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--
(1) in the case of the first applicable fiscal year, 10
percent of the amount determined under subtitle A of title V;
(2) in the case of the first fiscal year following such
applicable fiscal year, 20 percent of the amount determined
under such sections for the State for the fiscal year;
(3) in the case of the second such fiscal year, 30 percent
of the amount determined under such sections for the State for
the fiscal year; and
(4) in the case of the third such fiscal year or any
subsequent fiscal year, 40 percent of the amount determined
under such sections for the State for the fiscal year.
(e) Waiver and Modification.--
(1) In general.--A State may request that the Secretary
waive, or permit the modification of, any provision or
provisions of the model State law described in section 302.
(2) Requirements.--The Secretary shall grant a request for
a waiver or modification under paragraph (1) unless the
Secretary determines that--
(A) the State has not demonstrated that the State
has enacted laws that implement requirements that are
comparable to the requirements of all of the elements
of the model State law under section 302; or
(A) the cumulative effect of granting all of such
waivers or modifications with respect to the State
would render the youth anti-tobacco laws and marketing
systems of the State to be ineffective.
(f) Definition.--For purposes of this section, the term ``first
applicable fiscal year'' means--
(1) fiscal year 2000, in the case of any State described in
subsection (a)(2); and
(2) fiscal year 1999, in the case of any other State.
SEC. 302. MODEL STATE LAW.
The model State law described in this section with respect to a
State is the following:
``SECTION 1. DISTRIBUTION TO MINORS.
``(a) In General.--No person shall distribute a tobacco product to
an individual under 18 years of age. A person who violates this
subsection is liable for--
``(1) a civil money penalty of $100 for the first violation
of this subsection;
``(2) a civil money penalty of $200 for a second violation
of this subsection; and
``(3) a civil money penalty of $500 for a third and
subsequent violation of this subsection.
``(b) Employers.--The employer of an employee who has violated
subsection (a) more than once while in the employ of the employer is
liable for a civil money penalty of $250 for each violation by such
employee. An employer who pays a civil money penalty under this
subsection shall not, for purposes of section 10, be considered as
having violated this Act.
``(c) Defenses.--It shall be a defense to a charge brought under
subsection (a) that--
``(1) the defendant--
``(A) relied upon proof of age that appeared on its
face to be valid, or
``(B) had complied with the requirements of section
7, or
``(2) the individual to whom the tobacco product was
distributed was at the time of the distribution employed in
violation of section 8(b).
``(d) Enforcement.--A person who violates subsection (a) shall not
be liable for a civil money penalty unless the individual who received
the tobacco product is proceeded against under section 2(a), except
that such a person shall be liable for such penalty if such individual
was not proceeded against because such individual was testing
compliance with this Act under section 8(b).
``SEC. 2. PURCHASE, RECEIPT, OR POSSESSION BY MINORS PROHIBITED.
``(a) In General.--An individual under 18 years of age shall not
purchase or attempt to purchase, receive or attempt to receive, possess
or attempt to possess, smoke or attempt to smoke, or otherwise use or
consume or attempt to use or consume a tobacco product in a public
place. An individual who violates this subsection is liable for a civil
money penalty of not less than $25 and not more than $150 for each
violation and shall be subject to suspension of the individual's
authorization to operate a motor vehicle. Upon the second or subsequent
violation of this subsection, the authorization of such individual to
operate a motor vehicle shall be suspended for a period of not less
than 30 days and such individual shall be required to perform community
service.
``(b) Notice.--A law enforcement agency, upon determining that an
individual under 18 years of age allegedly purchased, received,
possessed, smoked, or otherwise used or attempted to purchase, receive,
possess, smoke, or otherwise use, a tobacco product in violation of
subsection (a) shall notify the individual's parent or parents,
custodian, or guardian as to the nature of the violation if the name
and address of a parent, guardian, or custodian is reasonably
ascertainable by the law enforcement agency. The notice required by
this subsection shall be made not later than 48 hours after the
individual who allegedly violated subsection (a) is cited by such
agency for the violation. The notice may be made by any means
reasonably calculated to give prompt actual notice, including notice in
person, by telephone, or by first-class mail.
``(c) Employment.--Subsection (a) does not prohibit an individual
under the age of 18 from possessing a tobacco product during regular
working hours and in the course of such individual's employment if the
tobacco product is not possessed for such individual's consumption.
``SEC. 3. SIGNAGE.
``It shall be unlawful for any person who sells tobacco products
over-the-counter to fail to post conspicuously a sign communicating
that--
``(1) the sale of tobacco products to individuals under the
age of 18 is prohibited by law,
``(2) the purchase of tobacco products by individuals under
the age of 18 is prohibited by law, and
``(3) proof of age may be demanded.
A person who fails to post a sign in violation of this section is
liable for a civil money penalty of $250 for each violation.
``SEC. 4. SAMPLING.
``It shall be unlawful for any person to distribute tobacco product
samples in any face-to-face transaction without first procuring, from
any prospective purchaser or recipient who appears to be under the age
of 18, proof of age establishing that such prospective purchaser or
recipient is 18 years of age or older. A person who violates this
section is liable for a civil money penalty of $250 for each violation.
This section does not apply to distributions of tobacco products in an
area or establishment that individuals under the age of 18 are not
permitted to enter.
``SEC. 5. OUT-OF-PACKAGE DISTRIBUTION.
``It shall be unlawful for any person to distribute cigarettes or
smokeless tobacco products other than in an unopened package
originating with the manufacturer that bears the health warning
required by Federal law. A person who distributes a cigarette or
smokeless tobacco product in violation of this section is liable for a
civil money penalty of $250 for each violation.
``SEC. 6. DISPLAYS.
``(a) General Rule.--It shall be unlawful for any person who sells
tobacco products to maintain packages of such products in any display
or storage configuration which affords customers direct access to such
packages.
``(b) Penalty.--Any person who violates subsection (a) is liable
for a civil money penalty of $250 for each violation.
``SEC. 7. NOTIFICATION OF EMPLOYEES.
``(a) Notice to Employees.--Within 180 days of the effective date
of this Act, every person engaged in the business of distributing
tobacco products at retail shall implement a program to notify each
employee employed by that person who distributes tobacco products that
this Act--
``(1) prohibits the distribution of tobacco products to any
individual under 18 years of age and the purchase, receipt,
possession, smoking, or other use or consumption of tobacco
products by any individual under 18 years of age,
``(2) prohibits out-of-package distribution of cigarettes
and smokeless tobacco products, and
``(3) permits a defense to a charge of distribution of a
tobacco product to an individual under 18 years of age based on
evidence that the defendant relied upon proof of age that
appeared on its face to be valid.
Any employer failing to provide the required notice to any employee
shall be liable for a civil money penalty of $250 for each violation.
``(b) Statement.--It shall be a defense to a charge that an
employer violated subsection (a) of this section that the employee
acknowledged receipt, either in writing or by electronic means, of a
statement in substantially the following form:
``I understand that State law prohibits the distribution of
tobacco products to individuals under 18 years of age and out-
of-package distribution of cigarettes and smokeless tobacco
products and permits a defense based on evidence that a
prospective purchaser's proof of age was reasonably relied upon
and appeared on its face to be valid. I understand that if I
sell, give, or voluntarily provide tobacco products to an
individual under the age of 18, I may be found responsible for
a civil money penalty for each violation. I promise to comply
with this law.''
``(c) Vicarious Liability.--If an employer is charged with a
violation of subsection (a) and the employer uses as a defense to such
charge the defense provided by subsection (b), the employer shall be
deemed to be liable for such violation if such employer pays the
penalty imposed on the employee involved in such violation or in any
way reimburses the employee for such penalty.
``SEC. 8. RANDOM UNANNOUNCED INSPECTIONS; REPORTING; AND COMPLIANCE.
``(a) Enforcement and Inspection.--The State Police of a State, or
such local law enforcement authority duly designated by the State
Police, shall enforce this Act in a manner that can reasonably be
expected to reduce the extent to which tobacco products are distributed
to individuals under 18 years of age and shall conduct random,
unannounced inspections in accordance with the procedures set forth in
this Act and in regulations issued under section 301 of the PROTECT Act
to ensure compliance with this Act.
``(b) Use of Individuals Under 18.--The State may engage an
individual under 18 years of age to test compliance with this Act,
except that such an individual may be used to test compliance with this
Act only if the testing is conducted under the following conditions:
``(1) Prior to use of any individual under the age of 18
years in a random, unannounced inspection, written consent
shall be obtained from such individual's parents or legal
guardian.
``(2) An individual under 18 years of age shall act solely
under the supervision and direction of the State during a
random, unannounced inspection.
``(3) An individual under 18 years of age used in random,
unannounced inspections shall not be used in any such
inspection at a store in which such individual is a regular
customer.
``(4) If an individual under 18 years of age participating
in random, unannounced inspections is questioned about such
individual's age, such person shall state such individual's
actual age and shall present a true and correct proof of age if
requested at any time during the inspection to present it.
``(c) Penalty.--Any person who uses any person under 18 years of
age, other than as permitted by subsection (b), to test compliance with
this Act, is liable for a civil money penalty of $250 for each
violation.
``(d) Use of Penalty Money and Fees.--Civil money penalties
collected for violations of this Act and fees collected under section 9
may only be used to defray the costs of administration and enforcement
of this Act.
``SEC. 9. LICENSURE.
``(a) In General.--The State shall require that each person engaged
in the distribution of tobacco products hold a license issued under
this section. A separate license shall be required for each place of
business where tobacco products are distributed at retail. A license
issued under this section is not assignable and is valid only for the
person in whose name it is issued and for the place of business
designated in the license.
``(b) Fee.--The annual license fee shall be not less than $500 for
each place of business where tobacco products are distributed at
retail.
``(c) Application.--Every application for a license, including
renewal of a license, under this section shall be made upon a form
provided by the State and shall set forth the name under which the
applicant transacts or intends to transact business, the location of
the place of business for which the license is to be issued, the street
address to which all notices relevant to the license are to be sent (in
this Act referred to as `notice address'), and any other identifying
information that the State may require.
``(d) Action on License.--The State shall issue or renew a license
or deny an application for a license or the renewal of a license within
30 days of receiving a properly completed application and the license
fee. The State shall provide notice to an applicant of action on an
application denying the issuance of a license or refusing to renew a
license.
``(e) Scope and Renewal.--Every license issued by the State shall
be valid for 1 year from the date of issuance and shall be renewed upon
application except as otherwise provided in this Act.
``(f) Change of Address.--Upon notification of a change of address
for a place of business for which a license has been issued, a license
shall be reissued for the new address without the filing of a new
application.
``(g) Notice.--The State shall notify every person in the State who
is engaged in the distribution at retail of tobacco products of the
license requirement of this section and of the date by which such
person should have obtained a license.
``(h) Penalty.--
``(1) In general.--Any person who engages in the
distribution at retail of tobacco products without a license
required by this section is liable for a civil money penalty in
an amount equal to two times the applicable license fee and
$100 for each day on which such distribution continues without
a license.
``(2) Suspension or revocation.--Any person who engages in
the distribution at retail of tobacco products after a license
issued under this section has been suspended or revoked is
liable for a civil money penalty of $250 per day for each day
on which such distribution continues after the date such person
received notice of such suspension or revocation.
``(i) Term.--The term of a license shall be 1 year.
``(j) Effective Date.--No person shall engage in the distribution
at retail of tobacco products on or after 180 days after the date of
enactment of this Act unless the person is authorized to do so by a
license issued pursuant to this section or is an employee or agent of a
person who has been issued such a license.
``SEC. 10. SUSPENSION, REVOCATION, DENIAL, AND NONRENEWAL OF LICENSES.
``(a) Notice.--Upon a finding that a licensee has been determined
by a court of competent jurisdiction to have violated this Act during
the license term, the State shall notify the licensee in writing,
served personally or by registered mail at the notice address, that any
subsequent violation of this Act at the same place of business may
result in an administrative action to suspend the license for a period
determined by the State.
``(b) Suspension.--Upon finding that a further violation by the
licensee has occurred involving the same place of business for which
the license was issued and the licensee has been provided notice under
subsection (a), the State may initiate an administrative action to
suspend the license for a period to be determined by the State. If an
administrative action to suspend a license is initiated, the State
shall immediately notify the licensee in writing at the notice address
of the initiation of the action and the reasons therefore and permit
the licensee an opportunity, at least 30 days after written notice is
served personally or by registered mail upon the licensee, to show why
suspension of the license would be unwarranted or unjust.
``(c) Revocation.--The State may initiate an administrative action
to revoke a license that previously has been suspended under subsection
(b) if, during the one year period in which the license was issued, a
further violation of this Act is committed after the suspension by the
licensee involving the same place of business for which the license was
issued. If an administrative action to revoke a license is initiated,
the State shall immediately notify the licensee in writing at the
notice address of the initiation of the action and the reasons
therefore and permit the licensee an opportunity, at least 30 days
after written notice is served personally or by registered mail upon
the licensee, to show why revocation of the license would be
unwarranted or unjust.
``(d) Other Violations.--No action with respect to any license at a
place of business may be taken based on a violation that occurred
subsequent to the occurrence of another violation unless such other
violation is fully adjudicated at the time the subsequent violation
occurred.
``(e) Fee.--A person whose license has been suspended or revoked
with respect to a place of business pursuant to this section shall pay
the State a fee of $1,000 for the renewal or reissuance of the license
at that same place of business.
``(f) Effect on Application for New License.--Revocation of a
license under subsection (c) with respect to a place of business shall
not be grounds to deny an application by that person for a new license
with respect to that place of business for more than 12 months
subsequent to the date of such revocation. Revocation or suspension of
a license with respect to a particular place of business shall not be
the grounds to deny an application for a new license, to refuse to
renew a license, or to revoke or suspend an existing license at another
place of business.
``(g) Judicial Review.--A licensee may seek judicial review of an
action of the State suspending, revoking, denying, or refusing to renew
a license under this section by filing a complaint in a court of
competent jurisdiction. A complaint shall be filed within 30 days after
the date on which notice of the action is received by the licensee. The
court shall review the evidence de novo.
``(h) Report.--The State shall not report any action suspending,
revoking, denying, or refusing to renew a license under this section to
the Secretary of Health and Human Services, unless judicial review, if
any, of the action has been completed.
``SEC. 11. PREEMPTION.
``(a) In General.--The provisions of this Act shall not preempt any
provisions of State or local law that provide greater restrictions than
those required in this Act so long as such State or local laws do not
conflict with regulations issued under section 910 of the Federal Food,
Drug and Cosmetic Act.
``(b) Food and Drug Administration.--Nothing in this Act shall be
construed to prohibit the Secretary of Health and Human Services from
regulating tobacco products under chapter IX of the Federal Food, Drug,
and Cosmetic Act.
``SEC. 12. SEVERABILITY.
``If any provision of this Act or its application to any person or
circumstance is held invalid, such holding shall not affect other
provisions or applications of this Act that can be given effect without
the invalid application.
``SEC. 13. NO PRIVATE RIGHT OF ACTION.
``Nothing in this Act shall be construed to create a right of
action by any private person for any violation of any provision of this
Act.
``SEC. 14. JURISDICTION AND VENUE.
``Any action alleging a violation of this Act may only be brought
in a court of general jurisdiction in the city or county where the
violation is alleged to have occurred.
``SEC. 15. REPORT.
``The State shall prepare for submission annually to the Secretary
of Health and Human Services a report on the State's reporting of
compliance with this title and any implementing regulations promulgated
by the Secretary.
``SEC. 16. DEFINITIONS.
``For purposes of this Act:
``(1) Direct access.--The term `direct access' means the
ability of a customer to obtain physically a package of tobacco
products without the intervention of an employee of the
establishment.
``(2) Package.--The term `package' means a pack, box,
carton, pouch, or container of any kind in which cigarettes or
smokeless tobacco products are offered for sale, sold, or
otherwise distributed to consumers.
``(3) Proof of age.--The term `proof of age' means a
driver's license or other form of identification issued by a
governmental authority or other identification that includes a
photograph and the date of birth of the individual.
``(4) Sample.--The term `sample' means a tobacco product
distributed to members of the public at no cost for the purpose
of promoting the product, but excludes tobacco products
distributed--
``(A) in conjunction with the sale of other tobacco
products,
``(B) to consumer or market research panels,
``(C) to persons employed in the trade, or
``(D) to customers or consumers in response to
customer or consumer complaints.
``(5) Tobacco product.--The term `tobacco product' means--
``(A) `tobacco products' as defined in section 5 of
the PROTECT Act; or
``(B) any other product containing tobacco as a
principal ingredient which, because of its appearance,
type, or tobacco used in the product, or its packaging
and labeling, is likely to be offered to, or purchased
by, consumers as a tobacco product as described in
subparagraph (A).''.
Subtitle B--Required Reduction in Underage Usage
SEC. 311. PURPOSE.
It is the purpose of this subtitle to encourage the achievement of
dramatic and immediate reductions in the number of underage consumers
of tobacco products through the imposition of substantial financial
surcharges on participating manufacturers if certain underage tobacco-
use reduction targets are not met.
SEC. 312. DETERMINATION OF UNDERAGE USE BASE PERCENTAGES.
(a) Cigarettes.--For purposes of this section, the underage use
base percentage for cigarettes shall be a percentage determined by the
Secretary, weighted by the relative population of the age groups
involved as determined using data compiled in 1995 by the Bureau of the
Census, based on--
(1) the average of the percentages of 12th graders
(individuals who are 16 or 17 years of age) who used cigarette
products on a daily basis for each of the calendar years 1986
through 1996;
(2) the average of the percentages of 10th graders
(individuals who are 14 or 15 years of age) who used cigarette
products on a daily basis for each of the calendar years 1991
through 1996; and
(3) the average of the percentages of 8th graders
(individuals who are 13 years of age) who used cigarette
products on a daily basis for each of the calendar years 1991
through 1996.
(b) Smokeless Tobacco.--For purposes of this section, the underage
use base percentage for smokeless tobacco products shall be a
percentage determined by the Secretary, weighted by the relative
population of the age groups involved as determined using data compiled
in 1995 by the Bureau of the Census, based on--
(1) the average of the percentages of 12th graders
(individuals who are 16 or 17 years of age) who used smokeless
tobacco products on a daily basis in 1996;
(2) the average of the percentages of 10th graders
(individuals who are 14 or 15 years of age) who used smokeless
tobacco products on a daily basis in 1996; and
(3) the average of the percentages of 8th graders
(individuals who are 13 years of age) who used smokeless
tobacco products on a daily basis in 1996.
(c) Use of Certain Data or Methodology.--For purposes of
determining the percentages under paragraphs (1) through (3) of
subsections (a) and (b), the Secretary shall use the data contained in
the National High School Drug Use Survey entitled Monitoring the Future
by the University of Michigan or such other comparable index, as
determined appropriate by the Secretary after notice and an opportunity
for a hearing, that utilizes methodology identical to that used by the
University of Michigan in such survey.
SEC. 313. ANNUAL DAILY INCIDENCE OF UNDERAGE USE OF TOBACCO PRODUCTS.
(a) Annual Determination.--Not later than the expiration of the 5-
year period beginning on the date of enactment of this Act, and
annually thereafter, the Secretary shall determine the average annual
incidence of the daily use of tobacco products by individuals who are
under 18 years of age.
(b) Cigarettes.--With respect to cigarette products, a
determination under subsection (a) for a year shall be based on the
percentage, as weighted by the relative population of the age groups
involved as determined using data compiled in 1995 by the Bureau of the
Census, of--
(1) 12th graders (individuals who are 16 or 17 years of
age) who used cigarette products on a daily basis during the
year involved;
(2) 10th graders (individuals who are 14 or 15 years of
age) who used cigarette products on a daily basis during the
year involved; and
(3) 8th graders (individuals who are 13 years of age) who
used cigarette products on a daily basis during the year
involved.
