193 
‘‘(d) KNOWLEDGE OF ILLEGAL TRANSACTION.— 
‘‘(1) IN GENERAL.—If the manufacturer or dis-
tributor of a tobacco product has knowledge which 
reasonably supports the conclusion that a tobacco 
product manufactured or distributed by such manu-
facturer or distributor that has left the control of 
such person may be or has been— 
‘‘(A) imported, exported, distributed or of-
fered for sale in interstate commerce by a per-
son without paying duties or taxes required by 
law; or 
‘‘(B) imported, exported, distributed or di-
verted for possible illicit marketing, the manu-
facturer or distributor shall promptly notify the 
Attorney General of such knowledge. 
‘‘(2) KNOWLEDGE DEFINED.—For purposes of 
this subsection, the term ‘knowledge’ as applied to 
a manufacturer or distributor means— 
‘‘(A) the actual knowledge that the manu-
facturer or distributor had; or 
‘‘(B) the knowledge which a reasonable 
person would have had under like circumstances 
or which would have been obtained upon the ex-
ercise of due care.’’. 
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SEC. 242. STUDY AND REPORT. 
(a) STUDY.—The Comptroller General of the United 
States shall conduct a study of cross-border trade in to-
bacco products to— 
(1) collect data on cross-border trade in tobacco 
products, including illicit trade and trade of counter-
feit tobacco products and make recommendations on 
the monitoring of such trade; 
(2) collect data on cross-border advertising (any 
advertising intended to be broadcast, transmitted, or 
distributed from the United States to another coun-
try) of tobacco products and make recommendations 
on how to prevent or eliminate, and what tech-
nologies could help facilitate the elimination of, 
cross-border advertising. 
(b) REPORT.—Not later than 18 months after the 
date of enactment of this Act, the Comptroller General 
of the United States shall submit to the Committee on 
Health, Education, Labor, and Pensions of the Senate and 
the Committee on Energy and Commerce of the House 
of Representatives a report on the study described in sub-
section (a). 
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195 
TITLE III—RESPONSIBLE MAR-
KETING 
AND 
CONSUMER 
AWARENESS 
Subtitle A—General Provisions 
SEC. 301. NUTRITION LABELING OF RESTAURANT FOODS. 
Section 403(q)(5) of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 343(q)(5)(A)(i)) is amended— 
(1) in clause (A)— 
(A) in subclause (i), by inserting ‘‘except 
as provided in clauses (H) and (I),’’ before 
‘‘which’’ the first place it appears; and 
(B) in subclause (ii), by inserting ‘‘except 
as provided in clauses (H) and (I),’’ before 
‘‘which’’ the first place it appears; and 
(2) by adding at the end the following: 
‘‘(H) RESTAURANTS AND RETAIL FOOD ESTAB-
LISHMENTS.— 
‘‘(i) IN
GENERAL.—Except for food de-
scribed in subclause (iii), in the case of food 
that is served, processed, or prepared in a res-
taurant or similar retail food establishment that 
is part of a chain with 20 or more locations 
doing business under the same trade name (re-
gardless of the type of ownership of the loca-
tions), the restaurant or establishment shall 
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disclose the information described in subclause 
(ii). 
‘‘(ii) INFORMATION REQUIRED TO BE DIS-
CLOSED.—Except as provided in subclause (iii), 
the establishment shall disclose— 
‘‘(I)(aa) in a statement adjacent to 
the name of the food on any menu listing 
the food for sale, or by any other means 
deemed equivalent by the Secretary, the 
number of calories, grams of saturated fat 
plus trans fat, and milligrams of sodium 
contained in a standard serving of the 
food, as usually offered for sale, in a clear 
and conspicuous manner; and 
‘‘(bb) information, specified by the 
Secretary by regulation, designed to enable 
the public to understand, in the context of 
a total daily diet, the significance of the 
nutrition information that is provided; and 
‘‘(II) in a statement adjacent to the 
name of the food on any menu board or 
other sign listing the food for sale, or by 
any other means deemed equivalent by the 
Secretary— 
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197 
‘‘(aa) the number of calories con-
tained in a serving of the food, as 
usually offered for sale, in a clear and 
conspicuous manner; and 
‘‘(bb) notification that the infor-
mation required by subitems (aa) and 
(bb) of item (I) shall be provided in 
writing at the request of a prospective 
purchaser. 
‘‘(iii) 
NONAPPLICABILITY
TO
CERTAIN 
FOOD.—This clause does not apply to— 
‘‘(I) items that are not listed on a 
menu or menu board (such as condiments 
and other items placed on the table or 
counter for general use); or 
‘‘(II) daily specials, temporary menu 
items, or other irregular menu items, as 
specified by the Secretary by regulation. 
