Everything For Everybody Concerned About Smoking
and Protecting the Rights of Nonsmokers
The Hatch Tobacco Bill, s.1530 [long download]
105th CONGRESS
1st Session
S. 1530
To resolve ongoing tobacco litigation, to reform the civil justice
system responsible for adjudicating tort claims against companies that
manufacturer tobacco products, and establish a national tobacco policy
for the United States that will decrease youth tobacco use and reduce
the marketing of tobacco products to young Americans.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
November 13, 1997
Mr. Hatch introduced the following bill; which was read the first time
_______________________________________________________________________
A BILL
To resolve ongoing tobacco litigation, to reform the civil justice
system responsible for adjudicating tort claims against companies that
manufacturer tobacco products, and establish a national tobacco policy
for the United States that will decrease youth tobacco use and reduce
the marketing of tobacco products to young Americans.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Placing Restraints
on Tobacco's Endangerment of Children and Teens Act'' or the ``PROTECT
Act''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Goals and purposes.
Sec. 4. National goals for the reduction in underage tobacco use.
Sec. 5. Definitions.
TITLE I--NATIONAL TOBACCO SETTLEMENT TRUST FUND
Sec. 101. Establishment of Trust Fund.
Sec. 102. Licensing fees payment schedule.
Sec. 103. Enforcement.
TITLE II--NATIONAL PROTOCOL AND LIABILITY PROVISIONS
Subtitle A--National Tobacco Control Protocol
Chapter 1--Establishment
Sec. 201. Requirement.
subchapter a--protocol restrictions on advertising
Sec. 211. Application of subchapter.
Sec. 212. Agreement to prohibit certain advertising.
Sec. 213. Consensual restrictions.
Sec. 214. Agreement on format and content requirements for labeling and
advertising.
Sec. 215. Agreement to ban on nontobacco items and services, contests
and games of chance, and sponsorship of
subchapter b--provisions relating to lobbying
Sec. 220. Application of subchapter.
Sec. 221. Agreement to provisions relating to lobbying.
Sec. 222. Agreement tsubchapter c--other provisions
Sec. 225. Application of subchapter.
Sec. 226. Determination of licensing fee amount.
Sec. 227. Attorney's fees and expenses.
Sec. 228. Limitations with respect to Indian country.
Chapter 3--Enforcement
Sec. 231. Federal enforcement of the protocol.
Sec. 232. State enforcement of the protocol.
Sec. 233. Private enforcement of protocol.
Sec. 234. Removal.
Subtitle B--Consent Decrees
Sec. 241. Consent decrees.
Sec. 242. State enforcement of consent decrees.
Sec. 243. Non-participating manufacturers.
Subtitle C--Liability Provisions
Chapter 1--General Provisions
Sec. 251. Definitions.
Chapter 2--Immunity And Liability for Past Conduct
Sec. 255. Application of chapter.
Sec. 256. General immunity.
Sec. 257. Civil liability for past conduct.
Sec. 258. Civil liability for future conduct.
Sec. 259. Non-participating manufacturers.
Sec. 260. Payment of judgments and settlements.
Sec. 261. State eligibility.
Sec. 262. Removal.
Sec. 263. Conforming amendments.
TITLE III--REDUCTION IN UNDERAGE TOBACCO USE
Subtitle A--State Laws Regarding the Sale of Tobacco Products to Minors
Sec. 300. Short title.
Sec. 301. State laws regarding sale of tobacco products to individuals
under the age of 18.
Sec. 302. Model State law.
Subtitle B--Required Reduction in Underage Usage
Sec. 311. Purpose.
Sec. 312. Determination of underage use base percentages.
Sec. 313. Annual daily incidence of underage use of tobacco products.
Sec. 314. Required reduction in underage tobacco use.
Sec. 315. Application of surcharges.
Sec. 316. Abatement procedures.
Sec. 317. Incentive for exceeding reduction goals.
TITLE IV--HEALTH AND SAFETY REGULATION OF TOBACCO PRODUCTS
Sec. 401. Health and safety regulation of tobacco products.
``CHAPTER IX--HEALTH PROMOTION AND DISEASE PREVENTION PROGRAM FOR
TOBACCO PRODUCTS
``Sec. ``subchapter a--tobacco product regulation
``Sec. 901. Statement of general duties.
``Sec. 902. Tobacco product health risk management standards.
``Sec. 903. Good manufacturing practice standards.
``Sec. 904. Tobacco product labeling, warning, and packaging
standards.
``Sec. 905. Reduced risk tobacco products.
``Sec. 906. Tobacco product marketing provisions.
``Sec. 907. Tobacco Products Scientific Advisory Committee.
``Sec. 908. Reports.
``Sec. 909. Judicial review.
``Sec. 910. Preemption.
Sec. 402. Technical provisions.
Sec. 403. Federal licensing of military and other entities.
TITLE V--PAYMENTS TO STATES AND PUBLIC HEALTH PROGRAMS
Subtitle A--Payments to States
Sec. 501. Reimbursement for State expenditures.
Sec. 502. Requirement for State use of certain funds.
Subtitle B--Public Health Programs
Sec. 521. National Institutes of Health Trust Fund for Health Research.
Sec. 522. National anti-tobacco product consumption and tobacco product
cessation public health program.
TITLE VI--STANDARDS TO REDUCE INVOLUNTARY EXPOSURE TO TOBACCO SMOKE
Sec. 601. Definitions.
Sec. 602. Smoke-free environment policy.
Sec. 603. Preemption.
Sec. 604. Regulations.
Sec. 605. Effective date.
TITLE VII--PUBLIC DISCLOSURE OF HEALTH RESEARCH
Sec. 701. Purpose.
Sec. 702. National tobacco document depository.
Sec. 703. Enforcement.
TITLE VIII--AGRICULTURAL TRANSITION PROVISIONS
Sec. 801. Short title.
Sec. 802. Purposes.
Sec. 803. Definitions.
Subtitle A--Tobacco Production Transition
Chapter 1--Tobacco Transition Contracts
Sec. 811. Tobacco Transition Account.
Sec. 812. Offer and terms of tobacco transition contracts.
Sec. 813. Elements of contracts.
Sec. 814. Buyout payments to owners.
Sec. 815. Transition payments to producers.
Sec. 816. Tobacco worker transition program.
Sec. 817. Farmer opportunity grants.
Chapter 2--Rural Economic Assistance Block Grants
Sec. 821. Rural economic assistance block grants.
Subtitle B--Tobacco Price Support and Production Adjustment Programs
Chapter 1--Tobacco Price Support Program
Sec. 831. Interim reform of tobacco price support program.
Sec. 832. Termination of tobacco price support program.
Chapter 2--Tobacco Production Adjustment Programs
Sec. 835. Termination of tobacco production adjustment programs.
Subtitle C--Funding
Sec. 841. Trust Fund.
Sec. 842. Commodity Credit Corporation.
TITLE IX--MISCELLANEOUS PROVISIONS
Sec. 901. Provisions relating to Native Americans.
Sec. 902. Whistleblower protections.
Sec. 903. Limited antitrust exemption.
Sec. 904. Pass-through.
Sec. 905. Effective date.
SEC. 2. FINDINGS.
(a) General Findings.--Congress makes the following findings:
(1) Tobacco is an addictive substance the use of which
constitutes the Nation's number 1 preventable cause of death.
(2) The use of tobacco products by the nation's children is
a serious and growing public health problem that results in new
generations of tobacco-dependent children and adults.
(3) There is a consensus within the scientific and medical
communities that currently marketed tobacco products are
inherently unsafe and cause cancer, heart disease, and other
serious adverse health effects. The tobacco industry concealed
relevant data concerning the effects of tobacco products on
adolescents and adults.
(4) Virtually all new users of tobacco products are under
the age of 18. Tobacco industry advertising and marketing is
directed at adolescents and as such, sweeping new restriction
on the sale, promotion, and distribution of such products are
needed.
(5) Enhancing the existing legal mechanisms and the
available prevention, research, and treatment resources with
respect to tobacco will allow our Nation to address more
effectively the problems associated with the use of tobacco
products.
(6) Public health authorities believe that the societal
benefits of enacting tobacco settlement legislation in human
and economic terms would be vast. The Secretary of Health and
Human Services has found that reducing underage tobacco use 50
percent ``would prevent well over 60,000 early deaths''. The
Secretary has estimated that the monetary value of the
regulations promulgated as a result of this Act will be an
estimated $43,000,000,000 per year in reduced medical costs,
improved productivity, and the benefit of avoiding the
premature death of loved ones.
(7) The unique position occupied by tobacco in the history
and economy of the United States, the magnitude of the actual
and potential tobacco-related litigation, the advisability of
avoiding the cost, expense, uncertainty, and inconsistency
associated with such protracted litigation, the need to limit
the sale, distribution, marketing, and advertising of tobacco
products to persons of legal age, and the need to better
educate the public (especially young people) concerning the
health risks of using tobacco products make it in the public
interest to enact legislation to facilitate a comprehensive
resolution of such matters.
(b) Findings Related to Interstate Commerce and the Judicial
System.--Congress makes the following findings:
(1) The sale, distribution, marketing, advertising, and use
of tobacco products are activities substantially affecting
interstate commerce and as such, have a substantial effect on
the economy of the United States.
(2) The sale, distribution, marketing, advertising, and use
of tobacco products are activities that substantially affect
interstate commerce by virtue of the health care-related and
other costs that Federal and State governmental authorities
have incurred because of the usage of tobacco products.
(3) Various civil actions brought by State attorneys
general, cities, counties, the Commonwealth of Puerto Rico,
third-party payors, and other private classes and individuals
to recover damages relating to tobacco-related diseases,
conditions and products are pending throughout the United
States; of these actions are slow-moving, expensive, and
burdensome not only for the litigants but also for Federal and
State judicial systems.
SEC. 3. GOALS AND PURPOSES.
(a) Goals.--It is a goal of this Act to--
(1) decrease youth smoking and reduce the marketing of
tobacco products to young Americans;
(2) decrease tobacco use by all Americans by encouraging
public education and smoking cessation programs and to decrease
the exposure of individuals to environmental (second-hand)
smoke;
(3) enhance biomedical research efforts into diseases
associated with tobacco use;
(4) advance our knowledge about the health effects of
nicotine and tobacco on the human body;
(5) provide transition assistance to tobacco farmers and
create incentives to reduce the production and distribution of
tobacco products;
(6) return to the States funds that they have expended with
respect to tobacco-related health care costs and other costs
related to tobacco;
(7) establish the authority of the Food and Drug
Administration with respect to the types of tobacco products
that may be lawfully sold;
(8) reform tobacco litigation practices to bring finality
to current litigation and provide greater predictability in
future individual cases; and
(9) wisely invest increased tobacco revenues in important
public health priorities, such as smoking cessation, public
education, counter-advertising.
