II 

110TH CONGRESS 

1ST SESSION S. 1834 

To improve the health of Americans through the gradual elimination of 

tobacco products. 

IN THE SENATE OF THE UNITED STATES 

JULY 19, 2007 

Mr. ENZI introduced the following bill; which was read twice and referred to 

the Committee on Finance 

A BILL 

To improve the health of Americans through the gradual 

elimination of tobacco products. 

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

5 ‘‘Help End Addiction to Lethal Tobacco Habits Act’’ or 

6 the ‘‘HEALTH Act’’. 

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

8 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—REQUIREMENTS ON MANUFACTURERS 

Sec. 101. Reports. 


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Sec. 102. Tobacco testing. 

Sec. 103. Warning labels. 

TITLE II—TOBACCO USE SURVEYS 

Sec. 201. Tobacco use survey. 

TITLE III—REDUCTION IN UNITED STATES TOBACCO USERS 

Sec. 301. Amendment to the Public Health Service Act. 

TITLE IV—REVENUE PROVISIONS 

Sec. 401. Increase in excise tax rate on tobacco products based on relative 

health risk. 

TITLE V—CESSATION AND PREVENTION 

Sec. 501. Food and Drug Administration Tobacco Risk Classification Panel. 

Sec. 502. Authority to prohibit nicotine. 

Sec. 503. Counter-advertising. 

Sec. 504. Medicare coverage of counseling for cessation of tobacco use. 

Sec. 505. Medicare coverage of tobacco cessation pharmacotherapy. 

Sec. 506. Tobacco cessation for Federal employee health benefits plans. 

Sec. 507. Matching grants for States that use a significant portion of master 

settlement agreement funds for tobacco control and cessation. 

1 TITLE I—REQUIREMENTS ON 

2 MANUFACTURERS 

3 SEC. 101. REPORTS. 

4 (a) FEDERAL CIGARETTE LABELING.—Section 7(a) 

5 of the Federal Cigarette Labeling and Advertising Act (15 

6 U.S.C. 1335a(a)) is amended by striking ‘‘which does not 

7 identify the company which uses the ingredients or the 

8 brand of cigarettes which contain the ingredients’’ and in9 serting ‘‘and a specification of the quantity of nicotine and 

10 tar contained in each such product’’. 

11 (b) SMOKELESS TOBACCO.—Section 7(a) of the Com12 prehensive Smokeless Tobacco Health Education Act of 

13 1986 (15 U.S.C. 4403(a)(1)) is amended— 


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1 (1) in subparagraph (A), by striking ‘‘which 

2 does not identify the company which uses the ingre3 dients or the brand of smokeless tobacco which con4 tains the ingredients’’; and 

5 (2) in subparagraph (B), by inserting ‘‘and tar’’ 

6 after ‘‘nicotine’’. 

7 SEC. 102. TOBACCO TESTING. 

8 (a) FEDERAL CIGARETTE LABELING AND ADVER9 TISING ACT.—Section 7 of the Federal Cigarette Labeling 

10 and Advertising Act (15 U.S.C. 1335a) is amended by 

11 adding at the end the following: 

12 ‘‘(c) TOBACCO TESTING.— 

13 ‘‘(1) STANDARDS AND PRACTICES FOR MEAS14 URING AND ANALYZING TOBACCO CONSTITUENTS.— 

15 ‘‘(A) IN GENERAL.—Not later than 18 

16 months after the date of enactment of the Help 

17 End Addiction to Lethal Tobacco Habits Act, 

18 the Secretary of Commerce, acting through the 

19 Director of the National Institute of Standards 

20 and Technology and in consultation with the 

21 Secretary of Health and Human Services, shall 

22 develop and publish in the Federal Register 

23 standards and best practices for— 

24 ‘‘(i) the sampling of tobacco and to25 bacco products for testing; and 


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1 ‘‘(ii) accurate measurement and anal2 ysis of tobacco constituents, including— 

3 ‘‘(I) nicotine; 

4 ‘‘(II) tar; 

5 ‘‘(III) carbon monoxide; and 

6 ‘‘(IV) any other constituent as 

7 may be necessary. 

8 ‘‘(B) COMPONENTS.—The standards and 

9 best practices developed under subparagraph 

10 (A) shall address the need for— 

11 ‘‘(i) standardized measurement and 

12 verification practices for tobacco con13 stituent reports made by all persons under 

14 this section, taking into account— 

15 ‘‘(I) protocols and standards cur16 rently in use by persons making such 

17 reports; 

18 ‘‘(II) existing protocols and 

19 standards developed by members of 

20 the public health community; 

21 ‘‘(III) the report required under 

22 subsection (b)(1)(B); and 

23 ‘‘(IV) such other factors as the 

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1 retary of Health and Human Services 

2 determine to be appropriate; 

3 ‘‘(ii) measurement and verification of 

4 actions taken to reduce the harm or expo5 sure from tobacco products; and 

6 ‘‘(iii) such other measurement and 

7 verification standards as the Secretary of 

8 Commerce and the Secretary of Health 

9 and Human Services determine to be ap10 propriate. 

11 ‘‘(C) OPTIONS.—The standards and best 

12 practices developed under subparagraph (A) 

13 may require the measurement of the content, 

14 rather than the yield of tobacco ingredients, 

15 components, or additives. 

16 ‘‘(2) APPLICABLE LAW.—To ensure that high 

17 quality information is produced, the standards and 

18 best practices developed under paragraph (1) shall 

19 conform to the guidelines established under section 

20 515 of the Treasury and General Government Ap21 propriations Act, 2001 (commonly known as the 

22 Data Quality Act) (44 U.S.C. 3516 note; 114 Stat. 

23 2763A–1543), as enacted into law by section 1(a)(3) 

24 of Public Law 106–554. 


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1 ‘‘(3) TRANSITIONAL MEASUREMENT STAND2 ARDS.—Until such time as the standards and best 

3 practices developed under paragraph (1) are avail4 able, persons reporting to Federal Trade Commis5 sion under this section shall use— 

6 ‘‘(A) the conditions described in the Inter7 national Organization for Standardization 

8 standard ISO 3308; 

9 ‘‘(B) the International Organization for 

10 Standardization standards 4387 to determine 

11 tar, 10315 to determine nicotine, and 8454 to 

12 determine carbon monoxide; and 

13 ‘‘(C) the sampling specified in the Inter14 national Organization for Standardization 

15 standard ISO 8243.’’. 

16 (b) COMPREHENSIVE SMOKELESS TOBACCO HEALTH

17 EDUCATION ACT OF 1986.—Section 4 of the Comprehen18 sive Smokeless Tobacco Health Education Act of 1986 (15 

19 U.S.C. 4403) is amended by adding at the end the fol20 lowing: 

21 ‘‘(c) TOBACCO TESTING.— 

22 ‘‘(1) STANDARDS AND PRACTICES FOR MEAS23 URING AND ANALYZING SMOKELESS TOBACCO CON24 STITUENTS.— 


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1 ‘‘(A) IN GENERAL.—Not later than 18 

2 months after the date of enactment of the Help 

3 End Addiction to Lethal Tobacco Habits Act, 

4 the Secretary of Commerce, acting through the 

5 Director of the National Institute of Standards 

6 and Technology and in consultation with the 

7 Secretary of Health and Human Services, shall 

8 develop and publish in the Federal Register 

9 standards and best practices for— 

10 ‘‘(i) the sampling of smokeless tobacco 

11 and tobacco products for testing; and 

12 ‘‘(ii) accurate measurement and anal13 ysis of smokeless tobacco constituents, in14 cluding— 

15 ‘‘(I) nicotine; 

16 ‘‘(II) tar; 

17 ‘‘(III) nitrosamines; and 

18 ‘‘(IV) any other constituent as 

19 may be necessary. 

20 ‘‘(B) COMPONENTS.—The standards and 

21 best practices developed under subparagraph 

22 (A) shall address the need for— 

23 ‘‘(i) standardized measurement and 

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1 stituent reports made by all persons under 

2 this section, taking into account— 

3 ‘‘(I) protocols and standards cur4 rently in use by persons making such 

5 reports; 

6 ‘‘(II) existing protocols and 

7 standards developed by members of 

8 the public health community; 

9 ‘‘(III) the report required under 

10 subsection (b)(1)(B); and 

11 ‘‘(IV) such other factors as the 

12 Secretary of Commerce and the Sec13 retary of Health and Human Services 

14 determine to be appropriate; 

15 ‘‘(ii) measurement and verification of 

16 actions taken to reduce the harm or expo17 sure from smokeless tobacco products; and 

18 ‘‘(iii) such other measurement and 

19 verification standards as the Secretary of 

20 Commerce and the Secretary of Health 

21 and Human Services determine to be ap22 propriate. 

23 ‘‘(C) OPTIONS.—The standards and best 

24 practices developed under subparagraph (A) 

25 may require the measurement of the content, 


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1 rather than the yield of tobacco ingredients, 

2 components, or additives. 

3 ‘‘(2) APPLICABLE LAW.—To ensure that high 

4 quality information is produced, the standards and 

5 best practices developed under paragraph (1) shall 

6 conform to the guidelines established under section 

7 515 of the Treasury and General Government Ap8 propriations Act, 2001 (commonly known as the 

9 Data Quality Act) (44 U.S.C. 3516 note; 114 Stat. 

10 2763A–1543), as enacted into law by section 1(a)(3) 

11 of Public Law 106–554. 

12 ‘‘(3) TRANSITIONAL MEASUREMENT STAND13 ARDS.—Until such time as the standards and best 

14 practices developed under paragraph (1) are avail15 able, persons reporting to Federal Trade Commis16 sion under this section shall use— 

17 ‘‘(A) the International Organization for 

18 Standardization standards 15592–3 to deter19 mine tar and 15152 to determine nicotine; and 

20 ‘‘(B) the sampling specified in the Inter21 national Organization for Standardization 

22 standard ISO 4874.’’. 

23 SEC. 103. WARNING LABELS. 

24 (a) CIGARETTE LABELING AND ADVERTISING WARN25 INGS.— 


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1 (1) IN GENERAL.—Section 4(a) of the Federal 

2 Cigarette Labeling and Advertising Act (15 U.S.C. 

3 1333(a)) is amended— 

4 (A) in paragraph (1) by striking ‘‘section, 

5 one of the following labels:’’ and all that fol6 lows, and inserting the following: 

7 ‘‘section— 

8 ‘‘(A) 1 of the following labels: 

9 ‘‘SURGEON GENERAL’S WARNING: Smok10 ing kills. 

11 ‘‘SURGEON GENERAL’S WARNING: Smok12 ing seriously harms you and others around you. 

13 ‘‘SURGEON GENERAL’S WARNING: Smok14 ers die younger. 

15 ‘‘SURGEON GENERAL’S WARNING: Smok16 ing clogs the arteries and causes heart attacks and 

17 strokes. 

18 ‘‘SURGEON GENERAL’S WARNING: Ciga19 rettes cause fatal lung cancer. 

20 ‘‘SURGEON GENERAL’S WARNING: Smok21 ing when pregnant harms your baby. 

22 ‘‘SURGEON GENERAL’S WARNING: Pro23 tect children: don’t make them breathe your smoke. 

24 ‘‘SURGEON GENERAL’S WARNING: Smok25 ing is highly addictive, don’t start. 


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1 ‘‘SURGEON GENERAL’S WARNING: Stop2 ping smoking reduces the risk of fatal heart and 

3 lung diseases. 

4 ‘‘SURGEON GENERAL’S WARNING: Smok5 ing can cause a slow and painful death. 

6 ‘‘SURGEON GENERAL’S WARNING: Get 

7 help now to stop smoking: (telephone/postal address/ 

8 Internet address/consult your doctor/pharmacist). 

9 ‘‘SURGEON GENERAL’S WARNING: Smok10 ing may reduce the blood flow and causes impotence. 