(c) Smokeless Tobacco.--With respect to smokeless tobacco products,
a determination under subsection (a) for a year shall be based on the
percentage, as weighted by the relative population of the age groups
involved as determined using data compiled in 1995 by the Bureau of the
Census, of--
(1) 12th graders (individuals who are 16 or 17 years of
age) who used smokeless tobacco products on a daily basis
during the year involved;
(2) 10th graders (individuals who are 14 or 15 years of
age) who used smokeless tobacco products on a daily basis
during the year involved; and
(3) 8th graders (individuals who are 13 years of age) who
used cigarette smokeless tobacco on a daily basis during the
year involved.
(d) Use of Certain Data or Methodology.--
(1) In general.--For purposes of determining the
percentages under paragraphs (1) through (3) of subsections (b)
and (c), the Secretary shall use the data contained in the
National High School Drug Use Survey entitled Monitoring the
Future by the University of Michigan (if such survey is still
being undertaken) or such other comparable index, as determined
appropriate by the Secretary after notice and an opportunity for a
hearing, that utilizes methodology identical to that used by the
University of Michigan in such survey.
(2) Alteration of methodology.--If the Secretary determines
that the methodology used by the University of Michigan in the
survey referred to in paragraph (1) has been altered in a
material manner from the methodology used during the period
from 1986 to 1996 (including by altering States or regions on
which the survey is based), the Secretary, after notice and an
opportunity for a hearing, shall use percentages based on an
index developed by the Secretary that utilizes methodology
identical to that used by the University of Michigan in such
survey.
SEC. 314. REQUIRED REDUCTION IN UNDERAGE TOBACCO USE.
(a) In General.--For purposes of assessing surcharges under section
315, the Secretary shall determine whether the required percentage
reduction in the underage use of tobacco products for a year (based on
the tables contained in subsection (b)) has been achieved for the year
involved. Such determination shall be based on--
(1) with respect to cigarette products, the average annual
incidence of the daily use of tobacco products by individuals
who are under 18 years of age for the year involved (as
determined under section 313(b)) as compared to the underage
use base percentage for cigarette products (as determined under
section 312(a)); and
(2) with respect to smokeless tobacco products, the average
annual incidence of the daily use of smokeless tobacco products
by individuals who are under 18 years of age for the year
involved (as determined under section 313(c)) as compared to
the underage use base percentage for smokeless tobacco products
(as determined under section 312(b)).
(b) Percentage Reduction in Underage Use of Tobacco Products.--For
purposes of subsection (a), the required percentage reduction in the
underage use of tobacco products with respect to each tobacco product
shall be determined based on the national goals for the reduction in
underage tobacco use under section 4.
SEC. 315. APPLICATION OF SURCHARGES.
(a) In General.--If the Secretary determines that the percentage
reduction in the underage use of tobacco products for a year has not
been achieved as required under section 314, the Secretary shall impose
a surcharge on the participating manufacturers of the tobacco products
involved.
(b) Amount of Surcharge.--
(1) In general.--
(A) Cigarettes.--With respect to cigarettes, the
amount of any surcharge to be imposed under this
section for a calendar year shall be equal to--
(i) with respect to each of the first 5
calendar years to which this section applies,
the product of--
(I) $100,000,000, and the number of
applicable surcharge percentage points
as determined under subsection (c) up
to 5 percentage points;
(II) $200,000,000, and the number
of applicable surcharge percentage
points as determined under subsection
(c), if such percentage points are
greater than 5 but less than 11
percentage points; and
(III) $300,000,000, and the number
of applicable surcharge percentage
points as determined under subsection
(c), if such percentage points are 11
or more percentage points; and
(ii) with respect to calendar years
succeeding the period referred to in
subparagraph (A), the product of--
(I) $250,000,000, and the number of
applicable surcharge percentage points
as determined under subsection (c) up
to 5 percentage points; and
(II) $500,000,000, and the number
of applicable surcharge percentage
points as determined under subsection
(c), if such percentage points are 5 or
more percentage points.
(B) Smokeless tobacco.--With respect to smokeless
tobacco, the amount of any surcharge to be imposed
under this section for a calendar year shall be equal
to--
(i) with respect to each of the first 5
calendar years to which this section applies,
the product of--
(I) $15,000,000, and the number of
applicable surcharge percentage points
as determined under subsection (c) up
to 5 percentage points;
(II) $30,000,000, and the number of
applicable surcharge percentage points
as determined under subsection (c), if
such percentage points are greater than
5 but less than 11 percentage points;
and
(III) $45,000,000, and the number
of applicable surcharge percentage
points as determined under subsection
(c), if such percentage points are 11
or more percentage points; and
(ii) with respect to calendar years
succeeding the period referred to in
subparagraph (A), the product of--
(I) $30,000,000, and the number of
applicable surcharge percentage points
as determined under subsection (c) up
to 5 percentage points; and
(II) $60,000,000, and the number of
applicable surcharge percentage points
as determined under subsection (c), if
such percentage points are 5 or more
percentage points.
(2) Adjustments.--The amount applicable under paragraph (1)
shall be annually adjusted by the Secretary based on--
(A) with respect to subparagraph (A) of such
paragraph--
(i) the proportional percentage increase or
decrease, as compared to calendar year 1995, in
the population of individuals residing in the
United States who are at least 13 years of age
but less than 18 years of age;
(ii) the proportional percentage increase
or decrease, as compared to calendar year 1996,
in the average profit per unit (measured in
cents and weighted by annual sales) earned by
participating manufacturers for the tobacco
product involved (as determined by the
Secretary through a contract with a nationally
recognized accounting firm having no connection
to such manufacturers); and
(B) any methodology utilized to avoid the double
counting of underage individuals whose tobacco use has
previously resulted in the imposition of a surcharge,
limited to the extent that there were not other
underage users of tobacco in such previous years for
whom a surcharge was not paid because of the limitation
contained in section 316.
(3) Profit per unit.--For purposes of paragraph (2)(A)(ii),
the average profit per unit for calendar 1996 shall be
determined using the operating profit reported by participating
manufacturers to the Securities and Exchange Commission.
(4) Annual limitations.--The total amount of surcharges
imposed under this section for a calendar year shall not
exceed--
(A) in the case of cigarettes--
(i) $5,000,000,000 for each of the years
described in paragraph (1)(A)(i); and
(ii) $10,000,000,000 for each of the years
described in paragraph (1)(A)(ii); and
(B) in the case of smokeless tobacco products--
(i) $500,000,000 for each of the years
described in paragraph (1)(B)(i); and
(ii) $1,000,000,000 for each of the years
described in paragraph (1)(B)(ii).
(c) Determination of Applicable Surcharge Percentage Points.--
(1) In general.--Except as provided in paragraph (2), with
respect to a calendar year, the applicable surcharge percentage
points shall be equal to the percentage point difference
between--
(A) the required percentage reduction in the
underage use of the tobacco product involved for the
year (based on the tables in section 314(b)); and
(B) the number of percentage points by which the
average annual incidence of the daily use of the
tobacco products involved by individuals who are under
18 years of age for the year (as determined under
section 313) is less than the underage use base
percentage for such products (as determined under
section 312).
(2) Adjustment.--If for any calendar year the Secretary
determines that the average annual incidence of the daily use
of the tobacco products involved by individuals who are under
18 years of age (as determined under section 313) is greater
than the underage use base percentage for such products (as
determined under section 312), the applicable surcharge
percentage point shall be equal to--
(A) the percentage point amount determined under
paragraph (1)(A); and
(B) the number of percentage points by which the
average annual incidence of the daily use of the
tobacco products involved by individuals who are under
18 years of age (as determined under section 313) is
greater than the underage use base percentage for such
products (as determined under section 312).
(3) Type of product.--Separate determinations shall be made
under this section for cigarette products and smokeless tobacco
products.
(d) Joint and Several Obligation.--Any surcharge imposed under this
section with respect to a tobacco product (cigarette products or
smokeless tobacco products) shall be the joint and several obligation
of all participating manufacturers of such product as allocated by the
market share of each such manufacturer with respect to such product.
The market share of each manufacturer for each such product shall be
based on the market share of such product for the year preceding the
year for which the determination is being made.
(e) Assessment.--Not later than May 1 of each year in which a
surcharge will be imposed under this section, the Secretary shall
assess, pursuant to subsection (d), to each participating manufacturer
the amount for which such manufacturer is obligated. Not later than
July 1 of any year in which a manufacturer receives an assessment under
this section, the manufacturer shall pay such assessment in full or be
subject to such interest on such amount as the Secretary may by
regulation prescribe.
(f) Use of Amounts.--Amounts received under this section shall be
used to further the purposes of this Act.
(g) Prohibition.--No stay or other injunctive relief may be granted
by the Secretary or any court that has the effect of enjoining the
imposition and collection of the surcharges to be applied under this
section.
SEC. 316. ABATEMENT PROCEDURES.
(a) Petitions.--Upon payment by a participating manufacturer of the
amount assessed to the manufacturer under section 315(f), the
manufacturer may submit a petition to the Secretary for an abatement of
the assessment. A notice of such abatement petition shall be submitted
to the attorney general of each State.
(b) Hearing.--The Secretary shall provide for the conduct of a
hearing on an abatement petition received under subsection (a) pursuant
to the procedures described in sections 554, 556, and 557 of title 5,
United States Code. The attorney general of any State shall be
permitted to be heard at any hearing conducted under this subsection.
(c) Burden.--The burden at any hearing under subsection (b) shall
be on the participating manufacturer to prove, by a preponderance of
the evidence, that the manufacturer should be granted the abatement.
(d) Basis of Decision.--Any decision regarding a petition for an
abatement under this section shall be based on a determination as to
whether--
(1) the participating manufacturer has acted in good faith
and in full compliance with this Act (and any amendment made by
this Act) and any regulations or State or local laws
promulgated in furtherance of this Act;
(2) the participating manufacturer has pursued all
reasonably available measures to attain the reductions;
(3) there is any evidence of any direct or indirect action
by the participating manufacturer to undermine the achievement
of the reductions required under section 314 or to undermine
any other provision of this Act (or amendment); and
(4) the participating manufacturer has taken (or failed to
take) any other action as determined appropriate by the
Secretary.
(e) Amount.--Upon a determination granting an abatement under this
section, the Secretary shall order the abatement of any or all of the
amount paid by the participating manufacturer (as determined by the
Secretary), together with interest that may have accrued on such amount
during the period between the date on which payment by the manufacturer
was made and the date on which the abatement order was granted. Such
interest shall be equal to that provided for the average 52-week
Treasury Bill during the period involved.
(f) Aggrieved Parties.--Any participating manufacturer or attorney
general of any State that is aggrieved by an abatement that is granted
under this section may seek judicial review of the abatement decision
within 30 days of the date of such decision in the Court of Appeals for
the District of Columbia Circuit. Review in such cases shall be subject
to the procedures described in sections 701 through 706 of title 5,
United States Code.
(g) Prohibition.--A participating manufacturer may not file a
petition under subsection (a) until such time as the manufacturer has
fully paid the Secretary the amount assessed to the manufacturer under
section 315(f).
SEC. 317. INCENTIVE FOR EXCEEDING REDUCTION GOALS.
(a) In General.--If the Secretary determines that the percentage
reduction in the underage use of tobacco products for a year exceeds 60
percent for cigarettes and 45 percent for smokeless tobacco products
for a year as required under section 314, the Secretary shall notify
the Trustees who shall adjust, in accordance with subsection (b), the
amount of the licensing fee that a participating manufacturer shall be
required to pay for such year under section 102.
(b) Amount.--
(1) Cigarettes.--With respect to cigarettes, the amount of
a licensing fee adjustment applicable to a participating
manufacturer under this section shall be an amount equal to \1/
80\ of the amount that the manufacturer is required to pay for
such year multiplied by the number of percentage points by
which the manufacturer has reduced underage tobacco use in
excess of the 60 percent reduction required under section 314.
(2) Smokeless tobacco.--With respect to smokeless tobacco,
the amount of a licensing fee adjustment applicable to a
participating manufacturer under this section shall be an
amount equal to \1/110\ of the amount that the manufacturer is
required to pay for such year multiplied by the number of
percentage points by which the manufacturer has reduced
underage tobacco use in excess of the 45 percent reduction
required under section 314.
(c) Procedures.--The Trustees, in consultation with the Secretary,
shall develop procedures to carry out this section.
TITLE IV--HEALTH AND SAFETY REGULATION OF TOBACCO PRODUCTS
SEC. 401. HEALTH AND SAFETY REGULATION OF TOBACCO PRODUCTS.
(a) Prohibited Acts.--Section 301 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 331) is amended by adding at the end the
following:
``(x) The introduction or delivery for introduction into interstate
commerce of any tobacco product that does not comply with the
provisions of chapter IX.
``(y) The failure by the manufacturer of a tobacco product to
comply with a tobacco product health risk management standard, a good
manufacturing practice standard, a tobacco product labeling, warning or
packaging standard, or any other requirement of chapter IX.''.
(b) Definition.--Section 201(g)(1) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 301(g)(1)) is amended by striking ``; and (D)''
and inserting ``, including nicotine-containing tobacco products that
do not comply with chapter IX; and (D)''.
(c) Inspections.--Section 704(a)(1) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 374(a)(1)) is amended--
(1) in subparagraph (A), by striking ``or cosmetics'' each
place that such appears and inserting ``, cosmetics, or tobacco
products''; and
(2) in the second sentence, by striking ``drugs or'' each
place that such appears and inserting ``drugs, tobacco products
or''.
(d) Regulation of Tobacco Products.--The Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 301 et seq.) is amended--
(1) by redesignating chapter IX as chapter X;
(2) by redesignating sections 901, 902, 903, 904, and 905
as sections 1001, 1002, 1003, 1004, and 1005, respectively; and
(3) by adding after chapter VIII the following new chapter:
``CHAPTER IX--HEALTH AND SAFETY REGULATORY REQUIREMENTS RELATING TO
TOBACCO PRODUCTS
``SEC. 900. DEFINITIONS.
``In this chapter:
``(1) 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).
``(2) 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
title pertaining to cigarettes shall also apply to cigarette
tobacco.
``(3) 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.''.
``(4) 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.
``(5) Tar.--The term `tar' means mainstream total
particulate matter minus nicotine and water.
``(6) Tobacco additive.--The term `tobacco additive' means
any substance the intended use of which results or may
reasonably be expected to result, directly or indirectly, in
the substance becoming a component of, or otherwise affecting
the characteristics of, any tobacco product, including any
substance that may have been removed from the tobacco product
and then readded in the substance's original or modified form.
``(7) Tobacco product.--The term `tobacco product' means
cigarettes and smokeless tobacco products.
``Subchapter A--Tobacco Product Regulation
``SEC. 901. STATEMENT OF GENERAL DUTIES.
``As part of the comprehensive health promotion and disease
prevention program established under this chapter and the PROTECT Act
(and the amendments made by such Act) relating to diseases and
conditions associated with the use of tobacco products, and that places
a special emphasis on discouraging the use of such products by young
Americans, the Secretary shall--
``(1) develop and implement health risk management
standards for tobacco products under section 902;
``(2) develop and implement good manufacturing practice
standards for tobacco products under section 903;
``(3) develop and implement tobacco product labeling,
warning, and packaging standards under section 904;
``(4) develop and implement standards that encourage the
development and use of reduced risk tobacco products under
section 905;
``(5) develop and implement tobacco product marketing
standards under section 906;
``(6) establish and oversee a tobacco products scientific
advisory committee under section 907 to provide advice on the
establishment of tobacco product marketing standards under
section 902, 903, 904, and 905; and
``(7) submit reports to Congress evaluating the
effectiveness of this chapter and the PROTECT Act as described
in section 908.
``SEC. 902. TOBACCO PRODUCT HEALTH RISK MANAGEMENT STANDARDS.
``(a) Authority.--
``(1) In general.--The Secretary shall by regulation
(promulgated under the authority of section 701(a) and
consistent with the procedures described in section 553 of
title 5, United States Code) establish tobacco product health
risk standards.
``(2) Consultation.--In developing and promulgating
regulations under this chapter, the Secretary shall consult (as
the Secretary determines appropriate) with--
``(A) the Federal public health and safety
officials, including--
``(i) the Surgeon General;
``(ii) the Director of the Centers for
Disease Control and Prevention;
``(iii) the Director of the Office on
Smoking and Health of the Centers for Disease
Control and Prevention;
``(iv) the Commissioner of Food and Drugs;
``(v) the Director of the National
Institutes of Health;
``(vi) the Director of the National Cancer
Institute;
``(vii) the Administrator of the Agency for
Health Care Policy and Research;
``(viii) the Administrator of the Substance
Abuse and Mental Health Services
Administration;
``(ix) the Administrator of the Health
Resources and Services Administration;
``(x) the Director of the Office of
National Drug Control Policy;
``(xi) the Administrator of the Drug
Enforcement Agency;
``(xii) the Administrator of the Bureau of
Alcohol, Tobacco, and Firearms; and
``(xiii) other Federal public health
experts; and
``(B) other public health and safety experts,
including State and local public health and safety
officials, and other interested members of the public
and affected parties.
``(b) Procedures for the Establishment of Standards.--
``(1) Publication of notice.--
``(A) In general.--The Secretary shall publish in
the Federal Register a notice of proposed rulemaking
for the establishment, amendment, or revocation of any
health risk management standard for a tobacco product
under this section. The Secretary may publish an
advance notice of proposed rulemaking in order to
solicit broad input at an earlier stage in the
rulemaking process.
``(B) Contents of notice.--A notice of proposed
rulemaking for the establishment or amendment of a
health risk management standard for a tobacco product
shall be accompanied by a justification of the proposed
action and shall--
``(i) invite interested persons to submit
to the Secretary, within 30 days of the
publication of the notice, requests for changes
in the standard based on new information
relevant to the standard; and
``(ii) invite interested persons to submit
an existing health risk management standard for
the tobacco product, including a draft or
proposed health risk management standard, for
consideration by the Secretary.
``(C) Notice of revocation.--A notice of proposed
rulemaking for the revocation of a health risk
management standard shall set forth a finding with
supporting justification that the health risk
management standard is no longer necessary with respect
to the tobacco product.
``(D) Comments.--The Secretary shall provide for a
comment period of not less than 60 days after the date
on which a notice has been published under this
paragraph.
``(2) Request for change.--If, after the publication of a
notice in accordance with paragraph (1), the Secretary receives
a request for a change in the health risk management standard
for a tobacco product, the Secretary shall, within 60 days of
the publication of the notice, either deny the request or give
notice of an intent to initiate such a change.
``(3) Regulation for establishment.--
``(A) In general.--After the expiration of the
period for comment on a notice of proposed rulemaking
published under paragraph (1) with respect to a health
risk management standard, and after consideration of
such comments and any report from the tobacco products
advisory committee under section 907, the Secretary
shall--
``(i) promulgate a regulation establishing
a health risk management standard and publish
in the Federal Register findings on the matters
referred to in subsection (b); or
``(ii) publish a notice terminating the
proceeding for the development of the standard
together with the reasons for such termination.
``(B) Contents.--A regulation establishing a health
risk management standard under subparagraph (A) shall
set forth the date or dates upon which the standard
shall take effect, but no such regulation may take
effect before the expiration of the 1-year period
beginning on the date of its publication unless the
Secretary determines that an earlier effective date is
necessary for the protection of the public health. Such
date or dates shall be established so as to minimize
economic loss to, and disruption or dislocation of,
domestic and international trade.
``(4) Amending or revoking of standards.--
``(A) In general.--The Secretary, upon the
initiative of the Secretary or upon petition of an
interested person, may by regulation, promulgated in
accordance with the requirements of paragraphs (1),
(2), and (3), amend or revoke a health risk management
standard for a tobacco product.
``(B) Effectiveness of amendment.--The Secretary
may declare a proposed amendment of a health risk
management standard under this section to be effective
on and after its publication in the Federal Register
and until the effective date of any final action taken
on such amendment if the Secretary determines that
making it so effective is in the public interest. A
proposed amendment of a health risk management standard
made so effective under the preceding sentence may not
prohibit, during the period in which it is so
effective, the introduction or delivery for
introduction into interstate commerce of a tobacco
product which conforms to such standard without the
change or changes provided by such proposed amendment.