(b) Purposes.--It is the purpose of this Act to--
(1) provide for the funding by the tobacco industry of an
aggressive Federal enforcement program relating to tobacco
advertising and distribution, including a State-administered
retail licensing system to prevent minors from obtaining
tobacco products;
(2) subject the tobacco industry to severe financial
penalties in the event that underage tobacco usage does not
decline radically over the next 10 years;
(3) provide for the establishment of national standards to
control the manufacturing of tobacco products and the
ingredients used in such products;
(4) provide certain regulatory powers to the Secretary of
Health and Human Services to encourage the development and
marketing by the tobacco industry of ``less hazardous tobacco
products'', including the power to regulate the level of
nicotine in such products;
(5) require the manufacturers of tobacco products to
disclose all present and future non-public internal laboratory
research regarding tobacco products;
(6) establish a minimum Federal standard to limit smoking
in public places, including the halls of Congress;
(7) provide for the establishment of a National Tobacco
Settlement Trust Fund to be funded by the tobacco industry and
used in accordance with this Act;
(8) provide for the establishment of a national education-
oriented counter advertising and tobacco use prevention
campaign to be funded through the National Tobacco Settlement
Trust Fund;
(9) provide annual payments to States to fund tobacco-
related health benefits programs through the National Tobacco
Settlement Trust Fund; and
(10)(A) settle the present tobacco-related governmental
parens patriae and private class actions as to which a final
judgment or final settlement has not been reached as of the
effective date of this Act;
(B) bar future tobacco-related claims based on dependency;
(C) preclude claims for punitive damages based on conduct
that took place prior to the effective date of this Act to that
such claims are not reduced to final judgment or final
settlement prior to the effective date of this Act; and
(D) preclude further class actions or aggregations of
claims in tobacco-related actions.
SEC. 4. NATIONAL GOALS FOR THE REDUCTION IN UNDERAGE TOBACCO USE.
(a) In General.--With respect to the average annual incidence of
the daily use of tobacco products by individuals who are under 18 years
of age, it shall be the national goals of the United States that such
use be reduced as follows:
(1) Cigarettes.--With respect to cigarettes--
(A) in the fifth and sixth calendar years after the
date of enactment of this Act the percentage decrease
in the use of cigarette products shall be at least 30
percent;
(B) in the seventh, eighth and ninth calendar years
after the date of enactment of this Act the percentage
decrease in the use of cigarette products shall be at
least 50 percent; and
(C) in the tenth and subsequent calendar years
after the date of enactment of this Act the percentage
decrease in the use of cigarette products shall be at
least 60 percent.
(2) Smokeless tobacco products.--With respect to smokeless
tobacco products--
(A) in the fifth and sixth calendar years after the
date of enactment of this Act the percentage decrease
in the use of smokeless tobacco products shall be at least 25 percent;
(B) in the seventh, eighth and ninth calendar years
after the date of enactment of this Act the percentage
decrease in the use of smokeless tobacco products shall
be at least 35 percent; and
(C) in the tenth and subsequent calendar years
after the date of enactment of this Act the percentage
decrease in the use of smokeless tobacco products shall
be at least 45 percent.
(b) Determinations.--Determinations as to whether the national
goals described in subsection (a) have been met shall be made in
accordance with the provisions of subtitle B of title III.
SEC. 5. DEFINITIONS.
In this Act:
(1) Brand.--The term ``brand'' means a variety of a tobacco
product distinguished by the tobacco used, tar content,
nicotine content, flavoring used, size, filtration, or
packaging.
(2) Cigarette.--The term ``cigarette'' means any product
which contains nicotine, is intended to be burned under
ordinary conditions of use, and consists of--
(A) any roll of tobacco wrapped in paper or in any
substance not containing tobacco; and
(B) any roll of tobacco wrapped in any substance
containing tobacco which, because of its appearance,
the type of tobacco used in the filler, or its
packaging and labeling, is likely to be offered to, or
purchased by, consumers as a cigarette described in
subparagraph (A).
(3) Cigarette tobacco.--The term ``cigarette tobacco''
means any product that consists of loose tobacco that contains
or delivers nicotine and is intended for use by persons in a
cigarette. Unless otherwise stated, the requirements of this
Act pertaining to cigarettes shall also apply to cigarette
tobacco.
(4) Commerce.--The term ``commerce'' means--
(A) commerce between any State, the District of
Columbia, the Commonwealth of Puerto Rico, Guam, the
Virgin Islands, American Samoa, the Northern Mariana
Islands or any territory or possession of the United
States;
(B) commerce between points in any State, the
District of Columbia, the Commonwealth of Puerto Rico,
Guam, the Virgin Islands, American Samoa, the Northern
Mariana Islands or any territory or possession of the
United States; or
(C) commerce wholly within the District of
Columbia, Guam, the Virgin Islands, American Samoa, the
Northern Mariana Islands or any territory or possession
of the United States.
(5) Commissioner.--The term ``Commissioner'' means the
Commissioner of Food and Drugs.
(6) Consent decree.--The term ``consent decree'' means a
consent decree executed by the participating manufacturers and
a State under the provision of section 241.
(7) Court.--The term ``court'' means any judicial or agency
court, forum or tribunal within the United States, including
without limitation any Federal, State, or tribal court.
(8) Distributor.--The term ``distributor'' means any person
who furthers the distribution of tobacco products, whether
domestic or imported, at any point from the original place of
manufacture to the person who sells or distributes the product
to individuals for personal consumption. Such term shall not
include common carriers.
(9) Indian tribe.--The term ``Indian tribe'' has the same
meaning given such term in section 4(e) of the Indian Self
Determination and Education Assistance Act (25 U.S.C. 450b(e)).
(10) Tribal organization.--The term ``tribal organization''
has the same meaning given such term in section 4 of the Indian
Self Determination and Education Assistance Act (25 U.S.C. 450b).
(11) Manufacturer.--The term ``manufacturer'' means--
(A) a person who directly (not through a subsidiary
company or affiliate) manufactures tobacco products for
sale in the United States;
(B) a successor or assign of a person described in
subparagraph (A);
(C) an entity established by a person described in
subparagraph (A); or
(D) an entity to which a person described in
subparagraph (A) directly or indirectly makes a
fraudulent conveyance after the effective date of this
Act or a transfer that would otherwise be voidable
under chapter 7 of title 11, United States Code, but
only to the extent of the interest or obligation
transferred.
Such term shall not include a parent or affiliate of a person
who manufactures tobacco products unless such parent or
affiliate itself is a person described in any of subparagraphs
(A) through (D).
(12) Nicotine.--The term ``nicotine'' means the chemical
substance named 3-(1-Methyl-2-pyrrolidinyl)pyridine or
C10 H14 N2 , including any salt
or complex of nicotine.
(13) Package.--The term ``package'' means a pack, box,
carton, or container of any kind in which tobacco products are
offered for sale, sold, or otherwise distributed to consumers.
(14) Participating manufacturer.--The term ``participating
manufacturer'' means a manufacturer which, within the periods
specified in the applicable provisions of title II--
(A) enters into the Protocol; and
(B) enters into a consent decree with each State
that requests that the manufacturer enter into the
Protocol.
(15) Person.--The term ``person'' means an individual,
partnership, corporation, or any other business or legal
entity.
(16) Point of sale.--The term ``point of sale'' means any
location at which an individual can purchase or otherwise
obtain tobacco products for personal consumption.
(17) Protocol.--The term ``Protocol'' means the protocol to
be executed under subtitle A of title II for the purpose of
setting forth certain obligations being undertaken by the
Attorney General, participating manufacturers, the chief
executive officer of each State, and a representative of the
members of the class certified for purposes of Dianne Castano
v. American Tobacco Company, as consideration for the
resolution of tobacco claims through the civil liability
provisions of title II.
(18) Retailer.--The term ``retailer'' means any person who
sells tobacco products to individuals for personal consumption,
or who operates a facility where vending machines or self-
service displays are permitted under this Act.
(19) Sale.--The term ``sale'' includes the selling,
providing samples of, or otherwise making tobacco products
available for personal consumption in any place within the
scope of this Act.
(20) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(21) Smokeless tobacco.--The term ``smokeless tobacco''
means any product that consists of cut, ground, powdered, or
leaf tobacco that contains nicotine and that is intended to be
placed in the oral or nasal cavity.
(22) State.--The term ``State'' includes the several
States, the District of Columbia, the Commonwealth of Puerto
Rico, Guam, the Virgin Islands, American Samoa, the Northern
Mariana Islands, and any other territory or possession of the
United States. Such term includes any political division of any
State.
(23) Tobacco.--The term ``tobacco'' means tobacco in its
unmanufactured form.
(24) Tobacco claim.--The term ``tobacco claim'' means a
claim directly or indirectly arising out of, based on, or
related to the health-related effects or attributes of tobacco
products, including a claim arising out of, based on, or
related to allegations regarding any conduct, statement or
omission concerning the health-related effects or attributes of
such products, that is brought against--
(A) a manufacturer or the predecessors or past,
present or future parents, affiliates, officers,
directors, employees or agents of a manufacturer; or
(B) any importer, supplier, distributor,
wholesaler, retailer or other seller of tobacco
products or any grower of tobacco.
(25) Tobacco product.--The term ``tobacco product'' means
cigarettes, cigarette tobacco, and smokeless tobacco.
(26) Trust fund.--The term ``Trust Fund'' means the
National Tobacco Settlement Trust Fund established under
section 101.
TITLE I--NATIONAL TOBACCO SETTLEMENT TRUST FUND
SEC. 101. ESTABLISHMENT OF TRUST FUND.
(a) Creation and Deposits.--
(1) In general.--There is established in the Treasury of
the United States a trust fund to be known as the ``National
Tobacco Settlement Trust Fund''.
(2) Deposits.--The Trust Fund shall be composed of the
following deposits to be paid by participating manufacturers
under the fee payment schedule under section 102:
(A) Compensatory damage deposits.--With respect to
compensatory damages, $303,337,500,000 shall be
deposited in the Trust Fund and shall represent the
settlement amount referred to in the Protocol and the
consent decrees.
(B) Punitive damage deposits.--With respect to
punitive damages, $95,000,000,000 shall be deposited in
the Trust Fund and shall represent the settlement of
tobacco-related punitive damages claims which occurred
prior to the date of enactment of this Act, and shall
be used to fund the Trust Fund for Health Research
under section 521.
(3) Accounts in trust fund.--The National Tobacco
Settlement Trust Fund shall consist of--
(A) a State Account, and
(B) a Federal Account.
Each such Account shall consist of such amounts as may be
transferred to it under this section or credited under section
103(b)(3).
(4) Trustees.--
(A) In general.--The National Tobacco Settlement
Trust Fund shall be administered by the Attorney
General who shall serve together with the Secretary of
the Treasury and the Secretary of Health and Human
Services as the Trustees of the Fund.
(B) Advisory board.--The Trustees of the Trust
Fund, in administering the Trust Fund, shall be advised
by an advisory board established under section 103.
(b) Transfers to Trust Fund.--There is transferred to the State
Account and the Federal Account of the National Tobacco Settlement
Trust Fund, without further appropriation, an amount equal to 50
percent in the case of the State Account and 50 percent in the case of
the Federal Account of the--
(1) amounts received under section 102, less the amounts
made available under subparagraphs (D), (E), and (F) of
subsection (c)(3) for tobacco transition, Native Americans, and
asbestos-related injuries;
(2) amounts paid as fines or penalties, including interest
thereon, under section 104; and
(3) amounts repaid or recovered under section 315,
including interest thereon.
(c) Expenditures From Trust Fund.--
(1) In general.--Amounts in the National Tobacco Settlement
Trust Fund shall be made available in each fiscal year, without
further appropriation, as described in the table in paragraph
(2).