11 ‘‘SURGEON GENERAL’S WARNING: Smok12 ing causes aging of the skin. 

13 ‘‘SURGEON GENERAL’S WARNING: Smok14 ing can damage the sperm and decreases fertility. 

15 ‘‘SURGEON GENERAL’S WARNING: Smoke 

16 contains the toxic chemicals benzene, nitrosamines, 

17 formaldehyde, and hydrogen cyanide. 

18 ‘‘SURGEON GENERAL’S WARNING: Ciga19 rettes are addictive; and 

20 ‘‘(B) a label on 1 side of the package indicating the 

21 tar, nicotine, and carbon monoxide yields of the cigarettes 

22 so that at least 10 percent of the corresponding surface 

23 is covered, such label to be accompanied by the following 

24 statements: ‘Nicotine is addictive.’, and ‘Tar and Carbon 

25 Monoxide are harmful; there is no safe level.’.’’; 


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1 (B) in paragraph (2) by striking ‘‘section, 

2 one of the following labels:’’ and all that fol3 lows, and inserting the following: 

4 ‘‘section— 

5 ‘‘(A) 1 of the following labels: 

6 ‘‘SURGEON GENERAL’S WARNING: Smok7 ing kills. 

8 ‘‘SURGEON GENERAL’S WARNING: Smok9 ing seriously harms you and others around you. 

10 ‘‘SURGEON GENERAL’S WARNING: Smok11 ers die younger. 

12 ‘‘SURGEON GENERAL’S WARNING: Smok13 ing clogs the arteries and causes heart attacks and 

14 strokes. 

15 ‘‘SURGEON GENERAL’S WARNING: Ciga16 rettes cause fatal lung cancer. 

17 ‘‘SURGEON GENERAL’S WARNING: Smok18 ing when pregnant harms your baby. 

19 ‘‘SURGEON GENERAL’S WARNING: Pro20 tect children: don’t make them breathe your smoke. 

21 ‘‘SURGEON GENERAL’S WARNING: Smok22 ing is highly addictive, don’t start. 

23 ‘‘SURGEON GENERAL’S WARNING: Stop24 ping smoking reduces the risk of fatal heart and 

25 lung diseases. 


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1 ‘‘SURGEON GENERAL’S WARNING: Smok2 ing can cause a slow and painful death. 

3 ‘‘SURGEON GENERAL’S WARNING: Get 

4 help now to stop smoking: (telephone/postal address/ 

5 Internet address/consult your doctor/pharmacist). 

6 ‘‘SURGEON GENERAL’S WARNING: Smok7 ing may reduce the blood flow and causes impotence. 

8 ‘‘SURGEON GENERAL’S WARNING: Smok9 ing causes aging of the skin. 

10 ‘‘SURGEON GENERAL’S WARNING: Smok11 ing can damage the sperm and decreases fertility. 

12 ‘‘SURGEON GENERAL’S WARNING: Smoke 

13 contains the toxic chemicals benzene, nitrosamines, 

14 formaldehyde, and hydrogen cyanide. 

15 ‘‘SURGEON GENERAL’S WARNING: Ciga16 rettes are addictive; and 

17 ‘‘(B) a label on the advertisement indicating the tar, 

18 nicotine, and carbon monoxide yields of the cigarettes so 

19 that at least 10 percent of the surface is covered, such 

20 label to be accompanied by the following statements: ‘Nic21 otine is addictive.’, and ‘Tar and Carbon Monoxide are 

22 harmful; there is no safe level.’.’’; and 

23 (C) in paragraph (3) by striking ‘‘section, 

24 one of the following labels:’’ and all that fol25 lows, and inserting the following: 


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1 ‘‘section— 

2 ‘‘(A) 1 of the following labels: 

3 ‘‘SURGEON GENERAL’S WARNING: Smok4 ing kills. 

5 ‘‘SURGEON GENERAL’S WARNING: Smok6 ing seriously harms you and others around you. 

7 ‘‘SURGEON GENERAL’S WARNING: Smok8 ers die younger. 

9 ‘‘SURGEON GENERAL’S WARNING: Smok10 ing clogs the arteries and causes heart attacks and 

11 strokes. 

12 ‘‘SURGEON GENERAL’S WARNING: Ciga13 rettes cause fatal lung cancer. 

14 ‘‘SURGEON GENERAL’S WARNING: Smok15 ing when pregnant harms your baby. 

16 ‘‘SURGEON GENERAL’S WARNING: Pro17 tect children: don’t make them breathe your smoke. 

18 ‘‘SURGEON GENERAL’S WARNING: Smok19 ing is highly addictive, don’t start. 

20 ‘‘SURGEON GENERAL’S WARNING: Stop21 ping smoking reduces the risk of fatal heart and 

22 lung diseases. 

23 ‘‘SURGEON GENERAL’S WARNING: Smok24 ing can cause a slow and painful death. 


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1 ‘‘SURGEON GENERAL’S WARNING: Get 

2 help now to stop smoking: (telephone/postal address/ 

3 Internet address/consult your doctor/pharmacist). 

4 ‘‘SURGEON GENERAL’S WARNING: Smok5 ing may reduce the blood flow and causes impotence. 

6 ‘‘SURGEON GENERAL’S WARNING: Smok7 ing causes aging of the skin. 

8 ‘‘SURGEON GENERAL’S WARNING: Smok9 ing can damage the sperm and decreases fertility. 

10 ‘‘SURGEON GENERAL’S WARNING: Smoke 

11 contains the toxic chemicals benzene, nitrosamines, 

12 formaldehyde, and hydrogen cyanide. 

13 ‘‘SURGEON GENERAL’S WARNING: Ciga14 rettes are addictive; and 

15 ‘‘(B) a label on the advertisement indicating the tar, 

16 nicotine, and carbon monoxide yields of the cigarettes so 

17 that at least 10 percent of the surface is covered, such 

18 label to be accompanied by the following statements: ‘Nic19 otine is addictive.’, and ‘Tar and Carbon Monoxide are 

20 harmful; there is no safe level.’.’’. 

21 (2) LOCATION AND GRAPHICS.—Section 4(b) of 

22 the Federal Cigarette Labeling and Advertising Act 

23 (15 U.S.C. 1333(b)) is amended— 

24 (A) in paragraph (1), by striking ‘‘shall be 

25 located in the place label statements were’’ and 


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1 all that follows through the end and inserting 

2 ‘‘shall: 

3 ‘‘(A) Occupy at least 50 percent of the front 

4 and rear panels of the package on which it is dis5 played and printed directly on the package under6 neath the cellophane or other clear wrapping. All 

7 text of the warning described in such paragraph (1) 

8 shall be in conspicuous and legible 17-point type, un9 less the text of the label statement would occupy 

10 more than 70 percent of such area, in which case 

11 the text may be in a smaller conspicuous and legible 

12 type size. The text shall be black on a white back13 ground, or white on a black background, in a man14 ner that contrasts, by typography, layout, or color, 

15 with all other printed material on the package. 

16 ‘‘(B) Be accompanied by color graphics depict17 ing the negative health consequences of smoking.’’; 

18 (B) in paragraph (2), by adding at the end 

19 the following: ‘‘Each label statement shall be 

20 accompanied by color graphics depicting the 

21 negative health consequences of smoking.’’; and 

22 (C) in paragraph (3), by adding at the end 

23 the following: ‘‘Each label statement shall be 

24 accompanied by color graphics depicting the 

25 negative health consequences of smoking.’’. 


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1 (3) LABEL ROTATION.—Section 4(c)(1) of the 

2 Federal Cigarette Labeling and Advertising Act (15 

3 U.S.C. 1333(c)(1)) is amended— 

4 (A) by striking ‘‘quarterly’’; and 

5 (B) by inserting before the period at the 

6 end ‘‘in equal distribution and display.’’. 

7 (b) SMOKELESS TOBACCO LABELS AND ADVER8 TISING WARNINGS.—Section 3(a)(1) of the Comprehen9 sive Smokeless Tobacco Health Education Act of 1986 (15 

10 U.S.C. 4402(a)(1)) is amended— 

11 (1) in subsection (a)(1), by striking ‘‘Act, one 

12 of the following labels:’’ and all that follows, and in13 serting the following: 

14 ‘‘Act— 

15 ‘‘(A) 1 of the following labels: 

16 ‘‘WARNING: Smokeless tobacco is addictive. 

17 ‘‘WARNING: This product causes mouth dis18 eases. 

19 ‘‘WARNING: Use of this product can cause 

20 cancer. 

21 ‘‘WARNING: This tobacco product can damage 

22 your health and is addictive. 

23 ‘‘WARNING: This product contains cancer24 causing agents. 

25 ‘‘WARNING: Tobacco can kill. 


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1 ‘‘WARNING: Tobacco users die younger. 

2 ‘‘WARNING: Tobacco use when pregnant 

3 harms your baby. 

4 ‘‘WARNING: Tobacco is highly addictive, don’t 

5 start. 

6 ‘‘WARNING: Get help now to stop using to7 bacco: (telephone/postal address/Internet address/ 

8 consult your doctor/pharmacist). 

9 ‘‘WARNING: Tobacco contains the toxic chemi10 cals benzene, nitrosamines, formaldehyde, and hy11 drogen cyanide; and 

12 ‘‘(B) a label on 1 side of the package indicating the 

13 tar, nicotine, and nitrosamines yields of the products so 

14 that at least 10 percent of the corresponding surface is 

15 covered, such label to be accompanied by the following 

16 statements: ‘Nicotine is addictive.’, and ‘Tar and 

17 Nitrosamines are harmful; there is no safe level.’.’’; 

18 (2) by striking subsection (b) and inserting the 

19 following: 

20 ‘‘(b) LABEL FORMAT.—Each label statement re21 quired by paragraph (1) shall: 

22 ‘‘(1) Be located on the 2 principal display pan23 els of the package, but not the bottom, and each 

24 label statement shall comprise at least 40 percent of 

25 such panels of the package. All of the text of the 


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1 warning described in paragraph (1) shall appear in 

2 17 point conspicuous and legible type in a manner 

3 that contrasts by typography, layout, or color, with 

4 all other printed material on the package. The text 

5 of the label statement shall be black on a white 

6 background, or white on a black background, in an 

7 alternating fashion under the plan submitted under 

8 subsection (d), except that if the text of a label 

9 statement would occupy more than 70 percent of the 

10 area specified by subparagraph (A), such text may 

11 appear in a smaller type size.’’; and 

12 (3) in subsection (c)(2)— 

13 (A) by striking ‘‘every 4 months’’; and 

14 (B) by inserting before the period at the 

15 end ‘‘in equal distribution and display’’. 

16 TITLE II—TOBACCO USE 

17 SURVEYS 

18 SEC. 201. TOBACCO USE SURVEY. 

19 (a) ANNUAL SURVEY.—Not later than January 1, 

20 2008, and annually thereafter, the Secretary shall conduct 

21 a survey to support the calculation of allowances under 

22 title XXX of the Public Health Service Act (as added by 

23 section 301). Such survey shall— 

24 (1) determine— 


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1 (A) the percentage of all individuals who 

2 used a tobacco product within the 30-day period 

3 prior to the conduct of the survey; and 

4 (B) the percentage of individuals identified 

5 under paragraph (1) who identify each brand of 

6 each type of tobacco product as the usual brand 

7 smoked or used within such 30-day period; 

8 (2) be conducted in coordination with existing 

9 survey activities; 

10 (3) be based on a nationally representative sam11 ple of at least 200,000 completed interviews of indi12 viduals; 

13 (4) be a household-based in person survey; and 

14 (5) contain any other elements as may be nec15 essary. 

