted at the place or places where the 
                        accounts of ACT are normally kept. All books, 
                        accounts, financial records, reports, files, 
                        and all other papers, things, or property 
                        belonging to or in use by ACT and necessary to 
                        facilitate the audits shall be made available 
                        to the person or persons conducting the audits, 
                        and full facilities for verifying transactions 
                        with any assets held by depositories, fiscal 
                        agents, and custodians shall be afforded to 
                        such person or persons.
                            (ii) Content of audit.--The report of each 
                        audit conducted under clause (i) shall be 
                        included in the annual report required under 
                        this subsection. The audit report shall set 
                        forth the scope of the audit and include such 
                        statements as are necessary to present fairly 
                        ACT's assets and liabilities, surplus or 
                        deficit, with an analysis of the changes 
                        therein during the year, supplemented in 
                        reasonable detail by a statement of the income 
                        and expenses of ACT during the year, and a 
                        statement of the application of funds, together 
                        with the independent auditor's opinion of those 
                        statements.
                            (iii) Report.--Not later than December 31 
                        of each year, ACT shall submit an annual report 
                        for the preceding fiscal year to the President 
                        for transmittal to Congress. The report shall 
                        include a comprehensive and detailed report of 
                        ACT's operations, activities, financial 
                        condition, and accomplishments under this 
                        section and may include such recommendations as 
                        ACT deems appropriate.
                    (B) Comptroller general.--
                            (i) In general.--The financial transactions 
                        of ACT for each fiscal year may be audited by 
                        the Comptroller General in accordance with such 
                        principles and procedures and under such rules 
                        and regulations as the Comptroller General may 
                        prescribe. Any such audit shall be conducted at 
                        the place or places where accounts of ACT are 
                        normally kept. The Comptroller General shall 
                        have access to all books, accounts, records, 
                        reports, files, and all other papers, things, 
                        or property belonging to or in use by ACT 
                        pertaining to its financial transactions and 
                        necessary to facilitate the audit. All books, 
                        accounts, records, reports, files, papers, and 
                        property of ACT shall remain in the possession 
                        and custody of ACT.
                            (ii) Report.--A report of each audit shall 
                        be made by the Comptroller General to Congress. 
                        A copy of each report shall be furnished to the 
                        President and to ACT at the time the report is 
                        submitted to Congress.
            (6) Recordkeeping.--
                    (A) In general.--ACT shall ensure that each 
                recipient of assistance from ACT under this section 
                keeps such records as may be reasonably necessary to 
                fully disclose the amount and the disposition by such 
                recipient of the proceeds of such assistance, the total 
                cost of the project or undertaking in connection with 
                which such assistance is given or used, and the amount 
                and nature of that portion of the cost of the project 
                or undertaking supplied by other sources, and such 
                other records as will facilitate an effective audit.
                    (B) Access.--ACT shall ensure that it, or any of 
                its duly authorized representatives, shall have access 
                for the purpose of audit and examination to any books, 
                documents, papers, and records of each recipient of 
                assistance from ACT that are pertinent to assistance 
                provided through ACT under this section.

SEC. 1133. PROHIBITION ON USE OF FUNDS TO FACILITATE THE EXPORTATION OR 
              PROMOTION OF TOBACCO.

    (a) In General.--Notwithstanding any other provision of law, no 
funds made available by appropriations or otherwise made available may 
be used by any officer, employee, department, or agency of the United 
States--
            (1) to promote or encourage the export, re-export, sale, 
        manufacture, advertising, promotion, distribution, or use of 
        tobacco or tobacco products to or in a foreign country; or
            (2) to seek, through negotiation or otherwise, the removal 
        or reduction by any foreign country of any restriction or 
        proposed restriction in that country on the importation, 
        export, re-export, sale, manufacture, advertising, promotion, 
        distribution, packaging, labeling, use, content, imposition of 
        tariffs, or taxation, of tobacco or tobacco products.
    (b) Exception.--Subsection (a)(2) shall not apply to any 
restriction or proposed restriction by a foreign country if--
            (1) the restriction is applied in a manner which 
        constitutes a means of arbitrary or unjustifiable 
        discrimination between countries;
            (2) the Secretary of Commerce certifies in writing to 
        Congress that the restriction is being applied in a manner that 
        constitutes a means of arbitrary or unjustifiable 
        discrimination between countries; and
            (3) the Secretary of Health and Human Services certifies to 
        Congress in writing that the restriction is not a reasonable 
        means of protecting the public health.
    (c) Definition.--In this section, the term ``arbitrary or 
unjustifiable discrimination'' means a restriction or proposed 
restriction by a foreign country that--
            (1) is arbitrary or unjustifiable; and
            (2) does not adhere to the principle of national treatment 
        and applies less favorable treatment to goods that are imported 
        into that country than the country applies to like goods that 
        are the product, growth, or manufacture of that country.

SEC. 1134. HARMONIZATION WITH UNITED STATES INTERNATIONAL COMMITMENTS 
              AND OBLIGATIONS.

    The United States Trade Representative shall report to the Congress 
within 90 days after the date of enactment of this Act on any 
provisions of this Act that are inconsistent with obligations of the 
United States under treaties or other international agreements to which 
it is a signatory, including any treaty pending ratification, together 
with recommendations as to how to implement or modify the provision 
without violating international law.

              Subtitle D--Prevention of Tobacco Smuggling

SEC. 1141. DEFINITIONS.

    (a) Incorporation of Certain Definitions.--In this subtitle, the 
terms ``cigar'', ``cigarette'', ``person'', ``pipe tobacco'', 
``smokeless tobacco'', ``State'', ``tobacco product'', and ``United 
States'' shall have the meanings given such terms in sections 5702(a), 
5702(b), 7701(a)(1), 5702(o), 5702(n)(1), 3306(j)(1), 5702(c), and 
3306(j)(2) respectively of the Internal Revenue Code of 1986.
    (b) Other Definitions.--In this subtitle:
            (1) Affiliate.--The term ``affiliate'' means any one of 2 
        or more persons if 1 of such persons has actual or legal 
        control, directly or indirectly, whether by stock ownership or 
        otherwise, of the other or others of such persons, and any one 
        of 2 or more persons subject to common control, actual or 
        legal, directly or indirectly, whether by stock ownership or 
        otherwise.
            (2) Interstate or foreign commerce.--The term ``interstate 
        or foreign commerce'' means commerce between any State and any 
        place outside thereof, or commerce within any Territory or the 
        District of Columbia, or between points within the same State 
        but through any place outside thereof.
            (3) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.
            (4) Package.--The term ``package'' means the innermost 
        sealed container irrespective of the material from which such 
        container is made, in which a tobacco product is placed by the 
        manufacturer and in which such tobacco product is offered for 
        sale to a member of the general public.
            (5) Retailer.--The term ``retailer'' means any dealer who 
        sells, or offers for sale, any tobacco product to any person 
        other than a wholesaler.

SEC. 1142. TOBACCO PRODUCT LABELING REQUIREMENTS.