(2) Expenditure table.--For purposes of paragraph (1),
amounts shall be made available in each full fiscal year
following the date of enactment of this Act as follows:
In billions of dollars
----------------------------------------------------------------------------------------------------------------
Native
Year States Public Health Research Asbestos Agriculture Americans
----------------------------------------------------------------------------------------------------------------
1st 3.25 1.1 2.15 0 3.0925 0.2
2nd 3.75 1.6 2.15 0.2 5.0925 0.2
3rd 4.75 2.2 2.55 0.2 6.1925 0.2
4th 7.0 3.3 3.7 0.2 .0925 0.2
5th 7.5 3.5 4.0 0.2 .0925 0.2
6th 8.0 4.0 4.0 0.2 0.1 0.2
7th 8.0 4.0 4.0 0.2 0.1 0.2
8th 8.0 4.0 4.0 0.2 0.1 0.2
9th 8.0 4.0 4.0 0.2 0.1 0.2
10th 8.0 4.0 4.0 0.2 0.1 0.2
11th 8.0 4.0 4.0 0.2 0.0575 0.2
12th 8.0 4.0 4.0 0.2 0.0575 0.2
13th 8.0 4.0 4.0 0.2 0.0575 0.2
14th 8.0 4.0 4.0 0.2 0.0575 0.2
15th 8.0 4.0 4.0 0.2 0.0575 0.2
16th 8.0 4.0 4.0 0.2 0.065 0.2
17th 8.0 4.0 4.0 0.2 0.065 0.2
18th 8.0 4.0 4.0 0.2 0.065 0.2
19th 8.0 4.0 4.0 0.2 0.065 0.2
20th 8.0 4.0 4.0 0.2 0.065 0.2
21st 8.0 4.0 4.0 0.2 0.0725 0.2
22nd 8.0 4.0 4.0 0.2 0.0725 0.2
23rd 8.0 4.0 4.0 0.2 0.0725 0.2
24th 8.0 4.0 4.0 0.2 0.0725 0.2
25th 8.0 4.0 4.0 0.2 0.0725 0.2
----------------------------------------------------------------------------------------------------------------
(3) Definitions and use of funds.--With respect to the
table in paragraph (2):
(A) State.--The term ``State'' means the State
account established under subsection (a)(3)(A). Amounts
provided to the State Account under this section shall
be available in each fiscal year, without further
appropriation, to make payments to the States as
provided for in subtitle A of title V.
(B) Research.--The term ``research'' means
activities carried out by the Secretary under section
521 to conduct and support biomedical and behavioral
research into the causes of tobacco use, diseases and
conditions associated with tobacco use and other
substance abuse dependencies, and the development of
therapies for such diseases and conditions.
(C) Public health.--The term ``public health''
means public health activities carried out by the
Secretary under section 522 to implement the National
Anti-Tobacco Product Consumption and Tobacco Product
Cessation Public Health Program to further the purposes
of this Act.
(D) Asbestos.--The term ``asbestos'' means programs
and activities carried out by the Secretary of Labor
relating to victims of asbestos-related injuries with
respect to which the use of tobacco products have been
determined to be a significant contributor.
(E) Agriculture.--The term ``agriculture'' means
the Tobacco Transition Account to be administered by
the Secretary of Agriculture as provided for under
section 841.
(F) Native americans.--The term ``Native
Americans'' means anti-tobacco consumption and
cessation activities to be carried out by the Indian
Health Service under section 901(h).
(4) Federal account.--Amounts to which subparagraphs (B)
through (D) of paragraph (3) apply shall be deposited into
Federal Account and shall be available in each fiscal year,
without further appropriation, as described in such
subparagraphs.
(5) Reservation.--Prior to making available amounts under
this subsection for a fiscal year, the Trustees shall reserve
the amounts to which subparagraphs (E) through (G) of paragraph
(3) apply, for use in each fiscal year, without further
appropriation, as described in such subparagraphs.
(d) Maintenance of Effort.--The Trustees may not make an
expenditure for a fiscal year--
(1) under subsection (c)(1), unless a State certifies that
the aggregate expenditure of funds of the State, exclusive of
Federal funds, for the purposes of the expenditure under such
subsection will be maintained at a level that does not fall
below the average level of such aggregate expenditure for the
preceding 2 fiscal years of the State; and
(2) under any subparagraph of subsection (c)(2), unless
such expenditure is in addition to, and not in substitution
for, any appropriation otherwise applicable with respect to the
purpose described in such subparagraph.
(e) Adjustments.--The amounts described in subsection (a)(1)
relating to deposits and in subsection (c) relating to expenditures
shall be adjusted annually by the Trustees to account for any
adjustments made under section 102(c)(2) relating to fee payments.
Amounts for expenditures under subsection (c) shall be adjusted
proportionally by the Trustees based on the adjustments under section
102(c)(2).
SEC. 102. LICENSING FEES PAYMENT SCHEDULE.
(a) Requirement of Initial Payment.--To be eligible to receive the
protections provided under subtitle C of title II, participating
manufacturers shall, on the later of--
(1) the date of enactment of this Act;
(2) the date on which the Protocol is executed under
section 201; or
(3) the date on which all applicable consent decrees are
executed under section 241;
pay licensing fees to the Trust Fund in an aggregate amount of
$10,000,000,000.
(b) Subsequent Base Amount Payments.--To be eligible to receive the
protections provided under subtitle C of title II, participating
manufacturers shall, not later than December 31 of each year involved,
pay licensing fees to the Trust Fund in an aggregate amount of--
(1) with respect to the first fiscal year following the
year in which the fees are paid under subsection (a),
$9,792,500,000;
(2) with respect to the second such fiscal year,
$12,992,500,000;
(3) with respect to the third such fiscal year,
$16,092,500,000;
(4) with respect to the fourth such fiscal year,
$14,492,500,000;
(5) with respect to the fifth such fiscal year,
$15,492,500,000;
(6) with respect to the sixth such fiscal year, and each of
the next 4 succeeding fiscal years, $16,500,000,000 for each
such year;
(7) with respect to the 11th such fiscal year, and each of
the next 4 succeeding fiscal years, $16,457,500,000 for each
such year;
(8) with respect to the 16th such fiscal year, and each of
the next 4 succeeding fiscal years, $16,465,000,000 for each
such year; and
(9) with respect to the 21st such fiscal year, and each of
the next 4 succeeding fiscal years, $16,472,500,000 for each
such year.
(c) Adjustments.--
(1) In general.--The amount of the annual base amount
payments for each year under subsection (b) shall be adjusted
by the Trustees in accordance with the formula described in
paragraph (2). In prescribing such adjustments, the Trustees
shall ensure that participating manufacturers make annual
payments based on their relative domestic volume of sales of
units of tobacco products during the year for which the payment
is due.
(2) Formula.--
(A) Inflation adjustment.--With respect to a year,
the base amount payment for such year under subsection
(b) shall be increased for such year by the greater of
3 percent or the percentage increase in the Consumer
Price Index for the period beginning in the first full
fiscal year beginning after the date of enactment of
this Act and ending in the year for which the
determination is being made.
(B) Volume adjustment.--
(i) Determination.--With respect to a
year--
(I) if the actual volume is greater
than the base volume, the amount of the
annual base amount payments for such
year under subsection (b) shall be
increased by an amount equal to the
amount determined by multiplying such
base amount by the ratio of the actual
volume to the base volume; or
(II) if the actual volume is less
than the base volume, the annual base
amount payments for such year under
subsection (b) shall be reduced by an
amount equal to the amount determined
by multiplying such base amount by the
greater of--
(aa) the ratio of the
actual volume to the base
volume; or
(bb) the ratio of the
portion of the actual volume
attributable to sales to
individuals 18 years of age or
older to the portion of the
base volume attributable to
sales to individual 18 years of
age or older.
(ii) Required reduction.--If a reduction in
the applicable base amount is required under
clause (ii), but the participating
manufacturers' aggregate net operating profits
from domestic sales of tobacco products for the
year for which the annual payment is being
calculated, as reported to the Securities and
Exchange Commission, is greater than such
participating manufacturers' aggregate net
operating profits from domestic sales of
tobacco products in 1996 (as increased for
inflation) as reported to the Securities and
Exchange Commission, such reduction shall be
reduced (but not below zero) by an amount equal
to 25 percent of such increase in such profits.
(iii) Nonreporting manufacturer.--In the
case of a participating manufacturer that does
not report profits to the Securities and
Exchange Commission, the profit figures
referred to in this subparagraph shall be those
reflected in that participating manufacturer's
audited financial statements for the applicable
year. The determination of the participating
manufacturers' aggregate net operating profits
from domestic sales of tobacco products shall
be derived using the same methodology as was
employed in deriving such participating
manufacturers' aggregate net operating profits
from domestic sales of tobacco products in
1996, as reported to the Securities and
Exchange Commission.
(iv) Definitions.--For purposes of this
subparagraph--
(I) the term ``actual volume''
means the number of units of tobacco
products sold domestically by
participating manufacturers in the year
involved (as reported by such
participating manufacturers to the
Secretary); and
(II) the term ``base volume'' means
the number of units of tobacco products
sold domestically by participating
manufacturers in 1996.
(d) Determination of Amount.--The amount of licensing fees that
each participating manufacturer shall be required to pay to the Trust
Fund under this section shall be determined under the Protocol under
section 226. In making such determinations, consideration shall be
provided for any payments made by manufacturers to States under any
settlement of a civil action described in section 256(a).
(e) Guidelines.--The Trustees shall develop guidelines and
implement procedures for the collection of fees under this section.
(f) Collection of Unpaid Payments.--In any case where the Trustees
do not receive a payment under this section within 30 days after it is
due, such payment shall be treated as a claim of the United States
Government subject to subchapter II of chapter 37 of title 31, United
States Code.
SEC. 103. ADMINISTRATIVE PROVISIONS.
(a) Duty of Trustees.--It shall be the duty of the Attorney General
as a Trustees of the National Tobacco Settlement Trust Fund to hold the
Trust Fund and to report to the Committees on Judiciary, Labor and
Human Resources, Commerce and Agriculture of the Senate and the
Committees on Judiciary, Commerce, and Agriculture of the House of
Representatives each fiscal year--
(1) on the financial condition and the results of the
operations of the Trust Fund during the fiscal year preceding
the fiscal year in which such report is submitted, and
(2) on the expected condition and operations of the Trust
Fund during the fiscal year in which such report is submitted
and the 5 fiscal years succeeding such fiscal year.
Such report shall be printed as both a House and Senate document of the
session of the Congress to which the report is made.
(b) Investment of Amounts in Trust Fund.--
(1) Investment in obligations.--The Trustees shall invest
such portion of the State Account and the Federal Account of
the National Tobacco Settlement Trust Fund as is not, in their
judgment, required to meet current withdrawals. Such
investments may be made only in interest-bearing obligations of
the United States. For such purpose, such obligations may be
acquired--
(A) on original issue at the issue price, or
(B) by purchase of outstanding obligations at the
market price.
(2) Sale of obligations.--Any obligation acquired by the
State Account or the Federal Account of the Trust Fund may be
sold by the Secretary of the Treasury at the market price.
(3) Crediting of interest and sale proceeds.--The interest
on, and the proceeds from the sale or redemption of, any
obligations held in the State Account or the Federal Account of
the Trust Fund shall be credited to and form a part of such
Account.
(c) Establishment of Advisory Board.--
(1) In general.--There is established an advisory board
(referred to in this subsection as the ``Advisory Board'') to
advise the Trustees of the National Tobacco Settlement Trust
Fund in the administration of the Trust Fund.
(2) Membership.--
(A) In general.--The Advisory Board shall be
composed of the Trustees of the National Tobacco
Settlement Trust Fund, who shall act as the co-
chairpersons of the Advisory Board, and 4 members to be
appointed--
(i) \1/2\ by the Speaker of the House of
Representatives, in consultation with the
minority leader of the House of
Representatives, and
(ii) \1/2\ by the majority leader of the
Senate, in consultation with the minority
leader of the Senate.