16 (b) EXISTING DATA SOURCES.—The Secretary may 

17 combine, replace or otherwise alter the following existing 

18 surveys to collect needed data in the most efficient and 

19 cost-effective manner: 

20 (1) The National Health Interview Survey. 

21 (2) The National Survey on Drug Use and 

22 Health under section 505 of the Public Health Serv23 ice Act (42 U.S.C. 290aa–4). 

24 (3) The Behavior Risk Factor Surveillance Sur25 vey. 


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1 (4) The Monitoring the Future study. 

2 (5) The Youth Risk Behavior Surveillance Sys3 tem. 

4 (6) The current Population Survey Tobacco 

5 Use Supplement. 

6 TITLE III—REDUCTION IN 

7 UNITED STATES TOBACCO 

8 USERS 

9 SEC. 301. AMENDMENT TO THE PUBLIC HEALTH SERVICE 

10 ACT. 

11 The Public Health Service Act (42 U.S.C. 201 et 

12 seq.) is amended by adding at the end the following: 

13 ‘‘TITLE XXX—REDUCTION IN 

14 UNITED STATES TOBACCO 

15 USERS 

16 ‘‘SEC. 3001. PURPOSE. 

17 ‘‘It is the purpose of this title to— 

18 ‘‘(1) reduce the adverse health effects of to19 bacco use through reductions in the annual size of 

20 the tobacco market from 2006 levels in the United 

21 States; 

22 ‘‘(2) effectuate such reductions by requiring 

23 compliance by tobacco manufacturers with pre24 scribed user limitations by specified deadlines, which 

25 limitations may be met through alternative methods 


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1 of compliance provided by a market share allocation 

2 and transfer system; and 

3 ‘‘(3) encourage tobacco control and prevention, 

4 and smoking cessation. 

5 ‘‘SEC. 3002. DEFINITIONS. 

6 ‘‘In this title: 

7 ‘‘(1) ACTUAL 2006 TOBACCO USERS.—The term 

8 ‘actual 2006 tobacco users’ for affected brands 

9 means the total number of United States tobacco 

10 users in calendar year 2006 as determined using 

11 data reported in surveys under title II of the Help 

12 End Addiction to Lethal Tobacco Habits Act. 

13 ‘‘(2) AFFECTED BRAND.—The term ‘affected 

14 brand’ means a brand marketed by an affected man15 ufacturer that is subject to tobacco user reduction 

16 requirements or limitations under this title. 

17 ‘‘(3) AFFECTED MANUFACTURER.—The term 

18 ‘affected manufacturer’ means a manufacturer of to19 bacco products (as defined in section 5702 of the In20 ternal Revenue Code of 1986) who applies for a per21 mit under section 40.62 of title 26, Code of Federal 

22 Regulations (or successor regulations). 

23 ‘‘(4) ALLOWABLE 2006 TOBACCO USERS.—The 

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1 ally enforceable limitation on the number of United 

2 States tobacco users applicable to the brand. 

3 ‘‘(5) ALLOWANCE.—The term ‘allowance’ 

4 means an authorization, allocated to an affected 

5 brand by the Secretary under this title, to sell to, 

6 during or after a specified calendar year, 1 United 

7 States tobacco user. 

8 ‘‘(6) BASELINE.—The term ‘baseline’ means 

9 the number of United States tobacco users of an af10 fected brand, calculated as follows: 

11 ‘‘(A) For each affected brand that was in 

12 commercial operation as of January 1, 2007, 

13 the baseline shall be the annual average number 

14 of United States tobacco users of the brand 

15 during calendar years 2004, 2005, and 2006, 

16 as determined using data recorded by the De17 partment of Health and Human Services pursu18 ant to surveys under the following: 

19 ‘‘(i) The National Health Interview 

20 Survey. 

21 ‘‘(ii) The National Survey on Drug 

22 Use and Health under section 505 of the 

23 Public Health Service Act (42 U.S.C. 

24 290aa–4). 


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1 ‘‘(iii) The Behavior Risk Factor Sur2 veillance Survey. 

3 ‘‘(iv) The Monitoring the Future 

4 study. 

5 ‘‘(v) The Youth Risk Behavior Sur6 veillance System. 

7 ‘‘(vi) The current Population Survey 

8 Tobacco Use Supplement. 

9 ‘‘(B) For any affected brand for which 

10 such survey data was not collected, the baseline 

11 shall be the annual average number of tobacco 

12 users for those years, as calculated pursuant to 

13 a method which the Secretary shall prescribe by 

14 regulation not later than 9 months after the 

15 date of enactment of this title. 

16 ‘‘(C) The Secretary may, upon application 

17 or on his or her own motion, supplement data 

18 needed in support of this title and correct any 

19 factual errors in data from which baselines have 

20 been calculated. Corrected data shall be used 

21 for purposes of issuing allowances under the 

22 title. Such corrections shall not be subject to ju23 dicial review, nor shall the failure of the Sec24 retary to correct an alleged factual error in 

25 such reports be subject to judicial review. 


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1 ‘‘(7) BRAND.—The term ‘brand’ has the mean2 ing given such term in section 5702 of the Internal 

3 Revenue Code of 1986. 

4 ‘‘(8) COMPLIANCE PLAN.—The term ‘compli5 ance plan’ means a schedule and description of the 

6 method or methods for compliance and certification 

7 by the owner or operator that the manufacturer is 

8 in compliance with the requirements of this title. 

9 ‘‘(9) DESIGNATED REPRESENTATIVE.—The 

10 term ‘designated representative’ means a responsible 

11 person or official authorized by the owner or oper12 ator of an affected brand to represent the owner or 

13 operator in matters pertaining to the holding, trans14 fer, or disposition of allowances allocated to an af15 fected brand, and the submission of and compliance 

16 with permits, permit applications, and compliance 

17 plans for the affected brand. 

18 ‘‘(10) EXISTING BRAND.—The term ‘existing 

19 brand’ means a brand of tobacco product that com20 menced commercial distribution before the date of 

21 enactment of this title. 

22 ‘‘(11) NEW BRAND.—The term ‘new brand’ 

23 means a brand of tobacco product that commences 

24 commercial distribution on or after the date of en25 actment of this title. 


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1 ‘‘(12) PERMITTING AUTHORITY.—The term 

2 ‘permitting authority’ means the Alcohol and To3 bacco Tax and Trade Bureau. 

4 ‘‘(13) UNITED STATES TOBACCO USER.—The 

5 term ‘United States tobacco user’ means a person in 

6 the United States who uses a tobacco product (as 

7 defined in section 5702 of the Internal Revenue 

8 Code of 1986) as determined using surveys de9 scribed in title II of the Help End Addiction to Le10 thal Tobacco Habits Act. 

11 ‘‘SEC. 3003. UNITED STATES TOBACCO USER ALLOWANCE 

12 PROGRAM FOR EXISTING AND NEW BRANDS. 

13 ‘‘(a) ALLOCATIONS OF ANNUAL ALLOWANCES FOR

14 EXISTING AND NEW BRANDS.— 

15 ‘‘(1) IN GENERAL.—For the United States to16 bacco user limitation programs under this title, the 

17 Secretary shall allocate annual allowances for the af18 fected brand, to be held or distributed by the des19 ignated representative of the owner or operator of 

20 each affected brand of an affected manufacturer in 

21 accordance with this title, in an amount that is 

22 equal to the annual United States tobacco user limi23 tation calculated under this section and sections 

24 3004, 3005, or 3007, except as otherwise specifically 

25 provided elsewhere in this title. 


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1 ‘‘(2) LIMITATION.— 

2 ‘‘(A) IN GENERAL.—Except as provided in 

3 section 3007, beginning on January 1, 2015, 

4 the Secretary shall not allocate annual allow5 ances pursuant to section 3005 in such an 

6 amount as would result in total annual allow7 ances in excess of 30,000,000. For purposes of 

8 the preceding sentence, the Secretary shall not 

9 take into account unused allowances carried 

10 forward by owners and operators of affected 

11 brands or by other persons holding such allow12 ances, following the year for which they were al13 located. 

14 ‘‘(B) PRO RATA REDUCTIONS.—If deter15 mined necessary to comply with the limitation 

16 imposed under subparagraph (A), the Secretary 

17 shall reduce, on a pro rata basis, the Phase II 

18 allowance allocations for each affected brand, 

19 subject to the requirements of section 3005. 

20 ‘‘(3) ANNUAL ALLOCATION.—The Secretary 

21 shall allocate allowances for each affected brand of 

22 an affected manufacturer annually, as provided for 

23 in this section, section 3004, and section 3005. 

24 ‘‘(4) REMOVAL OF BRANDS.—Except as pro25 vided for in section 3007, the removal of an existing 


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1 affected brand or manufacturer from commercial op2 eration at any time after the date of the enactment 

3 of this title shall not terminate or otherwise affect 

4 the allocation of allowances pursuant to section 3004 

5 or 3005 to which the brand is entitled. Allowances 

6 shall be allocated by the Secretary without cost to 

7 the recipient. 

8 ‘‘(5) ELECTION.—Any person who may make 

9 an election concerning the amount of allowances to 

10 be allocated to a brand or brands shall make such 

11 election and so inform the Secretary not later than 

12 March 31, 2015, in the case of an election under 

13 section 3005. If such person fails to make such elec14 tion, the Secretary shall set forth for each brand 

15 owned or operated by such person, the amount of al16 lowances reflecting the election that would, in the 

17 judgment of the Secretary, provide the greatest ben18 efit for the owner or operator of the brand. 

19 ‘‘(b) ALLOWANCE TRANSFER SYSTEM.— 

20 ‘‘(1) IN GENERAL.—Allowances allocated under 

21 this title may be transferred among the designated 

22 representatives of the owners or operators of af23 fected manufacturers under this title and any other 

24 person who holds such allowances, as provided for by 


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1 the allowance system regulations promulgated under 

2 paragraph (2). 

3 ‘‘(2) REGULATIONS.—Not later than 18 months 

4 after the date of enactment of this title, the Sec5 retary shall promulgate regulations for purposes of 

6 paragraph (1). Such regulations shall— 

7 ‘‘(A) provide for the establishment of the 

8 allowance system described in this section, in9 cluding requirements for the allocation, trans10 fer, and use of allowances under this title; 

11 ‘‘(B) prohibit the use of any allowance 

12 prior to the calendar year for which the allow13 ance was allocated; and 

14 ‘‘(C) provide, consistent with the purposes 

15 of this title, for the identification of unused al16 lowances, and for such unused allowances to be 

17 carried forward and added to allowances allo18 cated in subsequent years, including allowances 

19 allocated to brands subject to Phase I require20 ments (as described in section 3004) which are 

21 applied to limitation requirements in Phase II 

22 (as described in section 3005); and 

23 ‘‘(D) establish a system for issuing, record24 ing, and tracking allowances under this section, 

25 such regulations to specify all necessary proceVerDate Aug 31 2005 08:51 Jul 20, 2007 Jkt 059200 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 E:\BILLS\S1834.IS S1834

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1 dures and requirements for an orderly and com2 petitive functioning of the allowance system, 

3 and all allowance allocations and transfers 

4 shall, upon recordation by the Secretary, be 

5 deemed a part of each brand’s permit require6 ments pursuant to section 3006, without any 

7 further permit review and revision. 

8 ‘‘(3) CERTIFICATION.—Transfers of allowances 

9 under this subsection shall not be effective until 

10 written certification of the transfer, signed by a re11 sponsible official of each party to the transfer, is re12 ceived and recorded by the Secretary within 30 days. 

13 ‘‘(4) PREALLOCATION TRANSFERS.—Regula14 tions under this subsection shall permit the transfer 

15 of allowances prior to the issuance of such allow16 ances under subsection (a). Recorded preallocation 

17 transfers shall be deducted by the Secretary from 

18 the number of allowances which would otherwise be 

19 allocated to the transferor, and added to those allow20 ances allocated to the transferee. Preallocation 

21 transfers shall not affect the prohibition contained in 

22 this subsection against the use of allowances prior to 

23 the year for which they are allocated. 