``(c) Regulation of the Composition of Tobacco Products.--Tobacco
product health risk management standards established under this section
shall--
``(1) include provisions that are designed to reduce the
overall health risks to the public based upon the best
available technology, including the reduction in risk to the
consumers of such products, individuals who reduce or cease the
use of such products, and individuals who do not initiate the
use of such products;
``(2) where necessary to provide a reduction in the overall
health risks of tobacco products to the public, include
requirements--
``(A) if technologically and commercially feasible,
with respect to the construction, components,
constituents, ingredients (including tobacco
additives), and properties of the product, including
the establishment of levels of nicotine and other
components, ingredients (including tobacco additives),
and constituents of the product, or smoke emitted by
such products;
``(B) specifying the procedures for the testing of
such products, including devising procedures to be used
by tobacco product manufacturers, the Secretary, or
other appropriate entities, to measure relevant health-
related characteristics of such products;
``(C) for the testing of such products, including
devising procedures to be used by manufacturers, the
Secretary, or other appropriate entities to measure the
relevant health related characteristics of such
products to assess the conformity of such products with
the applicable health risk management standards; and
``(D) to limit the sale and distribution of tobacco
products to the extent authorized by this chapter;
``(3) as required under section 904, prescribe certain
conditions pertaining to the labeling and advertising of
tobacco products.
``(4) comply with regulations promulgated by the Secretary
that specify the health risk assessment procedures for the
testing of tobacco and nontobacco constituents contained in
tobacco products and determinations concerning such products
under subsection (d).
``(5) not later than 3 years after the date of enactment of
this chapter, limit the amount of tar in a cigarette to not
more than 12 milligrams, except that nothing in this paragraph
shall be construed as limiting the authority of the Secretary
to promulgate regulations further limiting the amount of tar that may
be contained in a cigarette.
``(d) Tobacco Products Risk Assessment Standards.--
``(1) Tobacco constituents.--The health risk management
standards promulgated under subsection (c)(4) with respect to
the testing of tobacco products shall include provisions
relating to the assessment of the health risks posed by the
components of tobacco, including nicotine and tar, and by
tobacco use including carbon-monoxide.
``(2) Nontobacco ingredients.--
``(A) In general.--The health risk management
regulations under subsection (c)(4) with respect to the
testing of nontobacco ingredients used in tobacco
products--
``(i) during the 5-year period beginning on
the date of enactment of this chapter, this
paragraph shall only apply to new ingredients
(those ingredients that were not previously
used in such products on such date of
enactment) used in such products; and
``(ii) after the expiration of the 5-year
period described in clause (i), this section
shall apply to all ingredients used in such
products.
``(B) Implementation.--In carrying out this
section, all requirements with respect to nontobacco
ingredients, substances, and compounds shall be
implemented in accordance with subparagraph (A).
``(3) Health risk assessments.--
``(A) Requirement.--Not later than 5 years after
the date of enactment of this chapter, and annually
thereafter, each manufacturer shall submit to the
Secretary a health risk assessment for each ingredient,
substance, or compound that is listed under subsection
(e)(1)(A) with respect to each brand of tobacco product
manufactured by each such manufacturer.
``(B) Availability of new information.--The
Secretary may include in the regulations promulgated
under this section, provisions that permit
manufacturers to, in subsequent years, revise
information that was submitted under subparagraph (A)
in previous years if new data becomes available to that
manufacturer. Such regulations may require that a
manufacturer submit a simple notification to the
Secretary where the manufacturer determines that no new
data has become available during the previous year.
``(C) Joint submission.--At the discretion of the
Secretary, the health risk assessments under this
paragraph may be conducted by qualified third party
organizations on behalf of more than 1 manufacturer for
1 or more product or ingredient, substance or compound
if a joint submission is consistent with the public
health.
``(D) Basis of assessment.--The health risk
assessment of an ingredient, substance, or compound
described in subparagraph (A) shall--
``(i) be based on the best scientific
evidence available at the time of the
submission of the assessment; and
``(ii) ascertain whether there is a
reasonable certainty in the minds of competent
scientists that the ingredient, substance, or
compound is not harmful in the quantities used
under the intended conditions of use.
``(4) Regulatory action.--
``(A) Absence of a risk assessment.--Not later than
12 months after the date of enactment of this chapter
and subject to the requirements of paragraphs (1) and
(3)(A), the Secretary shall promulgate regulations to
prohibit the use of any ingredient, substance, or
compound in the tobacco product of a manufacturer if no
health risk assessment has been submitted as required
under this subsection by the manufacturer for the
ingredient, substance, or compound.
``(B) Review of health risk assessments.--
``(i) General review.--Not later than 90
days after the receipt of a health risk
assessment under this subsection, the Secretary
shall review the findings contained in such
assessment.
``(ii) Approval, conditional approval, or
disapproval.--The Secretary shall approve or
disapprove of, or condition, the use of the
ingredient, substance, or compound that was the
subject of the assessment under this subsection within 120 days after
the completion of a review under clause (i) and provide notice to the
manufacturer of such action.
``(iii) General applicability.--At the
discretion of the Secretary, the approval,
conditional, approval, or disapproval of a
particular ingredient, substance, or compound
under clause (ii) may by regulation be made
generally applicable to tobacco product
manufacturers or a subgroup of such
manufacturers. In the case of a conditional
approval, the Secretary shall develop a
procedure to enable manufacturers to certify
that the condition will be complied with.
``(iv) Inaction by secretary.--If the
Secretary fails to act with respect to an
assessment during the period referred to in
clause (ii), the safety of the ingredient,
substance, or compound involved shall be deemed
to be approved with respect to the manufacturer
submitting the assessment until such time as
the succeeding annual risk assessment is
submitted by the manufacturer or a review is
completed.
``(e) Annual Submission.--
``(1) In general.--Each manufacturer of a tobacco product
shall annually provide the Secretary with--
``(A) a list of all ingredients, substances, and
compounds (other than tobacco, water or reconstituted
tobacco sheet made wholly from tobacco) that are added
in the manufacture of the tobacco product, for each
brand of tobacco product so manufactured;
``(B) a description of the quantity of the
ingredients, substances, and compounds that are listed
under subparagraph (A) with respect to each brand of
tobacco product;
``(C) a description of the nicotine content of the
product, measured in milligrams of nicotine;
``(D) any other information determined appropriate
by the Secretary and included as a requirement in a
regulation promulgated under this section.
``(2) General disclosure and confidentiality.--
``(A) Requirement.--Regulations under subsection
(c)(4) shall require that each person who
manufacturers, packages, or imports cigarettes or
smokeless tobacco products shall annually provide the
Secretary with the information required under this
section, including information as to all ingredients,
substances and compounds in a tobacco product.
``(B) Confidentiality.--
``(i) Petition by manufacturer.--Upon the
submission of the information required under
subsection (d)(1), or the submission of any
other information under any other provisions of
this chapter, a manufacturer may petition the
Secretary to exempt certain ingredients,
substances, or compounds or other information
submitted from public disclosure under this
subsection on the basis that such information
should be considered confidential as a trade
secret. Such petition may be accompanied by
such data as the manufacturer elects to submit.
``(ii) Determination.--Not later than 90
days after receiving a petition under clause
(i), the Secretary, in consultation with the
Attorney General, shall make a determination
with respect to whether the information
described in the petition should be exempt from
disclosure under clause (i) as a trade secret.
The Secretary shall provide the manufacturer
involved with notice of such determination, but
the decision of the Secretary shall be final.
``(iii) Procedures for confidential
information.--The Secretary shall develop
procedures to maintain the confidentiality of
information that is treated as a trade secret
under a determination under clause (ii). Such
procedures shall include--
``(I) a requirement that such
information be maintained in a secure
facility; and
``(ii) a requirement that only the
Secretary, or the authorized agents of the
Secretary, will have access to the information
and shall be instructed to maintain the
confidentiality of such information.
``(iv) Health disclosure.--Notwithstanding
a determination under clause (ii), the
Secretary may require that any ingredient,
substance, or compound contained in a tobacco
product that is determined to be exempt from
disclosure be disclosed if the Secretary
determines that it is in the interest of public
health to disclose such ingredient, substance,
or compound.
``(v) Other disclosure.--The Secretary (or
any employee of the Department of Health and
Human Services) shall not disclose any
information described in subclause (I) if such
disclosure is prohibited under any provision of
law. Any information that is not required to be
disclosed to the public under this subsection,
shall be exempt from disclosure pursuant to
subsection (a) of section 552 of title 5,
United States Code, by reason of subsection
(b)(4) of such section, and shall be considered
confidential and shall not be disclosed, except
that such information may be disclosed to other
officers or employees as provided for in clause
(iii)(II) or when relevant in any proceeding
under this chapter.
``(3) General disclosure of safety.--With respect to each
annual submission under paragraph (1) during the 5-year period
beginning on the date of enactment of this chapter, the
manufacturer shall, for each ingredient, substance, or compound
contained on the list of the manufacturer for the year
involved, disclose whether the manufacturer has determined that
the ingredient, substance, or compound would be exempt from
public disclosure under this chapter.
``(f) Actions to Modify or Prohibit Certain Tobacco Products.--
``(1) In general.--The Secretary may adopt a health risk
management standard under this section that requires--
``(A) the modification of a tobacco product in a
manner that involves--
``(i) the gradual reduction or elimination
of nicotine yields of the product; or
``(ii) the reduction or elimination of
other harmful constituents, ingredients
(including tobacco additives), substances,
compounds and properties of the product in
accordance with subsection (d)(4)(B), including
the establishment of levels of nicotine and
other components, ingredients (including
tobacco additives), and constituents of the
product, or smoke emitted by such products; or
``(B) the prohibition of a tobacco product.
``(2) Considerations.--In determining whether to require a
modification or prohibition described in paragraph (1), the
Secretary shall identify, make available for public comment,
and consider relevant factors including whether the
modification or prohibition--
``(A) will result in a significant reduction in the
health risks associated with the use of the tobacco
product, constituent, or component involved;
``(B) will result in a significant increase in the
number of individuals seeking tobacco product cessation
or withdrawal treatments, including an assessment of
the effectiveness and accessibility of such treatments;
``(C) will result in the creation of a significant
demand for, and supply of, contraband products or other
tobacco products that do not meet the requirements of
this chapter; and
``(D) is technologically feasible for commercial
manufacturing.
``(3) General prohibition of tobacco products.--
``(A) Nondelegation.--The Secretary may not
delegate the authority provided under this section to
promulgate a regulation that results in a general
prohibition of a class of tobacco products.
``(B) Congressional Review.--In accordance with
section 801 of title 5, United States Code, Congress
shall review, and may disapprove, any rule of the
Secretary establishing, amending, or revoking a tobacco
product health risk management standard, except that
with respect to a standard that results in a general
prohibition of a class of tobacco products, such
standard shall only take effect upon the date of
enactment of a joint resolution of approval of such
standard. The provisions of section 802 of title 5,
United States Code, relating to certain disapproval
resolutions shall apply to the consideration of any
joint resolution of approval under this subsection.
``(g) Compliance.--
``(1) In general.--Health risk management standards under
this section shall apply to all tobacco products to which such
standards are relevant.
``(2) Limitation.--During the period in which a regulation
promulgated under this section establishing a health risk
standard is in effect, a tobacco product shall not be
considered to be in violation of section 301 if such product is
in compliance with such regulation.
``(h) Evaluation.--The Secretary shall periodically evaluate the
effectiveness of tobacco product health risk standards to determine
whether such standards should be amended to reflect new medical,
scientific, or technological information.
``SEC. 903. GOOD MANUFACTURING PRACTICE STANDARDS.
``(a) Authority.--
``(1) In general.--The Secretary shall, in accordance with
subsections (a) and (b) of section 902, prescribe regulations
requiring that the methods used in, and the facilities and
controls used for, the manufacture, packing, and storage of a
tobacco product conform to current good manufacturing practice,
as prescribed in such regulations, to ensure that such products
will be in compliance with this chapter.
``(2) Registration.--The regulations promulgated under
paragraph (1) shall require that all tobacco product
manufacturers register with the Secretary.
``(3) Special consultation procedures.--In developing and
promulgating any regulation under paragraph (1) the Secretary
shall afford the Tobacco Products Scientific Advisory Committee
established under section 907 an opportunity (with a reasonable
time period) to submit recommendations in response to the
notice of proposed rulemaking.
``(b) Pesticide Residues.--The regulations promulgated under
subsection (a) shall at a minimum require, after consultation with the
Administrator of the Environmental Protection Agency, the development
and adherence to applicable tolerances with respect to pesticide
chemical residues in finished tobacco products, except that such
tolerances shall only apply if the Administrator determines that such
tolerances are necessary to prevent such residues from being injurious
to health when used in tobacco products.
``(c) Petitions for Exemptions and Variances.--
``(1) In general.--Any person subject to any requirement
prescribed by regulations under subsection (a) may petition the
Secretary for an exemption or variance from such requirement.
Such a petition shall be submitted to the Secretary in such
form and manner as the Secretary shall by regulation prescribe
and shall--
``(A) in the case of a petition for an exemption
from a requirement, set forth the basis for the
petitioner's determination that compliance with the
requirement is not required to ensure that the tobacco
product is in compliance with section 902;
``(B) in the case of a petition for a variance from
a requirement, set forth the methods proposed to be
used in, and the facilities and controls proposed to be
used for, the manufacture, packing, and storage of the
product in lieu of the methods, facilities, and
controls prescribed by the requirement; and
``(C) contain such other information as the
Secretary shall prescribe.
``(2) Tobacco product requirements waiver board.--
``(A) Authority.--The Secretary shall establish a
Tobacco Product Requirements Waiver Board (referred to
in this paragraph as the `Waiver Board') to provide
advice and make recommendations to the Secretary with
respect to the approval or disapproval of petitions
submitted under paragraph (1).
``(B) Membership.--The Waiver Board shall be
composed of 9 members to be appointed by the Secretary,
of which--
``(i) 3 members shall be appointed from
among individuals who are officers or employees
of the Federal Government or a State or local
government;
``(ii) 2 members shall be appointed from
among individuals who are representatives of
the interests of the cigarette and smokeless
tobacco industries;
``(iii) 2 members shall be appointed from
among individuals who are representatives of
the interests of physicians and other health
professionals; and
``(iv) 2 members shall be appointed from
among individuals who are representatives of
the interests of the general public.
``(C) Chairperson.--The Secretary shall designate 1
of the members of the Waiver Board to serve as the
Chairperson.
``(D) Compensation and expenses.--
``(i) Compensation.--Members of the Waiver
Board who are not officers or employees of the
United States, while attending conferences or
meetings of the Waiver Board or otherwise
serving at the request of the Secretary, shall
be entitled to receive compensation at rates to
be fixed by the Secretary, which rates may not
exceed the daily equivalent of the rate of pay
for level 4 of the Senior Executive Schedule
under section 5382 of title 5, United States
Code, for each day (including traveltime) they
are so engaged.
``(ii) Expenses.--While conducting the
business of the Waiver Board away from their
homes or regular places of business, each
member may be allowed travel expenses,
including per diem in lieu of subsistence, as
authorized by section 5703 of title 5 of the
United States Code for persons in the
Government service employed intermittently.
``(3) Action on petition.--
``(A) In general.--Not later than 120 days of the
date on which the Secretary receives the
recommendations of the Waiver Board, the Secretary
shall issue an order approving or denying a petition
submitted under paragraph (1). The Secretary may
approve--
``(i) a petition for an exemption for a
tobacco product from a requirement if the
Secretary determines that absolute compliance
with such requirement is not required to assure
that the product will comply with this section
and is otherwise consistent with the public
health; and
``(ii) a petition for a variance for a
tobacco product from a requirement if the
Secretary determines that the methods to be
used in, and the facilities and controls to be
used for, the manufacture, packing, and storage
of the product in lieu of the methods,
controls, and facilities prescribed by the
requirement are sufficient to ensure that the
product will comply with this section and is
otherwise in compliance with the public health.
``(B) Conditions.--An order of the Secretary
approving a petition for a variance shall prescribe
such conditions respecting the methods used in, and the
facilities and controls used for, the manufacture,
packing, and storage of the tobacco product to be
granted the variance under the petition as may be
necessary to ensure that the product will comply with
this section.
``(4) Informal hearing.--After the issuance of an order
under paragraph (3) respecting a petition, the petitioner shall
have an opportunity for an informal hearing on such order.
``(d) Recordkeeping and Reporting.--The regulations promulgated
under subsection (a) shall require that manufacturers maintain such
files and records as the Secretary may reasonably require relating to
tobacco product safety. Such regulations may require manufacturers to
report serious adverse events that are not well-known or well-
documented by the scientific community (including events related to
contamination or a change in any ingredient or any major change in
manufacturing processes).
``(e) Inspection Authority.--As provided in section 704, the
officers and employees of the Secretary shall have the authority to
conduct unannounced inspections of any factory, warehouse, or other
establishment of any tobacco product manufacturer and shall have access
to the records, files, papers, processes, controls, and facilities
relating to tobacco product manufacturing.
``(f) Agricultural Producers.--The Secretary may not promulgate any
regulation under this section that has the effect of placing regulatory
burdens on tobacco producers (as such term is used for purposes of the
Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.) and the
Agricultural Act of 1949 (7 U.S.C. 1441 et seq.)) in excess of the
regulatory burdens generally placed on other agricultural commodity
producers.
``SEC. 904. TOBACCO PRODUCT LABELING, WARNING, AND PACKAGING STANDARDS.
``(a) Cigarettes.--
``(1) In general.--
``(A) Packaging.--It shall be unlawful for any
person to manufacture, package, or import for sale or
distribution within the United States any cigarettes
the package of which fails to bear, in accordance with
the requirements of this subsection, one of the
following statements:
``WARNING: Cigarettes Are Addictive.
``WARNING: Tobacco Smoke Can Harm Your
Children.
``WARNING: Cigarettes Cause Fatal Lung Disease.
``WARNING: Cigarettes Cause Cancer.
``WARNING: If You Think Smoking Is Cool, You
Are Dead Wrong.
``WARNING: Cigarettes Cause Strokes And Heart
Disease.
``WARNING: Smoking During Pregnancy Can Harm
Your Baby.
``WARNING: Smoking Can Kill You.
``WARNING: Tobacco Smoke Causes Fatal Lung
Disease In Nonsmokers.
``WARNING: Quitting Smoking Now Greatly Reduces
Serious Risks To Your Health.
``(B) Advertising.--It shall be unlawful for any
manufacturer or importer of cigarettes to advertise or
cause to be advertised within the United States any
cigarette unless the advertising bears, in accordance
with the requirements of this subsection, one of the
following statements:
``WARNING: Cigarettes Are Addictive.
``WARNING: Tobacco Smoke Can Harm Your
Children.
``WARNING: Cigarettes Cause Fatal Lung Disease.
``WARNING: Cigarettes Cause Cancer.
``WARNING: If You Think Smoking Is Cool, You
Are Dead Wrong.
``WARNING: Cigarettes Cause Strokes And Heart
Disease.
``WARNING: Smoking During Pregnancy Can Harm
Your Baby.
``WARNING: Smoking Can Kill You.
``WARNING: Tobacco Smoke Causes Fatal Lung
Disease In Nonsmokers.
``WARNING: Quitting Smoking Now Greatly Reduces
Serious Risks To Your Health.
``(2) Requirements for label statements.--
``(A) Location.--Each label statement required by
subparagraph (A) of paragraph (1) shall be located on
the upper portion of the front panel of the cigarette
package (or carton) and occupy not less than 25 percent
of such front panel.
``(B) Type and color.--With respect to each label
statement required by subparagraph (A) of paragraph
(1), the phrase `WARNING' shall appear in capital
letters and the label statement shall be printed in 17
point type with adjustments as determined appropriate
by the Secretary to reflect the length of the required
statement. All the letters in the label statement shall
appear in conspicuous and legible type, in contrast by
typography, layout, or color with all other printed
material on the package, and be printed in an
alternating black-on-white and white-on-black format as
determined appropriate by the Secretary.