(b) Nominees.--The members appointed under each
clause of subparagraph (A) shall be chosen in the
following manner:
(i) 1 member from a nominee list prepared
by State attorneys general.
(ii) 1 member from a nominee list prepared
by representatives of the tobacco industry.
(iii) 1 member from a nominee list prepared
by representatives of public health experts.
(iv) 1 member from a nominee list prepared
by representatives of the members of the class
of plaintiffs in Dianne Castano v. American
Tobacco Company.
(3) Terms and vacancies.--Each member of the Advisory Board
shall serve for a term of 4 years, to begin on the date of
appointment. Any vacancy on the Advisory Board shall not affect
its powers, but shall be filled in the same manner as the
original appointment. Any member appointed to fill a vacancy
occurring before the expiration of the term for which the
member's predecessor was appointed shall be appointed for the
remainder of that term.
(4) Powers.--
(A) Hearings.--The Advisory Board may hold such
hearings, sit and act at such times and places, take
such testimony, and receive such evidence as the
Advisory Board considers advisable to carry out the duties of the
Advisory Board.
(B) Information from federal agencies.--The
Advisory Board may secure directly from any Federal
department or agency such information as the Advisory
Board considers necessary to carry out such duties.
(5) Personnel matters.--
(A) Compensation.--Each member of the Advisory
Board who is not an officer or employee of the Federal
Government shall serve without compensation. All
members of the Advisory Board who are officers or
employees of the United States shall serve without
compensation in addition to that received for their
services as officers or employees of the United States.
(B) Travel expenses.--The members of the Advisory
Board shall be allowed travel expenses, including per
diem in lieu of subsistence, at rates authorized for
employees of agencies under subchapter I of chapter 57
of title 5, United States Code, while away from their
homes or regular places of business in the performance
of services for the Advisory Board.
(6) Limitation.--Amounts used for administrative expenses
under this section shall not exceed .1 percent of the amounts
in the Trust Fund in each year or $15,000,000 whichever is
less.
(7) Nonapplication of faca.--The provisions of the Federal
Advisory Committee Act (5 U.S.C. App. 2) shall not apply to the
Advisory Board established under this subsection.
(d) Budgetary Treatment of Trust Fund Operations.--
(1) In general.--The receipts and disbursements of the
National Tobacco Settlement Trust Fund shall not be included in
the totals of the budget of the United States Government as
submitted by the President or of the congressional budget and
shall be exempt from any general budget limitation imposed by
statute on expenditures and net lending (budget outlays) of the
United States Government.
(2) No transfers between trust fund and general fund.--No
provision of law may provide for payments from the general fund
of the Treasury to the National Tobacco Settlement Trust Fund
or for payments from the Trust Fund to the general fund of the
Treasury.
SEC. 104. ENFORCEMENT.
(a) Initial Penalty.--There is hereby imposed an initial penalty on
the failure of any participating manufacturer to make any fee payment
required under section 102 within 60 days after the date on which such
fee is due.
(b) Amount of Penalty.--The amount of the penalty imposed by
subsection (a) on any failure with respect to a manufacturer shall be
$100,000 for each day during the noncompliance period.
(c) Noncompliance Period.--For purposes of this section, the term
``noncompliance period'' means, with respect to any failure to make the
fee payment required under section 102, the period--
(1) beginning on the due date for such payment; and
(2) ending on the date on which such payment is paid in
full.
(d) Limitations.--
(1) In general.--No penalty shall be imposed by subsection
(a) on any failure to make a fee payment under section 102
during any period for which it is established to the
satisfaction of the Trustees that none of the persons
responsible for such failure knew or, exercising reasonable
diligence, would have known, that such failure existed.
(2) Corrections.--No penalty shall be imposed under
subsection (a) on any failure to make a fee payment under
section 102 if--
(A) such failure was due to reasonable cause and
not to willful neglect; and
(B) such failure is corrected during the 30-day
period beginning on the 1st date that any of the
persons responsible for such failure knew or,
exercising reasonable diligence, would have known, that
such failure existed.
(3) Waiver.--In the case of any failure to make a fee
payment under section 102 that is due to reasonable cause and
not to willful neglect, the Trustees may waive all or part of
the penalty imposed under subsection (a) to the extent that the
Trustees determines that the payment of such penalty would be
excessive relative to the failure involved.
(e) Status as Participating Manufacturer.--If, at the end of the 1-
year period beginning on the date on which a participating manufacturer
fails to make a timely fee payment as required under section 102, such
manufacture has not fully paid the amount owed by such manufacturer
under such section, such manufacturer shall be considered a
nonparticipating manufacturer and shall not be eligible for any
protections or assistance provided for under this Act (including the
liability protections under subtitle C of title I).
TITLE II--NATIONAL PROTOCOL AND LIABILITY PROVISIONS
Subtitle A--National Tobacco Control Protocol
CHAPTER 1--ESTABLISHMENT
SEC. 201. REQUIREMENT.
(a) Requirement.--To be eligible to receive the liability
protections provided for in subtitle C, each tobacco manufacturer to
which this Act applies shall, not later than 90 days after the date of
enactment of this Act, enter into a National Tobacco Control Protocol
with the Attorney General of the United States, the chief executive
officer of each State, and a representative of the members of the class
certified for purposes of Dianne Castano v. American Tobacco Company.
(b) Terms and Conditions.--The Protocol referred to in subsection
(a) shall be--
(1) developed by the Attorney General, in consultation with
the Secretary, the State attorneys' general, and other
individuals determined appropriate by the Attorney General, as
a binding and enforceable contract that embodies the terms of
this subtitle; and
(2) designed to be enforceable in Federal or State courts
as provided for in this subtitle.
(c) Contracts.--As part of the Protocol under this subtitle, a
participating manufacturer shall agree, with respect to any contract
entered into by the manufacturer with an entity that is a distributor
or retailer of tobacco products, to include in such contract as a term
and condition a requirement that such distributor or retailer comply
with the provisions of the Protocol.
CHAPTER 2--TERMS AND CONDITIONS
Subchapter A--Protocol Restrictions on Advertising
SEC. 211. APPLICATION OF SUBCHAPTER.
The provisions of this subchapter shall be considered as part of
the Protocol.
SEC. 212. AGREEMENT TO PROHIBIT CERTAIN ADVERTISING.
(a) Prohibition on Outdoor Advertising.--
(1) In general.--No manufacturer, distributor, or retailer
may use any form of outdoor tobacco product advertising,
including billboards, posters, or placards.
(2) Stadia and arenas.--Except as otherwise provided in
this title, a manufacturer, distributor, or retailer shall not
advertise tobacco products in any arena or stadium where
athletic, musical, artistic or other social or cultural events
or activities occur.
(b) Prohibition on Use of Human Images and Cartoons.--No
manufacturer, distributor, or retailer may use a human image or a
cartoon character or cartoon-type character in its advertising,
labeling or promotional material with respect to a tobacco product.
(c) Prohibition on Advertising on the Internet.--No manufacturer,
distributor, or retailer may use the Internet to advertise tobacco
products unless such an advertisement is inaccessible in or from the
United States.
(d) Prohibition on Point of Sale Advertising.--
(1) In general.--Except as otherwise provided in this
subsection, no manufacturer, distributor, or retailer may use
point of sale advertising of tobacco products.
(2) Adult only stores and tobacco outlets.--Paragraph (1)
shall not apply to point of sale advertising at adult only
stores and tobacco outlets.
(3) Permissible advertising.--
(A) In general.--Each manufacturer of tobacco
products may display not more than 2 separate point of
sale advertisements in or at each location at which
tobacco products are offered for sale.
(B) Market share manufacturers.--A manufacturer
with at least 25 percent of the market share of the
tobacco product involved may display an additional
point of sale advertisement in or at each location at
which tobacco products are offered for sale.
(C) Retailers.--No manufacturer, distributor, or
retailer may enter into any arrangement with a retailer
to limit the ability of the retailer to display any
form of permissible point of sale advertisement or
promotional material originating with another
manufacturer, distributor, or retailer.
(4) Limitations.--
(A) In general.--A point of sale advertisement
permitted under this subsection shall be comprised of a
display area than is not larger than 576 square inches
(either individually or in the aggregate) and shall
consist only of black letters on a white background or
other recognized typographical marks. Such advertisement shall not be
attached to nor located within 2 feet of any fixture on which candy is
displayed for sale.
(B) Audio and video formats.--Audio and video
advertisements permitted under section 214(c) may be
distributed to individuals who are 18 years of age or
older at point of sale but may not be played or viewed
at such point of sale.
(C) Display fixtures.--Display fixtures in the form
of signs consisting of brand name and price and not
larger than 2 inches in height are permitted.
(5) Definition.--For purposes of this subsection, the term
``point of sale advertising'' means all printed or graphical
materials bearing the brand name (alone or in conjunction with
any other word), logo, motto, selling message, recognizable
color or pattern of colors, or any other indicia of product
identification similar or identical to those used for tobacco
products, which, when used for its intended purpose, can
reasonably be anticipated to be seen by customers at a location
at which tobacco products are offered for sale.
SEC. 213. CONSENSUAL RESTRICTIONS.
(a) Restriction on Product Names.--A manufacturer shall not use a
trade or brand name of a nontobacco product as the trade or brand name
for a cigarette or smokeless tobacco product, except for a tobacco
product whose trade or brand name was on both a tobacco product and a
nontobacco product that were sold in the United States on January 1,
1995.
(b) Advertising Limit Actions.--
(1) In general.--A manufacturer, distributor, or retailer
may in accordance with this title, disseminate or cause to be
disseminated advertising or labeling which bears a tobacco
product brand name (alone or on conjunction with any other
word) or any other indicia of tobacco product identification
only in newspapers, in magazines, in periodicals or other
publications (whether periodic or limited distribution), on
billboards, posters and placards in accordance with section
212(a), in nonpoint of sale promotional material (including
direct mail), in point-of-sale promotional material, and in
audio or video formats delivered at a point-of-sale.
(2) Limitation.--A manufacturer, distributor, or retailer
that intends to disseminate, or to cause to be disseminated,
advertising or labeling for a tobacco product in a medium that
is not described in paragraph (1) shall notify the Commissioner
not less than 30 days prior to the date on which such medium is
to be used. Such notice shall describe the medium and discuss
the extent to which the advertising or labeling may be seen by
individuals who are under 18 years of age.
(3) Action by commissioner.--Not later than 30 days after
the date on which the Commissioner receives a notice under
paragraph (2), the Commissioner shall make a determination with
respect to the action to be taken concerning such notice.
(c) Restriction on Placement in Entertainment Media.--
(1) In general.--No payment shall be made by any
manufacturer, distributor, or retailer for the placement of any
tobacco product or tobacco product package or advertisement--
(A) as a prop in any television program or motion
picture produced for viewing by the general public; or
(B) in a video or on a video game machine.
(2) Video game.--The term ``video game'' means any
electronic amusement device that utilizes a computer,
microprocessor, or similar electronic circuitry and its own
cathode ray tube, or is designed to be used with a television
set or a monitor, that interacts with the user of the device.
(3) Video.--The term ``video'' means an audiovisual work
produced for viewing by the general public, such as a
television program, a motion picture, a music video, and the
audiovisual display of a video game.