24 ‘‘(c) NEW AFFECTED BRANDS.— 


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1 ‘‘(1) IN GENERAL.—After January 1, 2009, it 

2 shall be unlawful for a new affected brand to sell to 

3 a number of United States tobacco users in excess 

4 of the number of allowances held for the brand by 

5 the brand’s owner or operator. Such new affected 

6 brands shall not be eligible for an allocation of 

7 United States tobacco user allowances under this 

8 section. New affected brands may obtain allowances 

9 from any person, in accordance with this section. 

10 ‘‘(2) ENFORCEMENT.—The owner or operator 

11 of any new affected brand in violation of this sub12 section shall be liable for fulfilling the obligations 

13 specified in section 3008. 

14 ‘‘(d) NATURE OF ALLOWANCES.— 

15 ‘‘(1) IN GENERAL.—An allowance allocated 

16 under this title shall be a limited authorization to 

17 sell to 1 United States tobacco user in accordance 

18 with the provisions of this title. Such allowance shall 

19 not constitute a property right. Allowances under 

20 this title, once allocated to a person by the Sec21 retary, may be received, held, and temporarily or 

22 permanently transferred in accordance with this title 

23 (and the regulations promulgated hereunder) with24 out regard to whether or not a permit is in effect 

25 under the permitting authority with respect to the 


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1 brand for which such allowance was originally allo2 cated and recorded. 

3 ‘‘(2) RULES OF CONSTRUCTION.—Nothing in 

4 this title or in any other provision of law shall be 

5 construed to limit the authority of the United States 

6 to terminate or limit an authorization under this 

7 title. Nothing in this section relating to allowances 

8 shall be construed as affecting the application of, or 

9 compliance with, any other provision of this title to 

10 an affected brand or manufacturer. Nothing in this 

11 section shall be construed as requiring a change of 

12 any kind in any State law regulating excise tax rates 

13 or affecting any State law regarding such State reg14 ulation or as limiting State regulation under such a 

15 State law. 

16 ‘‘(e) PROHIBITIONS.— 

17 ‘‘(1) IN GENERAL.—It shall be unlawful— 

18 ‘‘(A) for any person to hold, use, or trans19 fer any allowance allocated under this title, ex20 cept in accordance with regulations promul21 gated by the Secretary; 

22 ‘‘(B) for any affected brand to sell to 

23 United States tobacco users in excess of the 

24 number of allowances held for that brand for 


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1 that year by the owner or operator of the 

2 brand. 

3 ‘‘(2) EFFECT OF PROVISION.—Upon the alloca4 tion of allowances under this title, the prohibition 

5 contained in paragraph (1)(B) shall supersede any 

6 other United States tobacco user limitation applica7 ble under this title to the brands for which such al8 lowances are allocated. 

9 ‘‘(3) LIMITATION.—An allowance under this 

10 title may not be used prior to the calendar year for 

11 which such allowance is allocated. 

12 ‘‘(4) RULE OF CONSTRUCTION.—Nothing in 

13 this section, or in the allowance system regulations 

14 promulgated under this section, shall be construed to 

15 relieve the Secretary of the Treasury of permitting, 

16 monitoring, and enforcement obligations under this 

17 title of under the Internal Revenue Code of 1986, 

18 nor relieve affected manufacturers of their require19 ments and liabilities under this title or such Code. 

20 ‘‘(f) APPLICABILITY OF THE ANTITRUST LAWS.— 

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

22 shall be construed to effect— 

23 ‘‘(A) the applicability of the antitrust laws 

24 to the transfer, use, or sale of allowances; or 


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1 ‘‘(B) the authority of the Federal Trade 

2 Commission under any provision of law relating 

3 to unfair methods of competition or anti4 competitive acts or practices. 

5 ‘‘(2) DEFINITION.—As used in this section, the 

6 term ‘antitrust laws’ means those Acts set forth in 

7 section 1 of the Clayton Act (15 U.S.C. 12). 

8 ‘‘SEC. 3004. PHASE I TOBACCO USER REQUIREMENTS. 

9 ‘‘(a) UNITED STATES TOBACCO USER LIMITA10 TIONS.— 

11 ‘‘(1) IN GENERAL.—Not later than 9 months 

12 after the date of enactment of this title, the Sec13 retary shall publish in the Federal Register a list of 

14 affected brands and their allowances for the years 

15 2009 through 2015. Such allowances for each such 

16 brand for 2009 shall equal the product of— 

17 ‘‘(A) the average of— 

18 ‘‘(i) the baseline of the brand in19 volved, divided by the total number of 

20 United States tobacco users as determined 

21 using survey data under section 201 of the 

22 Help End Addiction to Lethal Tobacco 

23 Habits Act; and 

24 ‘‘(ii) the production of that brand pro25 duced in that year for the domestic market 


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1 (as determined by the Secretary of Agri2 culture), divided by the total production 

3 for the domestic market for that year (as 

4 determined by the Secretary of Agri5 culture); and 

6 ‘‘(B) the total number of United States to7 bacco users (as determined using survey data 

8 under section 201 of the Help End Addiction to 

9 Lethal Tobacco Habits Act). 

10 ‘‘(2) PROHIBITION.—After January 1, 2009, it 

11 shall be unlawful for any affected brand to sell to 

12 United States tobacco users in excess of the limita13 tion determined under paragraph (1) for such brand 

14 (stated as a total number of allowances in such list 

15 for phase I), unless— 

16 ‘‘(A) the user limitations applicable to such 

17 brand have been achieved pursuant to this sec18 tion and section 3005; or 

19 ‘‘(B) the owner or operator of such brand 

20 holds allowances to sell to not less than the 

21 brand’s total annual users; 

22 except that, after January 1, 2015, the user limita23 tions established in this section shall be superseded 

24 by those established under section 3005. The owner 

25 or operator of any brand in violation of this section 


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•S 1834 IS

1 shall be fully liable for such violation including liabil2 ity for fulfilling the obligations specified in section 

3 3008. 

4 ‘‘(b) SUBSTITUTIONS.—The owner or operator of an 

5 affected brand under subsection (a) may include in its sec6 tion 3006 permit application and proposed compliance 

7 plan, a proposal to reassign, in whole or in part, the af8 fected brand’s tobacco user reduction requirements to any 

9 other brand or brands under the control of such owner 

10 or operator. Such proposal shall specify— 

11 ‘‘(1) the designation of the substitute brand or 

12 brands to which any part of the reduction obliga13 tions of subsection (a) shall be required, in addition 

14 to, or in lieu of, any original affected brands des15 ignated under such subsection; 

16 ‘‘(2) the original affected brand’s baseline, the 

17 actual and allowable 2006 tobacco users, and the au18 thorized annual allowance allocation stated in the 

19 list in subsection (a)(1); 

20 ‘‘(3) the calculation of the annual average 

21 United States tobacco users for calendar years 2004, 

22 2005, and 2006, sold to by the substitute brand or 

23 brands, based on the baseline for each brand; 


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1 ‘‘(4) the user limitations that would be applica2 ble to the original and substitute affected brands 

3 under the substitution proposal; 

4 ‘‘(5) documentation, to the satisfaction of the 

5 Secretary, that the reassigned user limitations will, 

6 in total, achieve the same or greater user reduction 

7 than would have been achieved by the original af8 fected brand and the substitute brand or brands 

9 without such substitution; and 

10 ‘‘(6) such other information as the Secretary 

11 may require. 

12 ‘‘(c) SECRETARY’S ACTION ON SUBSTITUTION PRO13 POSALS.— 

14 ‘‘(1) FINAL ACTION.— 

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

16 take final action on a substitution proposal 

17 under subsection (b) in accordance with section 

18 3006 if the substitution proposal complies with 

19 the requirements of this subsection. 

20 ‘‘(B) APPROVAL.—The Secretary may ap21 prove a substitution proposal under subsection 

22 (b) in whole or in part and with such modifica23 tions or conditions as may be consistent with 

24 the orderly functioning of the allowance system 


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1 under this title and which will ensure the user 

2 reductions contemplated by this title. 

3 ‘‘(C) DISAPPROVAL.—If a substitution pro4 posal does not meet the requirements of sub5 section (b), the Secretary shall disapprove it. 

6 ‘‘(D) LIMITATION.—The owner or operator 

7 of a brand on the list in subsection (a) shall not 

8 substitute another brand or brands without the 

9 prior approval of the Secretary. 

10 ‘‘(2) ACTIONS UPON APPROVAL.— 

11 ‘‘(A) IN GENERAL.—Upon the approval of 

12 a substitution proposal under this subsection, 

13 each substitute brand, and each manufacturer 

14 with such brand, shall be deemed to be affected 

15 under this title, and the Secretary of the Treas16 ury shall revise any permits to the original and 

17 substitute affected manufacturer and brand in 

18 accordance with the approved substitution plan 

19 and section 3006. 

20 ‘‘(B) REVISED ALLOCATION.—The Sec21 retary shall allocate allowances for the original 

22 and substitute affected brands in accordance 

23 with the approved substitution proposal pursu24 ant to section 3003. 


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1 ‘‘(C) LIMITATION.—It shall be unlawful for 

2 any manufacturer or brand that is allocated al3 lowances pursuant to this section to sell to 

4 United States tobacco users in excess of the 

5 limitation provided for in the approved substi6 tution plan unless the owner or operator of each 

7 brand governed by the permit and approved 

8 substitution plan holds allowances to sell to not 

9 less than the brand’s total annual users. The 

10 owner or operator of any original or substitute 

11 affected brand operated in violation of this sub12 section shall be fully liable for such violation, 

13 including liability for fulfilling the obligations 

14 specified in section 3008. 

15 ‘‘(3) DISAPPROVAL.—If a substitution proposal 

16 is disapproved, the Secretary shall allocate allow17 ances to the original affected brand or brands in ac18 cordance with subsection (a). 

19 ‘‘(4) RULE OF CONSTRUCTION.—Nothing in 

20 this subsection shall be construed as an event of 

21 force majeur or a commercial impractibility or in 

22 any other way as a basis for excused nonperform23 ance by a manufacturer. 


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1 ‘‘SEC. 3005. PHASE II TOBACCO USER REQUIREMENTS. 

2 ‘‘(a) APPLICABILITY.—Beginning on January 1, 

3 2015, each existing affected brand shall be subject to the 

4 limitations or requirements of this section. 

5 ‘‘(b) AFFECTED BRANDS AND MANUFACTURERS.— 

6 ‘‘(1) AFFECTED BRANDS.—Each brand that is 

7 subject to an annual tobacco user limitation under 

8 this section shall be deemed to be an affected brand 

9 under this title. 

10 ‘‘(2) AFFECTED MANUFACTURERS.—Each man11 ufacturer that includes one or more affected brands 

12 is an affected manufacturer. 

13 ‘‘(3) BRANDS NOT IN OPERATION IN 2008.—In 

14 the case of a brand that was not in operation during 

15 calendar year 2008, the United States tobacco users 

16 for a calendar year after 2008, as determined by the 

17 Secretary, shall be used in lieu of the 2008 rate. 

18 ‘‘(4) PUBLICATION OF LIST.— 

19 ‘‘(A) PROPOSED LIST.—Not later than De20 cember 31, 2013, the Secretary shall publish a 

21 proposed list of the annual Phase II allowance 

22 allocations for the years 2016 through 2027. 

23 ‘‘(B) FINAL LIST.—After notice and op24 portunity for public comment, but not later 

25 than November 30, 2014, the Secretary shall 

26 publish a final list of the annual Phase II alloVerDate Aug 31 2005 08:51 Jul 20, 2007 Jkt 059200 PO 00000 Frm 00040 Fmt 6652 Sfmt 6201 E:\BILLS\S1834.IS S1834

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•S 1834 IS

1 cations, subject to the provisions of section 

2 3005. 