    (a) In General.--It shall be unlawful for any person to sell or 
ship or deliver for sale or shipment, or otherwise introduce in 
interstate or foreign commerce, or to receive therein, or to remove 
from customs custody for use, any tobacco product unless such product 
is packaged and labeled in conformity with this section.
    (b) Labeling.--
            (1) Identification.--Not later than 1 year after the date 
        of enactment of this subtitle, the Secretary shall promulgate 
        regulations that require each manufacturer of tobacco products 
        to legibly print a unique serial number on all packages of 
        tobacco products manufactured for sale or distribution. Such 
        serial number shall be designed to enable the Secretary to 
        identify the manufacturer of the product, and the location and 
        date of manufacture. The Secretary shall determine the size and 
        location of the serial number.
            (2) Country of final destination.--Each package of a 
        tobacco product that is exported shall be labeled with the name 
        of the country of final destination. The Secretary shall 
        promulgate regulations to determine the size and location of 
        the label and under what circumstances a waiver of this 
        paragraph shall be granted.
    (c) Prohibition on Alteration.--It shall be unlawful for any person 
to alter, mutilate, destroy, obliterate, or remove any mark or label 
required under this subtitle upon a tobacco product in or affecting 
commerce, except as authorized by Federal law or except under 
regulations of the Secretary authorizing relabeling for purposes of 
compliance with the requirements of this section or of State law.

SEC. 1143. REQUIREMENTS FOR THE TRACKING OF TOBACCO PRODUCTS.

    (a) Posting of Bond.--
            (1) In general.--It shall be unlawful for any person to 
        export any tobacco product unless such person--
                    (A) has posted with the Secretary a tobacco product 
                bond in accordance with this section for such product 
                that contains a disclosure of the country to which such 
                product will be exported; and
                    (B) receives a written statement from the recipient 
                of the tobacco products involved that such person--
                            (i) will not knowingly and willfully 
                        violate any law or regulation of such country 
                        with respect to such products; and
                            (ii) has never been convicted of any 
                        offense with respect to tobacco products.
            (2) Regulations.--The Secretary shall promulgate 
        regulations that determine the frequency and the amount of each 
        bond that must be posted under paragraph (1), but in no case 
        shall such amount be less than an amount equal to the Federal 
        tax imposed under chapter 52 of the Internal Revenue Code of 
        1986 on the value of the shipment of the products involved if 
        such products were consumed within the United States.
    (b) Return of Bond.--The Secretary shall return a bond posted under 
subsection (a) upon a determination by the Secretary (based on 
documentation provided by the person who posted the bond in accordance 
with regulations promulgated by the Secretary) that the tobacco 
products to which the bond applies have been received in the country of 
final destination as designated in the bond.

SEC. 1144. TOBACCO PRODUCT PERMITS.

    (a) In General.--Not later than 1 year after the date of enactment 
of this Act, the Secretary shall establish a program under which 
tobacco product permits are issued to persons (desiring to sell or 
ship, or deliver for sale or shipment, or otherwise introduce in 
interstate or foreign commerce, or to receive therein, or to remove 
from customs custody for use, any tobacco product).
    (b) Conditions.--The issuance of a permit to a tobacco product 
manufacturer under this section shall be conditioned upon the 
compliance of the manufacturer with the requirements of this subtitle.
    (c) Revocation, Suspension, and Annulment.--The program established 
under subsection (a) shall permit the Secretary to revoke, suspend, or 
annul a permit issued under this section if the Secretary determines 
that the terms or conditions of the permit have not been complied with. 
Prior to any action under this subsection, the Secretary shall provide 
the permittee with due notice and the opportunity for a hearing.
    (d) Records and Audits.--The Secretary shall, under the program 
established under subsection (a), require permit holders to keep 
records concerning the chain of custody of the tobacco products that 
are the subject of the permit and make such records available to the 
Secretary for inspection and audit.
    (e) Retailers.--This section shall not apply to retailers of 
tobacco products, except that retailers shall maintain commercial 
records of receipt, and such records shall be available to the 
Secretary for inspection and audit.

SEC. 1145. PROHIBITIONS.

    (a) Importation and Sale.--It shall be unlawful, except under a 
permit issued by the Secretary under section 1144--
            (1) to engage in the business of importing into the United 
        States tobacco products; or
            (2) for any person so engaged to sell, offer, or deliver 
        for sale, contract to sell, or ship, in or affecting commerce, 
        directly or indirectly or through affiliate, tobacco products 
        so imported.
    (b) Manufacture and Sale.--It shall be unlawful, except under a 
permit issued by the Secretary under section 1144--
            (1) to engage in the business of manufacturing, packaging 
        or warehousing tobacco products; or
            (2) for any person so engaged to sell, offer, or deliver 
        for sale, contract to sell, or ship, in interstate or foreign 
        commerce, directly or indirectly or through an affiliate, 
        tobacco products so manufactured, packaged or warehoused.
    (c) Wholesale.--It shall be unlawful, except under a permit issued 
by the Secretary under section 1144--
            (1) to engage in the business of purchasing for resale at 
        wholesale tobacco products, or, as a principal or agent, to 
        sell, offer for sale, negotiate for, or hold out by 
        solicitation, advertisement, or otherwise as selling, 
        providing, or arranging for, the purchase for resale at 
        wholesale of tobacco products; or
            (2) for any person so engaged to receive or sell, offer or 
        deliver for sale, contract to sell, or ship, in or affecting 
        commerce, directly or indirectly or through an affiliate, 
        tobacco products so purchased.
    (d) Effective Date.--The provisions of this section shall become 
effective on the date that is 180 days after the date of enactment of 
this Act.

SEC. 1146. PRICING AND LABELING OF PRODUCTS SOLD ON MILITARY 
              INSTALLATIONS OR BY NATIVE AMERICANS.

    (a) Military Installations.--
            (1) In general.--The Secretary, in consultation with the 
        Secretary of Defense, shall promulgate regulations that ensure 
        that the price charged for a tobacco product sold on a military 
        installation (as defined in section 2801(c)(2) of title 10, 
        United States Code) is equal to--
                    (A) the average price for which such product is 
                sold in the metropolitan area immediately bordering the 
                military installation; or
                    (B) the highest price (inclusive of Federal or 
                State taxes) for which such product is sold on military 
                installations located in the United States;
        whichever is greater.
            (2) Label.--The regulations under paragraph (1) shall 
        require that each package of a tobacco product that is sold on 
        a military installation be labeled as such. Such regulations 
        shall include requirements for the size and location of the 
        label.
    (b) Indian Tribes.--The Secretary, in consultation with the 
Secretary of Interior, shall promulgate regulations that require that 
each package of a tobacco product that is sold on an Indian reservation 
(as defined in section 403(9) of the Indian Child Protection and Family 
Violence Prevention Act (25 U.S.C. 3202(9))) be labeled as such. Such 
regulations shall include requirements for the size and location of the 
label.

SEC. 1147. PROHIBITION AGAINST SALE OF TOBACCO PRODUCTS IN OR TO DUTY-
              FREE SHOPS OR FORWARDING THROUGH OR MANUFACTURE IN TRADE 
              ZONES.

    (a) Duty-Free Shops.--It shall be unlawful for any person to sell a 
tobacco product--
            (1) in any duty-free shop located within the United States; 
        or
            (2) to any duty-free shop.
    (b) Trade Zones.--No person may forward through or manufacture a 
tobacco product in any foreign trade zone, as defined for purposes of 
the Act of June 18, 1934 (19 U.S.C. 81a et seq.).

SEC. 1148. JURISDICTION; PENALTIES; COMPROMISE OF LIABILITY.