(d) Restrictions on Glamorization of Tobacco Products.--No direct
or indirect payment shall be made by any manufacturer, distributor, or
retailer to any entity for the purpose of promoting the image or use of
a tobacco product through print or film media that appeals to
individuals under 18 years of age or through a live performance by an
entertainment artist that appeals to such individuals.
SEC. 214. AGREEMENT ON FORMAT AND CONTENT REQUIREMENTS FOR LABELING AND
ADVERTISING.
(a) In General.--Except as provided in subsections (b) and (c),
each manufacturer, distributor, or retailer advertising or causing to
be advertised, disseminating or causing to be disseminated, any
labeling or advertising for a tobacco product shall use only black text
on a white background.
(b) Certain Advertising Excepted.--
(1) In general.--Subsection (a) shall not apply to
advertising--
(A) in any facility where vending machines and
self-service displays are permitted under this title if
the advertising involved--
(i) is not visible from outside of the
facility; and
(ii) is affixed to a wall or fixture in the
facility;
(B) that appears in any publication (whether
periodic or limited distribution) that is an adult
publication.
(2) Adult publication.--For purposes of paragraph (1)(B),
the term ``adult publication'' means a newspaper, magazine,
periodical, or other publication--
(A) whose readers under 18 years of age constitute
15 percent or less of the total readership as measured
by competent and reliable survey evidence; and
(B) that is read by fewer than 2,000,000
individuals who are under 18 years of age as measured
by competent and reliable survey evidence.
(c) Audio or Video Formats.--Each manufacturer, distributor or
retailer advertising or causing to be advertised any advertising for a
tobacco product in an audio or video format shall comply with the
following:
(1) With respect to an audio format, the advertising shall
be limited to words only with no music or sound effects.
(2) With respect to a video format, the advertising shall
be limited to static black text only on a white background. Any
audio with the video advertising shall be limited to words only
with no music or sound effects.
SEC. 215. AGREEMENT TO BAN ON NONTOBACCO ITEMS AND SERVICES, CONTESTS
AND GAMES OF CHANCE, AND SPONSORSHIP OF EVENTS.
(a) Ban on All Non-Tobacco Merchandise.--No manufacturer, importer,
distributor, or retailer shall market, license, distribute, sell or
cause to be marketed, licensed, distributed or sold any item (other
than tobacco products) or service, which bears the brand name (alone or
in conjunction with any other word), logo, symbol, motto, selling
message, recognizable color or pattern of colors, or any other indicia
of product identification similar or identifiable to those used for any
brand of tobacco products.
(b) Gifts, Contests, and Lotteries.--No manufacturer, distributor,
or retailer shall offer or cause to be offered to any person purchasing
tobacco products any gift or item (other than a tobacco product) in
consideration of the purchase of such products, or to any person in
consideration of furnishing evidence, such as credits, proofs-of-
purchase, or coupons, of such a purchase.
(c) Sponsorship.--
(1) In general.--No manufacturer, distributor, or retailer
shall sponsor or cause to be sponsored any athletic, musical,
artistic or other social or cultural event, or any entry or
team in any event, in which the brand name (alone or in
conjunction with any other word), logo, motto, selling message,
recognizable color or pattern of colors, or any other indicia
of product identification similar or identical to those used
for tobacco products is used.
(2) Use of corporate name.--A manufacturer, distributor, or
retailer may sponsor or cause to be sponsored any athletic,
musical, artistic or other social or cultural event in the name
of the corporation which manufactures the tobacco product if--
(A) both the corporate name and the corporation
were registered and in use in the United States prior
to January 1, 1995; and
(B) the corporate name does not include any brand
name (alone or in conjunction with any other word),
logo, symbol, motto, selling message, recognizable
color or pattern of colors, or any other indicia or
product identification identical or similar to, or
identifiable with, those used for any brand of tobacco
products.
Subchapter B--Provisions relating to Lobbying
SEC. 220. APPLICATION OF SUBCHAPTER.
The provisions of this subchapter shall be considered as part of
the Protocol.
SEC. 221. AGREEMENT TO PROVISIONS RELATING TO LOBBYING.
(a) Definitions.--For purposes of this section, the terms
``lobbying activities'', ``lobbying firm'', and ``lobbyist'' have the
meanings given such terms by section 3 of the Lobbying Disclosure Act
of 1995 (2 U.S.C. 1602).
(b) General Requirement.--A manufacturer of a tobacco product shall
require that any lobbyist or lobbying firm employed or retained by the
manufacturer, or any other individual who performs lobbying activities
on behalf of the manufacturer, as part of the employment or retainer
agreement refrain from supporting or opposing any Federal or State
legislation, or otherwise supporting or opposing any governmental
action on any matter without the express consent of the manufacturer.
(c) Additional Agreements.--An individual shall not be employed or
retained to perform lobbying activities on behalf of a manufacturer of
a tobacco product unless such individual enters into a signed agreement
with the manufacturer that acknowledges that the individual--
(1) is fully aware of, and will fully comply with, all
applicable laws and regulations relating to the manufacture and
distribution of tobacco products;
(2) has reviewed and will fully comply with the
requirements of this Act (and the amendments made by this Act);
(3) has reviewed and will fully comply with any consent
decree entered into under subtitle C as that decree applies to
the manufacturer involved; and
(4) has reviewed and will fully comply with the business
conduct policies and other applicable policies and commitments
(including those relating to the prevention of underage tobacco
use) of the manufacturer involved.
SEC. 222. AGREEMENT TO TERMINATE CERTAIN ENTITIES.
(a) Requirement.--Not later than 1 year after the date of enactment
of this Act, manufacturers of tobacco products shall provide for the
termination of the activities of the Tobacco Institute and the Council
for Tobacco Research, U.S.A. and the Institute and Council shall be
dissolved.
(b) Establishment of Other Entities.--
(1) Authority.--Manufacturers of tobacco products may form
or participate in any trade organization or other industry
association only in accordance with this subsection.
(2) Board of directors.--A trade organization or other
industry association formed or participated in under this
subsection shall--
(A) shall be administered by an independent board
of directors, of which--
(i) during the 10-year period beginning on
the date on which the organization or
association is formed or first participated in
under this subsection, not less than 20 percent
(at least 1 member) shall be individuals who
are not current or former directors, officers,
or employees of an entity terminated under
subsection (a) or of the members of the
association or organization; and
(ii) during the life of the association or
organization, no member shall be a director of
any of the members of the association or
organization;
(B) be administered by officers who are appointed
by the board of directors and who are not otherwise
employed by any of the members of the association or
organization; and
(C) be provided with legal advice by a legal
adviser who is appointed by the board of directors and
who is not otherwise employed by any of the members of
the association or organization.
(3) By-laws.--A trade organization or other industry
association formed or participated in under this subsection
shall adopt by-laws that--
(A) prohibit meetings by members of the association
or organization who are competitors in the tobacco
industry except under the sponsorship of the
association or organization;
(B) require that every meeting of the board of
directors, or a subcommittee of the board or other
general committee, proceed under and strictly adhere to
an agenda that is approved by the legal counsel and
circulated in advance; and
(C) require the taking of minutes that describe the
substance of any meeting of the members of the
association or organization and the maintenance of such
minutes in the records of the association or
organization for a period of 5 years following the
meeting.
(c) Department of Justice.--
(1) Oversight.--The Attorney General and, as appropriate,
State antitrust authorities shall exercise oversight authority
over any association or organization to which subsection (b)
applies.
(2) Access and inspection.--During the 10-year period
beginning on the date on which an association or organization
to which subsection (b) applies is formed, the Attorney General
and, as appropriate State antitrust authorities shall, upon the
provision of reasonable notice to the legal counsel of the
association or organization, have access to--
(A) all books, records, meeting agenda and minutes,
and other documents maintained by the association or
organization; and
(B) the directors, officers, and employees of the
association or organization for interview purposes.
(3) Multi-state committee.--Two or more States, acting
through the attorney general of each such State, may establish
a multi-State oversight committee to assist the Attorney
General in exercising the oversight responsibilities under this
section.
(4) Confidentiality.--The Attorney General shall promulgate
regulations to provide that materials provided under paragraph
(2) are protected with appropriate confidentiality protections.
(d) Antitrust Exemptions.--The provisions of the Sherman Act (15
U.S.C. 1 et seq.), the Clayton Act (29 U.S.C. 52 et seq.), and any
other Federal or State antitrust laws shall not apply to an association
or organization to which subsection (b) applies.
Subchapter C--Other Provisions
SEC. 225. APPLICATION OF SUBCHAPTER.
The provisions of this subchapter shall be considered as part of
the Protocol.
SEC. 226. DETERMINATION OF LICENSING FEE AMOUNT.
With respect to the total amount of licensing fees to be paid by
participating manufacturers under section 102 for a fiscal year, such
manufacturers shall determine the percentage of such total amount that
each such manufacturer shall be required to pay and the manner in which
such payments will be made.
SEC. 227. ATTORNEY'S FEES AND EXPENSES.
(a) Arbitration Panel.--
(1) Establishment.--For the purpose of awarding of
attorneys' fees and expenses relating to litigation affected
by, or legal services that resulted in whole or in part in,
this Act, there is established an Arbitration Panel which shall
consist of--
(A) 3 members to be appointed by the Trustees;
(B) 1 member to be appointed by the participating
manufacturers;
(C) 1 member to be appointed by the Attorneys
General of the States who were signatories to the
Memorandum of Understanding dated June 20, 1997, by and
between tobacco manufacturers, the Attorneys Generals,
and private attorneys; and
(D) 1 member to be appointed by the private
attorneys, including attorneys representing plaintiffs
in the case of Dianne Castano v. American Tobacco
Company.
(2) Operation.--
(A) Establishment.--The members of the Arbitration
Panel shall be appointed not later than 30 days after
the effective date of this Act.
(B) Procedures.--Not later than 30 days after the
date on which all members of the Arbitration Panel are
appointed under paragraph (1), the Panel shall
establish the procedures under which the Panel will
operate which shall include--
(i) a requirement that any finding by the
Arbitration Panel must be in writing and
supported by written reasons;
(ii) procedures for the exchanging of
exhibits and witness lists by the various
claimants for awards;
(iii) to the maximum extent practicable,
requirements that proceedings before the Panel
be based on affidavits rather than live
testimony; and
(iv) a requirement that all claims be
submitted to the Arbitration Panel not later
than 3 months after the effective date of this
Act and a determination made by the Panel with
respect to such claims not later than 7 months
after such date of enactment.
(3) Right to petition.--Any individual attorney or group of
attorneys involved in litigation affected by this Act shall
have the right to petition the Arbitration Panel for attorneys'
fees and expenses.
(4) Criteria.--In making any award pursuant to this
section, the Arbitration Panel shall consider the following
criteria:
(A) The time and labor required by the claimant.
(B) The novelty and difficulty of the questions
involved in the action for which the claimant is making
a claim.
(C) The skill requisite to perform the legal
service involved properly.
(D) The preclusion of other employment by the
attorney due to acceptance of the action involved.
(E) Whether the fee is fixed or a percentage.
(F) Time limitations imposed by the client or the
circumstances.
(G) The amount involved and the results obtained.
(H) The experience, reputation, and ability of the
attorneys involved.
(I) The undesirability of the action.
(5) Appeal and enforcement.--The findings of the
Arbitration Panel shall be final, binding, nonappealable, and
payable within 30 days after the date on which the finding is
made public, except that if an award is to be paid in
installments, the first installment shall be payable within
such 30 day period and succeeding installments shall be paid
annually thereafter.