3 ‘‘(c) LIABILITY.—The owner or operator of any 

4 brand operated in violation of this section shall be liable 

5 under this Act for fulfilling the obligations specified in sec6 tion 3008. 

7 ‘‘(d) UNLAWFUL ACTS.—It shall be unlawful for a 

8 brand— 

9 ‘‘(1) beginning on January 1, 2015, to exceed 

10 an annual United States tobacco user limitation 

11 equal to the product of the brand’s baseline multiplied by 2 12 ⁄3, unless the owner or operator of such 

13 brand holds allowances to sell to not less than the 

14 brand’s total annual users; and 

15 ‘‘(2) beginning on January 1, 2027, to exceed 

16 an annual United States tobacco user limitation 

17 equal to the product of its baseline multiplied by 0.1, 

18 unless the owner or operator holds allowances to sell 

19 to not less than the brand’s total annual United 

20 States tobacco users. 

21 ‘‘SEC. 3006. PERMITS AND COMPLIANCE PLANS. 

22 ‘‘(a) PERMIT PROGRAM.—The provisions of this title 

23 shall be implemented, subject to section 3003, through the 

24 modification of, or an addition to, a permit issued to a 

25 brand that is subject to this title and issued and enforced 


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1 in accordance with the provisions of section 5713 of the 

2 Internal Revenue Code of 1986. Any such permit issued 

3 by the Secretary of the Treasury shall prohibit— 

4 ‘‘(1) annual sales to United States tobacco 

5 users in excess of the number of allowances the 

6 owner or operator, or the designated representative 

7 of the owners or operators, of the brand hold for the 

8 brand under this title; 

9 ‘‘(2) the brand from exceeding applicable 

10 United States tobacco user levels; 

11 ‘‘(3) the use of any allowance prior to the year 

12 for which it was allocated; and 

13 ‘‘(4) noncompliance with any other provision of 

14 the permit. 

15 No permit shall be issued under this section that is incon16 sistent with the requirements of this title, and section 

17 5713 of the Internal Revenue Code of 1986, as applicable. 

18 ‘‘(b) COMPLIANCE PLAN.— 

19 ‘‘(1) IN GENERAL.—An application for a permit 

20 under this section shall contain a compliance plan 

21 with respect to compliance by the manufacturer with 

22 the requirements of this title. The Secretary may re23 quire that the owner or operator of 2 or more af24 fected manufacturers submit an integrated compliVerDate Aug 31 2005 08:51 Jul 20, 2007 Jkt 059200 PO 00000 Frm 00042 Fmt 6652 Sfmt 6201 E:\BILLS\S1834.IS S1834

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1 ance plan providing an overall plan for achieving 

2 compliance by the affected manufacturers. 

3 ‘‘(2) COVERAGE OF ALL BRANDS.—Where an 

4 affected manufacturer consists of more than 1 af5 fected brand, the compliance plan shall cover all 

6 such brands. 

7 ‘‘(3) STATEMENT THAT BRAND WILL MEET RE8 QUIREMENTS.—Except as provided under section 

9 3004(c)(1)(B), the submission of a statement by the 

10 owner or operator, or the designated representative 

11 of the owner or operator, of a brand that is subject 

12 to the limitation requirements of sections 3004 and 

13 3005, that the brand will meet the applicable limita14 tion requirements of such sections in a timely man15 ner and that the owners and operators will hold al16 lowances to sell to not less than the total annual 

17 United States tobacco users of the brand, shall be 

18 deemed to meet the proposed and approved compli19 ance planning requirements of this section and sec20 tion 5713 of the Internal Revenue Code of 1986. 

21 ‘‘(4) AUTOMATIC AMENDING OF PERMITS AND

22 PLANS.—The recording by the Secretary of a trans23 fer of allowances under this title shall be deemed to 

24 automatically amend all applicable proposed or apVerDate Aug 31 2005 08:51 Jul 20, 2007 Jkt 059200 PO 00000 Frm 00043 Fmt 6652 Sfmt 6201 E:\BILLS\S1834.IS S1834

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1 proved permit applications, compliance plans, and 

2 permits under this section. 

3 ‘‘(5) RULE OF CONSTRUCTION.—Nothing in 

4 this section shall be construed as affecting allow5 ances under this title. 

6 ‘‘(c) REGULATIONS; ISSUANCE OF PERMITS.— 

7 ‘‘(1) REGULATIONS.—Not later than 9 months 

8 after the date of the enactment of this title, the Sec9 retary of the Treasury shall promulgate regulations, 

10 in consultation with the Secretary of Health and 

11 Human Services, in accordance with sections 5712 

12 and 5713 of the Internal Revenue Code of 1986, to 

13 modify the permit program for affected manufactur14 ers under this title. 

15 ‘‘(2) ISSUANCE OF PERMITS.— 

16 ‘‘(A) IN GENERAL.—Following the promul17 gation of regulations under paragraph (1), the 

18 Secretary of the Treasury shall issue modified 

19 permits to implement the requirements of sec20 tions 3004 and 3005 and the allowances pro21 vided for under section 3003 to the owner or 

22 operator of each affected manufacturer under 

23 sections 3004 and 3005. The permit issued in 

24 accordance with this subsection for an affected 

25 manufacturer shall provide that the affected 


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1 brands of the affected manufacturer may not 

2 sell to an annual number of United States to3 bacco users that is in excess of the number of 

4 allowances the owner or operator or designated 

5 representative hold for the brand. 

6 ‘‘(B) FIRST PHASE PERMITS.— 

7 ‘‘(i) IN GENERAL.—The Secretary of 

8 the Treasury shall issue permits to af9 fected manufacturers under section 5713 

10 of the Internal Revenue Code of 1986. 

11 ‘‘(ii) PERMIT APPLICATION AND COM12 PLIANCE PLAN.— 

13 ‘‘(I) IN GENERAL.—Not later 

14 than 12 months after the date of the 

15 enactment of this title, the designated 

16 representative of the owner or oper17 ator, or the owner and operator, of 

18 each affected manufacturer shall sub19 mit a permit application and compli20 ance plan for that manufacturer in 

21 accordance with regulations promul22 gated and issued by the Secretary of 

23 the Treasury under clause (i). The 

24 permit application and the compliance 

25 plan shall be binding on the owner or 


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1 operator or the designated representa2 tive of owners and operators for pur3 poses of this title, and shall be en4 forceable in lieu of a permit until a 

5 permit is issued by the Secretary of 

6 the Treasury for the manufacturer. 

7 ‘‘(II) ACTION ON COMPLIANCE

8 PLANS.—The Secretary shall review 

9 each proposed compliance plan to de10 termine whether it satisfies the re11 quirements of this title, and shall 

12 communicate such review to the Sec13 retary of the Treasury, who shall ap14 prove or disapprove such plan within 

15 6 months after the receipt of a com16 plete submission. If a plan is dis17 approved, it may be resubmitted for 

18 approval with such changes as the 

19 Secretary of the Treasury shall re20 quire consistent with the requirements 

21 of this title and within such period as 

22 the Secretary prescribes as part of 

23 such disapproval. 

24 ‘‘(C) SECOND PHASE PERMITS.— 


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1 ‘‘(i) IN GENERAL.—The Secretary of 

2 the Treasury shall issue permits to af3 fected manufacturers under section 5713 

4 of the Internal Revenue Code of 1986. 

5 ‘‘(ii) PERMIT APPLICATION AND COM6 PLIANCE PLAN.—Annually beginning in 

7 January 1, 2014, the designated represent8 ative of the owner or operator, or the 

9 owner and operator, of each affected man10 ufacturer shall submit a permit application 

11 and compliance plan for that manufacturer 

12 in accordance with regulations issued by 

13 the Secretary of the Treasury under clause 

14 (i). The permit application and the compli15 ance plan shall be binding on the owner or 

16 operator or the designated representative 

17 of owners and operators for purposes of 

18 this title, and shall be enforceable in lieu 

19 of a permit until a permit is issued by the 

20 Secretary of the Treasury for the manufac21 turer. 

22 ‘‘(D) NEW BRANDS.—The owner or oper23 ator of each manufacturer that includes a new 

24 brand shall submit a permit application and 

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1 ury not later than the date on which the brand 

2 commences operation. The Secretary of the 

3 Treasury shall issue a permit to the owner or 

4 operator of the brand, or the designated rep5 resentative thereof, if the brand satisfies the re6 quirements of sections 5712 and 5713 of the 

7 Internal Revenue Code of 1986 and this title. 

8 ‘‘(d) AMENDMENT OF PERMIT APPLICATION AND

9 COMPLIANCE PLAN.—At any time after the submission of 

10 a permit application and compliance plan under this sec11 tion, the applicant may submit a revised application and 

12 compliance plan, in accordance with the requirements of 

13 this section and the Internal Revenue Code of 1986. 

14 ‘‘(e) PROHIBITION.—It shall be unlawful— 

15 ‘‘(1) for an owner or operator, or designated 

16 representative, required to submit a permit applica17 tion or compliance plan under this title to fail to 

18 submit such application or plan in accordance with 

19 the regulations promulgated under this section or to 

20 otherwise fail to comply with regulations imple21 menting this section; and 

22 ‘‘(2) for any person to operate any manufac23 turer subject to this title except in compliance with 

24 the terms and requirements of a permit application 


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1 and compliance plan (including amendments thereto) 

2 or permit issued by the Secretary of the Treasury. 

3 For purposes of this subsection, compliance with a permit 

4 issued under section 5713 of the Internal Revenue Code 

5 of 1986 which complies with this title for manufacturers 

6 subject to this title shall be deemed to be in compliance 

7 with this subsection. 

8 ‘‘(f) CERTIFICATE OF REPRESENTATION AND MUL9 TIPLE OWNERS.— 

10 ‘‘(1) CERTIFICATE.—No permit shall be issued 

11 under this section to an affected brand until the des12 ignated representative of the owners or operators 

13 has filed a certificate of representation with regard 

14 to matters under this title, including the holding and 

15 distribution of allowances and the proceeds of trans16 actions involving allowances. Except as otherwise 

17 provided for in this subsection, where all legal or eq18 uitable title to or interest in an affected brand is 

19 held by a single person, the certification shall state 

20 that all allowances received by the brand are deemed 

21 to be held for that person. 

22 ‘‘(2) MULTIPLE OWNERS.—If there are multiple 

23 holders of a legal or equitable title to, or a leasehold 

24 interest in, such a brand, the certificate under para25 graph (1) shall state— 


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1 ‘‘(A) that allowances and the proceeds of 

2 transactions involving allowances will be deemed 

3 to be held or distributed in proportion to each 

4 holder’s legal, equitable, leasehold, or contrac5 tual reservation or entitlement; or 

6 ‘‘(B) if such multiple holders have ex7 pressly provided for a different distribution of 

8 allowances by contract, that allowances and the 

9 proceeds of transactions involving allowances 

10 will be deemed to be held or distributed in ac11 cordance with the contract. 

12 ‘‘(3) LEASEHOLDER AGREEMENTS.—A passive 

13 lessor, or a person who has an equitable interest 

14 through such lessor, whose rental payments are not 

15 based, either directly or indirectly, upon the reve16 nues or income from the affected brand shall not be 

17 deemed to be a holder of a legal, equitable, lease18 hold, or contractual interest for the purpose of hold19 ing or distributing allowances as provided in this 

20 subsection, during either the term of such leasehold 

21 or thereafter, unless expressly provided for in the 

22 leasehold agreement. 

23 ‘‘SEC. 3007. EXCESS USERS PENALTY. 