    (a) Jurisdiction.--The District Courts of the United States, and 
the United States court for any Territory, of the District where the 
offense is committed or of which the offender is an inhabitant or has 
its principal place of business, are vested with jurisdiction of any 
suit brought by the Attorney General in the name of the United States, 
to prevent and restrain violations of any of the provisions of this 
subtitle.
    (b) Penalties.--The provisions of section 3571 of title 18, United 
States Code, shall apply to any person convicted of violating any of 
the provisions of this subtitle as if such person were convicted of a 
felony under such title.
    (c) Compromise of Liability.--The Secretary is authorized, with 
respect to any violation of this subtitle, to compromise the liability 
arising with respect to a violation of this subtitle--
            (1) upon payment of a sum not in excess of $10,000 for each 
        offense, to be collected by the Secretary and to be paid into 
        the Treasury as miscellaneous receipts; and
            (2) in the case of repetitious violations and in order to 
        avoid multiplicity of criminal proceedings, upon agreement to a 
        stipulation, that the United States may, on its own motion upon 
        5 days' notice to the violator, cause a consent decree to be 
        entered by any court of competent jurisdiction enjoining the 
        repetition of such violation.

SEC. 1149. AMENDMENTS TO THE CONTRABAND CIGARETTE TRAFFICKING ACT.

    (a) Definitions.--Section 2341 of title 18, United States Code, is 
amended--
            (1) in paragraph (2)--
                    (A) by striking ``60,000'' and inserting 
                ``30,000''; and
                    (B) by inserting after ``payment of cigarette 
                taxes,'' the following: ``or in the case of a State 
                that does not require any such indication of tax 
                payment, if the person in possession of the cigarettes 
                is unable to provide any evidence that the cigarettes 
                are moving legally in interstate commerce,''; and
            (2) in paragraph (4), by striking ``and'' at the end;
            (3) in paragraph (5), by striking the period and inserting 
        a semicolon; and
            (4) by adding at the end the following:
            ``(6) the term `tobacco product' means cigars, cigarettes, 
        smokeless tobacco, and pipe tobacco (as such terms are defined 
        in section 5701 of the Internal Revenue Code of 1986); and
            ``(7) the term `contraband tobacco product' means a 
        quantity in excess of 30,000 of any tobacco product that is 
        manufactured, sold, shipped, delivered, transferred, or 
        possessed in violation of Federal laws relating to the 
        distribution of tobacco products.''.
    (b) Unlawful Acts.--Section 2342 of title 18, United States Code, 
is amended--
            (1) in subsection (a), by inserting ``or contraband tobacco 
        products'' before the period;
            (2) in subsection (b)--
                    (A) by striking ``cigarettes'' and inserting 
                ``tobacco products'';
                    (B) by striking ``60,000'' and inserting 
                ``30,000''; and
                    (C) by inserting before the period the following: 
                ``or knowingly to fail to maintain distribution 
                records, alter or obliterate required markings, or 
                interfere with any inspection as required with respect 
                to such quantity of tobacco products''; and
            (3) by adding at the end the following:
    ``(c) It shall be unlawful for any person knowingly to transport 
tobacco products under a false bill of lading or without any bill of 
lading.''.
    (c) Recordkeeping.--Section 2343 of title 18, United States Code, 
is amended--
            (1) by striking ``cigarettes'' each place that such appears 
        and inserting ``tobacco products'';
            (2) in subsection (a), by striking ``60,000'' and inserting 
        ``30,000'';
            (3) in subsection (b), by striking ``60,000'' and inserting 
        ``30,000''.
    (d) Penalties.--Section 2344 of title 18, United States Code, is 
amended--
            (1) in subsection (c), by inserting ``or contraband tobacco 
        products'' after ``cigarettes''; and
            (2) by adding at the end the following:
    ``(d) Any proceeds from the unlawful distribution of tobacco 
products shall be subject to seizure and forfeiture under section 
981(a)(1)(C).''.

SEC. 1150. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated such sums as may be 
necessary to carry out this subtitle.

                    Subtitle E--Antitrust Exemption

SEC. 1161. LIMITED ANTITRUST EXEMPTION.

    (a) In General.--The antitrust laws of the United States (as 
defined in section 1 of the Clayton Act (15 U.S.C. 12) and any other 
statute in pari materia, and any similar law of a State, do not apply 
to the joint discussion, consideration, review, action, agreement, or 
understanding by or among any participating tobacco product 
manufacturers, for the purposes of, and limited to--
            (1) entering into and complying with the Protocol, Trust 
        Agreement, or Consent Decree;
            (2) refusing to deal with a distributor, retailer, or other 
        seller of tobacco products who distributes such products for 
        sale to, or offers for sale or sells such products to, underage 
        persons, or who otherwise fails to comply with the applicable 
        requirements of the Act, the Protocol, or Consent Decree; or
            (3) submitting an application relating to a plan or program 
        of the type referred to in subsection (b) of this section or, 
        entering into, complying with or otherwise carrying out the 
        terms of, any plan or program that has been approved under 
        subsection (b) of this section.
    (b) Approval by Attorney General.--The Attorney General of the 
United States is authorized to approve, upon application by one or more 
participating tobacco product manufacturers, plans, or programs to 
reduce the use of tobacco products by underage individuals. Before 
approving any such plan or program, the Attorney General shall 
determine that approval is appropriate as part of the effort to reduce 
the use of tobacco products by underage individuals and will not have 
the effect of unduly restraining competition. The Attorney General 
shall approve or disapprove any such application in writing within 90 
days from the date it is received by the Department of Justice. Upon 
written withdrawal by the Attorney General of any approval under this 
subsection, the provisions of subsection (a)(3) shall not apply to any 
subsequent act or omission with respect to the plan or program to which 
the approval related.

     Subtitle F--Special Provisions Concerning Programs for Women, 
                         Minorities, and Others

SEC. 1171. RESEARCH RELATED TO PATTERNS OF SMOKING BY WOMEN AND 
              MINORITIES.

    (a) Research Design Criteria.--Any research funded under this Act, 
or under any amendment made by this Act, that is conducted for the 
purpose of investigating factors affecting tobacco use and patterns of 
smoking, shall if appropriate to the scope and purpose of the 
investigation include data and analysis with respect to different 
factors that may be present in the case of women or minorities.
    (b) Patterns of Smoking.--Research funded under this Act, or under 
any amendment made by this Act, examining patterns of smoking among 
minorities should be conducted in proportion to their prevalence in the 
smoking population and shall be conducted at minority education 
institutions, where available, or institutions that provide the 
greatest amount of health care to minority populations in a State.

SEC. 1172. COUNTER-ADVERTISING PROGRAMS.

    (a) In General.--The Secretary shall carry out programs to reduce 
tobacco usage through media-based (such as counter-advertising 
campaigns) and nonmedia-based education, prevention, and cessation 
campaigns designed to discourage the use of tobacco products by 
individuals and to encourage those who use such products to quit. Such 
programs shall target, in a culturally and linguistically appropriate 
manner, adults, children, women, and minorities who have been targeted 
by tobacco industry advertising.
    (b) Eligibility.--To be eligible to receive assistance under this 
section an entity or individual shall prepare and submit to the 
Secretary an application at such time, in such manner, and containing 
such information as the Secretary may require.
    (c) Use of Funds.--Amounts received by an individual or entity 
under this section shall be used to carry out activities under the 
programs established under subsection (a). Such amounts may be used to 
design and implement such activities and to conduct research concerning 
the effectiveness of such programs.
    (d) Funding.--There are authorized to be appropriated from the 
National Tobacco Settlement Trust Fund established by section 401, 
other than from amounts not in the State Litigation Settlement Account, 
or otherwise obligated under this Act such sums as are necessary to 
carry out the provisions of this section.

SEC. 1173. PREVENTION ACTIVITIES OF COMMUNITY AND MIGRANT HEALTH 
              CENTERS.