‘‘(iv) SELF-SERVICE
FACILITIES.—In the 
case of food sold at a salad bar, buffet line, caf-
eteria line, or similar self-service facility, a res-
taurant or other establishment shall place a 
sign that lists calories per standard serving ad-
jacent to each food offered. 
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198 
‘‘(v) VOLUNTARY
PROVISION
OF
NUTRI-
TION
INFORMATION; STATE
REGULATION
OF 
NUTRITION
INFORMATION
FOR
RESTAURANT 
FOOD.— 
‘‘(I) 
RETAIL
FOOD
ESTABLISH-
MENTS.—Nothing in this clause precludes 
a restaurant or similar retail food estab-
lishment from providing additional nutri-
tion information, voluntarily, if the infor-
mation complies with the nutrition labeling 
requirements contained in this subpara-
graph. 
‘‘(II) STATE
OR
LOCAL
REQUIRE-
MENTS.—Nothing in this clause precludes 
a State or political subdivision of a State 
from requiring that a restaurant or similar 
food establishment provide nutrition infor-
mation in addition to that required under 
this clause. 
‘‘(vi) REGULATIONS.— 
‘‘(I) PROPOSED
REGULATION.—Not 
later than 1 year after the date of enact-
ment of this clause, the Secretary shall 
promulgate proposed regulations to carry 
out this clause. 
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199 
‘‘(II) 
CONTENTS.—The 
regulations 
shall allow for the variations in serving 
sizes and in food preparation that can rea-
sonably be expected to result from inad-
vertent human error, training of food serv-
ice workers, and other factors. 
‘‘(III) 
FINAL
REGULATIONS.—Not 
later than 2 years after the date of enact-
ment of this clause, the Secretary shall 
promulgate final regulations to implement 
this clause. 
‘‘(IV) 
FAILURE
TO
PROMULGATE 
FINAL
REGULATIONS
BY
REQUIRED 
DATE.—If the Secretary does not promul-
gate final regulations under item (III) by 
the date that is 2 years after the date of 
enactment of this clause— 
‘‘(aa) the proposed regulations 
issued in accordance with item (I) 
shall become effective as the final reg-
ulations on the day after that date; 
and 
‘‘(bb) the Secretary shall publish 
in the Federal Register notice of the 
final regulations. 
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200 
‘‘(I) VENDING MACHINES.— 
‘‘(i) IN GENERAL.—In the case of an arti-
cle of food sold from a vending machine that— 
‘‘(I) does not permit a prospective 
purchaser to examine the article so as to 
be able to read a statement affixed to the 
article before purchasing the article; and 
‘‘(II) is operated by a person that is 
engaged in the business of owning and op-
erating 20 or more vending machines; 
the vending machine operator shall provide a con-
spicuous sign in close proximity to the article that 
includes a statement disclosing the number of cal-
ories contained in the article. 
‘‘(ii) VOLUNTARY
PROVISION
OF
NUTRI-
TION
INFORMATION; STATE
REGULATION
OF 
NUTRITION
INFORMATION
FOR
VENDING
MA-
CHINES.— 
‘‘(I) 
VENDING
MACHINE
OPERA-
TORS.—Nothing in this clause precludes a 
vending machine operator from providing 
additional nutrition information, volun-
tarily, if the information complies with the 
nutrition labeling requirements contained 
in this subparagraph. 
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201 
‘‘(II) STATE
OR
LOCAL
REQUIRE-
MENTS.—Nothing in this title precludes a 
State or political subdivision of a State 
from requiring that a vending machine op-
erator provide nutrition information in ad-
dition to that required under this clause. 
‘‘(iii) REGULATIONS.— 
‘‘(I) PROPOSED
REGULATIONS.—Not 
later than 1 year after the date of enact-
ment of this clause, the Secretary shall 
promulgate proposed regulations to carry 
out this clause. 
‘‘(II) 
FINAL
REGULATIONS.—Not 
later than 2 years after the date of enact-
ment of this clause, the Secretary shall 
promulgate final regulations to implement 
this clause. 
‘‘(III) 
FAILURE
TO
PROMULGATE 
FINAL
REGULATIONS
BY
REQUIRED 
DATE.—If the Secretary does not promul-
gate final regulations under item (II) by 
the date that is 2 years after the date of 
enactment of this clause— 
‘‘(aa) the proposed regulations 
issued in accordance with item (I) 
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202 
shall become effective as the final reg-
ulations on the day after that date; 
and 
‘‘(bb) the Secretary shall publish 
in the Federal Register notice of the 
final regulations.’’. 