``(C) Exception.--The provisions of subparagraph
(A) shall not apply in the case of a flip-top cigarette
package (offered for sale on the date of enactment of
this title) where the front portion of the flip-top
does not comprise at least 25 percent of the front
panel. In the case of such a package, the label
statement required by subparagraph (A) of paragraph (1)
shall occupy the entire front portion of the flip top.
``(3) Requirements for advertising.--
``(A) Location.--Each label statement required by
subparagraph (B) of paragraph (1) shall occupy not less
than 20 percent of the area of the advertisement
involved.
``(B) Type and color.--
``(i) Type.--With respect to each label
statement required by subparagraph (B) of
paragraph (1), the phrase `WARNING' shall
appear in capital letters and the label
statement shall be printed in the following
types:
``(I) With respect to whole page
advertisements on broadsheet
newspaper--45 point type.
``(II) With respect to half page
advertisements on broadsheet
newspaper--39 point type.
``(III) With respect to whole page
advertisements on tabloid newspaper--39
point type.
``(IV) With respect to half page
advertisements on tabloid newspaper--27
point type.
``(V) With respect to DPS magazine
advertisements--31.5 point type.
``(VI) With respect to whole page
magazine advertisements--31.5 point
type.
``(VII) With respect to 28cm x 3
column advertisements--22.5 point type.
``(VIII) With respect to 20cm x 2
column advertisements--15 point type.
The Secretary may revise the required type
sizes as the Secretary determines appropriate
within the 20 percent requirement.
``(ii) Color.--All the letters in the label
statement under this subparagraph shall appear
in conspicuous and legible type, in contrast by
typography, layout, or color with all other
printed material in the advertisement, and be
printed in an alternating black-on-white and
white-on-black format as determined appropriate
by the Secretary.
``(4) Rotation of label statements.--
``(A) In general.--Except as provided in
subparagraph (B), the label statements specified in
subparagraphs (A) and (B) of paragraph (1) shall be
rotated by each manufacturer or importer of cigarettes
quarterly in alternating sequence on packages of each
brand of cigarettes manufactured by the manufacturer or
importer and in the advertisements for each such brand
of cigarettes in accordance with a plan submitted by
the manufacturer or importer and approved by the
Secretary. The Secretary shall approve a plan submitted
by a manufacturer or importer of cigarettes which will
provide the rotation required by this paragraph and
which assures that all of the label statements required
by subparagraphs (A) and (B) will be displayed by the
manufacturer or importer at the same time.
``(B) Application of other rotation requirements.--
``(i) In general.--A manufacturer or
importer of cigarettes may apply to the
Secretary to have the rotation schedule
described in clause (iii) apply with respect to
a brand style of cigarettes manufactured or
imported by such manufacturer or importer if--
``(I) the number of cigarettes of
such brand style sold in the fiscal
year of the manufacturer or importer
preceding the submission of the
application is less than \1/4\ of 1
percent of all the cigarettes sold in
the United States in such year; and
``(II) more than \1/2\ of the
cigarettes manufactured or imported by
such manufacturer or importer for sale
in the United States are packaged into
brand styles which meet the
requirements of subclause (I).
If an application is approved by the Secretary,
the rotation schedule described in clause (iii)
shall apply with respect to the applicant
during the 1-year period beginning on the date
of the application approval.
``(ii) Plan.--An applicant under clause (i)
shall include in its application a plan under
which the label statements specified in
subparagraph (A) of paragraph (1) will be
rotated by the applicant manufacturer or
importer in accordance with the label rotation
described in clause (iii).
``(iii) Other rotation requirements.--Under
the rotation schedule which the manufacturer or
importer with an approved application may put
into effect, each of the label statements
specified in subparagraph (A) of paragraph (1)
shall appear on the packages of each brand
style of cigarettes with respect to which the
application was approved an equal number of
times within the 12-month period beginning on
the date of the approval by the Secretary of
the application.
``(5) Application of requirement.--Paragraph (1) does not
apply to a distributor or retailer of cigarettes who does not
manufacture, package, or import cigarettes for sale or
distribution within the United States.
``(6) Television and radio advertising.--It shall be
unlawful to advertise cigarettes and little cigars on any
medium of electronic communications subject to the jurisdiction
of the Federal Communications Commission.
``(b) Smokeless Tobacco Products.--
``(1) In general.--
``(A) Packaging.--It shall be unlawful for any
person to manufacture, package, or import for sale or
distribution within the United States any smokeless
tobacco product the package of which fails to bear, in
accordance with the requirements of this subsection,
one of the following statements:
WARNING: This Product May Cause Mouth Cancer.
WARNING: This Product May Cause Gum Disease And
Tooth Loss.
WARNING: This Product Is Not A Safe Alternative
To Cigarettes.
WARNING: Smokeless Tobacco Is Addictive.
``(B) Advertising.--It shall be unlawful for any
manufacturer or importer of smokeless tobacco products
to advertise or cause to be advertised within the
United States any smokeless tobacco product unless the
advertising bears, in accordance with the requirements
of this subsection, one of the following statements:
WARNING: This Product May Cause Mouth Cancer.
WARNING: This Product May Cause Gum Disease And
Tooth Loss.
WARNING: This Product Is Not A Safe Alternative
To Cigarettes.
WARNING: Smokeless Tobacco Is Addictive.
``(2) Requirements for label statements.--
``(A) Location.--Each label statement required by
subparagraph (A) of paragraph (1) shall be located on
the principal display panel of the product and occupy
not less than 25 percent of such panel.
``(B) Type and color.--With respect to each label
statement required by subparagraph (A) of paragraph
(1), the phrase `WARNING' shall appear in capital
letters and the label statement shall be printed in 17
point type with adjustments as determined appropriate
by the Secretary to reflect the length of the required
statement. All the letters in the label statement shall
appear in conspicuous and legible type in contrast by
typography, layout, or color with all other printed
material on the package and be printed in an
alternating black on white and white on black format as
determined appropriate by the Secretary.
``(3) Advertising and rotation.--The provisions of
paragraphs (3) and (4)(A) of subsection (a) shall apply to
advertisements for smokeless tobacco products and the rotation
of the statements required under paragraph (1)(A) on such
products.
``(4) Application of requirement.--Paragraph (1) does not
apply to a distributor or retailer of smokeless tobacco
products who does not manufacture, package, or import such
products for sale or distribution within the United States.
``(5) Television and radio advertising.--It shall be
unlawful to advertise smokeless tobacco on any medium of
electronic communications subject to the jurisdiction of the
Federal Communications Commission.
(c) Statement of Intended Use.--
(1) Requirement.--Each manufacturer, distributor, and
retailer advertising or causing to be advertised, disseminating
or causing to be disseminated advertising concerning, tobacco
products otherwise permitted under this chapter shall include,
in a type size and format as the Secretary may prescribe in a
regulation promulgated under subsection (d), the established
name of the product and a statement of the intended use of the
product as provided for in paragraph (2).
(3) Intended use statements.--
(A) Cigarettes.--A statement of intended use for
cigarettes or cigarette tobacco is as follows
(whichever is appropriate):
``Cigarettes--A Dangerous Tobacco Product Intended For
Use Only By Persons 18 or Older.
``Cigarette Tobacco--A Dangerous Tobacco Product
Intended For Use Only By Persons 18 or Older.
(B) Smokeless tobacco.--A statement of intended use
for a smokeless tobacco product is as follows
(whichever is appropriate):
``Loose Leaf Chewing Tobacco--A Dangerous Tobacco
Product Intended For Use Only By Persons 18 or Older.
``Plug Chewing Tobacco--A Dangerous Tobacco Product
Intended For Use Only By Persons 18 or Older.
``Twist Chewing Tobacco--A Dangerous Tobacco Product
Intended For Use Only By Persons 18 or Older.
``Moist Snuff--A Dangerous Tobacco Product Intended For
Use Only By Persons 18 or Older.
``Dry Snuff--A Dangerous Tobacco Product Intended For
Use Only By Persons 18 or Older.
``(d) Regulations.--
``(1) In general.--Not later than 180 days after the date
of the enactment of this title, the Secretary shall promulgate
such regulations as may be necessary to implement subsections
(a), (b), and (c).
``(2) Authority to revise tobacco product labeling
statements.--
``(A) In general.--The Secretary may by rule change
the text of any of the statements required under
subsections (a) and (b). A rule promulgated under this
subparagraph shall not become effective prior to the
expiration of the 1-year period beginning on the date
on which the final rule is published in the Federal
Register.
``(B) Limitation.--The Secretary may not promulgate
any rule under subparagraph (A) during the 5-year
period beginning on the effective date of the PROTECT
Act unless the Secretary can demonstrate extraordinary
circumstances.
``(3) Common or usual names.--The Secretary, in accordance
with the procedures set forth in section 902, shall promulgate
regulations requiring the disclosure to the public of the
common or usual name of each ingredient (other than tobacco,
water, or reconstituted tobacco sheet made wholly from tobacco)
contained in a tobacco product in descending order of
predominance by weight, except that such regulations--
``(A) may provide for the disclosure of spices,
flavorings, and colorings without naming each spice,
flavoring, or coloring; and
``(B) may exempt from disclosure incidental
additives, including processing aids and chemical
preservatives, that are present in a tobacco product at
insignificant levels that the Secretary determines do
not have any functional effect or health risk.
``(e) Preemption.--No statement relating to the use of cigarettes
or smokeless tobacco products and health, other than the statements
required by subsections (a), (b), or (c), shall be required on any
package or in any advertisement of cigarettes or a smokeless tobacco
product.
``(f) Exports.--Packages of cigarettes or smokeless tobacco
products manufactured, imported, or packaged--
``(1) for export from the United States; or
``(2) for delivery to a vessel or aircraft, as supplies,
for consumption beyond the jurisdiction of the internal revenue
laws of the United States;
shall be exempt from the requirements of this chapter, but such
exemptions shall not apply to cigarettes or smokeless tobacco products
manufactured, imported, or packaged for sale or distribution to members
or units of the Armed Forces of the United States located outside of
the United States.
``SEC. 905. REDUCED RISK TOBACCO PRODUCTS.
``(a) General Rule.--Except as provided in subsection (b), the
regulations promulgated in accordance with section 902 shall require
that a tobacco product be deemed to be in violation with this chapter
if the labeling of the package of the product, or the claims of the
manufacturer in connection with the product, can reasonably be
interpreted as stating or implying that the product presents a reduced
health risk as compared to other similar products. Any tobacco product
accompanied by a claim to diagnose, cure, mitigate, treat, or prevent a
disease, not including statements that the Secretary may permit for
reduced risk tobacco products under this section, will be subject to
regulation as a new drug under section 505.
``(b) Exception.--
``(1) In general.--Subsection (a) shall not apply to the
labeling of a tobacco product, or the claims of the
manufacturer in connection with the product, if--
``(A) the manufacturer, based on scientific
evidence, demonstrates to the Secretary that the
product reduces the risk to the health of the user as
compared to other similar tobacco products; and
``(B) the Secretary approves the specific claim
that will be made a part of the labeling of the
product, or the specific claims of the manufacturer in
connection with the product.
``(2) Reduction in health risk.--The Secretary shall
promulgate regulations to permit the inclusion of
scientifically-based specific health claims on the labeling of
a tobacco product package, or the making of such claims by the
manufacturer in connection with the product, where the
Secretary determines that the inclusion or making of such
claims would reduce the health risk to consumers and otherwise
promote public health.
``(c) Development of Reduced Risk Tobacco Product Technology.--
``(1) Notification of secretary.--The manufacturer of a
tobacco product shall provide written notice to the Secretary
upon the development or acquisition by the manufacturer of any
technology that would reduce the risk of such products to the
health of the user. Such notification shall not be required
until adequate intellectual property protections have been
secured by the manufacturer, such as the issuance of a patent
or the execution of a licensing agreement.
``(2) Confidentiality.--The Secretary shall promulgate
regulations to provide a manufacturer with appropriate
confidentiality protections with respect to technology that is
the subject of a notification under paragraph (1) that contains
evidence that the technology involved is in the early
developmental stages.
``(3) Licensing.--
``(A) In general.--With respect to any technology
for which a notification has been provided under
paragraph (1), the manufacturer shall permit the use of
such technology by other manufacturers of tobacco
products to which this chapter applies.
``(B) Fees.--The Secretary of Commerce shall
promulgate regulations to provide for the payment of a
commercially reasonable fee by each manufacturer that
uses the technology described under subparagraph (A) to
the manufacturer that submits the notice under
paragraph (1) for such technology. Such regulations
shall contain procedures for the resolution of fee
disputes between manufacturers under this subparagraph.
``(d) Requirement of Manufacture and Marketing.--
``(1) Purpose.--It is the purpose of this subsection to
provide for a mechanism to create incentives that help ensure
that tobacco products that are designed to be less hazardous to
the health of users are developed, tested, and made available
to consumers.
``(2) Determination.--Upon a determination by the Secretary
that the manufacture of a tobacco product that is less
hazardous to the health of users is technologically and
commercially feasible, the Secretary may, in accordance with
this subsection and through the issuance or amendment of a
health risk standard under section 902--
``(A) require the disclosure of the existence of
such technology;
``(B) prohibit the use of technology that is
superseded by such new technology; and
``(C) require that manufacturers cease
manufacturing and marketing tobacco products that do
not incorporate such technology.
``SEC. 906. TOBACCO PRODUCT MARKETING RESTRICTIONS.
``(a) In General.--The Secretary shall by regulation implement the
prohibitions described in this section concerning the marketing of
tobacco products to minors.
``(b) Sales to Minors Prohibited.--No retailer may distribute a
tobacco product to any individual who is under 18 years of age.
``(c) Photo Identification.--
``(1) Requirement.--Except as provided in paragraph (2),
each retailer shall verify, by means of photographic
identification containing the date of birth of the bearer, that
no individual purchasing a tobacco product is under 18 years of
age.
``(2) Exception.--No verification under paragraph (1) is
required for any individual who is at least 27 years of age.
``(3) Location of products.--Except as provided in
subsection (j), a retailer shall ensure that all tobacco
products are located in areas where customers do not have
access to the products.
``(d) Face-to-Face Transactions.--Except as provided in subsection
(i)(1), a retailer may sell tobacco products only in a direct, face-to-
face exchange without the assistance of any electronic or mechanical
device.
``(e) Out-of-Package Distribution.--No retailer may break or
otherwise open a tobacco product to sell or distribute to individuals
portions of such product (including individual cigarettes or a number
of cigarettes that is smaller than the quantity in the minimum package
size, or any quantity of cigarette tobacco or smokeless tobacco that is
smaller than the smallest package distributed by the retailer for
individual consumer use).
``(f) Retailer Compliance With Respect to Self-Service.--Each
retailer shall ensure that all tobacco-related self-service displays,
advertising, labeling, and other items that are located in the
establishment of the retailer and that do not comply with the
requirements of this section are removed or are brought into compliance
with the requirements of this section.
``(g) Minimum Cigarette Package Size.--Except as otherwise provided
in this section, no manufacturer, distributor, or retailer may sell or
cause to be sold, or distribute or cause to be distributed, any
cigarette package that contains fewer than 20 cigarettes.
``(h) Prohibition on Sampling.--No manufacturer, distributor, or
retailer may distribute or cause to be distributed any free samples of
any tobacco product.
``(i) Prohibition on Distribution Through Self-Service Modes of
Sale.--
``(1) Vending machines.--Except as provided in subsection
(j)(1)(B), no manufacturer, distributor, or retailer may
distribute or cause to be distributed any tobacco product
through a vending machine.
``(2) Other displays.--Except as provided in subsection
(j)(1)(C), no manufacturer, distributor, or retailer may
distribute or cause to be distributed any tobacco product
through a self-service display.
``(j) Permitted Self-Service Modes of Sale.--
``(1) In general.--Notwithstanding any other provision of
this section, the following methods of distributing tobacco
products are permitted:
``(A) Mail-order sales as provided for in paragraph
(2), except that mail-order redemption of coupons and
the distribution of free samples through the mail shall
be prohibited.
``(B) Distribution through vending machines that
are located in facilities where the retailer ensures
that no individuals under 18 years of age are present
or permitted to enter at any time.
``(C) Distribution through self-service displays
that are located in facilities where the retailer
ensures that no individuals under 18 years of age are
present or permitted to enter at any time.
``(2) Mail-order sales.--
``(A) In general.--A manufacturer, distributor, or
retailer may distribute or cause to be distributed a
tobacco product through mail-order sales only if such
sales are subject to a procedure for verifying that no
individual purchasing such products is under 18 years
of age.
``(B) Review by secretary.--Not later than 2 years
after the date of enactment of this section, the
Secretary shall review the verification procedures
implemented under subparagraph (A) to determine whether
individuals under 18 years of age are obtaining tobacco
products through the mail. If the Secretary determines
that a significant number of underage individuals are
obtaining such products through the mail, the Secretary
may promulgate regulations in accordance with section
902 to prohibit the distribution of tobacco products
through the mail.
``SEC. 907. TOBACCO PRODUCTS SCIENTIFIC ADVISORY COMMITTEE.
``(a) Establishment.--Not later than 1 year after the date of
enactment of this chapter, the Secretary shall establish an advisory
committee, to be known as the `Tobacco Products Scientific Advisory
Committee', to assist the Secretary in establishing, amending, or
revoking a regulation promulgated under section 902, 903, 904, or 905.
``(b) Membership.--
``(1) In general.--The Secretary shall appoint as members
of the Tobacco Products Scientific Advisory Committee--
``(A) individuals with expertise in the medicine,
science, or technology involving the manufacture and
use of tobacco products, who are of appropriately
diversified professional backgrounds;
``(B) individuals with expertise in law or ethics;
``(C) a representative of tobacco product
manufacturers;
``(D) a representative of the general public
selected from anti-tobacco organizations; and
``(E) a representative of the general public
selected from pro-tobacco organizations.
``(2) Limitation.--The Secretary may not appoint to the
Advisory Committee any individual who is in the regular full-
time employ of the Federal Government. The Secretary may
appoint Federal officials as ex-officio members.
``(3) Chairperson.--The Secretary shall designate 1 of the
members of advisory committee to serve as chairperson of the
Advisory Committee.
``(c) Duties.--The Tobacco Products Scientific Advisory Committee
shall--
``(1) assist the Secretary in establishing, amending, or
revoking regulations under section 902, 903, 904, or 905;
``(2) examine and make recommendations concerning the
effects of the alteration of the nicotine yield levels in
tobacco products;
``(3) examine and make recommendations concerning whether
there is a threshold level below which nicotine yields do not
produce dependence on the tobacco product involved, and, if so,
determine what that level is; and
``(4) review other safety, dependence or health issues
relating to tobacco products as requested by the Secretary.
``SEC. 908. REPORTS.
``Not later than 18 months after the date of enactment of this
chapter, and biennially thereafter, the Secretary shall prepare and
submit to Congress a report containing--
``(1) a description of the current sales, advertising, and
marketing practices associated with tobacco products;
``(2) a description of the use patterns of tobacco
products, including a report on use by individuals under 18
years of age;
``(3) a description of the effects of health promotion and
disease prevention efforts related to the use of tobacco
products;
``(4) an evaluation of the health promotion and disease
prevention efforts relating to tobacco products and the
identification of areas appropriate for further research; and
``(5) such recommendations for legislation and
administrative action relating to tobacco products as the
Secretary considers appropriate.
``SEC. 909. JUDICIAL REVIEW.
``(a) Application of Section.--
``(1) In general.--Not later than 60 days after the
effective date of any regulation under this chapter
establishing, amending, or revoking a health risk management
standard for a tobacco product, any person adversely affected
by such regulation may file a petition with the United States
Court of Appeals for the District of Columbia or for the
circuit wherein such person resides or has its principal place
of business for judicial review of such regulation. A copy of
the petition shall be transmitted by the clerk of the court to
the Secretary or other officer designated by him for that
purpose.
``(2) Record of proceeding.--The Secretary shall file in
the court under paragraph (1) the record of the proceedings on
which the Secretary based the regulation involved as provided
for in section 2112 of title 28, United States Code.
