‘‘(8) DIVIDENDS.—There shall be included the
amount of any dividends excluded from gross income
pursuant to section 116.’’
(3) Section 854 of such Code is amended by
adding at the end the following new subsection:
‘‘(c) TREATMENT UNDER SECTION 116.—
‘‘(1) IN
GENERAL.—For purposes of section
116, in the case of any dividend (other than a divi-
dend described in subsection (a)) received from a
regulated investment company which meets the re-
quirements of section 852 for the taxable year in
which it paid the dividend, a portion of such divi-
dend shall be treated as excludable under section
116 based on the portion of the company’s gross in-
come (determined without regard to gain from the
sale or other disposition of stock or securities) which
consists of dividends which are so excludable.
‘‘(2) NOTICE TO SHAREHOLDERS.—The amount
of any distribution by a regulated investment com-
pany which may be taken into account as a dividend
for purposes of the exclusion under section 116 shall
not exceed the amount so designated by the com-
pany in a written notice to its shareholders mailed
not later than 45 days after the close of its taxable
year.’’
(4) The table of sections for part III of sub-
chapter B of chapter 1 of such Code is amended by
inserting after the item relating to section 115 the
following new item:
‘‘Sec. 116. Dividends from tobacco companies which achieve youth
smoking reduction targets.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to taxable years begin-
ning after the date of the enactment of this Act.
SEC. 3. CHILD TOBACCO USE SURVEYS.
(a) ANNUAL PERFORMANCE SURVEY.—Not later
than October 1, 1999, and annually thereafter, the Sec-
retary of Health and Human Services (hereafter in this
section referred to as the ‘‘Secretary’’) shall conduct a sur-
vey to determine—
(1) the percentage of all young individuals who
used a type of tobacco product within the 30-day pe-
riod prior to the conduct of the survey; and
(2) the percentage of young individuals who
identify each brand of each type of tobacco product
as the usual brand smoked or used within such 30-
day period.
(b) YOUNG INDIVIDUALS.—For the purposes of this
section, the term ‘‘young individuals’’ means individuals
who are under 18 years of age.
(c) BASELINE LEVEL.—
(1) IN GENERAL.—For the purposes of this sec-
tion, the term ‘‘baseline level’’ means, with respect
to each type of tobacco product, the percentage of
young individuals determined to have used such to-
bacco products in the annual performance survey de-
scribed in subsection (a) completed by October 1,
1999.
(2) MANUFACTURER’S BASELINE LEVEL.—For
the purposes of this section, the term ‘‘manufactur-
er’s baseline level’’ means, with respect to each type
of tobacco product, the percentage of young individ-
uals determined to have identified a brand of each
such tobacco product of such manufacturer as the
usual brand smoked or used in the annual perform-
ance survey described in subsection (a) completed by
October 1, 1999.
(3) USE
OF
CERTAIN
DATA
OR
METHODOL-
OGY.—
(A) IN GENERAL.—For purposes of deter-
mining the percentages under paragraphs (1)
and (2), the Secretary may use the data col-
lected through national surveys of young indi-
viduals. Such surveys shall—
(i) be based on a nationally represent-
ative sample of at least 20,000 completed
interviews of young individuals;
(ii) be on a household-based in person
survey;
(iii) measure the use of tobacco prod-
uct within the past 30 days;
(iv) identify the usual brand of each
type of tobacco product used within the
past 30 days; and
(v) calculate the actual percentage re-
ductions in the underage use of a type of
tobacco product (or, in the case of the
manufacturer-specific surcharge, the use of
a type of tobacco product of a manufac-
turer) based on the point estimates from
the annual performance survey.
For purposes of clause (iv), point estimates
shall be deemed acceptable for measuring com-
pliance with percentage reduction targets and
for calculating surcharges if the precision of es-
timates of the proportion of young individuals
reporting the use of a type of tobacco product
(or, in the case of the manufacturer-specific
surcharge, the use of a type of tobacco product
of a manufacturer) for the purpose of measur-
ing compliance with percentage reduction tar-
gets and calculating surcharges without regard
to the 95 percent confidence interval around
such point estimates if the precision of esti-
mates of the percentage of young individuals re-
porting use of a type of tobacco product (or,
in the case of the manufacturer-specific sur-
charge, the use of a type of tobacco product of
a manufacturer) is such that the 95 percent
confidence interval around such point estimates
is no more than plus or minus 1 percent.
(B) CONCLUSIVE ACCURATENESS.—A sur-
vey using the methodology described in sub-
paragraph (A) shall be deemed conclusively
proper, correct, and accurate for purposes of
this Act. The Secretary may, by notice and
comment rulemaking, subsequently adopt a dif-
ferent survey methodology.
(C) FINAL
DETERMINATION.—The deter-
mination of the Secretary as to the amount and
allocation of the surcharge under this section
shall be final and the manufacturer shall pay
such surcharge within 30 days of the date on
which the manufacturer is assessed. Such pay-
ment shall be retained by the Secretary pending
final judicial review of what, if any, change in
the surcharge is appropriate.
(D) REVIEW.—The amount of any sur-
charge paid under this section shall be subject
to judicial review by the United States Court of
Appeals for the District of Columbia Circuit,
based on the arbitrary and capricious standard
of section 706 of title 5, United States Code.
Notwithstanding any other provision of law, no
court shall have the authority to stay any sur-
charge payment due to the Secretary under this
section pending judicial review until the Sec-
retary has made or failed to make a compliance
determination, as described under this section,
that has adversely affected the person seeking
the review.
(E) NONAPPLICABILITY.—Chapter 35 of
title 44, United States Code, shall not apply to
information required for the purposes of carry-
ing out this subsection.
(F) AMENDMENT
TO
PUBLIC
HEALTH
SERVICE
ACT.—Section 308(d) of the Public
Health Service Act (42 U.S.C. 242m(d)) is
amended—
(i) by inserting after ‘‘or 307’’ the fol-
lowing: ‘‘, or a survey conducted under sec-
tion 132 of the KIDS Act,’’; and
(ii) by inserting after ‘‘or 306’’ the
following: ‘‘, or in the course of a survey
conducted under section 132 of the KIDS
Act,’’.
(d) ADMINISTRATION.—
(1) TECHNICAL ADJUSTMENTS.—The Secretary
may make technical changes in the manner in which
the surveys are conducted under this section to re-
flect improved methodology so long as adjustments
are made to ensure that the results of the surveys
are comparable from year to year.
(2) PARTICIPATION IN SURVEY.—Notwithstand-
ing any other provision of law, the Secretary may
conduct a survey under this section involving minors
if the results of such survey with respect to such mi-
nors are kept confidential and not disclosed.
(e) TOBACCO PRODUCT.—For the purposes of this
section, cigarettes, cigars, little cigars, snuff, chewing to-
bacco, pipe tobacco, and roll-your-own tobacco shall each
be considered as a separate type of tobacco product.
Æ