SEC. 302. RULEMAKING AUTHORITY FOR ADVERTISING TO 
CHILDREN. 
(a) PURPOSE.—The purpose of this section is to re-
store the authority of the Federal Trade Commission to 
issue regulations that restrict the marketing or advertising 
of foods and beverages to children under the age of 18 
years if the Federal Trade Commission determines that 
there is evidence that consumption of certain foods and 
beverages is detrimental to the health of children. 
(b) AUTHORITY.—Section 18 of the Federal Trade 
Commission Act (15 U.S.C. 57a) is amended by striking 
subsection (h). 
SEC. 303. FOOD ADVERTISING IN SCHOOLS. 
Section 10 of the Child Nutrition Act of 1966 (42 
U.S.C. 1779), as amended by section 102 of this Act, is 
further amended by adding at the end the following: 
‘‘(c) FOOD ADVERTISING.—The Secretary may pro-
hibit the advertising of food in participating schools if the 
Secretary determines that consumption of the advertised 
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203 
food has a detrimental effect on the diets or health of chil-
dren.’’. 
SEC. 304. DISALLOWANCE OF DEDUCTIONS FOR ADVER-
TISING AND MARKETING EXPENSES RELAT-
ING TO TOBACCO PRODUCT USE. 
(a) IN GENERAL.—Part IX of subchapter B of chap-
ter 1 of subtitle A of the Internal Revenue Code of 1986 
(relating to items not deductible) is amended by adding 
at the end the following new section: 
‘‘SEC. 280I. DISALLOWANCE OF DEDUCTION FOR TOBACCO 
ADVERTISING AND MARKETING EXPENSES. 
‘‘No deduction shall be allowed under this chapter for 
expenses relating to advertising or marketing cigars, ciga-
rettes, smokeless tobacco, pipe tobacco, or any similar to-
bacco product. For purposes of this section, any term used 
in this section which is also used in section 5702 shall 
have the same meaning given such term by section 5702.’’. 
(b) CONFORMING AMENDMENT.—The table of sec-
tions for such part IX is amended by adding after the 
item relating to section 280H the following new item: 
‘‘Sec. 280I. Disallowance of deduction for tobacco advertising and marketing 
expenses.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
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204 
SEC. 305. FEDERAL-STATE TOBACCO COUNTER-ADVER-
TISING PROGRAMS. 
Part P of title III of the Public Health Service Act 
(42 U.S.C. 280g et seq.), as amended in section 211, is 
further amended by adding at the end the following: 
‘‘SEC. 399Q. FEDERAL-STATE TOBACCO COUNTER-ADVER-
TISING PROGRAMS. 
‘‘(a) IN GENERAL.—The Secretary, acting through 
the Director of the Centers for Disease Control and Pre-
vention, shall award grants to and enter into contracts 
with eligible entities for the implementation of national 
and local media (such as counter-advertising) and non- 
media campaigns designed to reduce the use of tobacco 
products. 
‘‘(b) ELIGIBILITY.—To be eligible to receive a grant 
under subsection (a), an entity shall be— 
‘‘(1) a public entity, including a State public 
health department; or 
‘‘(2) a private, nonprofit entity that— 
‘‘(A) is not affiliated with a manufacturer 
or importer of a tobacco product; 
‘‘(B) has demonstrated a record of con-
ducting a national antitobacco public education 
campaign to effectively reduce the use of to-
bacco products; 
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205 
‘‘(C) has expertise in conducting a multi- 
media communications campaign; and 
‘‘(D) has expertise in developing strategies 
that affect behavior changes in children and 
other targeted populations. 
‘‘(c) APPLICATION.—An eligible entity shall submit 
an application to the Secretary for a grant under this sec-
tion at such time, in such manner, and accompanied by 
such information as the Secretary may require. 
‘‘(d) USE OF FUNDS.—An eligible entity shall use 
amounts received under a grant under this section to— 
‘‘(1) design and implement multimedia public 
education and social marketing campaigns that— 
‘‘(A) discourage the use of tobacco prod-
ucts; 
‘‘(B) encourage the use of products de-
signed to enable tobacco use cessation; and 
‘‘(C) educate the public about the hazards 
of environmental tobacco smoke exposure; or 
‘‘(2) conduct research related to the effective-
ness of the campaigns described in paragraph (1). 