``(3) Definition.--For purposes of this section, the term
`record' means all notices and other matter published in the
Federal Register with respect to the regulation reviewed, all
information submitted to the Secretary with respect to such
regulation, proceedings of any panel or advisory committee with
respect to such regulation, any hearing held with respect to
such regulation, and any other information identified by the
Secretary, in the administrative proceeding held with respect
to such regulation, as being relevant to such regulation.
``(b) Additional Data, Views, and Arguments.--If the petitioner
applies to the court under this section for leave to adduce additional
data, views, or arguments respecting the regulation being reviewed and
shows to the satisfaction of the court that such additional data,
views, or arguments are material and that there were reasonable grounds
for the petitioner's failure to adduce such data, views, or arguments
in the proceedings before the Secretary, the court may order the
Secretary to provide additional opportunity for the oral presentation
of data, views, or arguments and for written submissions. The Secretary
may modify such findings, or make new findings by reason of the
additional data, views, or arguments so taken and shall file with the
court such modified or new findings, and the recommendations of the
Secretary, if any, for the modification or setting aside of the
regulation or order being reviewed, with the return of such additional
data, views, or arguments.
``(c) Standard for Review.--Upon the filing of the petition under
subsection (a) judicial review of a regulation, the court shall have
jurisdiction to review the regulation in accordance with chapter 7 of
title 5, United States Code, and to grant appropriate relief, including
interim relief, as provided for in such chapter. A regulation
promulgated under this chapter shall not be affirmed if it is found to
be unsupported by substantial evidence on the record taken as a whole.
``(d) Finality of Judgments.--The judgment of the court affirming
or setting aside, in whole or in part, any regulation under this
section shall be final, subject to review by the Supreme Court of the
United States upon certiorari or certification, as provided for in
section 1254 of title 28, United States Code.
``(e) Other Remedies.--The remedies provided for in this section
shall be in addition to and not in lieu of any other remedies provided
for by law.
``(f) Statement of Reasons.--To facilitate judicial review under
this section or under any other provision of law of a regulation issued
under this chapter, each such regulation shall contain a statement of
the reasons for its issuance and the basis, in the record of the
proceedings held in connection with its issuance, for its issuance.
``SEC. 910. PREEMPTION.
``(a) Limitation.--No requirement with respect to a tobacco product
shall be applied by any State or local statute or regulation if such
requirement conflicts with the requirements of section 902, 903, 904,
or 905.
``(b) Rule of Construction.--Nothing in this section shall be
construed as prohibiting a State or political subdivision of a State
from enacting statutes or regulations concerning tobacco products so
long as such statutes or regulations do not conflict with the
requirements of section 902, 903, 904, or 905.
``(c) Effect on Liability Law.--Except as otherwise provided in
this chapter, nothing in this section shall relieve any person from
liability at common law or under State statutory law to any other
person.''.
SEC. 402. TECHNICAL PROVISIONS.
(a) Application of Federal Cigarette Labeling and Advertising
Act.--The provisions of the Federal Cigarette Labeling and Advertising
Act (15 U.S.C. 1331 et seq.) that apply to cigarettes shall be
superseded by the provisions of this title (and the amendments made by
this title).
(b) Repeal.--The Comprehensive Smokeless Tobacco Health Education
Act of 1986 (15 U.S.C. 4401 et seq.) is repealed.
SEC. 403. FEDERAL LICENSING OF MILITARY AND OTHER ENTITIES.
(a) In General.--The Secretary, in consultation with the Secretary
of Defense, Secretary of State, and other appropriate Federal
officials, shall establish and implement a Federal tobacco licensing
program to be applied to entities that sell or distribute tobacco
products--
(1) on any military installation (as defined in section
2801(c)(2) of title X, United States Code);
(2) in any United States embassy;
(3) in any facility owned and operated by the Federal
Government either in the United States or in a foreign country;
(4) in any duty-free shop located within the United States;
or
(5) through any other Federal entity or on any other
Federal property as determined appropriate by the Secretary.
(b) Requirements of Program.--The program established under
subsection (a) shall apply requirements (including those for penalties,
suspensions, and revocations) similar to those required to be
implemented by States under this subtitle.
(c) Indian Tribes and Tribal Lands.--For purposes of applying and
enforcing the provisions of this subtitle to entities that sell or
otherwise distribute tobacco products on Indian reservations (as
defined in section 403(9) of the Indian Child Protection and Family
Violence Prevention Act (25 U.S.C. 3202(9))), an Indian tribe or tribal
organization shall be treated as a State.
TITLE V--PAYMENTS TO STATES AND PUBLIC HEALTH PROGRAMS
Subtitle A--Payments to States
SEC. 501. REIMBURSEMENT FOR STATE EXPENDITURES.
(a) Payments.--
(1) In general.--The Trustees shall use amounts made
available under section 101(c)(1) in each fiscal year to
provide funds to each State to reimburse such State for amounts
expended by the State for the treatment of individuals with
tobacco-related illnesses or conditions.
(2) Amount.--The amount for which a State is eligible for
under paragraph (1) for a fiscal year shall be based on the
applicable percentage described in paragraph (3) of the amount
available for such fiscal year under paragraph (1).
(3) Applicable percentage.--For purposes of paragraph (2),
the applicable percentage for any State is determined in
accordance with the following table.
State Applicable Percentage
Alabama................................... 1.270390
Alaska.................................... 0.241356
Arizona................................... 1.163883
Arkansas.................................. 0.751011
California................................ 8.805641
Colorado.................................. 1.054018
Connecticut............................... 1.596937
Delaware.................................. 0.227018
District of Columbia...................... 0.534487
Florida................................... 3.590667
Georgia................................... 2.007112
Hawaii.................................... 0.642527
Idaho..................................... 0.257835
Illinois.................................. 4.272898
Indiana................................... 1.714594
Iowa...................................... 0.758686
Kansas.................................... 0.762230
Kentucky.................................. 1.875439
Louisiana................................. 1.916886
Maine..................................... 0.870740
Maryland.................................. 2.051849
Massachusetts............................. 3.700447
Michigan.................................. 4.431824
Minnesota................................. 2.474364
Mississippi............................... 0.851450
Missouri.................................. 1.659116
Montana................................... 0.335974
Nebraska.................................. 0.445356
Nevada.................................... 0.307294
New Hampshire............................. 0.552048
New Jersey................................ 3.494187
New Mexico................................ 0.465816
New York.................................. 14.529380
North Carolina............................ 2.097625
North Dakota.............................. 0.250758
Ohio...................................... 4.690156
Oklahoma.................................. 0.841972
Oregon.................................... 1.092920
Pennsylvania.............................. 5.233270
Rhode Island.............................. 0.821727
South Carolina............................ 0.883628
South Dakota.............................. 0.234849
Tennessee................................. 2.479873
Texas..................................... 4.451382
Utah...................................... 0.330016
Vermont................................... 0.370244
Virginia.................................. 1.373860
Washington................................ 1.794612
West Virginia............................. 1.003660
Wisconsin................................. 2.098696
Wyoming................................... 0.122405
American Samoa............................ 0.008681
N. Mariana Islands........................ 0.001519
Guam...................................... 0.006506
U.S. Virgin Islands....................... 0.004804
Puerto Rico............................... 0.193175.
(4) Use of funds.--Except as provided in subsection (b), a
State may use amounts received under this subsection as the
State determines appropriate.
(b) Amount Attributable to Federal Medical Assistance Percentage.--
(1) Determination.--With respect to each State, the
Trustees shall determine the amount of the reimbursement under
subsection (a) for each fiscal year that is equal to the
percentage that has been applied to the State as the Federal
medical assistance percentage (as defined in section 1905(b))
of the Social Security Act (42 U.S.C. 1396d(b)) expenditures by
the State for the preceding fiscal year.
(2) Required use.--With respect to the amount determined
under paragraph (1) for a State for a fiscal year, the
Secretary shall not treat such amount as an overpayment under
any joint Federal-State health program if the State certifies
to the Trustee that such amount will be used by the State for
anti-smoking or tobacco-related purposes under section 502.
(c) Indian Tribes.--Based on the determinations made by the
Trustees under section 901(f)(2), the Trustees shall, from amounts
available for payments to States under this section in a fiscal year,
reserve not less than the aggregate amount determined under section
901(f)(2) for payments to Indian tribes under such section 901(f). The
Trustees shall reduce the amounts payable to a State under this section
in accordance with determinations with respect to such State under
section 901(f) to provide amounts to Indian tribes and tribal
organizations in such States.
SEC. 502. REQUIREMENTS FOR STATE USE OF CERTAIN FUNDS.
(a) State Plan.--To be eligible to receive a payment under section
501(b) a State shall prepare and submit to the Trustees a State plan
that--
(1) describes the manner in which the State intends to use
amounts provided under this subsection to conduct anti-tobacco
programs consistent with this Act and consistent with the
smoking cessation guidelines issued by the Agency for Health
Care Policy and Research;
(2) describes the specific anti-smoking programs that will
be funded by the State;
(3) describes the amount of funds that will be used for
each program described in paragraph (2);
(4) describes the activities to be conducted under such
programs, including the populations to be served, the
eligibility standards for such populations, if any, and the
goals and purposes of such programs;
(5) describes the measurable objectives that will be used
to evaluate program outcomes;
(6) describes the procedures to be used by the State to
conduct outreach to potential program participants;
(7) describes the manner in which such programs will be
coordinated with other Federal and State anti-smoking
initiatives; and
(8) has been approved under subsection (b).
(b) Submission, Approval, and Amendment of Plan.--
(1) Initial plan.--
(A) In general.--As a condition of receiving
payment under section 501(b), a State shall submit to
the Trustees an anti-smoking program plan that meets the applicable
requirements of this subsection.
(B) Approval.--Except as the Trustees may provide
under paragraph (5), a State plan submitted under
subparagraph (A)--
(i) shall be approved for purposes of this
section; and
(ii) shall be effective beginning with a
calendar quarter that is specified in the plan,
but in no case earlier than October 1, 1998.
(2) Amendments.--
(A) In general.--A State may amend, in whole or in
part, its State anti-smoking plan at any time through
transmittal of a plan amendment.
(B) Approval.--Except as the Trustees may provide
under paragraph (5), an amendment to a State plan
submitted under subparagraph (A)--
(i) shall be approved for purposes of this
title, and
(ii) shall be effective as provided in
subparagraph (C).
(C) Effective dates for amendments.--An amendment
to a State plan shall take effect on one or more
effective dates specified in the amendment.
(3) Disapproval.--
(A) Prompt review of plan submittals.--The Trustees
shall promptly review State plans and plan amendments
submitted under this subsection to determine if they
substantially comply with the requirements of this
section.
(B) 90-day approval deadlines.--A State plan or
plan amendment is considered approved unless the
Trustees notifies the State in writing, within 90 days
after receipt of the plan or amendment, that the plan
or amendment is disapproved (and the reasons for
disapproval) or that specified additional information
is needed.
(C) Correction.--In the case of a disapproval of a
plan or plan amendment, the Trustees shall provide a
State with a reasonable opportunity for correction
before taking financial sanctions against the State on
the basis of such disapproval.
(4) Program operation.--
(A) In general.--The State shall conduct the
program in accordance with the plan (and any
amendments) approved under paragraph (3) and with the
requirements of this section.
(B) Violations.--The Trustees shall establish a
process for enforcing requirements under this section.
Such process shall provide for the withholding of funds
in the case of substantial noncompliance with such
requirements. In the case of an enforcement action
against a State under this subparagraph, the Trustees
shall provide a State with a reasonable opportunity for
correction before taking financial sanctions against
the State on the basis of such an action.
(5) Continued approval.--An approved State plan shall
continue in effect unless and until the State amends the plan
under paragraph (2) or the Trustees finds, under paragraph (4),
substantial noncompliance of the plan with the requirements of
this section.
(c) Objectives and Goals, Plan Administration.--
(1) Records, reports, audits, and evaluation.--
(A) Data collection, records, and reports.--A State
plan shall include an assurance that the State will
collect the data, maintain the records, and furnish the
reports to the Trustees, at the times and in the
standardized format the Trustees may require in order
to enable the Trustees to monitor State program
administration and compliance and to evaluate and
compare the effectiveness of State plans under this
section.
(B) State assessment and study.--A State plan shall
include a description of the State's plan for the
annual assessments and reports under subsection (c)(1)
and the evaluation required by subsection (c)(2).
(C) Audits.--A State plan shall include an
assurance that the State will afford the Trustees
access to any records or information relating to the
plan for the purposes of review or audit.
(2) Program development process.--A State plan shall
include a description of the process used to involve the public
in the design and implementation of the plan and the method for
ensuring ongoing public involvement.
(3) Program budget.--A State plan shall include a
description of the budget for the plan. The description shall
be updated periodically as necessary and shall include details
on the planned use of funds and the sources of the non-Federal
share of plan expenditures, including any requirements for
cost-sharing by beneficiaries.
(d) Annual Reports; Evaluations.--
(1) Annual report.--The State shall--
(A) assess the operation of the State plan under
this section in each fiscal year, including the
progress made in reducing the number of adults and
children who use tobacco; and
(B) report to the Trustees, by January 1 following
the end of the fiscal year, on the result of the
assessment.
(2) State evaluations.--
(A) In general.--By March 31, 2000, each State that
has a State plan shall submit to the Trustees an
evaluation that includes each of the following:
(i) An assessment of the effectiveness of
the State plan in reducing the number of
children and adults who use tobacco products.
(ii) A description and analysis of the
effectiveness of elements of the State plan.
(iii) An assessment of the effectiveness of
other public and private programs in the State
in meeting program goals.
(iv) A review and assessment of State
activities to coordinate the plan under this
section with other public and private anti-
tobacco programs.
(v) Recommendations for improving the
program under this section.
(B) Report of the trustees.--The Trustees shall
submit to Congress and make available to the public by
December 31, 2001, a report based on the evaluations
submitted by States under subparagraph (A), containing
any conclusions and recommendations the Trustees
considers appropriate.
(e) Programs.--Anti-tobacco activities may be conducted using
amounts received under section 501(b) in conjunction with and under the
following programs:
(1) The special supplemental food program under section 17
of the Child Nutrition Act of 1966 (42 U.S.C. 1786).
(2) The Maternal and Child Health Services Block Grant
program under title V of the Social Security Act (42 U.S.C. 701
et seq.).
(3) The State Children's Health Insurance Program of the
State under title XXI of the Social Security Act (42 U.S.C.
1397aa et seq.).
(4) A Head Start program under the Head Start Act (42
U.S.C. 9801 et seq.).
(5) The school lunch program under the National School
Lunch Act (42 U.S.C. 1751 et seq.).
(6) An Indian Health Service Program.
(7) The community health center program under section 330
of the Public Health Service Act (42 U.S.C. 254b).
(8) Programs under title X of the Public Health Service Act
(42 U.S.C. 300 et seq.).
(9) Programs under title XXVI of the Public Health Service
Act (42 U.S.C. 300ff-11).
(10) State-initiated smoking cessation programs that
include provisions for reimbursing individuals for medications
or other therapeutic techniques.
(11) State-initiated public education campaigns, including
multi-media counter-advertising campaigns.
(12) State-initiated programs for event sponsorship
transitional assistance, including sponsoring or otherwise
supporting athletic, artistic, or other social and cultural
events traditionally under the sponsorship of, or that received
other support from, tobacco product manufacturers or
distributors prior to the date of enactment of this Act.
(f) Application of Requirements.--The requirements of the
respective provisions of law described in subsection (e) shall apply to
any funds made available under this section through State programs
under any such provision of law to the same extent that such
requirements would otherwise apply to such programs under such
provisions of law.
Subtitle B--Public Health Programs
SEC. 521. NATIONAL INSTITUTES OF HEALTH TRUST FUND FOR HEALTH RESEARCH.
(a) Creation of Trust Fund.--There is established a trust fund to
be known as the ``National Institutes of Health Trust Fund for Health
Research'' (referred to in this section as the ``Trust Fund''),
consisting of such amounts as may be appropriated or transferred to the
Trust Fund pursuant to section 101(c)(2) and (3)(D).
(b) Transfers to Trust Fund.--There is hereby appropriated to the
Trust Fund for each fiscal year an amount equivalent to the amount
described in section 101(d)(2)(A) for such fiscal year.
(c) Obligations From Trust Fund.--
(1) In general.--Subject to the provisions of paragraph
(4), with respect to the amounts made available in the Trust
Fund in a fiscal year, the Secretary shall distribute during
any fiscal year--
(A) 2 percent of such amounts to the Office of the
Director of the National Institutes of Health to be
allocated at the Director's discretion--
(i) for carrying out the responsibilities
of the Office of the Director, including the
Office of Research on Women's Health and the
Office of Research on Minority Health, the
Office of Alternative Medicine, the Office of
Rare Disease Research, the Office of Behavioral
and Social Sciences Research (for use for
efforts to reduce tobacco use), the Office of
Dietary Supplements, and the Office for Disease
Prevention; and
(ii) for construction and acquisition of
equipment for or facilities of or used by the
National Institutes of Health;
(B) 2 percent of such amounts for transfer to the
National Center for Research Resources to carry out
section 1502 of the National Institutes of Health
Revitalization Act of 1993 concerning Biomedical and
Behavioral Research Facilities;
(C) 1 percent of such amounts for carrying out
section 301 and part D of title IV of the Public Health
Service Act with respect to health information
communications;
(D) 10 percent of such amounts for carrying out
section 414 of the Public Health Service Act with
respect to national cancer research and demonstration
centers; and
(E) the remainder of such amounts to member
institutes and centers, including the Office of AIDS
Research, of the National Institutes of Health in the
same proportion to the total amount received under this
section, as the amount of annual appropriations under
appropriations Acts for each member institute and
Centers for the fiscal year bears to the total amount
of appropriations under appropriations Acts for all
member institutes and Centers of the National
Institutes of Health for the fiscal year.
(2) Plans of allocation.--The amounts transferred under
paragraph (1)(E) shall be allocated by the Director of the
National Institutes of Health or the various directors of the
institutes and centers, as the case may be, pursuant to
allocation plans developed by the various advisory councils to
such directors, after consultation with such directors.
(3) Grants and contracts fully funded in first year.--With
respect to any grant or contract funded by amounts distributed
under paragraph (1), the full amount of the total obligation of
such grant or contract shall be funded in the first year of
such grant or contract, and shall remain available until
expended.
(4) Trigger and release of monies and phase-in.--
(A) Trigger and release.--No expenditure shall be
made under paragraph (1) during any fiscal year in
which the annual amount appropriated for the National
Institutes of Health is less than the amount so
appropriated for the prior fiscal year.
(B) Phase-in.--The Secretary of Health and Human
Services shall phase-in the distributions required
under paragraph (1) so that--
(i) 25 percent of the amount in the Trust
Fund is distributed in the first fiscal year
for which funds are available;
(ii) 50 percent of the amount in the Trust
Fund is distributed in the second fiscal year
for which funds are available;
(iii) 75 percent of the amount in the Trust
Fund is distributed in the third fiscal year
for which funds are available; and
(iv) 100 percent of the amount in the Trust
Fund is distributed in the fourth and each
succeeding fiscal year for which funds are
available.
(d) National Tobacco Research Agenda.--
(1) In general.--Not later than 1 year after the date of
enactment of this Act, and annually thereafter, the Director of
the National Institutes of Health, in collaboration with the
Director of the Centers for Disease Control and Prevention, the
Commissioner of Food and Drugs, the Administrator of the
Substance Abuse and Mental Health Services Administration, and
the Director of the Office of National Drug Control Policy,
shall prepare and submit to the Secretary and to the
appropriate committees of Congress a National Tobacco Research
Agenda.