    (a) Funding.--There are authorized to be appropriated from the 
National Tobacco Settlement Trust Fund established by section 401, 
other than from amounts in the State Litigation Settlement Account, of 
this Act $300,000,000 for each of the first 10 fiscal years beginning 
after the date of enactment of this Act to carry out the provisions of 
subsection (b).
    (b) Program.--The Secretary shall make amounts made available under 
subsection (a) available to Community, Migrant, and Homeless Health 
Centers receiving grants under section 330 of the Public Health Service 
Act (42 U.S.C. 254c) to provide health services for diseases related to 
tobacco and to prevent tobacco-related diseases.
    (c) Limitation.--No amount may be expended or obligated under 
subsection (b) for any fiscal year in which the annual amount 
appropriated for Community, Migrant, and Homeless Health Centers is 
less than the amount appropriated for the previous fiscal year.

                    Subtitle G--Sense of the Senate

SEC. 1181. SENSE OF THE SENATE.

    It is the sense of the Senate that the proceeds of this Act may be 
used for purposes including, but not limited to--
            (1) reimbursing public health care financing programs for 
        tobacco-related costs, including Medicare;
            (2) supporting tobacco use prevention and cessation, 
        particularly with respect to youth, including counter-
        advertising at the Federal, State, Tribal, and local level;
            (3) supporting tobacco-related health services research 
        activities;
            (4) assisting tobacco farmers and tobacco dependent 
        communities;
            (5) creating, and fully and adequately funding, a Tobacco 
        Asbestos Trust to assist victims of the unique harm that 
        smoking causes to asbestos workers;
            (6) settling with and reimbursing States for tobacco-
        related health care costs and damages, including Medicaid;
            (7) providing funding for the Federal Black Lung Program;
            (8) providing funding for child care and early childhood 
        development;
            (9) providing funding for veterans' benefit programs; and
            (10) providing funding for clinical trials at the National 
        Institutes of Health.

Subtitle H--Ban On Sale Of Tobacco Products Through The Use Of Vending 
                                Machines

SEC. 1191. BAN OF SALE OF TOBACCO PRODUCTS THROUGH THE USE OF VENDING 
              MACHINES.

    (a) Ban of Sale of Tobacco Products Through the Use of Vending 
Machines.--Effective 12 months after the date of enactment of this Act, 
it shall be unlawful to sell tobacco products through the use of a 
vending machine.
    (b) Compensation for Banned Vending Machines.--
            (1) In general.--The owners and operators of tobacco 
        vending machines shall be reimbursed for the fair market value 
        of their businesses, including the cost of banned vending 
        machines, compensation for lost profits, unexpired contracts, 
        and for the owner's or operator's plant and equipment related 
        only to the production of tobacco vending machines.
            (2) Tobacco vending reimburment corporation.--
                    (A) Corporation.--Reimbursment shall be directed 
                through a private, nonprofit corporation established in 
                the District of Columbia, known as the Tobacco Vending 
                Reimburment Corporation (in this section referred to as 
                the ``Corporation''). The Corporation is--
                            (i) not an agency or establishment of the 
                        United States; and
                            (ii) except as otherwise provided in this 
                        section, is subject to, and has all the powers 
                        conferred upon a nonprofit corporation by the 
                        District of Columbia Nonprofit Corporation Act 
                        (D.C. Code section 29-501 et seq.).
                    (B) Duties.--The Corporation shall--
                            (i) disburse compensation funds to vending 
                        companies under this section;
                            (ii) verify operational machines; and
                            (iii) maintain complete records of machine 
                        verification and accountings of disbursements 
                        and administration of the compensation fund 
                        established under paragraph (4).
            (3) Management of corporation.--
                    (A) Board of directors.--The Corporation shall be 
                managed by a Board of Directors that--
                            (i) consists of distinguished Americans 
                        with experience in finance, public policy, or 
                        fund management;
                            (ii) includes at least 1 member of the 
                        United States tobacco vending machine industry;
                            (iii) shall be paid an annual salary on an 
                        individualized basis of $40,000 out of amounts 
                        transferred to the Corporation under paragraph 
                        (4)(A);
                            (iv) shall appoint a President to manage 
                        the day-to-day activities of the Corporation;
                            (v) shall develop guidelines by which the 
                        President shall direct the Corporation;
                            (vi) shall retain a national accounting 
                        firm to verify the distribution of funds and 
                        audit the compensation fund established under 
                        paragraph (4);
                            (vii) shall retain such legal, management, 
                        or consulting assistance as is necessary and 
                        proper; and
                            (viii) shall periodically report to 
                        Congress regarding the activities of the 
                        Corporation.
                    (B) Duties of the president of the corporation.--
                The President of the Corporation shall--
                            (i) hire appropriate staff;
                            (ii) prepare the report of the Board of 
                        Directors of the Corporation required under 
                        subparagraph (A)(viii); and
                            (iii) oversee Corporation functions, 
                        including verification of machines, 
                        administration and disbursement of funds, 
                        maintenance of complete records, operation of 
                        appeals procedures, and other directed 
                        functions.
            (4) Compensation Fund.--
                    (A) Transfer of funds from tobacco industry 
                payments.--The Secretary of the Treasury shall transfer 
                to the Corporation, out of funds in the National 
                Tobacco Settlement Trust Fund, other than from amounts 
                in the State Litigation Settlement Account, such sums 
                as are necessary to make due compensation to owners and 
                operators of tobacco vending machines and to carry out 
                the duties of the Corporation. Not later than 1 year 
                after such date on which the first transfer is made 
                under this subparagraph, the Secretary of the Treasury 
shall transfer to the Corporation out of funds paid to the United 
States by the tobacco industry, such additional sums as may be 
necessary for such purposes.
                    (B) Rules for disbursement of funds.--
                            (i) Payments to owners and operators.--The 
                        Corporation shall disburse funds to compensate 
                        the owners and operators of tobacco vending 
                        machines in accordance with the following:
                                    (I) The fair market value of each 
                                tobacco vending machine verified by the 
                                Corporation President in accordance 
                                with subparagraph (C), and proven to 
                                have been in operation before August 
                                10, 1995, shall be disbursed to the 
                                owner of the machine seeking 
                                compensation.
                                    (II) No compensation shall be made 
                                for a spiral glass front vending 
                                machine.
                            (ii) Other payments.--Funds transferred to 
                        the Corporation under subparagraph (A) may be 
                        used to pay the administrative costs of the 
                        Corporation that are necessary and proper or 
                        required by law. The total amount paid by the 
                        Corporation for administrative and overhead 
                        costs, including accounting fees, legal fees, 
                        consultant fees, and associated administrative 
                        costs shall not exceed 5 percent of the total 
                        amount transferred to the Corporation under 
                        subparagraph (A).
                    (C) Verification of vending machines.--Verification 
                of vending machines shall be based on copies of 
                official State vending licenses, company computerized 
                or handwritten sales records, or physical inspection by 
                the Corporation President or by an inspection agent 
                designated by the President. The Corporation President 
                and the Board of Directors of the Corporation shall 
                work vigorously to prevent and prosecute any fraudulent 
                claims submitted for compensation.
                    (D) Return of account funds not distributed to 
                vendors.--The Corporation shall be dissolved on the 
                date that is 4 years after the date of enactment of 
                this Act. Any funds not dispersed or allocated to 
                claims pending as of that date shall be transferred to 
                a public anti-smoking trust, or used for such other 
                purposes as Congress may designate.
    (c) Settlement of Legal Claims Pending Against the United States.--
Acceptance of a compensation payment from the Corporation by a vending 
machine owner or operator shall settle all pending and future claims of 
the owner or operator against the United States that are based on, or 
related to, the ban of the use of tobacco vending machines imposed 
under this section and any other laws or regulations that limit the use 
of tobacco vending machines.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated from the National Tobacco Settlement Trust Fund, other 
than from amounts in the Senate Litigation Settlement Account, such 
sums as may be necessary to carry out this section.