24 ‘‘(a) EXCESS USERS PENALTY.— 


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1 ‘‘(1) IN GENERAL.—The owner or operator of 

2 any brand or manufacturer subject to the require3 ments of section 3003, 3004 or 3005, that sells to 

4 United States tobacco users for any calendar year 

5 an amount in excess of the brand’s user limitation 

6 requirement or of the allowances the owner or oper7 ator holds for use for the brand for that calendar 

8 year shall be liable for the payment of an excess 

9 users penalty. 

10 ‘‘(2) DETERMINATION OF PENALTY.—The pen11 alty under paragraph (1) shall be an amount that 

12 equals the product of— 

13 ‘‘(A) the number of users in excess of the 

14 brand’s user limitation requirement or of the al15 lowances the operator holds for use for the 

16 brand for that year, as applicable; and 

17 ‘‘(B) $3,500. 

18 ‘‘(3) PAYMENT.—A penalty under this sub19 section shall be due and payable without demand to 

20 the Secretary of the Treasury. Any such payment 

21 shall be deposited in the United States Treasury 

22 pursuant to the Miscellaneous Receipts Act. Any 

23 penalty due and payable under this section shall not 

24 diminish the liability of the brand’s owner or oper25 ator for any fine, penalty, or assessment against the 


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1 brand for the same violation under any other section 

2 of this title. 

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

4 after the date of enactment of this title, the Sec5 retary shall promulgate regulations with respect to 

6 the payment of penalties under this subsection. 

7 ‘‘(b) EXCESS USERS OFFSET.— 

8 ‘‘(1) IN GENERAL.—The owner or operator of 

9 any affected manufacturer that sells to United 

10 States tobacco users during any calendar year in ex11 cess of the brand’s limitation requirement or of the 

12 allowances held for the brand for the calendar year, 

13 shall be liable to offset the excess users by an equal 

14 amount in the following calendar year, or such 

15 longer period as the Secretary of the Treasury may 

16 prescribe. 

17 ‘‘(2) PLAN.—Not later than 60 days after the 

18 end of the year in which the excess users occurred, 

19 the owner or operator of the manufacturer shall sub20 mit to the Secretary a proposed plan to achieve the 

21 offsets required under paragraph (1). Upon approval 

22 of the proposed plan by the Secretary, as submitted, 

23 modified, or conditioned, the plan shall be deemed to 

24 be a condition of the operating permit under section 


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1 3006 for the brand without further review or revi2 sion of the permit. 

3 ‘‘(3) DEDUCTION OF ALLOWANCES.—The Sec4 retary shall deduct allowances equal to the excess 

5 from those allocated for the manufacturer for the 

6 calendar year, or succeeding years during which off7 sets are required under this section, following the 

8 year in which the excess users occurred. 

9 ‘‘(c) PENALTY ADJUSTMENT.—The Secretary of the 

10 Treasury shall, by regulation, adjust the penalty amount 

11 specified in subsection (a)(2)(B) to account for the excess 

12 health costs per tobacco user and inflation, based on the 

13 change in Medical Inflation (as reported annually by the 

14 Council of Economic Advisors), on the date of enactment 

15 and annually thereafter. 

16 ‘‘(d) PROHIBITION.—It shall be unlawful for the 

17 owner or operator of any manufacturer liable for a penalty 

18 and offset under this section to fail— 

19 ‘‘(1) to pay the penalty under subsection (a); 

20 ‘‘(2) to provide, and thereafter comply with, a 

21 compliance plan as required under subsection (b); or 

22 ‘‘(3) to offset excess users as required under 

23 subsection (b). 


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1 ‘‘SEC. 3008. INVENTORIES; REPORTS; RECORDS. 

2 ‘‘(a) INVENTORIES.—Every manufacturer or im3 porter of tobacco products shall make a true and accurate 

4 inventory at the time of commencing business, at the time 

5 of concluding business, and at such other times, in such 

6 manner and form, and to include such items, as the Sec7 retary of the Treasury shall by regulation prescribe. Such 

8 inventories shall be subject to verification by any internal 

9 revenue officer. The Secretary, in consultation with the 

10 Secretary of the Treasury, shall develop and implement 

11 processes to verify allowances issued under section 3003 

12 against information in records of compliance. 

13 ‘‘(b) REPORTS.—Every manufacturer or importer of 

14 tobacco products shall make a report for each month and 

15 for any portion of a month during which such manufac16 turer or importer engages in such business. Such report 

17 shall be made regardless of whether any operations or 

18 transactions occurred during the month or portion of a 

19 month covered therein. The report for a month or portion 

20 of a month in which business is commenced or is con21 cluded shall be conspicuously marked ‘Commencing Re22 port’ or ‘Concluding Report’, respectively. The original of 

23 the report shall be submitted to the appropriate Alcohol 

24 and Tobacco Tax and Trade Bureau officer not later than 

25 the 20th day of the month succeeding the month covered 


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1 therein. Each report shall show, for the period covered, 

2 the total quantity of tobacco products— 

3 ‘‘(1) manufactured; 

4 ‘‘(2) received in bond; 

5 ‘‘(3) received by return to bond; 

6 ‘‘(4) disclosed by inventory as an overage; 

7 ‘‘(5) removed subject to tax; 

8 ‘‘(6) removed in bond; 

9 ‘‘(7) otherwise disposed of without determina10 tion of tax; 

11 ‘‘(8) disclosed by inventory as a shortage; and 

12 ‘‘(9) on hand, in bond, at the beginning of and 

13 end of the month. 

14 ‘‘(c) RECORDS.—Every affected manufacturer shall 

15 keep records in accordance with section 40.183 of title 27, 

16 Code of Federal Regulations (or successor regulations). 

17 Affected manufacturers shall retain any issued permit, 

18 compliance plan, if applicable, and any amendments there19 to, and documentation relating to allowances under section 

20 3003 received, held and temporarily or permanently trans21 ferred, including certification of such transfer together 

22 with the copy of the application and supporting docu23 ments.’’. 


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1 TITLE IV—REVENUE 

2 PROVISIONS 

3 SEC. 401. INCREASE IN EXCISE TAX RATE ON TOBACCO 

4 PRODUCTS BASED ON RELATIVE HEALTH 

5 RISK. 

6 (a) CIGARETTES.—Section 5701(b) of the Internal 

7 Revenue Code of 1986 is amended— 

8 (1) by striking ‘‘$19.50 per thousand ($17 per 

9 thousand on cigarettes removed during 2000 or 

10 2001)’’ in paragraph (1) and inserting ‘‘$19.50 plus 

11 the applicable risk amount per thousand’’, and 

12 (2) by striking ‘‘$40.95 per thousand ($35.70 

13 per thousand on cigarettes removed during 2000 or 

14 2001)’’ in paragraph (2) and inserting ‘‘$40.95 plus 

15 the applicable risk amount per thousand’’. 

16 (b) CIGARS.—Section 5701(a) of the Internal Rev17 enue Code of 1986 is amended— 

18 (1) by striking ‘‘$1.828 cents per thousand 

19 ($1.594 cents per thousand on cigars removed dur20 ing 2000 or 2001)’’ in paragraph (1) and inserting 

21 ‘‘$1.828 cents plus the applicable risk amount per 

22 thousand’’, 

23 (2) by striking ‘‘20.719 percent (18.063 percent 

24 on cigars removed during 2000 or 2001)’’ in paraVerDate Aug 31 2005 08:51 Jul 20, 2007 Jkt 059200 PO 00000 Frm 00056 Fmt 6652 Sfmt 6201 E:\BILLS\S1834.IS S1834

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1 graph (2) and inserting ‘‘20.719 percent plus the 

2 applicable risk percentage’’, and 

3 (3) by striking ‘‘$48.75 per thousand ($42.50 

4 per thousand on cigars removed during 2000 or 

5 2001)’’ in paragraph (2) and inserting ‘‘$48.75 plus 

6 the applicable risk amount per thousand’’. 

7 (c) SMOKELESS TOBACCO.—Section 5701(e) of the 

8 Internal Revenue Code of 1986 is amended— 

9 (1) by striking ‘‘58.5 cents (51 cents on snuff 

10 removed during 2000 or 2001)’’ in paragraph (1) 

11 and inserting ‘‘58.5 cents plus the applicable risk 

12 amount’’, and 

13 (2) by striking ‘‘19.5 cents (17 cents on chew14 ing tobacco removed during 2000 or 2001)’’ in para15 graph (2) and inserting ‘‘19.5 cents plus the applica16 ble risk amount’’. 

17 (d) APPLICABLE RISK AMOUNT.—Section 5701 of 

18 the Internal Revenue Code of 1986 is amended by adding 

19 at the end the following new subsection: 

20 ‘‘(p) APPLICABLE RISK AMOUNT.—With respect to 

21 each tobacco product or group of products classified by 

22 the Tobacco Risk Classification Panel under the Food and 

23 Drug Administration, the following applicable risk 

24 amounts or percentages shall apply: 


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1 ‘‘(1) Small cigarettes: Class I—$10; Class II— 

2 $20; and Class III—$30. 

3 ‘‘(2) Large cigarettes: Class I—$20; Class II— 

4 $40; and Class III—$60. 

5 ‘‘(3) Small cigars: Class I—$0.914; Class II— 

6 $1.828; and Class III—$2.742. 

7 ‘‘(4) Large cigars: Class I—5 percent; Class 

8 II—10 percent; and Class III—15 percent, but not 

9 more than $73.12. 

10 ‘‘(5) Smokeless (snuff): Class I—29.25 cents; 

11 Class II—58.5 cents; and Class III—87.75 cents. 

12 ‘‘(6) Smokeless (chewing): Class I—10 cents; 

13 Class II—20 cents; and Class III—30 cents.’’. 

14 (e) FLOOR STOCKS TAXES.— 

15 (1) IMPOSITION OF TAX.—On tobacco products 

16 and cigarette papers and tubes manufactured in or 

17 imported into the United States which are removed 

18 before January 1, 2008, and held on such date for 

19 sale by any person, there is hereby imposed a tax in 

20 an amount equal to the excess of— 

21 (A) the tax which would be imposed under 

22 section 5701 of the Internal Revenue Code of 

23 1986 on the article if the article had been re24 moved on such date, over 


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1 (B) the prior tax (if any) imposed under 

2 section 5701 of such Code on such article. 

3 (2) CREDIT AGAINST TAX.—Each person shall 

4 be allowed as a credit against the taxes imposed by 

5 paragraph (1) an amount equal to $500. Such credit 

6 shall not exceed the amount of taxes imposed by 

7 paragraph (1) on January 1, 2008, for which such 

8 person is liable. 

9 (3) LIABILITY FOR TAX AND METHOD OF PAY10 MENT.— 

11 (A) LIABILITY FOR TAX.—A person hold12 ing cigarettes on January 1, 2008, to which any 

13 tax imposed by paragraph (1) applies shall be 

14 liable for such tax. 

15 (B) METHOD OF PAYMENT.—The tax im16 posed by paragraph (1) shall be paid in such 

17 manner as the Secretary shall prescribe by reg18 ulations. 

19 (C) TIME FOR PAYMENT.—The tax im20 posed by paragraph (1) shall be paid on or be21 fore April 1, 2008. 

22 (4) ARTICLES IN FOREIGN TRADE ZONES.— 

23 Notwithstanding the Act of June 18, 1934 (48 Stat. 

24 998, 19 U.S.C. 81a) and any other provision of law, 

25 any article which is located in a foreign trade zone 


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1 on January 1, 2004, shall be subject to the tax im2 posed by paragraph (1) if— 

3 (A) internal revenue taxes have been deter4 mined, or customs duties liquidated, with re5 spect to such article before such date pursuant 

6 to a request made under the 1st proviso of sec7 tion 3(a) of such Act, or 

8 (B) such article is held on such date under 

9 the supervision of a customs officer pursuant to 

10 the 2d proviso of such section 3(a). 