(2) Contents.--The Agenda submitted under paragraph (a)
shall reflect the research needs in the area of tobacco-related
illnesses and diseases and conditions related to other abused
substances for the year for which the Agenda is being
submitted, with special emphasis on youth tobacco use. The
Agenda shall include research concerning--
(A) the role of tobacco products in causing cancer,
cardiovascular diseases, stroke, and other diseases;
(B) genetic and behavioral factors that are related
to the use of tobacco or the development of tobacco-
related diseases;
(C) the development of prevention and treatment
modalities with respect to tobacco use and cessation;
(D) the development and use of safer and less
addictive tobacco products;
(E) tobacco-related surveillance and education,
including the effects of counter-advertising;
(F) biomedical and behavioral research of the type
described in subparagraphs (A) through (E) for other
abused substances such as illicit narcotics; and
(G) brain development in the early years of life,
and the continued physical, intellectual, and social
development of children, with emphasis on how tobacco
and other abused substances affect such development.
(e) Budget Treatment of Amounts in Trust Fund.--The amounts in the
Trust Fund shall be excluded from, and shall not be taken into account,
for purposes of any budget enforcement procedure under the
Congressional Budget Act of 1974 or the Balanced Budget and Emergency
Deficit Control Act of 1985.
SEC. 522. NATIONAL ANTI-TOBACCO PRODUCT CONSUMPTION AND TOBACCO PRODUCT
CESSATION PUBLIC HEALTH PROGRAM.
(a) Authority and Duties.--Using amounts made available pursuant to
section 101(c)(2) and (3)(D), the Secretary shall carry out the
following activities:
(1) National anti-tobacco program.--
(A) In general.--The Secretary shall establish and
implement a national anti-tobacco product consumption
and tobacco product cessation program to discourage
individuals from beginning to use tobacco products and
other substances of abuse and to assist individuals who
consume such products to discontinue such use, with
special emphasis placed on health promotion and disease
prevention activities that discourage children under
the age of 18 from initiating or continuing use of such
products;
(B) Requirements.--In carrying out the program
under subparagraph (A), the Secretary shall--
(i) to the maximum extent practicable, act
in cooperation with State and local public
health officials, and private for-profit and
non-profit entities that carry out anti-tobacco
product use and tobacco product cessation
programs; and
(ii) to the extent determined appropriate
by the Secretary, coordinate the program
through the Centers for Disease Control and
Prevention, Office on Smoking and Health.
(2) Administrative activities.--The Secretary shall provide
funds for the administration and implementation of the public
health and regulatory provisions of this Act (including the
amendments made by this Act), including funds for the Centers
for Disease Control and Prevention and the Food and Drug
Administration.
(3) Block grants.--The Secretary shall use not less than 50
percent of the amounts available in each fiscal year under this
section to provide block grants to States to carry out
activities described in subsection (c).
(b) Recommendations.--In developing programs under this section,
the Secretary shall consider, as appropriate, the recommendations of
the members of the class certified for purposes of Dianne Castano v.
American Tobacco Company.
(c) Direct Federal Activities.--Under the national anti-tobacco
product consumption and tobacco cessation program implemented under
subsection (a)(1), the Secretary shall carry out the following
activities:
(1) Public education.--
(A) Model curricula.--The Secretary, acting through
the Director of the Centers for Disease Control and
Prevention, shall develop model curricula and other
materials designed to educate the public about the
health risks associated with tobacco use. Such
educational materials shall be specially designed to
influence the knowledge, attitudes, and behavior of
young Americans.
(B) Assistance by cdc.--The Director of the Centers
for Disease Control and Prevention shall provide
technical assistance to State and local public health
and education officials and parent-teacher and other
civic organizations in developing age effective anti-
tobacco educational curricula and other materials.
(C) Chronic consumers of tobacco products.--
Educational efforts under this paragraph shall include
the development of materials that advise members of the
public who consume tobacco products of the risks of
continuing to use such products and the benefits of
discontinuing the use of these products.
(D) Cessation education.--The Director of the
Centers for Disease Control and Prevention, in
consultation with State and local public health
officials, shall take appropriate action to inform
consumers of tobacco products about effective therapies
for ceasing the consumption of tobacco products. Such actions shall be
consistent with the tobacco use cessation guidelines issued by the
Agency for Health Care Policy and Research.
(2) Counter-advertising.--The Secretary shall carry out a
mass media public education campaign designed to counter the
effects of marketing practices of tobacco product manufacturers
and distributors.
(3) Model state program.--The Secretary shall establish a
model smoking cessation program that may be used by States in
the design of State-based smoking cessation programs. Such
model program shall provide for the provision of grants and
other assistance by such States to eligible entities and
individuals in the State for the establishment or
administration of tobacco product use prevention and cessation
programs.
(4) Other activities.--The Secretary may undertake anti-
tobacco product consumption and cessation activities in
addition to those specified in paragraphs (1) through (3). Such
activities may include enhanced direct Federal programs whose
goal is to reduce the use of other abused substances such as
illicit drugs.
(5) Grants and contracts.--The Secretary, acting under the
authority provided under section 301 of the Public Health
Service Act (42 U.S.C. 241 et seq.), may award grants and
contracts under subsection (a)(1) to public and private
entities (including for-profit entities if determined
appropriate by the Secretary) to carry out educational,
counter-advertising and other activities described in this
subsection.
(d) Voluntary Tobacco Use Prevention and Cessation Block Grants.--
(1) In general.--The Secretary shall award block grants to
States under subsection (a)(3) to enable such States to carry
out activities for the purpose of planning, implementing, and
evaluating tobacco use prevention and cessation activities
described in paragraph (4).
(2) Eligibility.--To be eligible to receive a grant under
this section, a State shall certify to the Secretary that such
State has in effect and is enforcing a law that contains the
provisions described in the model State law described in
section 302.
(3) Application.--
(A) In general.--A State that desires to receive a
voluntary block grant under subsection (a)(4) shall
prepare and submit to the Secretary an application, at
such time, in such manner, and accompanied by such
information as the Secretary may require.
(B) Contents.--An application submitted under
subparagraph (A) shall--
(i) describe the activities that will be
carried out using assistance under this
subsection; and
(ii) provide such assurances as the
Secretary determines to be necessary to carry
out this subsection.
(C) Joint application.--The Secretary shall permit
a State to submit a joint application for funds under
this subsection and section 502.
(4) Use of funds.--A State shall use amounts received under
this section to carry out tobacco abuse activities described in
section 502(e).
(5) Formula.--The amount of a block grant under this
subsection shall be determined by the Secretary based on a
formula to be developed by the Secretary that takes into
consideration the number of children between the ages of 10 and
18 in each State.
(6) Nonparticipating states.--If a State elects not to
participate in the voluntary block grant program under this
subsection, the funds allocated to such State will be
distributed to participating States in the same ratio as
amounts provided to such States under the formula developed
under paragraph (5).
TITLE VI--STANDARDS TO REDUCE INVOLUNTARY EXPOSURE TO TOBACCO SMOKE
SEC. 601. DEFINITIONS.
In this title--
(1) Administrator.--The term ``Administrator'' means the
Administrator of the Occupational Safety and Health
Administration.
(2) Public facility.--
(A) In general.--The term ``public facility'' means
any building regularly entered by 10 or more
individuals at least 1 day per week, including any such
building owned by or leased to a Federal, State, or
local government entity, and including any building
under the control of Congress or an instrumentality of
Congress (as such term is defined for purposes of
section 509 of the Americans with Disabilities Act of 1990 (42 U.S.C.
12209). Such term shall not include any building or portion thereof
regularly used for residential purposes.
(B) Exclusions.--The term ``public facility'' does
not include a building which is used as a bar, bar
area, private club, hotel guest room, casino, bingo
parlor, or the facilities of any tobacco product
manufacturer or distributor or the facilities of any
retailer primarily engaged in the business of selling
tobacco products.
(C) Bar.--The term ``bar'' means any indoor area
that is open to the general public and that is devoted
to the sale and service of alcoholic beverages for on-
premises consumption and where the service of food is
only incidental to the consumption of such beverages.
Service of food shall be considered incidental if the
food service generated less than 50 percent of the
total annual gross sales of the establishment.
(D) Bar area.--The term ``bar area'' means an area
within a restaurant that is devoted to the sale and
service of alcoholic beverages for on-premises
consumption and where the service of food is only
incidental to the consumption of such beverages.
Service of food shall be considered incidental if the
food service generated less than 50 percent of the
total annual gross sales of the area. Nothing in this
title shall be construed to require that a restaurant
to separate the bar area from the remainder of the
establishment.
(3) Responsible entity.--The term ``responsible entity''
means, with respect to any public facility, the owner of such
facility except that, in the case of any such facility or
portion thereof which is leased, such term means the lessee.
(4) Restaurant.--The term ``restaurant'' means any indoor
area that is open to the general public, or a portion of such
area, in which the business is the sale of food for on-premises
consumption and which has an indoor seating capacity of greater
than 50 individuals. Such term includes cafeterias, coffee
shops, diners, sandwich shops, and short order cafes. Such term
shall not include the bar area of any such area.
SEC. 602. SMOKE-FREE ENVIRONMENT POLICY.
(a) Policy Required.--In order to protect children and adults from
cancer, respiratory disease, heart disease, and other adverse health
effects from breathing environmental tobacco smoke, the responsible
entity for each public facility shall adopt and implement at such
facility a smoke-free environment policy which meets the requirements
of subsection (b) or, in the case of schools or facilities serving
children, subsection (d).
(b) Elements of Policy.--
(1) In general.--Each smoke-free environment policy for a
public facility shall--
(A) prohibit the smoking of cigarettes, cigars, and
pipes, and any other combustion of tobacco within the
facility and on facility property within the immediate
vicinity of the entrance to the facility; and
(B) post a clear and prominent notice of the
smoking prohibition in appropriate and visible
locations at the public facility.
(2) Exception.--
(A) In general.--Except as provided in subparagraph
(B), the smoke-free environment policy for a public
facility may provide an exception to the prohibition
specified in paragraph (1) for 1 or more specially
designated smoking areas within a public facility if
such area or areas meet the requirements of subsection
(c).
(B) Limitation.--Subparagraph (A) shall not apply
to a public facility that is a restaurant or prison.
(c) Specially Designated Smoking Areas.--A specially designated
smoking area meets the requirements of this subsection if--
(1) the area is ventilated in accordance with
specifications promulgated by the Administrator that ensure
that air from the area is directly exhausted to the outside and
does not recirculate or drift to other areas within the public
facility;
(2) the area is maintained at negative pressure, as
compared to adjoined nonsmoking areas, as determined under
regulations promulgated by the Administrator; and
(3) nonsmoking individuals do not have to enter the area
for any purpose while smoking is occurring in such area.
Cleaning and maintenance work shall be conducted in such area only
while no smoking is occurring in the area.
(d) Special Rules for Schools and Other Facilities Serving
Children.--
(1) In general.--With respect to a facility described in
paragraph (1), the responsible entity for the facility shall
adopt and implement at such facility a smoke-free environment
policy that--
(A) prohibits the smoking of cigarettes, cigars,
and pipes, and any other combustion of tobacco within
the facility and on facility property;
(B) prohibits the use of smokeless tobacco products
within the facility and on facility property; and
(C) post a clear and prominent notice of the
smoking and smokeless tobacco prohibition in
appropriate and visible locations at the public
facility.
(2) Facility.--A facility described in this subparagraph
is--
(A) an elementary or secondary school (as such term
is defined in section 14101 of the Elementary and
Secondary Education Act of 1965 (20 U.S.C. 8801);
(B) any facility at which a Head Start program or
project is being carried out under the Head Start Act
(42 U.S.C. 9831 et. seq.); and
(C) any facility, other than a home-based facility,
at which a licensed or certified child care provider
provides child care services.
(3) Designated areas.--The smoke-free environment policy
for a facility described in paragraph (2) may provide an
exception to the prohibition specified in paragraph (1) for 1
or more specially designated smoking areas within such facility
if such area or areas meet the requirements of subsection (c).
SEC. 603. PREEMPTION.
Nothing in this title shall preempt or otherwise affect any other
Federal, State or local law which provides protections from health
hazards from environmental tobacco smoke that are equal to or greater
than the protections provided for under this title.
SEC. 604. REGULATIONS.
Not later than 6 months after the date of enactment of this Act,
the Administrator shall promulgate such regulations as necessary to
carry out this title. Such regulations shall delegate to the States a
right to enforce the provisions of this title.
SEC. 605. EFFECTIVE DATE.
The provisions of this title shall take effect on the date that is
6 months after the date on which regulations are promulgated under
section 604 or 1 year after the date of enactment of this Act,
whichever is later.
TITLE VII--PUBLIC DISCLOSURE OF HEALTH RESEARCH
SEC. 701. PURPOSE.
It is the purpose of this title to provide for the disclosure of
previously nonpublic or confidential documents by manufacturers of
tobacco products, including the results of internal health research,
and to provide for a procedure to settle claims of attorney-client
privilege, work product, or trade secrets with respect to such
documents.
SEC. 702. NATIONAL TOBACCO DOCUMENT DEPOSITORY.
(a) Establishment.--
(1) In general.--To be eligible to receive the liability
protections provided for under subtitle C of title I,
manufacturers of tobacco products, acting in conjunction with
the Tobacco Institute and the Council for Tobacco Research,
U.S.A. (prior to the termination of such entities under section
155), and in accordance with the guidelines and procedures
established under paragraph (2), shall, not later than 90 days
after the date of enactment of this Act, establish and maintain
a National Tobacco Document Depository (in this title referred
to as the ``Depository''). Such Depository shall be located in
the Washington, D.C. area and be open to the public.
(2) Guidelines.--The Attorney General, in consultation with
the General Services Administration, shall establish guidelines
and procedures for the establishment and operation of the
Depository, including guidelines for the immediate disclosure
of documents relating to health and safety.
(b) Use of Depository.--The Depository shall be maintained in a
manner that permits the Depository to be used as a resource for
litigants, public health groups, and any other individuals who have an
interest in the corporate records and research of the manufacturers
concerning smoking and health, addiction or nicotine dependency, safer
or less hazardous cigarettes, and underage tobacco use and marketing.
(c) Contents.--The Depository shall include (and manufacturers and
the Tobacco Institute and the Council for Tobacco Research, U.S.A.
shall provide)--
(1) within 30 days of the date on which the Depository is
established, all documents provided by such entities to
plaintiffs in--
(A) civil or criminal actions brought by State
attorneys general (including all documents selected by
plaintiffs from the Guilford Repository of the United
Kingdom);
(B) Philip Morris Companies Inc.'s defamation
action against Capital Cities/American Broadcasting
Company News;
(C) the Federal Trade Commission's investigation
concerning Joe Camel and underage marketing;
(D) Haines v. Liggett Group, Inc. (814 F. Supp. 414
(D.N.J., Jan. 26, 1993)) and Cippollone v. Liggett
Group, Inc. (822 F. 2d 335, 56 USLW 2028, 7 Fed. R.
Serv. 3d 1438 (3rd Cir. (N.J.), Jun. 8, 1987)); and
(E) Estate of Burl Butler v. Philip Morris, Inc.
(case No. 94-4-53);
(2) within 90 days after the date of enactment of this Act,
any exiting documents discussing or referring to health
research, addiction or dependency, safer or less hazardous
cigarettes, studies of the smoking habits of minors, and the
relationship between advertising or promotion and youth
smoking, that the entities described in subsection (a) have not
completed producing as required in the actions described in
paragraph (1);
(3) within 30 days of the date on which the Depository is
established, all documents relating to indices (as defined by
the court in State of Minnesota and Blue Cross and Blue Shield
of Minnesota v. Philip Morris, Inc., et al.) of documents
relating to smoking and health, including all indices
identified by the manufacturers in the State of Texas v.
American Tobacco Company, et al.;
(4) upon the settlement of any action referred to in this
subsection, and after a good-faith, de novo, document-by-
document review of all documents previously withheld from
production in any actions on the grounds of attorney-client
privilege, all documents determined to be outside of the scope
of the privilege;
(5) all existing or future documents relating to original
laboratory research concerning the health or safety of tobacco
products, including all laboratory research results relating to
methods used to make tobacco products less hazardous to
consumers;
(6) a comprehensive new attorney-client privilege log of
all documents, itemized in sufficient detail so as to enable
any interested individual to determine whether the individual
will challenge the claim of privilege, that the entities
described in subsection (a) (based on the de novo review of
such documents by such entities) claim are protected from
disclosure under the attorney-client privilege;
(7) all existing or future documents relating to studies of
the smoking habits of minors or documents referring to any
relationship between advertising and promotion and underage
smoking;
(8) all original laboratory research conducted or funded,
directly or indirectly, by any participating tobacco product
manufacturer relating to the health effects or safety of
tobacco products, including all original laboratory research
relating to any methods or means of making tobacco products
less hazardous to consumers;
(9) all studies conducted or funded, directly or
indirectly, by any participating tobacco product manufacturer,
relating to tobacco product use by minors;
(10) all documents discussing or referring to the
relationship, if any, between advertising and promotion and the
use of tobacco products by minors;
(11) a privilege log describing each document or each
portion of a document otherwise subject to public disclosure
under this subsection that any participating tobacco product
manufacturer maintains is exempt from the public disclosure
provisions of this Act pursuant to subsection (d);
(12) a trade secrecy log describing each document or each
document otherwise subject to public disclosure; and
(13) all other documents determined appropriate under
regulations promulgated by the Secretary.
(d) Dispute Resolution Panel.--
(1) Establishment.--The Judicial Conference of the United
States shall establish a Tobacco Documents Dispute Resolution
Panel, to be composed of three Federal judges to be appointed
by the Conference, to resolve all disputes involving claims of
attorney-client, work product, or trade secrets privilege with
respect to documents required to be deposited into the
Depository under subsection (c) that may be brought by Federal,
State, or local governmental officials or the public or
asserted in any action by a manufacturer.
(2) Basis for determinations.--The determinations of the
Panel established under paragraph (1) shall be based on--
(A) the American Bar Association/American Law
Institute Model Rules or the principals of Federal law
with respect to attorney-client or work product
privilege; and
(B) the Uniform Trade Secrets Act with respect to
trade secrecy.
(3) Decision.--Any decision of the Panel established under
paragraph (1) shall be final and binding upon all Federal and
State courts.
(4) Assessing of fees.--As part of a determination under
this subsection, the Panel established under paragraph (1)
shall determined whether a claimant of the privilege acted in
good faith and had a factual and legal basis for asserting the
claim. If the Panel determines that the claimant did not act in
good faith, the Panel may assess costs against the claimant,
including a reasonable attorneys' fee, and may apply such other
sanctions as the Panel determines appropriate.
(5) Accelerated review.--The Panel established under
paragraph (1) shall establish procedures for the accelerated
review of challenges to a claim of privilege. Such procedures
shall include assurances that an individual filing a challenge
to such a claim need not make a prima facie showing of any kind
as a prerequisite to an in camera review of the documents at
issue.
(6) Special masters.--The Panel established under paragraph
(1) may appoint Special Masters in accordance with Rule 53 of
the Federal Rules of Civil Procedure. The cost relating to any
Special Master shall be assessed to the manufacturers as part
of a fee process to be established under regulations
promulgated by the Secretary.
(e) Other Provisions.--
(1) No waiver of privilege.--Compliance with this section
by the entities described in subsection (a) shall not be deemed
to be a waiver on behalf of such entities of any applicable
privilege or protection.
(2) Avoidance of destruction.--In establishing the
Depository, procedures shall be implemented to protect against
the destruction of documents.
(3) Deemed produced.--Any documents contained in the
Depository shall be deemed to have been produced for purposes
of any tobacco-related litigation in the United States.
(f) Documents.--For purposes of this section, the term
``documents'' shall include any paper documents that may be printed
using data that is contained in computer files.
SEC. 703. ENFORCEMENT.
(a) In General.--The Attorney General, acting through the National
Tobacco Settlement Trust Fund, or the chief law enforcement officer of
a State may bring a proceeding before the dispute resolution panel
under section 802(e) to enforce violations of such section. The panel
shall have exclusive jurisdiction over actions to enforce violations of
this title.
(b) Notice.--The person against whom a violation is alleged under
subsection (a) shall be given notice of a proceeding before the panel
and an opportunity to be heard. Participating tobacco product
manufacturers shall have the right to intervene in such proceedings.