                 TITLE XII--TOBACCO ASBESTOS TRUST FUND

SEC. 1201. DEFINITIONS.

    In this title:
            (1) Asbestos claim.--The term ``asbestos claim'' means a 
        claim brought or capable of being brought in a court of 
        competent jurisdiction by a person for personal injury, 
        wrongful death, loss of consortium, or other damages arising 
        from occupational exposure to asbestos or asbestos containing 
        products, including claims by spouses or household members who 
        were exposed to asbestos through the occupational exposure of 
        another person.
            (2) Asbestos claimant.--The term ``asbestos claimant'' 
        means a person who brings an asbestos claim.
            (3) Asbestos defendant.--The term ``asbestos defendant'' 
        means a person or existing entity (including a partnership or 
        corporation) who as part of its operations is defending 
        asbestos claims on the date of enactment of this Act.
            (4) Asbestos/tobacco claim.--The term ``asbestos/tobacco 
        claim'' means a legally justiciable asbestos claim of a person 
        who also claims injury, disease, or death arising from exposure 
        to tobacco.
            (5) Asbestos/tobacco claimant.--The term ``asbestos/tobacco 
        claimant'' means a person who has an asbestos/tobacco claim.
            (6) Asbestos trust.--The term ``asbestos trust'' means a 
        court-supervised trust that was established to resolve asbestos 
        claims arising directly or indirectly from exposure to asbestos 
        or asbestos containing products of an asbestos defendant, 
        including a trust created under the bankruptcy laws of the 
        United States, or Rule 23 of the Federal Rules of Civil 
        Procedure.
            (7) Exposure to tobacco.--The term ``exposure to tobacco'' 
        means any instance in which a person consumes, inhales, 
        ingests, or uses a tobacco product.
            (8) Tobacco.--The term ``tobacco'' means tobacco in its 
        manufactured form, including cigars, cigarettes, cigarillos, 
        cigarette tobacco, little cigars, pipe tobacco, and smokeless 
        tobacco.
            (9) Tobacco company.--The term ``tobacco company'' means 
        any person, including any repacker, or relabeler, who 
        manufactures, fabricates, assembles, processes, or labels a 
        finished tobacco product.
            (10) Trust fund.--The term ``trust fund'' means the Tobacco 
        Asbestos Trust Fund established under section 1202.

SEC. 1202. TOBACCO ASBESTOS TRUST FUND.

    (a) Establishment.--
            (1) In general.--There is established in the Treasury of 
        the United States a trust fund to be known as the ``Tobacco 
        Asbestos Trust Fund'', consisting of such amounts as may be 
        appropriated or credited to the trust fund.
            (2) Division.--
                    (A) In general.--The trust fund shall be composed 
                of 2 funds to be known as ``Fund I'' and ``Fund II''. 
                Each such fund shall meet the requirements of this 
                title.
                    (B) Fund i.--
                            (i) Administration.--Fund I shall be 
                        administered by the trustees appointed under 
                        paragraphs (1) and (3) of subsection (b). Fund 
                        I shall be considered to be a designated 
                        settlement fund within the meaning of section 
                        468B of the Internal Revenue Code of 1986.
                            (ii) Purpose and use.--The purpose of Fund 
                        I shall be for the reimbursement of asbestos 
                        trusts and asbestos defendants for payments 
                        made by such trust and defendants for the 
                        tobacco-caused portion of asbestos/tobacco 
                        claims. Fund I shall be used to allocate 
                        credits to asbestos trusts and asbestos 
                        defendants who settled and paid the civil 
                        claims of individuals who had exposure to 
                        tobacco and asbestos. Such credits may be used 
                        to direct the payment of funds by the trustees 
                        to pay asbestos claims and asbestos/tobacco 
                        claims, as described in section 1203.
                    (C) Fund ii.--
                            (i) Administration.--Fund II shall be 
                        administered by the trustees appointed under 
                        paragraphs (2) and (3) of subsection (b). Fund 
                        II shall be considered to be a designated 
                        settlement fund within the meaning of section 
                        468B of the Internal Revenue Code of 1986.
                            (ii) Purpose.--The purpose of Fund II shall 
                        be to pay asbestos/tobacco claims brought after 
                        the date of enactment of this Act for the 
                        tobacco-caused portion of the claimant's harm, 
                        as described in section 1204.
            (3) Separate operations.--The operations of each Fund shall 
        be conducted separately. Upon majority vote of the trustees of 
        Fund I and upon majority vote of the trustees of Fund II, the 
        Funds may, in the interest of efficiency and economy, conduct 
        certain tasks as a single operation.
    (b) Trustees.--Not later than 60 days after the date of enactment 
of this Act--
            (1) the Secretary shall appoint 2 individuals to serve as 
        trustees of the trust fund, of which--
                    (A) 1 individual shall represent asbestos trusts; 
                and
                    (B) 1 individual shall represent asbestos 
                defendants;
            (2) the Secretary of Labor shall appoint 2 individuals to 
        serve as trustees of the trust fund, of which--
                    (A) 1 individual shall represent asbestos 
                claimants; and
                    (B) 1 individual shall represent labor 
                organizations with asbestos claimants as members; and
            (3) the trustees appointed under paragraphs (1) and (2) 
        shall appoint an individual who shall be a member of the health 
        care profession with experience in asbestos disease or 
        disability to serve as a trustee.
    (c) Authorization and Allocations.--
            (1) Authorization.--There are appropriated, out of amounts 
        in the National Tobacco Settlement Trust Fund established by 
        section 401 (other than amounts in the State Litigation 
        Settlement Account or otherwise obligated), to the trust fund 
        the amounts set forth in section 1205. The Secretary of the 
        Treasury shall transfer amounts appropriated under this 
        paragraph to the trust fund.
            (2) Allocation between funds.--
                    (A) Baseline allocation.--Of the amounts 
                transferred under paragraph (1), 50 percent shall be 
                deposited into Fund I and 50 percent shall be deposited 
                into Fund II.
                    (B) Timing adjustment.--The trustees of Fund II may 
                provide an advance to Fund I as a loan (to be repaid 
                from proceeds of Fund I) from funds available in Fund 
                II as may be necessary to further the purposes of Fund 
                I.
    (d) Repayable Advances.--
            (1) Authorization.--In addition to the amounts appropriated 
        under subsection (c), there are authorized to be appropriated 
        to the trust fund, as repayable advances, such sums as may be 
        necessary for fiscal year 1999 and each subsequent fiscal year 
        to make the expenditures described in sections 1203 and 1204.
            (2) Repayment with interest.--Repayable advances made to 
        the trust fund shall be repaid, and interest on the advances 
        shall be paid to the general fund of the Treasury when the 
        Secretary of the Treasury determines that monies are available 
        in the Tobacco Asbestos Trust Fund to make the payments.
            (3) Rate of interest.--Interest on an advance made under 
        this subsection shall be at a rate determined by the Secretary 
        of the Treasury (as of the close of the calendar month 
        preceding the month in which the advance is made) that is equal 
        to the current average market yield on outstanding marketable 
        obligations of the United States with remaining period to 
        maturity comparable to the anticipated period during which the 
        advance will be outstanding.
    (e) Use of Trust Fund.--
            (1) In general.--The trust fund shall be used as provided 
        for in this title. No amount shall be expended or obligated 
        from the trust fund unless the expenditure or obligation is 
        authorized by an appropriation Act.
            (2) Limitation.--Amounts may only be made available from 
        the trust fund to, or for the direct benefit of, asbestos 
        claimants and asbestos/tobacco claimants.
    (f) Authority of Trustees.--
            (1) Decisions based on votes.--Except as provided in this 
        Act, the trustees of each Fund shall make decisions with regard 
to the respective Funds based on a majority vote.
            (2) General authority.--The trustees shall have the 
        authority to take such actions as may be necessary to 
        effectuate the purposes of the trust fund, including--
                    (A) the investment of the trust fund assets in a 
                reasonable and prudent manner consistent with the needs 
                and purposes of the trust fund; and
                    (B) commencing actions to enforce any provisions or 
                obligations imposed under this title.
            (3) Administrative authority.--The trustees shall have the 
        authority to employ officers, administrators, claims analysts, 
        attorneys, actuaries, investment specialists, and such other 
        employees and agents as may be required to administer the trust 
        fund.
    (g) Accounting for Expenses.--Except for the compensation and 
expenses of the trustees, which shall be charged equally to Fund I and 
Fund II, the trustees shall, to the extent feasible, separately account 
for all salaries, overhead, and other costs and expenses as between 
Fund I and Fund II on the basis of activities conducted separately with 
respect to each such Fund.
    (h) Expenditures From Trust Fund.--Amounts in the trust fund, and 
each of its Funds, shall be made available in each fiscal year, as 
provided by appropriations Acts, as necessary to make the expenditures 
and allocations provided for in sections 1203 and 1204.