‘‘(e) ALLOCATION
OF GRANTS.—Of the amounts 
awarded under this section, the Secretary shall award— 
‘‘(1) 50 percent of such amounts to eligible 
public entities; and 
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‘‘(2) 50 percent of such amounts to eligible pri-
vate, nonprofit entities. 
‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There 
are authorized to be appropriated $200,000,000 to carry 
out this section.’’. 
Subtitle B—Penalties for Failure to 
Reduce Teen Smoking 
SEC. 311. CHILD CIGARETTE USE SURVEYS. 
(a) ANNUAL PERFORMANCE SURVEY.— 
(1) IN GENERAL.—Not later than August 31, 
2007, and annually thereafter, the Secretary of 
Health and Human Services (referred to in this sec-
tion as the ‘‘Secretary’’) shall publish the results of 
an annual cigarette survey, to be carried out after 
the date of enactment of this Act and completed 
prior to August 21, 2007, and prior to August 21 
of each year thereafter, to determine— 
(A) the percentage of all young individuals 
who used a type of cigarette within the 30-day 
period prior to the conduct of the survey in-
volved; and 
(B) the percentage of young individuals 
who identify each brand of each type of ciga-
rette as the usual brand smoked within such 
30-day period. 
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207 
(2) YOUNG INDIVIDUALS.—For the purposes of 
this subtitle, the term ‘‘young individuals’’ means in-
dividuals who are under 18 years of age. 
(b) SIZE AND METHODOLOGY.— 
(1) IN GENERAL.—The survey referred to in 
subsection (a) shall be comparable in size and meth-
odology to the Monitoring the Future survey that 
was completed in 1999 to measure the use of ciga-
rettes (by brand) by youths under 18 years of age 
within the 30-day period prior to the conduct of the 
study. 
(2) CONCLUSIVE
ACCURATENESS.—A survey 
using the methodology described in paragraph (1) 
shall be deemed conclusively proper, correct, and ac-
curate for purposes of this section. 
(3) DEFINITION.—In this subtitle, the term 
‘‘Monitoring the Future survey’’ means the com-
bined survey of 8th, 10th, and 12th grade students 
that was conducted at the Institute for Social Re-
search at the University of Michigan. 
(c) REDUCTION.—The Secretary, based on a com-
parison of the results of the first annual cigarette survey 
referred to in subsection (a) and the Monitoring the Fu-
ture survey referred to in subsection (b)(1), shall deter-
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mine the percentage reduction (if any) in youth cigarette 
use for each manufacturer of cigarettes. 
(d) PARTICIPATION
IN SURVEY.—Notwithstanding 
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 minors are kept con-
fidential and not disclosed. 
(e) NONAPPLICABILITY.—Chapter 35 of title 44, 
United States Code, shall not apply to information re-
quired for the purposes of carrying out this section. 
(f) DEFINITION.—In this subtitle the term ‘‘ciga-
rette’’ has the meaning given such term in section 3(1) 
of the Federal Cigarette Labeling and Advertising Act (15 
U.S.C. 1332(1)). 
SEC. 312. CIGARETTE USE REDUCTION GOAL AND NON-
COMPLIANCE. 
(a) GOAL.—It shall be the cigarette use reduction 
goal that each manufacturer reduce youth cigarette use 
by at least 15 percent during the period between the Moni-
toring the Future survey referred to in section 311(b)(1) 
and the completion of the first annual cigarette survey 
(and such subsequent surveys as compared to the previous 
year’s survey) referred to in section 311(a). 
(b) NONCOMPLIANCE.— 
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209 
(1) INDUSTRY-WIDE
PENALTY.—If the Sec-
retary determines that the cigarette use reduction 
goal under subsection (a) has not been achieved, the 
Secretary shall, not later than September 10, 2007, 
and September 10 of each year thereafter, impose 
an industry-wide penalty on the manufacturers of 
cigarettes in an amount that is in the aggregate 
equal to— 
(A) if youth cigarette use has been reduced 
by 5 percent or less, $6,000,000,000; 
(B) if youth cigarette use has been reduced 
by at least 6 percent but less than 10 percent, 
$4,000,000,000; and 
(C) if youth cigarette use has been reduced 
by at least 11 percent but less than 15 percent, 
$2,000,000,000. 
(2) PAYMENT.—The industry-wide penalty im-
posed under this subsection shall be paid by each 
manufacturer based on the percentage of cigarettes 
of each such manufacturer that are used by youth 
(as determined under the Monitoring the Future 
survey and compared to the cigarettes manufactured 
by all manufacturers) as such percentage relates to 
the total amount to be paid by all manufacturers. 
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