(c) Penalties.--Violations of this subtitle shall give rise to
civil penalty of not to exceed $15,000 per violation and $1,000,000 for
all violations adjudicated in a single proceeding, except that no
penalty may be assessed where the person committing the violation had a
good faith factual and legal basis that the document, portion of a
document, or portion of an index of document that is the subject of the
alleged violation was exempt from public disclosure under subsections
(c) or (d) of section 702.
(d) Single Violation.--For purposes of this section, a failure to
disclose 1 or more portions of a single document in violation of this
title shall be considered to be part of a single violation.
TITLE VIII--AGRICULTURAL TRANSITION PROVISIONS
SEC. 801. SHORT TITLE.
This title may be cited as the ``Tobacco Transition Act''.
SEC. 802. PURPOSES.
The purposes of this title are--
(1) to authorize the use of binding contracts between the
United States and tobacco quota owners and tobacco producers to
compensate them for the termination of Federal programs that
support the production of tobacco in the United States;
(2) to make available to States funds for economic
assistance initiatives in counties of States that are dependent
on the production of tobacco; and
(3) to terminate Federal programs that support the
production of tobacco in the United States.
SEC. 803. DEFINITIONS.
In this title:
(1) Association.--The term ``association'' means a
producer-owned cooperative marketing association that has
entered into a loan agreement with the Commodity Credit
Corporation to make price support available to producers.
(2) Buyout payment.--The term ``buyout payment'' means a
payment made to a quota owner under section 814 in 1 or more
installments in accordance with section 812(c)(1).
(3) Contract.--The term ``contract'' or ``tobacco
transition contract'' means a contract entered into under
section 812.
(4) Governor.--The term ``Governor'' means the chief
executive officer of a State.
(5) Lease.--The term ``lease'' means a rental of quota on
either a cash rent or crop share basis.
(6) Marketing year.--The term ``marketing year'' means--
(A) in the case of Flue-cured tobacco, the period
beginning July 1 and ending the following June 30; and
(B) in the case of each other kind of tobacco, the
period beginning October 1 and ending the following
September 30.
(7) Owner.--The term ``owner'' means a person who, at the
time of entering into a tobacco transition contract, owns quota
provided by the Secretary.
(8) Phaseout period.--The term ``phaseout period'' means
the 3-year period consisting of the 1999 through 2001 marketing
years.
(9) Price support.--The term ``price support'' means a
nonrecourse loan provided by the Commodity Credit Corporation
through an association for the kind of tobacco involved.
(10) Producer.--The term ``producer'' means a person who
during at least 3 of the 1993 through 1997 crops of tobacco (as
determined by the Secretary) that were subject to quota--
(A) leased quota;
(B) shared in the risk of producing a crop of
tobacco; and
(C) marketed the tobacco subject to quota.
(11) Quota.--The term ``quota'' means the quantity of
tobacco produced in the United States, and marketed during a
marketing year, that will be used in, or exported from, the
United States during the marketing year (including an
adjustment for stocks), as estimated by the Secretary.
(12) Secretary.--The term ``Secretary'' means the Secretary
of Agriculture.
(13) State.--The term ``State'' means each of the several
States of the United States, the District of Columbia, the
Commonwealth of Puerto Rico, and any other territory or
possession of the United States.
(14) Tobacco.--The term ``tobacco'' means any kind of
tobacco for which a marketing quota is in effect or for which a
marketing quota is not disapproved by producers.
(15) Tobacco transition account.--The term ``Tobacco
Transition Account'' means the Tobacco Transition Account
established by section 811(a).
(16) Transition payment.--The term ``transition payment''
means a payment made to a producer under section 815 for each
of the 1999 through 2001 marketing years.
(17) Trust fund.--The term ``Trust Fund'' means the
National Tobacco Settlement Trust Fund established in the
Treasury of the United States consisting of amounts that are
appropriated or credited to the Trust Fund from the tobacco
settlement approved by Congress.
(18) United states.--The term ``United States'', when used
in a geographical sense, means all of the States.
Subtitle A--Tobacco Production Transition
CHAPTER 1--TOBACCO TRANSITION CONTRACTS
SEC. 811. TOBACCO TRANSITION ACCOUNT.
(a) Establishment.--There is established a Tobacco Transition
Account into to which amounts shall be transferred as provided for in
section 841.
(b) Use.--Funds appropriated or credited to the Tobacco Transition
Account shall be available for providing buyout payments and transition
payments authorized under this chapter.
(c) Termination.--The Tobacco Transition Account terminates
effective September 30, 2001.
SEC. 812. OFFER AND TERMS OF TOBACCO TRANSITION CONTRACTS.
(a) Offer.--The Secretary shall offer to enter into a tobacco
transition contract with each owner and producer of tobacco.
(b) Terms.--Under the terms of a contract, the owner or producer
shall agree, in exchange for a payment made pursuant to section 814 or
815, as applicable, to relinquish the value of quota that is owned or
leased.
(c) Rights of Owners and Producers.--
(1) Owners.--An owner shall receive a buyout payment in 3
equal installments, 1 installment for each of the 1999 through
2001 crops of tobacco, in which case the owner shall have the
right to continue production of each of those crops.
(2) Producers.--In the case of each of the 1999 through
2001 crops for the kind of tobacco involved, a producer who is
not an owner during the 1998 marketing year for the kind of
tobacco involved shall not be subject to any restrictions on
the quantity of tobacco produced or marketed.
SEC. 813. ELEMENTS OF CONTRACTS.
(a) Deadlines for Contracting.--
(1) Commencement.--To the maximum extent practicable, the
Secretary shall commence entering into contracts under this
chapter not later than 90 days after the date of enactment of
this Act.
(2) Deadline.--The Secretary may not enter into a contract
under this chapter after June 30, 1999.
(b) Duration of Contract.--
(1) Beginning date.--The term of a contract shall begin on
the date that is the beginning of the 1999 marketing year for
the kind of tobacco involved.
(2) Termination date.--The term of a contract shall
terminate on the date that is the end of the 2001 marketing
year for the kind of tobacco involved.
(c) Time for Payment.--
(1) In general.--A buyout payment or transition payment
shall be made not later than the date that is the beginning of
the marketing year for the kind of tobacco involved for each
year of the term of a tobacco transition contract of an owner
or producer of tobacco.
(2) Applicability.--This subsection shall be applicable to
all payments covered by section 812(c).
SEC. 814. BUYOUT PAYMENTS TO OWNERS.
(a) In General.--During the phaseout period, the Secretary shall
make buyout payments to owners in accordance with section 812(c)(1).
(b) Compensation for Lost Value.--The payment shall constitute
compensation for the lost value to the owner of the quota.
(c) Payment Calculation.--Under this section, the total amount of
the buyout payment made to an owner shall be determined by
multiplying--
(1) $8.00; by
(2) the average annual quantity of quota owned by the owner
during the 1995 through 1997 crop years.
SEC. 815. TRANSITION PAYMENTS TO PRODUCERS.
(a) In General.--The Secretary shall make transition payments
during each of the 1999 through 2001 marketing years for a kind of
tobacco that was subject to a quota to a producer who--
(1) produced the kind of tobacco during at least 3 of the
1993 through 1997 crop years; and
(2) entered into a tobacco transition contract.
(b) Transition Payments Limited to Leased Quota.--A producer shall
be eligible for transition payments only for the portion of the
production of the producer that is subject to quota that is leased
during the 3 crop years described in subsection (a)(1).
(c) Compensation for Lost Revenue.--The payments shall constitute
compensation for the lost revenue incurred by a tobacco producer during
each of the 1999 through 2001 marketing years for the kind of tobacco
involved.
(d) Election by Producer; Production.--
(1) Election.--The producer may elect which 3 of the 1993
through 1997 crop years shall be used for the calculation under
subsection (e).
(2) Production.--The producer shall have the burden of
demonstrating to the Secretary the production of tobacco for
each year of the election.
(e) Payment Calculation.--Under this section, each of the 3
transition payments made to a producer for the kind of tobacco involved
shall be determined by multiplying--
(1) 40 cents; by
(2) the average quantity of the kind of tobacco produced by
the producer during the 3 crop years elected by the producer
under subsection (d).
SEC. 816. TOBACCO WORKER TRANSITION PROGRAM.
(a) Group Eligibility Requirements.--
(1) Criteria.--A group of workers (including workers in any
firm or subdivision of a firm involved in the manufacture,
processing, or warehousing of tobacco or tobacco products)
shall be certified as eligible to apply for adjustment
assistance under this section pursuant to a petition filed
under subsection (b) if the Secretary of Labor determines that
a significant number or proportion of the workers in such
workers' firm or an appropriate subdivision of the firm have
become totally or partially separated, or are threatened to
become totally or partially separated, and--
(A) the sales or production, or both, of such firm
or subdivision have decreased absolutely; and
(B) the implementation of the national tobacco
settlement contributed importantly to such workers'
separation or threat of separation and to the decline
in the sales or production of such firm or subdivision.
(2) Definition of contributed importantly.--In paragraph
(1)(B), the term ``contributed importantly'' means a cause that
is important but not necessarily more important than any other
cause.
(3) Regulations.--The Secretary shall issue regulations
relating to the application of the criteria described in
paragraph (1) in making preliminary findings under subsection
(b) and determinations under subsection (c).
(b) Preliminary Findings and Basic Assistance.--
(1) Filing of petitions.--A petition for certification of
eligibility to apply for adjustment assistance under this
section may be filed by a group of workers (including workers
in any firm or subdivision of a firm involved in the
manufacture, processing, or warehousing of tobacco or tobacco
products) or by their certified or recognized union or other
duly authorized representative with the Governor of the State
in which such workers' firm or subdivision thereof is located.
(2) Findings and assistance.--Upon receipt of a petition
under paragraph (1), the Governor shall--
(A) notify the Secretary that the Governor has
received the petition;
(B) within 10 days after receiving the petition--
(i) make a preliminary finding as to
whether the petition meets the criteria
described in subsection (a)(1); and
(ii) transmit the petition, together with a
statement of the finding under clause (i) and
reasons for the finding, to the Secretary for
action under subsection (c); and
(C) if the preliminary finding under subparagraph
(B)(i) is affirmative, ensure that rapid response and
basic readjustment services authorized under other
Federal laws are made available to the workers.
(c) Review of Petitions by Secretary; Certifications.--
(1) In general.--The Secretary, within 30 days after
receiving a petition under subsection (b)(2)(B)(ii), shall
determine whether the petition meets the criteria described in
subsection (a)(1). Upon a determination that the petition meets
such criteria, the Secretary shall issue to workers covered by
the petition a certification of eligibility to apply for the
assistance described in subsection (d).
(2) Denial of certification.--Upon the denial of a
certification with respect to a petition under paragraph (1),
the Secretary shall review the petition in accordance with the
requirements of other applicable assistance programs to
determine if the workers may be certified under such other
provisions.
(d) Comprehensive Assistance.--
(1) In general.--Workers covered by a certification issued
by the Secretary under subsection (c)(1) shall be provided with
benefits and services described in paragraph (2) in the same
manner and to the same extent as workers covered under a
certification under subchapter A of title II of the Trade Act
of 1974 (19 U.S.C. 2271 et seq.), except that the total amount
of payments under this section for any fiscal year shall not
exceed $50,000,000.
(2) Benefits and services.--The benefits and services
described in this paragraph are the following:
(A) Employment services of the type described in
section 235 of the Trade Act of 1974 (19 U.S.C. 2295).
(B) Training described in section 236 of the Trade
Act of 1974 (19 U.S.C. 2296), except that
notwithstanding the provisions of section 236(a)(2)(A)
of such Act, the total amount of payments for training
under this section for any fiscal year shall not exceed
$25,000,000.
(C) Tobacco worker readjustment allowances, which
shall be provided in the same manner as trade
readjustment allowances are provided under part I of
subchapter B of chapter 2 of title II of the Trade Act
of 1974 (19 U.S.C. 2291 et seq.), except that--
(i) the provisions of sections 231(a)(5)(C)
and 231(c) of such Act (19 U.S.C.
2291(a)(5)(C), 2291(c)), authorizing the
payment of trade readjustment allowances upon a
finding that it is not feasible or appropriate
to approve a training program for a worker,
shall not be applicable to payment of
allowances under this section; and
(ii) notwithstanding the provisions of
section 233(b) of such Act (19 U.S.C. 2293(b)),
in order for a worker to qualify for tobacco
readjustment allowances under this section, the
worker shall be enrolled in a training program
approved by the Secretary of the type described
in section 236(a) of such Act (19 U.S.C.
2296(a)) by the later of--
(I) the last day of the 16th week
of such worker's initial unemployment
compensation benefit period; or
(II) the last day of the 6th week
after the week in which the Secretary
issues a certification covering such
worker.
In cases of extenuating circumstances relating
to enrollment of a worker in a training program
under this section, the Secretary may extend
the time for enrollment for a period of not to
exceed 30 days.
(D) Job search allowances of the type described in
section 237 of the Trade Act of 1974 (19 U.S.C. 2297).
(E) Relocation allowances of the type described in
section 238 of the Trade Act of 1974 (19 U.S.C. 2298).
(e) Ineligibility of Individuals Receiving Payments for Lost
Tobacco Quota.--No benefits or services may be provided under this
section to any individual who has received buyout payments for tobacco
quotas under section 812.
(f) Funding.--Of the amounts in the Account, the Secretary may use
not to exceed $50,000,000 for each of fiscal years 1999 through 2008 to
provide assistance under this section.
(g) Effective Date.--This section shall take effect on the date
that is the later of--
(1) October 1, 1998; or
(2) the date on which legislation implementing the national
tobacco settlement is enacted.
(h) Termination Date.--No assistance, vouchers, allowances, or
other payments may be provided under this section after the date that
is the earlier of--
(1) the date that is 10 years after the effective date of
this section under subsection (g); or
(2) the date on which legislation establishing a program
providing dislocated workers with comprehensive assistance
substantially similar to the assistance provided by this
section becomes effective.
SEC. 817. FARMER OPPORTUNITY GRANTS.
Part A of title IV of the Higher Education Act of 1965 (20 U.S.C.
1070 et seq.) is amended by adding at the end the following:
``Subpart 9--Farmer Opportunity Grants
``SEC. 420D. STATEMENT OF PURPOSE.
``It is the purpose of this subpart to assist in making available
the benefits of postsecondary education to eligible students
(determined in accordance with section 420F) in institutions of higher
education by providing farmer opportunity grants to all eligible
students.
``SEC. 420E. PROGRAM AUTHORITY; AMOUNT AND DETERMINATIONS;
APPLICATIONS.
``(a) Program Authority and Method of Distribution.--
``(1) Program authority.--From the Tobacco Transition
Account under section 811 of the PROTECT Act, the Secretary,
during the period beginning July 1, 1999, and ending September
30, 2024, shall pay to each eligible institution such sums as
may be necessary to pay to each eligible student (determined in
accordance with section 420F) for each academic year during
which that student is in attendance at an institution of higher
education, as an undergraduate, a farmer opportunity grant in
the amount for which that student is eligible, as determined
pursuant to subsection (b). Not less than 85 percent of such
sums shall be advanced to eligible institutions prior to the
start of each payment period and shall be based upon an amount
requested by the institution as needed to pay eligible
students, except that this sentence shall not be construed to
limit the authority of the Secretary to place an institution on
a reimbursement system of payment.
``(2) Construction.--Nothing in this section shall be
construed to prohibit the Secretary from paying directly to
students, in advance of the beginning of the academic term, an
amount for which the students are eligible, in cases where the
eligible institution elects not to participate in the
disbursement system required by paragraph (1).
``(3) Designation.--Grants made under this subpart shall be
known as `farmer opportunity grants'.
``(4) Amounts.--To carry out this subpart there shall be
transferred the following amounts from the Tobacco Transition
Account:
``(A) $42,500,000 for each of the academic years
1999-2000 through 2003-2004.
``(B) $50,000,000 for each of the academic years
2004-2005 through 2008-2009.
``(C) $57,500,000 for each of the academic years
2009-2010 through 2013-2014.
``(D) $65,000,000 for each of the academic years
2014-2015 through 2018-2019.
``(E) $72,500,000 for each of the academic years
2019-2020 through 2023-2024.
``(b) Amount of Grants.--
``(1) Amounts.--
``(A) In general.--The amount of the grant for a
student eligible under this subpart shall be--
``(i) $1,700, or such sum as may be
available, for each of the academic years 1999-
2000 through 2003-2004;
``(ii) $2,000, or such sum as may be
available, for each of the academic years 2004-
2005 through 2008-2009;
``(iii) $2,300, or such sum as may be
available, for each of the academic years 2009-
2010 through 2013-2014;
``(iv) $2,600, or such sum as may be
available, for each of the academic years 2014-
2015 through 2018-2019; and
``(v) $2,900, or such sum as may be
available, for each of the academic years 2019-
2020 through 2023-2024.
``(B) Part-time rule.--In any case where a student
attends an institution of higher education on less than
a full-time basis (including a student who attends an
institution of higher education on less than a half-
time basis) during any academic year, the amount of the
grant for which that student is eligible shall be
reduced in proportion to the degree to which that
student is not so attending on a full-time basis, in
accordance with a schedule of reductions established by
the Secretary for the purposes of this subparagraph,
computed in accordance with this subpart. Such schedule
of reductions shall be established by regulation and
published in the Federal Register.
``(2) Maximum.--No grant or combination of grants under
this subpart shall exceed the cost of tuition and fees at the
institution at which that student is in attendance. If, with
respect to any student, it is determined that the amount of a
grant exceeds the cost of tuition and fees for that year, the
amount of the farmer opportunity grant shall be reduced to an
amount equal to the cost of tuition and fees at such
institution.
``(3) Prohibition.--No grant shall be awarded under this
subpart to any individual who is incarcerated in any Federal,
State, or local penal institution.
``(c) Period of Eligibility for Grants.--
``(1) In general.--The period during which a student may
receive grants shall be the period required for the completion
of the first undergraduate baccalaureate course of study being
pursued by that student at the institution at which the student
is in attendance, except that any period during which the
student is enrolled in a noncredit or remedial course of study
as described in paragraph (2) shall not be counted for the
purpose of this paragraph.
``(2) Construction.--Nothing in this section shall be
construed to--
``(A) exclude from eligibility courses of study
that are noncredit or remedial in nature and that are
determined by the institution to be necessary to help
the student be prepared for the pursuit of a first
undergraduate baccalaureate degree or certificate or,
in the case of courses in English language instruction,
to be necessary to enable the student to utilize
already existing knowledge, training, or skills; and
``(B) exclude from eligibility programs of study
abroad that are approved for credit by the home
institution at which the student is enrolled.
``(3) Prohibition.--No student is entitled to receive
farmer opportunity grant payments concurrently from more than 1
institution or from the Secretary and an institution.
``(d) Applications for Grants.--
``(1) In general.--The Secretary shall from time to time
set dates by which students shall file applications for grants
under this subpart. The filing of applications under this
subpart shall be coordinated with the filing of applications
under section 411(d).
``(2) Information and assurances.--Each student desiring a
grant for any year shall file with the Secretary an application
for the grant containing such information and assurances as the
Secretary may deem necessary to enable the Secretary to carry
out the Secretary's functions and responsibilities under this
subpart.
``(e) Distribution of Grants to Students.--Payments under this
section shall be made in accordance with regulations promulgated by the
Secretary for such purpose, in such manner as will best accomplish the
purpose of this section. Any disbursement allowed to be made by
crediting the student's account shall be limited to tuition and fees
and, in the case of institutionally owned housing, room and board. The
student may elect to have the institution provide other such goods and
services by crediting the student's account.
``(f) Insufficient Funding.--If, for any fiscal year, the funds
made available to carry out this subpart from the Tobacco Community
Revitalization Trust Fund are insufficient to satisfy fully all grants
for students determined to be eligible under section 420F, the amount
of the grant provided under subsection (b) shall be reduced on a pro
rata basis among all eligible students.