SEC. 1203. PAYMENTS FROM FUND I.

    (a) In General.--Credits applying to the amounts deposited into 
Fund I shall be allocated and disbursed as provided for in this 
section.
    (b) Determination of Base.--
            (1) Notice.--Not later than 90 days after the date on which 
        the trustees for Fund I are appointed, the trustees shall 
        provide notice to all asbestos trusts and asbestos defendants 
        of the establishment of the Fund.
            (2) Request for information.--The notice under paragraph 
        (1) shall request that each asbestos trust and asbestos 
        defendant, within a reasonable period of time, provide the 
        trustees with information as to the amount of payments or 
        settlements made by or on behalf of such trusts or defendants 
        (and, in the case of non-bankruptcy trusts, also made by or on 
        behalf of their predecessor organizations), and the amount of 
        any outstanding bonded judgments, on asbestos claims as of the 
        date of enactment of this Act.
            (3) Determination.--Based on the information provided under 
        paragraph (2), the trustees for Fund I shall determine the 
        total amount of payments and settlements and outstanding bonded 
        judgments (reasonably adjusted for the probable resolution as 
        of the date the information is submitted under paragraph (2)) 
        on the asbestos claims of all asbestos trusts and asbestos 
        defendants that responded to the notice.
    (c) Allocation of Credits.--
            (1) In general.--Upon review of the information submitted 
        under subsection (b)(2), the trustees for Fund I shall provide 
        a credit with respect to each asbestos trust and asbestos 
        defendant submitting such information.
            (2) Amount.--A credit under paragraph (1) with respect to 
        an asbestos trust or asbestos defendant shall be based on the 
        ratio of--
                    (A) the amount of settlement payments and 
                outstanding bonded judgments on asbestos claims made by 
                or on behalf of the trust or defendant; and
                    (B) the total amount of settlement payments and 
                outstanding bonded judgments on asbestos claims made by 
                or on behalf of all asbestos trusts and asbestos 
                defendants described in paragraph (1).
    (d) Additional Factors.--
            (1) Interest.--In making the allocation of credits under 
        this section, the trustees for Fund I shall consider the timing 
        of past cash payments and include an appropriate interest 
        factor in making their allocation determinations.
            (2) Unpaid settlements.--In making the allocation of 
        credits under this section, the trustees for Fund I shall 
        include the settlements of asbestos trusts and asbestos 
        defendants that have not been paid as of the date of enactment 
        of this Act in an amount not to exceed 20 percent of the amount 
        of such unpaid settlements.
            (3) Limitation.--The aggregate amount of Fund I credits 
        allocated to asbestos trusts or asbestos defendants to account 
        for unpaid settlements under paragraph (2) shall not exceed an 
        amount equal to 6 percent of the amounts contained in Fund I 
        for the year involved. Any necessary reductions from the 
        application of the limitation under this paragraph shall be 
        determined using the ratios described in subsection (c).
            (4) Unused credits.--To the extent that any asbestos trust 
        or asbestos defendant has credits from its allocation under 
        this section that have not been the subject of a request and 
        direction to be paid for a period of 2 years from the date on 
        which such credits are made available, such unused credits 
        shall be reallocated proportionally to each asbestos trust and 
        asbestos defendant submitting information under subsection 
        (b)(2) according to the amount of the unpaid settlements of 
        such trust and defendants which remain unpaid after making the 
        allocations required by this section.
    (e) Review of Determinations.--
            (1) In general.--Any dispute regarding a determination made 
        by the trustees for Fund I under this section shall be resolved 
        not later than 6 months after the date on which notice of such 
        dispute is provided to the trustees. Such resolution shall be 
        under final and binding arbitration under the rules of the 
        American Arbitration Association.
            (2) Scope.--The scope of any review under paragraph (1) 
        shall be limited to determining whether the determinations of 
        the trustees were unsupported by substantial evidence or were 
        contrary to law.
            (3) Application of section.--During the pendency of any 
        dispute resolution proceeding under this subsection, the 
        trustees may continue to implement the provisions of this 
        section, reserving sufficient monies as may be necessary in 
        their judgment to satisfy the resolution of such disputes.
    (f) Use of Fund I Credits.--
            (1) For benefit of victims.--All monies credited to 
        asbestos trusts and asbestos defendants under this section 
        shall be used solely for the payment of asbestos claims and 
        asbestos/tobacco claims. None of the credits allocated under 
        this section to an asbestos trust or asbestos defendant shall 
        be used for the costs of defending against an asbestos claims, 
        for payment of corporate dividends, for reimbursement of 
        insurers, or for any other corporate purpose.
            (2) Mechanism for payment of victims.--
                    (A) Asbestos defendants.--An asbestos defendant 
                that receives an allocation of credit under this 
                section may only use such credit to direct that a 
                payment be made from Fund I to any asbestos claimant as 
                compensation for an asbestos claim or asbestos/tobacco 
                claim. The payment of such claimant shall be under a 
                written request submitted by the defendant to the Fund. 
                Such requests are not subject to approval by the Fund 
                so long as they do not exceed the defendant's 
                allocation of credit under this section.
                    (B) Asbestos trust.--All monies resulting from 
                credits allocated to an asbestos trust under this 
                section shall be paid to such trust for use according 
                to the rules of such trust with regard to the payment 
                of asbestos claims and asbestos/tobacco claims.

SEC. 1204. PAYMENTS FROM FUND II.