11 (5) DEFINITIONS.—For purposes of this sub12 section— 

13 (A) IN GENERAL.—Terms used in this sub14 section which are also used in section 5702 of 

15 the Internal Revenue Code of 1986 shall have 

16 the respective meanings such terms have in 

17 such section. 

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

19 means the Secretary of the Treasury or the 

20 Secretary’s delegate. 

21 (6) CONTROLLED GROUPS.—Rules similar to 

22 the rules of section 5061(e)(3) of such Code shall 

23 apply for purposes of this subsection. 

24 (7) OTHER LAWS APPLICABLE.—All provisions 

25 of law, including penalties, applicable with respect to 


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1 the taxes imposed by section 5701 of such Code 

2 shall, insofar as applicable and not inconsistent with 

3 the provisions of this subsection, apply to the floor 

4 stocks taxes imposed by paragraph (1), to the same 

5 extent as if such taxes were imposed by such section 

6 5701. The Secretary may treat any person who bore 

7 the ultimate burden of the tax imposed by para8 graph (1) as the person to whom a credit or refund 

9 under such provisions may be allowed or made. 

10 (f) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply to articles removed (as defined in 

12 section 5702(k) of the Internal Revenue Code of 1986) 

13 after December 31, 2007. 

14 (g) USE OF AMOUNTS.—With respect to any increase 

15 in revenues to the Treasury resulting from the provisions 

16 of and amendments made by this section, without further 

17 appropriation— 

18 (1) 50 percent of such increase shall be trans19 ferred to the Federal Hospital Insurance Trust 

20 Fund established under section 1817 of the Social 

21 Security Act (42 U.S.C. 1395i), 

22 (2) 25 percent of such increase shall be trans23 ferred to the States through the medicaid program 

24 under title XIX of the Social Security Act (42 

25 U.S.C. 1396 et seq.), and 


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1 (3) 25 percent of such increase shall be pro2 vided to the States through matching grants for the 

3 development and administration of programs to re4 strict youth access to tobacco products as provided 

5 for in regulations promulgated by the Secretary of 

6 Health and Human Services, including grants under 

7 section 3009 of the Public Health Service Act, and 

8 for counter-advertising under section 506C of the 

9 Public Health Service Act. 

10 TITLE V—CESSATION AND 

11 PREVENTION 

12 SEC. 501. FOOD AND DRUG ADMINISTRATION TOBACCO 

13 RISK CLASSIFICATION PANEL. 

14 Chapter VII of the Federal Food, Drug, and Cos15 metic Act (21 U.S.C. 371 et seq.) is amended by adding 

16 at the end the following: 

17 ‘‘Subchapter I—Provisions Relating to 

18 Tobacco 

19 ‘‘SEC. 765. TOBACCO RISK CLASSIFICATION PANEL. 

20 ‘‘(a) TOBACCO PRODUCT CLASSES.— 

21 ‘‘(1) IN GENERAL.—There are established the 

22 following classes of tobacco products: 

23 ‘‘(A) CLASS I—GENERAL RISK.—A tobacco 

24 product or group of products with typical health 

25 risks shall be referred to as a ‘Class I product’. 


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1 ‘‘(B) CLASS II—SPECIAL RISK.—A tobacco 

2 product or group of products that cannot be 

3 classified as a Class I tobacco product because 

4 it is— 

5 ‘‘(i) of greater risk than a Class I 

6 product; or 

7 ‘‘(ii) there is insufficient evidence to 

8 classify such product or group of products 

9 as Class I products; 

10 shall be referred to as a ‘Class II product’. 

11 ‘‘(C) CLASS III—ENHANCED RISK.—A to12 bacco product or group of products that— 

13 ‘‘(i) is of greater risk than a Class II 

14 product; 

15 ‘‘(ii) there is insufficient evidence to 

16 classify such product or group of products 

17 as Class II products; or 

18 ‘‘(iii) presents a potentially unreason19 able risk of illness or injury; 

20 shall be referred to as a ‘Class III product’. 

21 ‘‘(2) DETERMINATIONS.—For purposes of this 

22 section, the classification of a tobacco product or 

23 group of products is to be determined considering— 

24 ‘‘(A) the impact on youth tobacco use and 

25 health; 


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1 ‘‘(B) data supporting actual levels of risk, 

2 exposure or harm due to the product; and 

3 ‘‘(C) any implied reduction in levels of 

4 risk, exposure or harm due to the product or its 

5 labeling. 

6 ‘‘(b) ESTABLISHMENT OF PANEL.— 

7 ‘‘(1) IN GENERAL.—For the purpose of secur8 ing recommendations with respect to the classifica9 tion of tobacco products or groups of products, the 

10 Secretary shall establish a panel of experts to be 

11 known as the Tobacco Risk Classification Panel (re12 ferred to in this section as the ‘panel’). 

13 ‘‘(2) MEMBERS.—The Secretary shall appoint 

14 to the panel individuals who are qualified by training 

15 and experience to evaluate the risk and relative risk 

16 of tobacco products and who, to the extent feasible, 

17 possess skill in the study of the health effects of to18 bacco products, or experience in tobacco cessation, 

19 control and prevention. The Secretary shall des20 ignate one of the members of such panel to serve as 

21 the chairperson. 

22 ‘‘(3) ADMINISTRATIVE PROVISIONS.— 

23 ‘‘(A) COMPENSATION AND EXPENSES.— 

24 Members of the panel (other than officers or 

25 employees of the United States), while attendVerDate Aug 31 2005 08:51 Jul 20, 2007 Jkt 059200 PO 00000 Frm 00064 Fmt 6652 Sfmt 6201 E:\BILLS\S1834.IS S1834

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1 ing meetings or conferences of the panel or oth2 erwise engaged in its business, shall be entitled 

3 to receive compensation at rates to be fixed by 

4 the Secretary, but not at rates exceeding the 

5 daily equivalent of the rate in effect for grade 

6 GS–18 of the General Schedule, for each day so 

7 engaged, including travel time, and while so 

8 serving away from their homes or regular places 

9 of business each member may be allowed travel 

10 expenses (including per diem in lieu of subsist11 ence) as authorized by section 5703 of title 5, 

12 United States Code, for persons in the Govern13 ment service employed intermittently. 

14 ‘‘(B) STAFF AND ASSISTANCE.—The Sec15 retary shall furnish the panel with adequate 

16 clerical and other necessary assistance. 

17 ‘‘(C) MEETINGS.—The panel shall meet at 

18 such times as may be appropriate to enable the 

19 Secretary to meet applicable statutory dead20 lines. 

21 ‘‘(D) LIMITATIONS.—The panel shall not 

22 be subject to the annual chartering and annual 

23 report requirements of the Federal Advisory 

24 Committee Act. Section 14 of such Act shall 

25 not apply to the duration of the panel. 


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1 ‘‘(4) DUTIES.—The panel shall make rec2 ommendations to the Secretary concerning the clas3 sification of tobacco products. 

4 ‘‘(c) CLASSIFICATION.— 

5 ‘‘(1) IN GENERAL.—Not later than 15 months 

6 after the date of enactment of this section, and as 

7 necessary thereafter for new products, the Secretary, 

8 based on the recommendations of the panel, shall 

9 classify all tobacco products into the classes estab10 lished under subsection (a). Such classification may 

11 be made for a group of similar or related products. 

12 ‘‘(2) ACTIONS OF PANEL.— 

13 ‘‘(A) IN GENERAL.—Upon the completion 

14 of the panel’s review of a tobacco product or 

15 group of products referred to it under para16 graph (1), the panel shall submit to the Sec17 retary its recommendation for the classification 

18 of the tobacco product or group of products. 

19 Any such recommendation shall contain— 

20 ‘‘(i) a summary of the reasons for the 

21 recommendation; 

22 ‘‘(ii) a summary of the data upon 

23 which the recommendation is based; and 

24 ‘‘(iii) an identification of the risks to 

25 health presented by the tobacco product or 


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1 group of products with respect to which 

2 the recommendation is made. 

3 ‘‘(B) REVIEW AND FINAL DETERMINATION

4 BY SECRETARY.—After receiving the conclu5 sions and recommendations of the panel on a 

6 matter that the panel has reviewed under this 

7 section, the Secretary shall review the conclu8 sions and recommendations, shall make a final 

9 decision on the matter, and shall notify the af10 fected persons of the decision in writing and, if 

11 the decision differs from the conclusions and 

12 recommendations of the panel, shall include the 

13 reasons for the difference. 

14 ‘‘(C) SUBMISSION OF RECOMMENDA15 TIONS.—Not later than 1 year after the date of 

16 enactment of this section, the panel shall sub17 mit to the Secretary recommendations con18 cerning all tobacco products or groups of prod19 ucts introduced or delivered for introduction 

20 into interstate commerce for commercial dis21 tribution before the date of the enactment of 

22 this section. 

23 ‘‘(3) PUBLICATION.—Upon receipt of a rec24 ommendation from a panel under paragraph (2)(C), 

25 the Secretary shall publish in the Federal Register 


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1 the panel’s recommendation and a proposed regula2 tion classifying such tobacco product or group of 

3 products under subsection (a). 

4 ‘‘(4) EXISTING PRODUCTS.—In the case of a to5 bacco product or group of products which has been 

6 introduced or delivered for introduction into inter7 state commerce for commercial distribution before 

8 the date of enactment of this section, the panel shall 

9 recommend to the Secretary that the tobacco prod10 uct or group of products be classified as a Class III 

11 product unless the panel determines that classifica12 tion of the tobacco product or group of products in 

13 such class is not necessary. If a panel does not rec14 ommend that such a tobacco product or group of 

15 products be classified as a Class III product, it shall 

16 in its recommendation to the Secretary for the clas17 sification of the tobacco product or group of prod18 ucts set forth the reasons for not recommending 

19 classification of the tobacco product in such class. 

20 ‘‘(5) NEW PRODUCTS.— 

21 ‘‘(A) IN GENERAL.—Any tobacco product 

22 or group of products which was not introduced 

23 or delivered for introduction into interstate 

24 commerce for commercial distribution before 

25 the date of the enactment of this section shall 


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•S 1834 IS

1 be classified as a Class III product unless the 

2 Secretary in response to a recommendation of 

3 the panel has classified such tobacco product or 

4 group of products as a Class I or Class II prod5 uct. 

6 ‘‘(B) LIMITATION.—A tobacco product or 

7 group of products classified as a Class III prod8 uct under this subsection shall be classified in 

9 that class until the effective date of an order of 

10 the Secretary classifying the tobacco product or 

11 group of products as a Class I or Class II prod12 uct. 

13 ‘‘(6) ACCESS TO DATA.—Any person whose to14 bacco product is specifically the subject of review by 

15 the panel shall have— 

16 ‘‘(A) the same access to data and informa17 tion submitted to the panel (except for data and 

18 information that are not available for public 

19 disclosure under section 552 of title 5, United 

20 States Code) as the Secretary; and 

21 ‘‘(B) the opportunity to submit, for review 

22 by the panel, additional information, which 

23 shall be submitted to the Secretary for prompt 

24 transmittal to the panel. 


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1 ‘‘(7) MEETINGS.—Any meetings of the panel 

2 shall provide adequate time for initial presentations 

3 and for response to any differing views by persons 

4 whose tobacco products are specifically the subject of 

5 panel review, and shall encourage free and open par6 ticipation by all interested persons. 