(b) Source and Payment of Awards.--In no event shall any award of
the Arbitration Panel be paid from, credited against, or otherwise
affect in any way any fee payments that are required to be made by any
participating manufacturer under to section 102 or under any other
provision of this Act. Any such award shall be paid by participating
manufacturers pursuant to an allocation agreement among such
manufacturers.
(c) Validity and Enforceability of Private Agreements.--
Notwithstanding any other provision of this Act, nothing in this
section shall be construed to abrogate or restrict in any way the
rights of any parties to mediate, negotiate, or settle any fee or
expense disputes or issues to which this section applies, or to enter
into private agreements with respect to the allocation or division of
fees among the attorneys party to any such agreement.
(d) Limitation.--Notwithstanding any other provision of law, in no
event shall the amount of attorneys' fees awarded under this section
for a fiscal year exceed an amount equal to 5 percent of the amount
paid to the Trust Fund under section 102 for the fiscal year. Any
amounts in excess of such amount may be collected in subsequent fiscal
years subject to the 5 percent limitation with respect to each such
fiscal year. The manufacturer signatories to the Protocol shall be
responsible for the payment of all such attorneys' fees and such
payments shall not be counted against the fee payments to be made under
section 102 nor shall they be drawn from the National Tobacco
Settlement Trust Fund.
SEC. 228. LIMITATIONS WITH RESPECT TO INDIAN COUNTRY.
(a) General Prohibition.--A participating manufacturer shall not
engage in any activity within Indian country (as defined in section
901) that is otherwise prohibited under this Act (or an amendment made
by this Act).
(b) Limitation on Sale.--A participating manufacturer shall not
sell or otherwise distribute a tobacco product for subsequent
manufacture, distribution, or sale to an Indian tribe or tribal
organization, or provide such products to a manufacturer, distributor,
or retailer that is subject to the jurisdiction of a tribe or
organization, except under the same terms and conditions as the
manufacturer imposes on other manufacturers, distributors, or
retailers.
CHAPTER 3--ENFORCEMENT
SEC. 231. FEDERAL ENFORCEMENT OF THE PROTOCOL.
(a) Civil Action.--The Attorney General, acting in his or her
capacity as a Trustee, may bring a civil action for the enforcement, or
to restrain any breach, of the Protocol in the United States District
Court for the District of Columbia or in the district court of the
United States for the district in which the breach occurred.
(b) Remedy.--In any action under subsection (a), the district court
involved--
(1) shall restrain the conduct that is the subject of the
breach of the Protocol;
(2) shall order specific performance of the obligations set
forth in the Protocol; and
(3) may order civil penalties against any manufacturer who
knowingly violates a requirement of the Protocol in an amount
not to exceed $10,000,000 for all such violations adjudicated
in a single proceeding.
(c) Contracts With State Agencies.--The Attorney General may enter
into contracts with an agency of any State to assist in the enforcement
of the provisions of the Protocol.
(d) Action by Attorney General.--With respect to the funding of any
activities under subsection (a), the Attorney General shall use amounts
available in the Trust Fund under section 101. If the Attorney General
determines that amounts available in the Trust Fund are insufficient,
the Attorney General may use amounts available for the activities of
the Department of Justice.
SEC. 232. STATE ENFORCEMENT OF THE PROTOCOL.
(a) Civil Action.--The chief law enforcement officer of a State may
bring in its own name and within its jurisdiction a civil action for
the enforcement, or to restrain a breach, of the Protocol if the
alleged violation that is the subject of the proceedings occurred in
that State.
(b) Limitation.--No proceeding described in subsection (a) may be
commenced or maintained by a State--
(1) prior to the expiration of the 30-day period beginning
on the date on which the State has given notice to the Attorney
General that the State intends to bring such proceeding; or
(2) if the Attorney General is diligently prosecuting, or
has diligently prosecuted or settled, a proceeding pertaining
to such alleged breach.
In any proceeding described in paragraph (2) that is brought by the
Attorney General a State may intervene as a matter of right.
(c) Remedies.--In any proceeding described in subsection (b)--
(1) the remedies available shall be those described in
section 231(b); and
(2) no civil penalty shall be imposed if any State is
diligently prosecuting, or has already diligently prosecuted or
settled, a proceeding described in subsection (b) pertaining to
such alleged breach seeking any civil penalty.
(d) Single Breach.--For purposes of this section, conduct arising
out of the same transaction or occurrence, or a related series of
transactions or occurrences, that breaches any obligation under the
Protocol shall be considered to be part of a single breach.
SEC. 233. PRIVATE ENFORCEMENT OF PROTOCOL.
(a) In General.--A participating manufacturer may seek a
declaration of the rights and obligations of the manufacturer under the
Protocol by filing an action pursuant to section 2201 of title 28,
United States Code.
(b) Civil Action.--A participating manufacturer may bring a civil
action against another participating manufacturer to enforce, or
restrain breaches of, the Protocol by such other participating
manufacturer, except that--
(1) no such action may be commenced or maintained if the
Secretary is diligently prosecuting, or has diligently
prosecuted or settled, a proceeding pertaining to such alleged
breach;
(2) no such action may seek--
(A) monetary relief if any State is already
diligently prosecuting, or has already diligently
prosecuted or settled, a proceeding pertaining to such
alleged breach seeking any civil penalty; or
(B) injunctive relief in any State that is already
diligently prosecuting, or has already diligently
prosecuted or settled, a proceeding pertaining to such
alleged breach seeking injunctive relief; and
(3) the court, in any such action, shall restrain conduct
in breach of the Protocol and order specific performance of the
obligations set forth in the Protocol, and may award damages up
to the amount of profits lost by reason of the breach by the
participating manufacturer bringing such action.
(c) Single Breach.--For purposes of this section, conduct arising
out of the same transaction or occurrence, or a related series of
transactions or occurrences, that breaches any obligation under the
Protocol shall be considered to be part of a single breach.
(d) Right of Intervention.--In any proceeding described in section
231(a) or 232(a), any participating manufacturer may intervene as a
matter of right.
SEC. 234. REMOVAL.
Chapter 89 of title 28, United States Code, is amended by adding at
the end the following:
``Sec. 1453. Removal of state actions regarding tobacco products
``Any action described in section 231, 232, or 242 of the PROTECT
Act that is brought in State court may be removed by any defendant to
the Federal court for the district or division embracing the location
in which such action was brought, except that this section will not
apply where the alleged violation arises from conduct--
``(1) solely within the territorial boundaries of the State
bringing such action; and
``(2) not associated with or part of a pattern or course of
conduct involving any similar acts or omissions in any other
State.''.
Subtitle B--Consent Decrees
SEC. 241. CONSENT DECREES.
(a) Requirement.--To be eligible to receive payments under title V,
a State, to be eligible to receive liability protections under subtitle
C, a tobacco manufacturer, and to be eligible to receive any benefits
under this Act, a representative of the members of the class certified
for purposes of Dianne Castano v. American Tobacco Company, shall enter
into consent decrees under this section to be effective on the date of
enactment of this Act.
(b) Terms and Conditions.--
(1) In general.--The terms and conditions contained in the
consent decrees described in subsection (a) shall contain
provisions to clarify the application and requirements of this
Act (and the amendments made by this Act), and the Protocol,
including, but not limited to, provisions relating to--
(A) restrictions on tobacco product advertising and
marketing and youth access to such products;
(B) the termination, establishment, and operation
of trade associations;
(C) restrictions on tobacco lobbying;
(D) the disclosure of tobacco smoke constituents;
(E) the disclosure of nontobacco ingredients found
in tobacco products;
(F) the disclosure of existing and future documents
relating to health, toxicity, and addiction related to
tobacco product usage;
(G) the obligation of manufacturers to make
payments for the benefit of States, private litigants
and the general public;
(H) the obligation of manufacturers to interact
only with distributors and retailers that operate in
compliance with the applicable provisions of Federal,
State, or local law regarding the marketing and sale of
tobacco products;
(I) requirements for warnings, labeling, and
packaging of tobacco products;
(K) the dismissal of pending litigation as required
under title VII and as agreed to by the parties to the
decree; and
(L) any other matter determined appropriate by the
Secretary or the parties involved.
(2) Limitations.--The terms and conditions contained in the
consent decrees described in subsection (a) shall not contain
provisions relating to--
(A) tobacco product design, performance, or
modification;
(B) manufacturing standards and good manufacturing
practices;
(C) testing and regulation with respect to toxicity
and ingredients approval; and
(D) the national goals relating to percentage
reductions in the underage use of tobacco products for
a year under section 5.
(3) Waiver of constitutional claims.--The terms and
conditions contained in the consent decrees described in
subsection (a) shall include a provision waiving the Federal or
State constitutional claims of the parties and providing for
the severability of the provisions of the decree.
(4) Construction.--The terms and conditions contained in
the consent decrees described in subsection (a) shall provide
that the terms of the decree will be construed in a manner that
is consistent with the provision of this Act.
(c) Approval.--To be valid under this section, the provisions of a
consent decree must be approved by the Attorney General prior to
approval or entry by a court.
(d) Enforcement.--
(1) Changes in law.--The provisions of a consent decree
entered under this section shall remain in effect and
enforceable regardless of whether the provisions of this Act
are amended, except that any amendments to this Act that--
(A) establish Federal requirements that are in
conflict with obligations contained in the consent
decrees shall render such obligations unenforceable;
(B) require allocations of funds that are in
conflict with the allocation contained in the consent
decrees shall render such consent decree allocation
unenforceable; and
(C) require warnings, labeling, or packaging that
conflicts with the warning, labeling, or packaging
requirements of the consent decree, shall require that
modifications be made in the consent decree to conform
with such amendments.
(2) By state.--
(A) In general.--A State may bring an action to
enforce the provisions of any consent decree under this
section in any appropriate State court. Such
proceedings may seek injunctive relief only and may not
seek criminal or monetary sanctions. Enforcement of any
injunctive relief provided under a State action under
this section shall be permitted under any applicable
State law.
(B) Consistency.--The Attorney General shall
promulgate regulations to ensure the consistency of
State court ruling with respect to conduct under a
consent decree that is not exclusively local in nature.
SEC. 242. STATE ENFORCEMENT OF CONSENT DECREES.
(a) In General.--Subject to subsections (b) and (c), a State may
bring in its own name and within its jurisdiction proceedings for the
enforcement, or to restrain violations of, the terms of a consent
decree described in section 241 that is entered into by that State.
(b) Injunctive Relief.--A proceeding described in subsection (a)
shall be limited to injunctive relief only and may not seek or impose
criminal or monetary relief if criminal or monetary relief may be
imposed for the subsequent violation of any injunction that is entered
in an action described in subsection (a).
(c) Interpretation.--In any proceeding described in subsection (a),
the meaning of this Act and the Protocol shall control the
interpretation of the corresponding terms of the consent decree, and
such terms shall be interpreted in a manner identical to the
interpretation given the corresponding terms of this Act and the
Protocol.
SEC. 243. NON-PARTICIPATING MANUFACTURERS.
(a) In General.--With respect to a manufacturer that elects not to
enter into a consent decree under section 241, such manufacturer shall
not be eligible to receive the liability protections under subtitle C.
(b) Imposition of Fee.--
(1) In general.--A manufacturer shall be subject to an
annual fee as established under this subsection unless such
manufacturer enters into consent decrees as provided for in
section 241 and becomes a signatory to the Protocol under
section 201.