    (a) In General.--Amounts deposited into II shall be disbursed as 
provided for in this section.
    (b) Establishment of Fund.--The trustee for Fund II shall establish 
procedures and standards under subsection (c) for the payment, upon 
approval of an appropriate application, of a reasonable reimbursement 
for the costs, expenses, and fees incurred in connection with an 
asbestos claim or an asbestos/tobacco claim.
    (c) Procedures and Standards.--The procedures and standards 
established under this subsection for the payment of compensation to 
asbestos claimants and asbestos/tobacco claimants, shall include--
            (1) rules to ensure that compensation from Fund II is paid 
        only for that portion of an asbestos claimant's or an asbestos/
        tobacco claimant's harm caused by exposure to tobacco;
            (2) rules ensuring that--
                    (A) all present and future such claimants are 
                treated equitably in relationship to each other; and
                    (B) if future demands against Fund II require 
                limitations on current payment, that priority be given 
                to payment of asbestos claimants or asbestos/tobacco 
                claimants with the most serious harm due to exposure to 
                asbestos and tobacco;
            (3) rules establishing application forms and procedures for 
        the submission of claims and supporting documentation;
            (4) criteria establishing a minimum degree of asbestos 
        disability or impairment that must be demonstrated in order for 
        a claimant to receive compensation under this section;
            (5) criteria for the coordination of the administration of 
        Fund II with the signatories to the Louisiana Agreement 
        Providing Administrative Alternatives for Claimants with 
        Asbestos Related Conditions to expand the agreement to include 
        national coverage for claimants who may not be compensated 
under the criteria provided for under paragraph (4);
            (6) rules requiring recipients of funds from Fund II to 
        execute a release of personal injury claims for tobacco-caused 
        harm; and
            (7) rules to ensure that the administration of the claims 
        process, including attorney's fees, is fair and equitable to 
        asbestos claimants and asbestos/tobacco claimants.
    (d) Period for Final Determinations.--The trustees for Fund II 
shall make a final determination with respect to a claim submitted 
under this section not later than 120 days after the date on which the 
claim is submitted. In the event that exigent circumstances exist with 
respect to a such a claim, as verified by a competent medical 
professional, such final determination shall be made as soon as 
practicable, but in no case later than 60 days after the date of the 
submission of such claim.
    (e) No Limitation on Right to Sue.--Except as provided in section 
1206(b), nothing in this title shall be construed to limit the rights 
of any individual to bring a civil suit against a tobacco company.
    (f) Claims Administration.--The trustees for Fund II may establish, 
or enter into a contract for the establishment or operation of, a 
claims facility for the processing, evaluation, and settlement of 
claims submitted to Fund II.
    (g) Review Jurisdiction.--The District Courts of the United States 
shall have exclusive jurisdiction, without regard to the amount in 
controversy or the citizenship of the parties, to review a 
determination (or failure to make a determination as required by 
section 1206(a)) by or on behalf of the trustees with respect to 
compensation under Fund II by an individual bringing a claim. No such 
determination may be overturned or remanded if it is supported by 
substantial evidence. A claimant may not file a proceeding under this 
subsection unless the plaintiff has provided the trustees with a notice 
of intent of the plaintiff to file such an action, at least 90 days 
prior to the filing of such action.

SEC. 1205. TRANSFERS FROM NATIONAL TOBACCO SETTLEMENT TRUST FUND.

    (a) Special Asbestos-Tobacco Victim Transfers.--Beginning with 
calendar year 1999, the Secretary of the Treasury shall, for each 
calendar year, transfer from the National Tobacco Settlement Trust Fund 
established under section 401 (other than from amounts in the State 
Litigation Settlement Account) the amounts sufficient to provide the 
trust fund established by section 1202 the following amounts:
            (l) For calendar year 1999, $1,000,000,000.
            (2) For calendar year 2000, $1,500,000,000.
            (3) For calendar year 2001, $3,000,000,000.
            (4) For calendar year 2002, $3,000,000,000.
            (5) For calendar year 2003, $3,000,000,000.
            (6) For calendar year 2004, $4,000,000,000.
            (7) For each of the calendar years 2005 through 2014, 
        $550,000,000.
    (b) Payments.--The Secretary of the Treasury shall ensure that 
transfers are made under this section on a timely basis.

SEC. 1206. RULES FOR CLAIMS AGAINST ASBESTOS TRUSTS, ASBESTOS 
              DEFENDANTS, AND TOBACCO COMPANIES.

    (a) Purpose.--
            (1) In general.--It is the purpose of this title to ensure 
        that asbestos claimants and asbestos/tobacco claimants who are 
        eligible, by reason of harm resulting from exposure to asbestos 
        and tobacco, to receive compensation on a fair and timely 
        basis.
            (2) Rule of construction.--Nothing in this title shall be 
        construed to expand the rights of asbestos claimants and 
        asbestos/tobacco claimants in civil actions pending (or 
        resolved) against asbestos defendants or asbestos trusts on the 
        date of enactment of this Act.
    (b) Non-Binding Submission of Tobacco/Asbestos Claims to Fund II.--
            (1) In general.--A civil action by an individual for harm 
        caused by the combined effects of tobacco and asbestos shall 
        not proceed to trial or result in a judgment against an 
        asbestos defendant or asbestos trust until a claim is submitted 
        to Fund II by such individual and finally resolved in 
        accordance with section 1204(c)(3) as determined by the 
        trustees for Fund II. For purposes of this paragraph, the term 
        ``proceed to trial'' means--
                    (A) in a jury trial, to commence voir dire; and
                    (B) in a nonjury trial, to begin the trial.
            (2) Denial of claim.--A claimant whose claim under 
        paragraph (1) is denied, or who rejects an offer made by the 
        trustees for Fund II, may proceed to judgment or trial. All 
        claimants shall receive a final determination from Fund II 
        within 120 days after submission of a claim. In the event of 
        exigent circumstances, verified by a competent medical 
        professional, a claimant shall receive a final 
determination from Fund II as soon as practicable, but in all events 
within 60 days after submission.
    (c) Liability of Tobacco Companies.--
            (1) In general.--The provisions of this subsection limiting 
        the civil liability of tobacco companies shall remain in effect 
        so long as the transfers and deposits are made in accordance 
        with the provisions of this title.
            (2) Claims of asbestos-tobacco victims.--Any claimant who 
        receives a payment from Fund II, shall execute a release of 
        liability for all tobacco-caused harm.
            (3) Contribution claims for past amounts paid.--
        Notwithstanding any other provision of law, no tobacco company 
        shall be liable for contribution, indemnity, or otherwise to 
        any asbestos trust or asbestos defendant on any claim arising 
        from payments or obligations for payments to asbestos claimants 
        and asbestos/tobacco claimants made or incurred prior to the 
        date of enactment of this Act. All such claims by asbestos 
        defendants or asbestos trusts filed as of the date of enactment 
        of this Act are terminated.
            (4) Contribution claims for future amounts.--
        Notwithstanding any other provision of law, in any contribution 
        or similar action against a tobacco company arising from the 
        payments or obligations for payments to asbestos claimants and 
        asbestos/tobacco claimants made or incurred after the date of 
        enactment of this Act, an asbestos trust or asbestos defendant 
        may aggregate and establish a claim based on valid statistical 
        proof on a consolidated basis. In such an action, the 
        assessment of damages to a tobacco company defendant shall be 
        based upon the degree of relative causation as between asbestos 
        and tobacco based on statistical data applicable to relevant 
        disease categories.
            (5) Rights reserved.--Nothing in this subsection shall be 
        construed to limit the rights of any person that chooses not to 
        receive compensation from Fund II to commence a civil action 
        against any tobacco company.
    (d) Liability of Asbestos Trusts and Asbestos Defendants.--
            (1) Acceptance of fund ii award.--A claimant who accepts a 
        payment from Fund II shall execute a release of liability for 
        all tobacco-caused harm, and shall not recover from an asbestos 
        defendant in any civil action any damages for any portion of 
        the harm caused by exposure to tobacco.
            (2) Fund ii claimant's right to sue.--A claimant, whose 
        claim has been denied by the trustees for Fund II, or who has 
        rejected the offer of a payment from Fund II, may pursue a 
        civil action against a tobacco defendant or asbestos defendant 
        for personal injury attributable to both tobacco and asbestos, 
        to the extent that such action is otherwise permissible under 
        applicable law.
            (3) Succession to claimant's rights.--Any asbestos 
        defendant that pays a part or all of a judgment that includes 
        damages for tobacco-caused harm may elect--
                    (A) to--
                            (i) succeed to the rights of the claimant 
                        involved, in the same proportion that the 
                        payment by the defendant in the action involved 
                        bears to the total amount of the judgment; and
                            (ii) to request compensation on behalf of 
                        the claimant from Fund II as in the same manner 
                        as if the claimant had made a timely and proper 
                        election to receive such compensation, and on 
                        the same basis as other claimants similarly 
                        situated; or
                    (B) to pursue an action for indemnity or 
                contribution against any tobacco company.
            (4) Contribution claims against asbestos companies.--An 
        asbestos trust or asbestos defendant shall not be liable to a 
        tobacco company for contribution, indemnity, or otherwise with 
        respect to any claim arising from payments or obligations for 
        payments to asbestos claimants or for exposure to tobacco and 
        asbestos made or incurred either prior to or by virtue of, the 
        enactment of this Act. All such claims filed as of the date of 
        enactment of this Act are terminated.
    (e) Preservation of Joint Liability for Asbestos-Caused Injury or 
Condition.--Nothing in this title shall be construed to--
            (1) limit any joint liability under otherwise applicable 
        law among asbestos defendants or asbestos trusts for the 
        portion of a claimant's harm caused by asbestos;
            (2) limit the ability of any individual to claim that his 
        or her harm was caused by asbestos; or
            (3) delay the resolution of a claim brought by any 
        individual against an asbestos trust or asbestos defendant for 
        compensation for harm caused by asbestos.