7 ‘‘(d) CLASSIFICATION CHANGES.— 

8 ‘‘(1) IN GENERAL.—Based on new information 

9 concerning a tobacco product or group of products, 

10 the Secretary may by regulation change the classi11 fication of such tobacco product or group of prod12 ucts. In promulgating a regulation regarding a 

13 change in the classification of a tobacco product or 

14 group of products, the Secretary may secure from 

15 the panel a recommendation concerning the proposed 

16 change in the classification of the tobacco product or 

17 group of products and shall publish in the Federal 

18 Register any recommendation submitted to the Sec19 retary by the panel with respect to such change. 

20 ‘‘(2) CLASS CHANGES.—By regulation promul21 gated under paragraph (1), the Secretary may 

22 change the classification of a tobacco product from 

23 Class III to Class II or Class I only if the appro24 priate relative risk determination has been made.’’. 


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1 SEC. 502. AUTHORITY TO PROHIBIT NICOTINE. 

2 Subchapter I of chapter VII of the Federal Food, 

3 Drug, and Cosmetic Act (as amended by section 501) is 

4 further amended by adding at the end the following: 

5 ‘‘SEC. 766. AUTHORITY TO PROHIBIT NICOTINE. 

6 ‘‘The Secretary may prohibit the introduction or de7 livery for introduction into interstate commerce of any 

8 product that contains nicotine if such product has no 

9 health benefit.’’. 

10 SEC. 503. COUNTER-ADVERTISING. 

11 Part A of title V of the Public Health Service Act 

12 (42 U.S.C. 290aa et seq.) is amended by adding at the 

13 end the following: 

14 ‘‘SEC. 506C. TOBACCO USE COUNTER-ADVERTISING. 

15 ‘‘The Secretary, acting through the Administrator of 

16 the Substance Abuse and Mental Health Services Admin17 istration, shall carry out a campaign of counter-adver18 tising with respect to tobacco use. The campaign shall con19 sist of the placement of pro-health advertisements regard20 ing tobacco use on television, on radio, in print, on bill21 boards, on movie trailers, on the Internet, and in other 

22 media.’’. 

23 SEC. 504. MEDICARE COVERAGE OF COUNSELING FOR CES24 SATION OF TOBACCO USE. 

25 (a) COVERAGE.—Section 1861(s)(2) of the Social Se26 curity Act (42 U.S.C. 1395x(s)(2)) is amended— 


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•S 1834 IS

1 (1) in subparagraph (Z), by striking ‘‘and’’ at 

2 the end; 

3 (2) in subparagraph (AA), by inserting ‘‘and’’ 

4 at the end; and 

5 (3) by adding at the end the following new sub6 paragraph: 

7 ‘‘(BB) counseling for cessation of tobacco use 

8 (as defined in subsection (ccc));’’. 

9 (b) SERVICES DESCRIBED.—Section 1861 of the So10 cial Security Act (42 U.S.C. 1395x) is amended by adding 

11 at the end the following new subsection: 

12 ‘‘(ccc) COUNSELING FOR CESSATION OF TOBACCO

13 USE.—(1)(A) Subject to subparagraph (B), the term 

14 ‘counseling for cessation of tobacco use’ means diagnostic, 

15 therapy, and counseling services for cessation of tobacco 

16 use for individuals who use tobacco products or who are 

17 being treated for tobacco use which are furnished— 

18 ‘‘(i) by or under the supervision of a physician; 

19 ‘‘(ii) by a practitioner described in clause (i), 

20 (iii), (iv), (v) or (vi) of section 1842(b)(18)(C); or 

21 ‘‘(iii) by a licensed tobacco cessation counselor 

22 (as defined in paragraph (2)). 

23 ‘‘(B) Such term is limited to— 

24 ‘‘(i) services recommended in ‘Treating Tobacco 

25 Use and Dependence: A Clinical Practice Guideline’, 


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1 published by the Public Health Service in June 

2 2000, or any subsequent modification of such Guide3 line; and 

4 ‘‘(ii) such other services that the Secretary rec5 ognizes to be effective. 

6 ‘‘(2) In this subsection, the term ‘licensed tobacco 

7 cessation counselor’ means a tobacco cessation counselor 

8 who— 

9 ‘‘(A) is licensed as such by the State (or in a 

10 State which does not license tobacco cessation coun11 selors as such, is legally authorized to perform the 

12 services of a tobacco cessation counselor in the juris13 diction in which the counselor performs such serv14 ices); and 

15 ‘‘(B) meets uniform minimum standards relat16 ing to basic knowledge, qualification training, con17 tinuing education, and documentation that are es18 tablished by the Secretary for purposes of this sub19 section.’’. 

20 (c) PAYMENT AND ELIMINATION OF COST-SHARING

21 FOR COUNSELING FOR CESSATION OF TOBACCO USE.— 

22 (1) PAYMENT AND ELIMINATION OF COINSUR23 ANCE.—Section 1833(a)(1) of the Social Security 

24 Act (42 U.S.C. 1395l(a)(1)) is amended— 

25 (A) by striking ‘‘and’’ before ‘‘(V)’’; and 


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•S 1834 IS

1 (B) by inserting before the semicolon at 

2 the end the following: ‘‘, and (W) with respect 

3 to counseling for cessation of tobacco use (as 

4 defined in section 1861(ccc)), the amount paid 

5 shall be 100 percent of the lesser of the actual 

6 charge for the service or the amount determined 

7 by a fee schedule established by the Secretary 

8 for purposes of this subparagraph’’. 

9 (2) ELIMINATION OF COINSURANCE IN OUT10 PATIENT HOSPITAL SETTINGS.— 

11 (A) EXCLUSION FROM OPD FEE SCHED12 ULE.—Section 1833(t)(1)(B)(iv) of the Social 

13 Security Act (42 U.S.C. 1395l(t)(1)(B)(iv)) is 

14 amended by striking ‘‘and diagnostic mammog15 raphy’’ and inserting ‘‘, diagnostic mammog16 raphy, or counseling for cessation of tobacco 

17 use (as defined in section 1861(ccc))’’. 

18 (B) CONFORMING AMENDMENTS.—Section 

19 1833(a)(2) of the Social Security Act (42 

20 U.S.C. 1395l(a)(2)) is amended— 

21 (i) in subparagraph (F), by striking 

22 ‘‘and’’ after the semicolon at the end; 

23 (ii) in subparagraph (G)(ii), by strik24 ing the comma at the end and inserting ‘‘; 

25 and’’; and 


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1 (iii) by inserting after subparagraph 

2 (G)(ii) the following new subparagraph: 

3 ‘‘(H) with respect to counseling for ces4 sation of tobacco use (as defined in section 

5 1861(ccc)) furnished by an outpatient depart6 ment of a hospital, the amount determined 

7 under paragraph (1)(W),’’. 

8 (3) ELIMINATION OF DEDUCTIBLE.—The first 

9 sentence of section 1833(b) of the Social Security 

10 Act (42 U.S.C. 1395l(b)) is amended— 

11 (A) by striking ‘‘and’’ before ‘‘(8)’’; and 

12 (B) by inserting before the period the fol13 lowing: ‘‘, and (9) such deductible shall not 

14 apply with respect to counseling for cessation of 

15 tobacco use (as defined in section 1861(ccc))’’. 

16 (d) APPLICATION OF LIMITS ON BILLING.—Section 

17 1842(b)(18)(C) of the Social Security Act (42 U.S.C. 

18 1395u(b)(18)(C)) is amended by adding at the end the 

19 following new clause: 

20 ‘‘(vii) A licensed tobacco cessation counselor (as 

21 defined in section 1861(ccc)(2)).’’. 

22 (e) INCLUSION AS PART OF INITIAL PREVENTIVE

23 PHYSICAL EXAMINATION.—Section 1861(ww)(2) of the 

24 Social Security Act (42 U.S.C. 1395x(ww)(2)) is amended 

25 by adding at the end the following new subparagraph: 


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1 ‘‘(M) Counseling for cessation of tobacco use 

2 (as defined in subsection (ccc)).’’. 

3 (f) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to services furnished on or after 

5 the date that is 1 year after the date of enactment of this 

6 Act. 

7 SEC. 505. MEDICARE COVERAGE OF TOBACCO CESSATION 

8 PHARMACOTHERAPY. 

9 Section 1860D–2(e)(1) of the Social Security Act (42 

10 U.S.C. 1395w–102(e)(1)) is amended— 

11 (1) in subparagraph (A), by striking ‘‘or’’ after 

12 the semicolon at the end; 

13 (2) in subparagraph (B), by striking the comma 

14 at the end and inserting ‘‘; or’’; and 

15 (3) by inserting after subparagraph (B) the fol16 lowing new subparagraph: 

17 ‘‘(C) any agent approved by the Food and 

18 Drug Administration for purposes of promoting, 

19 and when used to promote, tobacco cessation 

20 that may be dispensed without a prescription 

21 (commonly referred to as an ‘over-the-counter’ 

22 drug), but only if such an agent is prescribed 

23 by a physician (or other person authorized to 

24 prescribe under State law),’’. 


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1 SEC. 506. TOBACCO CESSATION FOR FEDERAL EMPLOYEE 

2 HEALTH BENEFITS PLANS. 

3 (a) CONTRACT REQUIREMENT.—Section 8902 of title 

4 5, United States Code, is amended by adding at the end 

5 the following: 

6 ‘‘(p) Each contract under this chapter shall require 

7 the carrier to provide for the establishment and mainte8 nance of a tobacco cessation program.’’. 

9 (b) EFFECTIVE DATE AND APPLICATION.—The 

10 amendment made by this section shall take effect on the 

11 date of enactment of this Act and apply with respect to 

12 contracts for health benefits plans under chapter 89 of 

13 title 5, United States Code, which take effect on and after 

14 January of the first calendar year following 1 year after 

15 the date of enactment of this Act. 

16 SEC. 507. MATCHING GRANTS FOR STATES THAT USE A SIG17 NIFICANT PORTION OF MASTER SETTLEMENT 

18 AGREEMENT FUNDS FOR TOBACCO CONTROL 

19 AND CESSATION. 

20 Title XXX of the Public Health Service Act, as added 

21 by section 301, is amended by adding at the end the fol22 lowing: 


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1 ‘‘SEC. 3009. MATCHING GRANTS FOR STATES THAT USE A 

2 SIGNIFICANT PORTION OF MASTER SETTLE3 MENT AGREEMENT FUNDS FOR TOBACCO 

4 CONTROL AND CESSATION. 

5 ‘‘(a) IN GENERAL.—The Secretary may award 

6 matching grants to eligible States to enable such States 

7 to carry out additional tobacco control and cessation ac8 tivities. 

9 ‘‘(b) ELIGIBILITY.—To be eligible to receive a grant 

10 under subsection (a), a State shall— 

11 ‘‘(1) demonstrate to the satisfaction of the Sec12 retary that, with respect to the calendar year pre13 ceding the year in which the State is applying for 

14 such a grant, the State expended in excess of 25 

15 percent of the funds paid to the State for such year 

16 as part of the comprehensive settlement of Novem17 ber 1998 referred to in section 1903(d)(3)(B)(i) of 

18 the Social Security Act on tobacco control and ces19 sation activities; and 

20 ‘‘(2) submit to the Secretary an application at 

21 such time, in such manner, and containing such in22 formation as the Secretary may require. 

23 ‘‘(c) AMOUNT OF GRANT.—With respect to a grant 

24 under this section, an eligible State may receive not to 

25 exceed an amount equal to 50 percent of the amount exVerDate Aug 31 2005 08:51 Jul 20, 2007 Jkt 059200 PO 00000 Frm 00078 Fmt 6652 Sfmt 6201 E:\BILLS\S1834.IS S1834

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1 pended by the State in excess of the 25 percent of funds 

2 described in subsection (b)(1) for the year involved. 

3 ‘‘(d) FUNDING.—The Secretary shall use amounts 

4 made available in each fiscal year under section 401(g)(3) 

5 of the Help End Addiction to Lethal Tobacco Habits Act 

6 to carry out this section.’’. 

Æ 


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