(2) Amount.--
(A) Total.--The total amount of all fees
established under this subsection for a year shall be
equal to the amount of fees to be paid by manufacturers
under section 102 for the year involved.
(B) Per manufacturer.--The Secretary shall
promulgate regulations for the purpose of assessing
fees under this subsection and determining the amount
of the fee to be assessed to each manufacturer which
shall be based on the market share of each such
manufacturer.
(c) Settlement Reserve Fund.--
(1) In general.--Each nonparticipating manufacturer to
which subsection (b)(1) applies shall annually deposit into an
escrowed reserve fund an amount equal to 150 percent of the
amount that such manufacturer would have paid under section 102
for the year in which the manufacturer is making such deposit
if the manufacturer had been a signatory to the Protocol under
section 201.
(2) Use.--Amounts contained in the reserve fund of a
manufacturer under paragraph (1) shall be used solely for
tobacco-related liability payments. The manufacturer may
reclaim any amounts remaining in the fund (with interest) at
the end of the 35-year period beginning on the date on which
such fund is established.
Subtitle C--Liability Provisions
CHAPTER 1--GENERAL PROVISIONS
SEC. 251. DEFINITIONS.
In this subtitle:
``(1) Final judgment.--The term ``final judgment'' means a
judgment on which all rights of appeal or discretionary review
have been exhausted or waived or for which the time to appeal
or seek such discretionary review has expired.
``(2) Final settlement.--The term ``final settlement''
means a settlement agreement that is executed and approved as
necessary to be fully binding on all relevant parties.
``(3) Individual claim.--The term ``individual claim''
means a claim for relief that is based on the death of, injury
to, or loss of consortium of a single individual and that is
brought directly by such individual or by the estate or natural
heirs of such individual.
``(4) Third-party payor.--The term ``third-party payor''
means any person, including an insurance company or health and
welfare plan, who claims to have paid money or incurred a debt
as a result of injury to another person, except that such term
shall not include the heirs or survivors of a single individual
with respect to an injury to such individual.
CHAPTER 2--IMMUNITY AND LIABILITY FOR PAST CONDUCT
SEC. 255. APPLICATION OF CHAPTER.
(a) In General.--This chapter shall apply to the enforcement of all
judgments and settlements with respect to tobacco claims maintained
against participating manufacturers.
(b) Limitation on Enforcement.--A judgment or settlement concerning
any tobacco claim described in subsection (a) that is not a final
judgment or final settlement as of the effective date of this Act shall
not be enforced by any court except in accordance with this chapter.
(c) General Prohibition.--
(1) In general.--No obligation to pay any amount under a
judgment or settlement to which this chapter applies shall
arise, nor shall a lien, attachment, garnishment or other means
of collecting or securing payment under any such judgment or
settlement issue, become operative, or be enforced, except as
provided for in this chapter.
(2) Requirement of statement.--A judgment to which this
chapter applies that requires a monetary payment shall not be
issued or entered unless such judgment contains a statement, on
the face of the judgment, of the following:
``Satisfaction of this judgment is subject to the
requirements of the PROTECT Act.''.
(3) Enforcement.--A judgment to which this chapter applies
that does not contain the statement required under paragraph
(2) shall not be valid or enforceable.
(4) Appeal.--The posting of a bond or the application of
any form of penalty or enhanced interest may not be required in
connection with the appeal of any judgment to which this
chapter applies.
SEC. 256. GENERAL IMMUNITY.
(a) State Attorney General Actions.--
(1) Pending actions.--Health-related civil actions that
have been commenced by a State or local governmental entity, or
on behalf of such an entity, against a manufacturer that is a
signatory to the National Tobacco Control Protocol under
section 201 and that are pending on the date of enactment of
this Act are terminated.
(2) Future actions.--A manufacturer that is a signatory to
the National Tobacco Control Protocol under section 201 shall
be immune from any civil action commenced after the date of
enactment of this Act by a Federal, State, or local
governmental entity, or on behalf of such an entity, for all health-
related claims arising from the use of a tobacco product.
(b) Other Actions.--
(1) Class actions.--
(A) Pending actions.--Class actions for claims
arising from the use of a tobacco product that are
pending against a manufacturer that is a signatory to
the National Tobacco Control Protocol under section
201, are terminated.
(B) Future actions.--A manufacturer that is a
signatory to the National Tobacco Control Protocol
under section 201 shall be immune from any class action
commenced after the date of enactment of this Act for
all claims arising from the use of a tobacco product.
(2) Addiction and dependence claims.--
(A) Pending actions.--Any civil action for claims
based on addiction to or dependence on a tobacco
product that are pending against a manufacturer that is
a signatory to the National Tobacco Control Protocol
under section 201, are terminated.
(B) Future actions.--A manufacturer that is a
signatory to the National Tobacco Control Protocol
under section 201 shall be immune from any civil action
commenced after the date of enactment of this Act for
all claims based on addiction to or dependence on a
tobacco product.
(c) Preservation.--All personal injury claims arising from the use
of a tobacco product by an individual shall be preserved.
SEC. 257. CIVIL LIABILITY FOR PAST CONDUCT.
(a) Application.--The provisions of this section shall apply to all
civil actions permitted under section 256 for relief arising from the
conduct of a manufacturer that is a signatory to the National Tobacco
Control Protocol under section 201 that occurred prior to the date of
enactment of this Act.
(b) Punitive Damages Prohibited.--No punitive damages shall be
awarded in any claim described in subsection (a).
(c) Individual Trials.--No class action suits, joinder of parties,
aggregation of claims, consolidation of actions, extrapolations, or
other devices to resolve cases other than on the basis of individual
actions shall be permitted without the consent of the defendant. Any
defendant, in an action that involves a violation of this subsection,
may remove such action to an appropriate Federal court.
(d) Joint Sharing Agreement.--As part of the National Tobacco
Control Protocol under section 201, all signatories shall agree to the
joint sharing of any civil liability for actions for damages arising
from the use of tobacco products. Such signatories shall not be jointly
and severally liable for damages involving nonsignatories. Actions
involving both signatories and nonsignatories shall be severed.
(e) Permissible Parties.--
(1) Plaintiffs.--The following individuals may be
plaintiffs in a civil action to which this section applies:
(A) Individuals bringing claims, or claims
derivative of such claims, on their own behalf for a
tobacco-related injury, or the heirs of such
individuals.
(B) Third-party payors for claims not based on
subrogation that were pending on June 9, 1997.
(C) Third-party payors for claims based on
subrogation of individual claims permitted under
subparagraph (A).
(2) Defendants.--This section shall apply only to actions
brought against a signatory of the National Tobacco Control
Protocol under section 201, a successor or assign of such a
signatory, any future fraudulent transferees, or any entity for
suit designated to survive a defunct signatory. Such
signatories shall be vicariously liable for the actions of
their agents.
(f) Removal.--Except as provided in subsection (c), there shall be
no removal of an action to which this section applies.
(g) Discovery.--The development, after the date of enactment of
this Act, of any tobacco product that reduces the risk of injury or
illness to a user shall not be admissible or discoverable.
(h) Limitation on Enforcement.--
(1) In general.--A judgment or settlement concerning any
tobacco claim in a civil action permitted under section 256
that is not a final judgment or final settlement as of the
effective date of this Act shall not be enforced by any court
except in accordance with this section.
(2) Obligations.--No obligation to pay any amount under a
judgment or settlement to which this section applies shall
arise, nor shall a lien, attachment, garnishment or other means
of collecting or securing payment under any such judgment or
settlement issue, become operative, or be enforced, except to
the extent that the Secretary of the Treasury certifies that
the requirements of subsection (i) have been met.
(3) Requirement of statement.--A judgment to which this
section applies that requires a monetary payment shall not be
issued or entered unless such judgment contains a statement, on
the face of the judgment, of the following:
``Satisfaction of this judgment is subject to the
requirements of section 257 of the PROTECT Act.''.
(4) Enforcement.--A judgment to which this section applies
that does not contain the statement required under paragraph
(3) shall not be valid or enforceable.
(5) Appeal.--The posting of a bond or the application of
any form of penalty or enhanced interest may not be required in
connection with the appeal of any judgment to which this
section applies.
(i) Procedures for Collection of Judgment.--
(1) Certification.--A participating manufacturer shall not
make, or be required to make, any monetary payment with respect
to any judgment or settlement to which this section applies unless the
Attorney General acting as Trustee--
(A) certifies that the requirements of paragraph
(2) have been met with respect to such payment; and
(B) publishes such certification in the Federal
Register.
(2) Filing with attorney general.--
(A) By party claiming entitlement.--Any party
claiming an entitlement to monetary payment under a
final judgment or final settlement of a tobacco claim
to which this section applies shall register such claim
with the Attorney General acting as Trustee by filing a
true and correct copy of the final judgment or final
settlement agreement with the Attorney General and
providing a copy of such filing to all other parties to
the judgment or settlement.
(B) Of payment.--Any party making a payment
described in this subsection shall certify such payment
to the Attorney General by filing a true and correct
copy of the instrument of payment and a statement of
the remaining unpaid portion, if any, of the final
judgment or final settlement involved with the Attorney
General and providing a copy of such filing to all
other parties to the judgment or settlement.
(3) Determinations.--Not later than 30 days after the date
of which the Attorney General receives a registration of a
claim under paragraph (2)(A) the Attorney General shall
determine whether payment of such claim is permitted under this
section. If the Attorney General determines that such claim is
payable under this section, the Secretary shall certify such
claim.
(4) Payment.--Subject to the limitations contained in
subsection (j), a participating manufacturer to which a claim
that is certified under paragraph (3) applies, shall make
payment on such claim not later than 1 year after the date of
such certification.
(j) Limitations.--
(1) Aggregate annual cap.--With respect to a calendar year,
the aggregate amount of all tobacco claims judgments or
settlements to which this section applies, that the signatories
of the National Tobacco Control Protocol under section 201
shall be required to pay, shall not exceed an amount equal to
33 percent of the annual fee payments required of all such
signatories under section 102 for the year involved. The
Attorney General, based on certifications issued under
subsection (i)(3) shall make determinations with respect to the
amounts of payments to be made in a calendar year.
(2) Payment of excess.--If the amount of the judgments and
settlements described in paragraph (1) exceed an amount equal
to 33 percent of the annual fee payments required under section
102 for the year involved, such excess amount shall be paid in
the following year.
(3) Effect of settlement.--The signatories described in
paragraph (1) shall receive a credit, to be applied against the
amount owed by such signatories to the National Tobacco
Settlement Trust Fund under section 102 for the year involved,
in an amount equal to 80 percent of the aggregate amounts paid
under judgments or settlements of tobacco-related claims to
which this section applies for such year.
(5) Individual cap.--With respect to an action to which
this section applies, any amount awarded in excess of
$1,000,000 may be paid in the year following the year in which
the judgment or settlement was entered, except that this
paragraph shall not apply if all other awards under judgments
or settlements entered in the first year can be paid without
exceeding the aggregate annual cap under paragraph (1). Such
excess amount shall carry over from year to year with no
payments in any single year exceeding $1,000,000 and no
interest accruing on such amounts until such time as the annual
aggregate cap is not exceeded.
(k) Defense Costs.--The signatories of the National Tobacco Control
Protocol under section 201 shall be responsible for the payment of all
attorneys' fees and other costs associated with being a defendant in an
action to which this section applies.
SEC. 258. CIVIL LIABILITY FOR FUTURE CONDUCT.