                     TITLE XIII--VETERANS' BENEFITS

SEC. 1301. RECOVERY BY SECRETARY OF VETERANS AFFAIRS.

    Title 38, United States Code, is amended by adding after part VI 
the following:

    ``PART VII--RECOVERY OF COMPENSATION COSTS FOR TOBACCO-RELATED 
                          DISABILITY OR DEATH

``Chapter 91--Tort liability for disability or death due to tobacco use

``Sec.
``9101. Recovery by Secretary of Veterans Affairs
``9102. Regulations
``9103. Limitation or repeal of other provisions for recovery of 
                            compensation
``9104. Exemption from annual limitation on damages
``Sec.  9101. Recovery by Secretary of Veterans Affairs
    ``(a) Conditions; exceptions; persons liable; amount of recovery; 
subrogation.--In any case in which the Secretary is authorized or 
required by law to provide compensation under this title for disability 
or death from injury or disease attributable in whole or in part to the 
use of tobacco products by a veteran during the veterans active 
military, naval, or air service under circumstances creating a tort 
liability upon a participating tobacco product manufacturer, 
distributor, or retailer of a tobacco product (other than or in 
addition to the United States) to pay damages therefor, the Secretary 
shall have a right to recover (independent of the rights of the injured 
or diseased veteran) from said participating tobacco product 
manufacturer, distributor, or retailer the cost of the compensation 
paid or to be paid and shall, as to this right, be subrogated to any 
right or claim that the injured or diseased veteran, his or her 
guardian, personal representative, estate, dependents, or survivors has 
against such third person to the extent of the cost of the compensation 
paid or to be paid.
    ``(b) Enforcement procedure; intervention; joinder of parties; 
State or Federal court proceedings.--The Secretary may, to enforce such 
right under subsection (a) of this section:
            ``(1) intervene or join in any action or proceeding brought 
        by the injured or diseased veteran, his or her guardian, 
        personal representative, estate, dependents, or survivors, 
        against the participating tobacco product manufacturer, 
        distributor, or retailer of a tobacco product who is liable for 
        the injury or disease; or
            ``(2) if such action or proceeding is not commenced within 
        six months after the first day on which compensation is paid by 
        the Secretary in connection with the injury or disease 
        involved, institute and prosecute legal proceedings against the 
        participating tobacco product manufacturer, distributor, or 
        retailer of a tobacco product who is liable for the injury or 
        disease, in a State or Federal court, either alone (in its own 
        name or in the name of the injured veteran, his or her 
        guardian, personal representative, estate, dependents, or 
        survivors) or in conjunction with the injured or diseased 
        veteran, his or her guardian, personal representative, estate, 
        dependents, or survivors.
    ``(c) Credits to appropriations.--Any amount recovered or collected 
under this section for compensation paid by the Secretary shall be 
credited to a revolving fund established in the Treasury of the United 
States known as the Department of Veterans Affairs Tobacco Recovery 
Fund (hereafter called the Fund). The Fund shall be available to the 
Secretary without fiscal year limitation for purposes of veterans 
benefit programs, including administrative costs. The Secretary may 
transfer such funds as deemed necessary to the various Department of 
Veterans Affairs appropriations, which shall remain available until 
expended.
    ``(d) Definition.--For purposes of this section, the term 
participating tobacco product manufacturer, distributor, or retailer of 
a tobacco product means a manufacturer, distributor, or retailer of 
tobacco products that has entered into a consent decree as such term is 
defined in section 701 of the National Tobacco Policy and Youth Smoking 
Reduction Act and that is a signatory to the Protocol as such term is 
defined in section 6 of that Act.
``Sec.  9102. Regulations
    ``(a) Determination and establishment of present value of 
compensation to be paid.--The Secretary may prescribe regulations to 
carry out this chapter, including regulations with respect to the 
determination and establishment of the present value of compensation to 
be paid to an injured or diseased veteran or his or her surviving 
spouse, child, or parent.
    ``(b) Settlement, release and waiver of claims.--To the extent 
prescribed by regulations under subsection (a) of this section, the 
Secretary may--
            ``(1) compromise, or settle and execute a release of, any 
        claim which the Secretary has by virtue of the right 
        established by section 9101 of this title; or
            ``(2) waive any such claim, in whole or in part, for the 
        convenience of the Government, or if he or she determines that 
        collection would result in undue hardship upon the veteran who 
        suffered the injury or disease or his or her surviving spouse, 
        child or parent resulting in payment of compensation.
    ``(c) Damages recoverable for personal injury unaffected.--No 
action taken by the Secretary in connection with the rights afforded 
under this chapter shall operate to deny to the injured veteran or his 
or her surviving spouse, child or parent the recovery for that portion 
of his or her damage not covered hereunder.
``Sec.  9103. Limitation or repeal of other provisions for recovery of 
              compensation
    ``This chapter does not limit or repeal any other provision of law 
providing for recovery by the Secretary of the cost of compensation 
described in section 9101 of this title.
``Sec.  9104. Exemption from annual limitation on damages
    ``Any amount recovered under section 9101 of this title for 
compensation paid or to be paid by the Secretary for disability or 
death from injury or disease attributable in whole or in part to the 
use of tobacco products by a veteran during the veterans active 
military, naval, or air service shall not be subject to the limitation 
on the annual amount of damages for which the participating tobacco 
product manufacturers, distributors, and retailers may be found liable 
as provided in the National Tobacco Policy and Youth Smoking Reduction 
Act and shall not be counted in computing the annual amount of damages 
for purposes of that section.''.
```