(a) Application.--The provisions of this section shall apply to all
civil actions permitted under section 256 for relief arising from the
conduct of a manufacturer that is a signatory to the National Tobacco
Control Protocol under section 201 that occurs after the date of
enactment of this Act.
(b) General Provisions.--The provisions of subsections (c) and (e)
through (i) of section 256 shall apply to actions under this section.
(c) Third-Party Payor Claims.--Third-party payor claims that are
not based on subrogation shall not be commenced under this section.
SEC. 259. NON-PARTICIPATING MANUFACTURERS.
The provisions of this title shall not apply to any manufacturer
that--
(1) is not a signatory to the National Tobacco Control
Protocol under section 201; and
(2) is at least 12 months delinquent in the payment of
amounts under section 102.
SEC. 260. PAYMENT OF JUDGMENTS AND SETTLEMENTS.
(a) In General.--Notwithstanding sections 1257, 1738 and 2283 of
title 28, United States Code, or any doctrine of abstention or
principle of res judicta or collateral estoppel, a participating
manufacturer may commence an action in a district court of the United
States to enjoin any State court proceeding to enforce or execute any
judgment or settlement that is unenforceable under this chapter. Such
an action shall be deemed a civil action arising under the laws of the
United States for purposes of section 1331 of title 28, United States
Code, and may be commenced in the district court of the United States
for the district and division embracing the place where the State court
proceeding is pending.
(b) Injunctions.--Upon a demonstration by the participating
manufacturer in an action under subsection (a) that the judgment or
settlement that is the subject of such action is unenforceable under
this chapter, the court shall issue an injunction against the
enforcement of such judgment or settlement and may order such other
relief as is appropriate.
SEC. 261. STATE ELIGIBILITY.
(a) Requirement for State Law.--To be eligible to receive funds
under subtitle A of title V, a State shall--
(1) have in effect a State law that provides that--
(A) sections 256 through 259 shall be the law of
the State and shall be binding in all proceedings in
any court or tribunal in the State without limitation,
notwithstanding any other provision of law, court
decision, rule or practice; and
(B) any defendant in a civil action to which this
Act applies shall have a right of prompt interlocutory
appeal to the highest court of the State to enforce the
requirements of the State law; and
(2) have withdrawn and dismissed with prejudice any claim
required to be dismissed by the State under this chapter within
60 days of the effective date of this Act.
(b) Certification.--Not later than 6 months after the effective
date of this Act, and annually thereafter, the Attorney General shall
certify that each State that is eligible to receive funds under
subtitle A of title V has complied with the requirements of this
section. A State shall not be eligible for such funds prior to being
certified under this subsection.
(c) Effect of Nonenactment of Law.--
(1) In general.--With respect to a State that does not
comply with subsection (a)(1), no tobacco claim that is
otherwise maintainable under this chapter shall be maintained
in any court of that State.
(2) Application of law.--Until such time as the State
complies with subsection (a)(1), any tobacco claim that is
otherwise maintainable under this chapter that is asserted
under the law of, or in the courts of, such State shall be
deemed to arise under this section and shall be subject to the
provisions of this chapter, and the substantive rules of
decision for such claim shall otherwise be derived from the law
of the State that would have been applicable but for the
operation of this subsection.
SEC. 262. REMOVAL.
Chapter 89 of title 28, United States Code, (as amended by section
234) is further amended by adding at the end the following:
``Sec. 1454. Removal of certain actions relating to tobacco products
``(a) Limitation.--A civil action in any State court that is
maintainable under chapter 1 of subtitle C of title I of the PROTECT
Act shall not be removed to a district court of the United States
except as provided for in this section.
``(b) Removal Permitted.--
``(1) Agreement of parties.--A civil action maintainable
under chapter 1 of subtitle C of title I of the PROTECT Act may
be removed at any time prior to judgment to the district court
of the United States for the district and division embracing
the place where such action is pending if all plaintiffs and
all defendants consent in writing to such removal.
``(2) Participating manufacturer.--A civil action that a
defendant reasonably contends is being conducted in a manner
inconsistent with the terms of chapter 1 of subtitle C of title
II of the PROTECT Act may he removed by such defendant to the
district court of the United States for the district and
division embracing the place where such action is pending, if
the removing defendant is a participating manufacturer as
defined in section 5 of such Act.
``(c) Jurisdiction.--In any action removed pursuant to subsection
(b), the district court shall have jurisdiction over such action to the
full extent permitted under the Constitution.
``(d) Notice.--The notice of removal of a civil action under
subsection (b)(2) shall be filed not later than 30 days after the
receipt by the removing defendant of an order or ruling that such
defendant reasonably contends is inconsistent with the terms of chapter
1 of subtitle C of title II of the PROTECT Act.
``(e) Determinations by District Court.--In a civil action removed
under subsection (b)(2), if the district court determines--
``(1) that the action was being conducted in a manner
inconsistent with the terms of chapter 1 of subtitle C of title
II of the PROTECT Act, the district court shall--
``(A) order that the action be dismissed without
prejudice; or
``(B) enter such other orders as may be necessary
to bring the action into conformity with such chapter
and retain jurisdiction over any claim or claims as necessary to serve
the interests of justice and the requirements of the PROTECT Act;
``(2) that the action was being conducted in a manner
consistent with the terms of such chapter but that the
defendant removing the action had a reasonable basis to seek
removal under this section, the district court shall retain
jurisdiction over any claim or claims as may be necessary to
serve the interests of justice and the requirements of the
PROTECT Act; or
``(3) that the defendant removing the action had no
reasonable basis for contending that such action was being
conducted in a manner inconsistent with the terms of such
chapter, the district court shall remand the case to the State
court from which it was removed.
``(f) Reviewability of Order.--An order remanding an action to a
State court under subsection (e) shall be reviewable by appeal or
otherwise.
``(h) Miscellaneous.--For purposes of this section--
``(1) the parties in controversy shall be considered to be
of diverse citizenship unless all plaintiffs (including all
members of any plaintiff class) and all defendants are citizens
of the same State;
``(2) a corporation shall be considered to be a citizen
only of the State of its incorporation; and
``(3) there shall be no requirement of a minimum amount in
controversy.
``(i) Application of Certain Procedures.--The procedures described
in sections 1446(a), 1446(d), and 1447(a) through (c) shall be
applicable to an action removed under this section.''.
SEC. 263. CONFORMING AMENDMENTS.
Title 11, United States Code, is amended--
(1) in section 362(b)--
(A) in paragraph (17), by striking ``or'' at the
end;
(B) in paragraph (18), by striking the period and
inserting ``; or''; and
(C) by inserting after paragraph (18), the
following:
``(19) under subsection (a) of this section, of the
commencement or continuation of any action or other proceeding
by a participating manufacturer (as defined in section 5 of the
PROTECT Act) regarding any interest or obligation arising under
or directly related to a liability apportionment agreement
entered into in accordance with chapter 1 of subtitle C of
title II of the PROTECT Act.'';
(2) in section 365--
(A) in subsection (a), by striking ``and (d)'' and
inserting ``(d), and (p)''; and
(B) by adding at the end the following:
``(p) The trustee may not reject, shall be deemed to have assumed
as of the commencement of the case, and shall cause the debtor to
perform on an executory contract of a participating manufacturer (as
defined in section 5 of the PROTECT Act) to the extent such executory
contract is directly related to a liability apportionment agreement
entered into in accordance with chapter 1 of subtitle C of title II of
the PROTECT Act.'';
(3) in section 507(a), by adding at the end the following:
``(10) Tenth, any unsecured claim of a participating
tobacco product manufacturer (as defined in section 5 of the
PROTECT Act) that arises under or is directly related to a
liability apportionment agreement entered into in accordance
with chapter 1 of subtitle C of title II of the PROTECT Act.'';
(4) in section section 541(b)--
(A) in paragraph (4), by striking ``or'' at the
end;
(B) in paragraph (5), by striking the period and
inserting ``; or''; and
(C) by inserting after paragraph (5), the
following:
``(6) any interest of the debtor in property to the extent
that the debtor has transferred or agreed to transfer such
interest pursuant to a liability apportionment agreement
entered into in accordance with chapter 1 of subtitle C of
title II of the PROTECT Act or any written agreement directly
related to such liability apportionment agreement.''; and
(5) in subsection 1141--
(A) in subsection (a), by striking ``and (d)(3)''
and inserting ``, (d)(3), and (d)(5)'';
(B) in subsection (a), by striking ``and (d)(3)''
and inserting ``, (d)(3), and (d)(5)''; and
(C) in subsection (d), by adding at the end the
following:
``(5) The confirmation of a plan does not discharge a debtor from
any debt or other obligation arising under or directly related to a
liability apportionment agreement entered into in accordance with
chapter 1 of subtitle C of title II of the PROTECT Act.''.
TITLE III--REDUCTION IN UNDERAGE TOBACCO USE
Subtitle A--State Laws Regarding the Sale of Tobacco Products to Minors
SEC. 300. SHORT TITLE.
This subtitle may be cited as the ``Tobacco Use by Minors
Prevention Act''.
SEC. 301. STATE LAWS REGARDING SALE OF TOBACCO PRODUCTS TO INDIVIDUALS
UNDER THE AGE OF 18.
(a) Eligibility.--
(1) In general.--Subject to paragraph (2), for fiscal year
1999 and each subsequent fiscal year a State shall not be
eligible for payments under subtitle A of title V if that State
does not have in effect a State law with the provisions
contained in the model State law described in section 302.
(2) Delayed applicability for certain states.--In the case
of a State whose legislature does not convene a regular session
in fiscal year 1999, the requirement described in paragraph (1)
shall apply only for fiscal year 2000 and subsequent fiscal
years.
(b) Enforcement.--For the first applicable fiscal year and for each
subsequent fiscal year, a State shall--
(1) enforce the law described in subsection (a)(1)
systematically and conscientiously and in a manner that can
reasonably be expected to reduce the extent to which tobacco
products are available to individuals under the age of 18;
(2) certify that the State requires such enforcement of
such law to be treated as a priority by State and local law
enforcement authorities;
(3) conduct random, unannounced inspections to ensure
compliance with the law described in subsection (a)(1); and
(4) annually submit to the Trustees a report describing--
(A) the activities carried out by the State to
enforce such law during the fiscal year preceding the
fiscal year for which the State is seeking the grant;
(B) the steps taken by the State to ensure that
enforcement of such law was treated as a priority by
State and local law enforcement authorities;
(C) the extent of success the State has achieved in
reducing the availability of tobacco products to
individuals under the age of 18, including the results
of the inspections conducted under paragraph (1); and
(D) the strategies to be utilized by the State for
enforcing such law during the fiscal year for which the
grant is sought.
(c) Funding.--The law specified in subsection (a)(1) may be
administered and enforced by a State using--
(1) any amounts made available to the State under subtitle
A of title V;
(2) any fees collected for licenses issued pursuant to the
law described in subsection (a)(1);
(3) any fines or penalties assessed for violations of the
law specified in subsection (a)(1); or
(4) any other funding source that the legislature of the
State may prescribe by statute.
(d) Noncompliance of State.--Before making a payment under subtitle
A of title V to a State for the first applicable fiscal year or any
subsequent fiscal year, the Trustees, in consultation with the
Secretary, shall make a determination whether the State has maintained
compliance with subsections (a) and (b). If, after notice to the State
and an opportunity for a hearing, the Trustees determines that the
State is not in compliance with such subsections, the Trustees shall
reduce the amount of the State payment under such subtitle for the
fiscal year involved by an amount equal to--