``(g) Treatment of Institutions and Students Under Other Laws.--Any
institution of higher education that enters into an agreement with the
Secretary to disburse to students attending that institution the
amounts those students are eligible to receive under this subpart shall
not be deemed, by virtue of such agreement, to be a contractor
maintaining a system of records to accomplish a function of the
Secretary. Recipients of farmer opportunity grants shall not be
considered to be individual grantees for purposes of the Drug-Free
Workplace Act of 1988 (41 U.S.C. 701 et seq.).
``SEC. 420F. STUDENT ELIGIBILITY.
``(a) In General.--In order to receive any grant under this
subpart, a student shall--
``(1) be a member of a tobacco farm family in accordance
with subsection (b);
``(2) be enrolled or accepted for enrollment in a degree,
certificate, or other program (including a program of study
abroad approved for credit by the eligible institution at which
such student is enrolled) leading to a recognized educational
credential at an institution of higher education that is an
eligible institution in accordance with section 487, and not be
enrolled in an elementary or secondary school;
``(3) if the student is presently enrolled at an
institution of higher education, be maintaining satisfactory
progress in the course of study the student is pursuing in
accordance with subsection (c);
``(4) not owe a refund on grants previously received at any
institution of higher education under this title, or be in
default on any loan from a student loan fund at any institution
provided for in part D, or a loan made, insured, or guaranteed
by the Secretary under this title for attendance at any
institution;
``(5) file with the institution of higher education that
the student intends to attend, or is attending, a document,
that need not be notarized, but that shall include--
``(A) a statement of educational purpose stating
that the money attributable to such grant will be used
solely for expenses related to attendance or continued
attendance at such institution; and
``(B) such student's social security number; and
``(6) be a citizen of the United States.
``(b) Tobacco Farm Families.--
``(1) In general.--For the purpose of subsection (a)(1), a
student is a member of a tobacco farm family if during calendar
year 1996 the student was--
``(A) an individual who--
``(i) is an active tobacco producer; or
``(ii) is otherwise actively engaged in the
production of tobacco;
``(B) a spouse, son, daughter, stepson, or
stepdaughter of an individual described in subparagraph
(A);
``(C) an individual--
``(i) who was a brother, sister,
stepbrother, stepsister, son-in-law, or
daughter-in-law of an individual described in
subparagraph (A); and
``(ii) whose principal place of residence
was the home of the individual described in
subparagraph (A); or
``(D) an individual who was a dependent (within the
meaning of section 152 of the Internal Revenue Code of
1986) of an individual described in subparagraph (A).
``(2) Administration.--On request, the Secretary of
Agriculture shall provide to the Secretary such information as
is necessary to carry out this subsection.
``(c) Satisfactory Progress.--
``(1) In general.--For the purpose of subsection (a)(3), a
student is maintaining satisfactory progress if--
``(A) the institution at which the student is in
attendance reviews the progress of the student at the
end of each academic year, or its equivalent, as
determined by the institution; and
``(B) the student has at least a cumulative C
average or its equivalent, or academic standing
consistent with the requirements for graduation, as
determined by the institution, at the end of the second
such academic year.
``(2) Special rule.--Whenever a student fails to meet the
eligibility requirements of subsection (a)(3) as a result of
the application of this subsection and subsequent to that
failure the student has academic standing consistent with the
requirements for graduation, as determined by the institution,
for any grading period, the student may, subject to this
subsection, again be eligible under subsection (a)(3) for a
grant under this subpart.
``(3) Waiver.--Any institution of higher education at which
the student is in attendance may waive paragraph (1) or (2) for
undue hardship based on--
``(A) the death of a relative of the student;
``(B) the personal injury or illness of the
student; or
``(C) special circumstances as determined by the
institution.
``(d) Students Who Are Not Secondary School Graduates.--In order
for a student who does not have a certificate of graduation from a
school providing secondary education, or the recognized equivalent of
such certificate, to be eligible for any assistance under this subpart,
the student shall meet either 1 of the following standards:
``(1) Examination.--The student shall take an independently
administered examination and shall achieve a score, specified
by the Secretary, demonstrating that such student can benefit
from the education or training being offered. Such examination
shall be approved by the Secretary on the basis of compliance
with such standards for development, administration, and
scoring as the Secretary may prescribe in regulations.
``(2) Determination.--The student shall be determined as
having the ability to benefit from the education or training in
accordance with such process as the State shall prescribe. Any
such process described or approved by a State for the purposes
of this section shall be effective 6 months after the date of
submission to the Secretary unless the Secretary disapproves
such process. In determining whether to approve or disapprove
such process, the Secretary shall take into account the
effectiveness of such process in enabling students without
secondary school diplomas or the recognized equivalent to
benefit from the instruction offered by institutions utilizing
such process, and shall also take into account the cultural
diversity, economic circumstances, and educational preparation
of the populations served by the institutions.
``(e) Special Rule for Correspondence Courses.--A student shall not
be eligible to receive a grant under this subpart for a correspondence
course unless such course is part of a program leading to an associate,
bachelor, or graduate degree.
``(f) Courses Offered Through Telecommunications.--
``(1) Relation to correspondence courses.--A student
enrolled in a course of instruction at an eligible institution
of higher education (other than an institute or school that
meets the definition in section 521(4)(C) of the Carl D.
Perkins Vocational and Applied Technology Education Act (20
U.S.C. 2471(4)(C))) that is offered in whole or in part through
telecommunications and leads to a recognized associate,
bachelor, or graduate degree conferred by such institution
shall not be considered to be enrolled in correspondence
courses unless the total amount of telecommunications and
correspondence courses at such institution equals or exceeds 50
percent of such courses.
``(2) Restriction or reductions of financial aid.--A
student's eligibility to receive a grant under this subpart may
be reduced if a financial aid officer determines under the
discretionary authority provided in section 479A that
telecommunications instruction results in a substantially
reduced cost of attendance to such student.
``(3) Definition.--For the purposes of this subsection, the
term `telecommunications' means the use of television, audio,
or computer transmission, including open broadcast, closed
circuit, cable, microwave, or satellite, audio conferencing,
computer conferencing, or video cassettes or discs, except that
such term does not include a course that is delivered using
video cassette or disc recordings at such institution and that
is not delivered in person to other students of that
institution.
``(g) Study Abroad.--Nothing in this subpart shall be construed to
limit or otherwise prohibit access to study abroad programs approved by
the home institution at which a student is enrolled. An otherwise
eligible student who is engaged in a program of study abroad approved
for academic credit by the home institution at which the student is
enrolled shall be eligible to receive a grant under this subpart,
without regard to whether such study abroad program is required as part
of the student's degree program.
``(h) Verification of Social Security Number.--The Secretary, in
cooperation with the Commissioner of Social Security, shall verify any
social security number provided by a student to an eligible institution
under subsection (a)(5)(B) and shall enforce the following conditions:
``(1) Pending verification.--Except as provided in
paragraphs (2) and (3), an institution shall not deny, reduce,
delay, or terminate a student's eligibility for assistance
under this subpart because social security number verification
is pending.
``(2) Denial or termination.--If there is a determination
by the Secretary that the social security number provided to an
eligible institution by a student is incorrect, the institution
shall deny or terminate the student's eligibility for any grant
under this subpart until such time as the student provides
documented evidence of a social security number that is
determined by the institution to be correct.
``(3) Construction.--Nothing in this subsection shall be
construed to permit the Secretary to take any compliance,
disallowance, penalty, or other regulatory action against--
``(A) any institution of higher education with
respect to any error in a social security number,
unless such error was a result of fraud on the part of
the institution; or
``(B) any student with respect to any error in a
social security number, unless such error was a result
of fraud on the part of the student.''.
CHAPTER 2--RURAL ECONOMIC ASSISTANCE BLOCK GRANTS
SEC. 821. RURAL ECONOMIC ASSISTANCE BLOCK GRANTS.
(a) In General.--For each of fiscal years 1999 through 2001, the
Secretary shall use funds in the Tobacco Transition Account to provide
block grants to tobacco-growing States to assist areas of such a State
that are economically dependent on the production of tobacco.
(b) Funding.--To carry out this section, there shall be credited to
the Tobacco Transition Account, from the Trust Fund, $100,000,000 for
each of fiscal years 1999 through 2001.
(c) Payments by Secretary to Tobacco-Growing States.--
(1) In general.--The Secretary shall use the amount
available for a fiscal year under subsection (b) to make block
grant payments to the Governors of tobacco-growing States.
(2) Amount.--The amount of a block grant paid to a tobacco-
growing State shall be based on--
(A) the number of counties in the State in which
tobacco production is a significant part of the
county's economy; and
(B) the level of economic dependence of the county
on tobacco production.
(d) Grants by States To Assist Tobacco-Growing Areas.--
(1) In general.--A Governor of a tobacco-growing State
shall use the amount of the block grant to the State under
subsection (c) to make grants to counties or other public or
private entities in the State to assist areas that are
dependent on the production of tobacco, as determined by the
Governor.
(2) Amount.--The amount of a grant paid to a county or
other entity to assist an area shall be based on (as determined
by the Secretary)--
(A) the ratio of gross tobacco sales receipts in
the area to the total farm income in the area; and
(B) the ratio of all tobacco related receipts in
the area to the total income in the area.
(3) Use of grants.--A county or other entity that receives
a grant under this subsection shall use the grant in a manner
determined appropriate by the county or entity (with the
approval of the State) to assist producers and other persons who are
economically dependent on the production of tobacco, including use
for--
(A) on-farm diversification and alternatives to the
production of tobacco and risk management; and
(B) off-farm activities such as development of non-
tobacco related jobs.
(e) Termination of Authority.--The authority provided by this
section terminates October 1, 2001.
Subtitle B--Tobacco Price Support and Production Adjustment Programs
CHAPTER 1--TOBACCO PRICE SUPPORT PROGRAM
SEC. 831. INTERIM REFORM OF TOBACCO PRICE SUPPORT PROGRAM.
(a) Price Support Rates.--Section 106 of the Agricultural Act of
1949 (7 U.S.C. 1445) is amended--
(1) by striking subsection (a) and inserting the following:
``(a) In General.--The price support rate for each kind of tobacco
for which quotas have been approved shall be reduced by--
``(1) for the 1999 crop, 25 percent from the 1998 support
rate for the kind of tobacco involved;
``(2) for the 2000 crop, 10 percent from the 1999 support
rate for the kind of tobacco involved; and
``(3) for the 2001 crop, 10 percent from the 2000 support
rate for the kind of tobacco involved.'';
(2) by striking subsections (b) and (f); and
(3) by redesignating subsections (c), (d), and (g) as
subsections (b), (c), and (d), respectively.
(b) Budget Deficit Assessment.--Section 106 of the Agricultural Act
of 1949 (7 U.S.C. 1445) (as amended by subsection (a)(3)) is amended by
striking subsection (d) and inserting the following:
``(d) Tobacco Transition Payment.--Effective only for the 1998 crop
of tobacco, the Secretary of the Treasury shall transfer from the
Tobacco Transition Account of the National Tobacco Settlement Trust
Fund an amount equal to the product obtained by multiplying--
``(1) the amount per pound equal to 2 percent of the
national price support level for each kind of tobacco for which
price support is made available under this Act; and
``(2) the total quantity of the kind of tobacco that is
produced or purchased in, or imported into, the United
States.''.
(c) No Net Cost Tobacco Fund and Account.--
(1) No net cost tobacco fund.--Section 106A of the
Agricultural Act of 1949 (7 U.S.C. 1445-1) is amended to read
as follows:
``SEC. 106A. NO NET COST TOBACCO FUND.
``(a) Definitions.--In this section:
``(1) Association.--The term `association' means a
producer-owned cooperative marketing association that has
entered into a loan agreement with the Corporation to make
price support available to producers of a kind of tobacco.
``(2) Corporation.--The term `Corporation' means the
Commodity Credit Corporation, an agency and instrumentality of
the United States within the Department of Agriculture through
which the Secretary makes price support available to producers.
``(3) Net gains.--The term `net gains' means the amount by
which the total proceeds obtained from the sale by an
association of a crop of quota tobacco pledged to the
Corporation for a price support loan exceeds the principal
amount of the price support loan made by the Corporation to the
association on the crop, plus interest, charges, and costs of
administering the price support program.
``(4) No net cost tobacco fund.--The term `No Net Cost
Tobacco Fund' means the capital account established within each
association under this section.
``(5) Purchaser.--The term `purchaser' means any person who
purchases in the United States, either directly or indirectly
for the account of the person or another person, Flue-cured or
burley quota tobacco.
``(6) Quota tobacco.--The term `quota tobacco' means any
kind of tobacco for which marketing quotas are in effect or for
which marketing quotas are not disapproved by producers.
``(7) Trust fund.--The term `Trust Fund' means the National
Tobacco Settlement Trust Fund established in the Treasury of
the United States consisting of amounts that are appropriated
or credited to the Trust Fund from the tobacco settlement
approved by Congress.
``(b) Price Support Program; Loans.--The Secretary--
``(1) may carry out the tobacco price support program
through the Corporation; and
``(2) shall, except as otherwise provided by this section,
continue to make price support available to producers through
loans to associations that, under agreements with the
Corporation, agree to make loan advances to producers.
``(c) Establishment of Fund.--
``(1) In general.--Each association shall establish within
the association a No Net Cost Tobacco Fund.
``(2) Amount.--There shall be transferred from the Trust
Fund to each No Net Cost Tobacco Fund such amount as the
Secretary determines will be adequate to reimburse the
Corporation for any net losses that the Corporation may sustain
under its loan agreements with the association, based on--
``(A) reasonable estimates of the amounts that the
Corporation has lent or will lend to the association
for price support for the 1982 and subsequent crops of
quota tobacco, except that for the 1986 and subsequent
crops of burley quota tobacco, the Secretary shall
determine the amount of assessments without regard to
any net losses that the Corporation may sustain under the loan
agreements of the Corporation with the association for the 1983 crop of
burley quota tobacco;
``(B) the cost of administering the tobacco price
support program (as determined by the Secretary); and
``(C) the proceeds that will be realized from the
sales of tobacco that are pledged to the Corporation by
the association as security for loans.
``(d) Administration.--The Secretary shall--
``(1) require that the No Net Cost Tobacco Fund established
by each association be kept and maintained separately from all
other accounts of the association and be used exclusively, as
prescribed by the Secretary, for the purpose of ensuring,
insofar as practicable, that the Corporation, under its loan
agreements with the association with respect to 1982 and
subsequent crops of quota tobacco, will suffer no net losses
(including recovery of the amount of loans extended to cover
the overhead costs of the association), after any net gains are
applied to net losses of the Corporation under paragraph (3),
except that, notwithstanding any other provision of law, the
association may, with the approval of the Secretary, use funds
in the No Net Cost Tobacco Fund, including interest and other
earnings, for--
``(A) the purposes of reducing the association's
outstanding indebtedness to the Corporation associated
with 1982 and subsequent crops of quota tobacco and
making loan advances to producers as authorized; and
``(B) any other purposes that will be mutually
beneficial to producers and purchasers and to the
Corporation;
``(2) permit an association to invest the funds in the No
Net Cost Tobacco Fund in such manner as the Secretary may
approve, and require that the interest or other earnings on the
investment shall become a part of the No Net Cost Tobacco Fund;
``(3) require that loan agreements between the Corporation
and the association provide that the Corporation shall retain
the net gains from each of the 1982 and subsequent crops of
tobacco pledged by the association as security for price
support loans, and that the net gains will be used for the
purpose of--
``(A) offsetting any losses sustained by the
Corporation under its loan agreements with the
association for any of the 1982 and subsequent crops of
tobacco; or
``(B) reducing the outstanding balance of any price
support loan made by the Corporation to the association
under the loan agreements for 1982 and subsequent crops
of tobacco; and
``(4) effective for the 1986 and subsequent crops of quota
tobacco, if the Secretary determines that the amount in the No
Net Cost Tobacco Fund or the net gains referred to in paragraph
(3) exceeds the total amount necessary for the purposes
specified in this section, suspend the transfer of amounts from
the Trust Fund to the No Net Cost Tobacco Fund under this
section.
``(e) Noncompliance.--
``(1) In general.--If any association that has entered into
a loan agreement with the Corporation with respect to any of
the 1982 or subsequent crops of quota tobacco fails or refuses
to comply with this section (including regulations promulgated
under this section) or the terms of the agreement, the
Secretary may terminate the agreement or provide that no
additional loan funds may be made available under the agreement
to the association.
``(2) Price support.--If the Secretary takes action under
paragraph (1), the Secretary shall make price support available
to producers of the kind or kinds of tobacco, the price of
which had been supported through loans to the association,
through such other means as are authorized by this Act or the
Commodity Credit Corporation Charter Act (15 U.S.C. 714 et
seq.).
``(f) Termination of Agreement or Association.--If, under
subsection (e), a loan agreement with an association is terminated, or
if an association having a loan agreement with the Corporation is
dissolved, merges with another association, or otherwise ceases to
operate, the No Net Cost Tobacco Fund or the net gains referred to in
subsection (d)(3) shall be applied or disposed of in such manner as the
Secretary may approve or prescribe, except that the net gains shall, to
the extent necessary, first be applied or used for the purposes
specified in this section.
``(g) Regulations.--The Secretary shall issue such regulations as
are necessary to carry out this section.''.
(2) No net cost tobacco account.--Section 106B of the
Agricultural Act of 1949 (7 U.S.C. 1445-2) is amended to read
as follows:
``SEC. 106B. NO NET COST TOBACCO ACCOUNT.
``(a) Definitions.--In this section:
``(1) Area.--The term `area', when used in connection with
an association, means the general geographical area in which
farms of the producer-members of the association are located,
as determined by the Secretary.
``(2) Association.--The term `association' has the meaning
given the term in section 106A(a)(1).
``(3) Corporation.--The term `Corporation' has the meaning
given the term in section 106A(a)(2).
``(4) Net gains.--The term `net gains' has the meaning
given the term in section 106A(a)(3).
``(5) No net cost tobacco account.--The term `No Net Cost
Tobacco Account' means an account established by and in the
Corporation for an association under this section.
``(6) Purchaser.--The term `purchaser' has the meaning
given the term in section 106A(a)(5).
``(7) Tobacco.--The term `tobacco' means any kind of
tobacco (as defined in section 301(b) of the Agricultural
Adjustment Act of 1938 (7 U.S.C. 1301(b))) for which marketing
quotas are in effect or for which marketing quotas are not
disapproved by producers.
``(8) Trust fund.--The term `Trust Fund' has the meaning
given the term in section 106A(a)(7).
``(b) Price Support Program; Loans.--Notwithstanding section 106A,
the Secretary shall, on the request of any association, and may, if the
Secretary determines, after consultation with the association, that the
accumulation of the No Net Cost Tobacco Fund for the association under
section 106A is, and is likely to remain, inadequate to reimburse the
Corporation for net losses that the Corporation sustains under its loan
agreements with the association--
``(1) continue to make price support available to producers
through the association in accordance with loan agreements
entered into between the Corporation and the association; and
``(2) establish and maintain in accordance with this
section a No Net Cost Tobacco Account for the association in
lieu of the No Net Cost Tobacco Fund established within the
association under section 106A.
``(c) Establishment of Account.--
``(1) In general.--A No Net Cost Tobacco Account
established for an association under subsection (b)(2) shall be
established within the Corporation.
``(2) Amount.--There shall be transferred from the Trust
Fund to each No Net Cost Tobacco Account such amount as the
Secretary determines will be adequate to reimburse the
Corporation for any net losses that the Corporation may sustain
under its loan agreements with the association, based on--
``(A) reasonable estimates of the amounts that the
Corporation has lent or will lend to the association
for price support for the 1982 and subsequent crops of
quota tobacco, except that for the 1986 and subsequent
crops of burley quota tobacco, the Secretary shall
determine the amount of assessments without regard to
any net losses that the Corporation may sustain under
the loan agreements of the Corporation with the
association for the 1983 crop of burley quota tobacco;
``(B) the cost of administering the tobacco price
support program (as determined by the Secretary); and
``(C) the proceeds that will be realized from the
sales of the kind of tobacco involved that are pledged
to the Corporation by the association as security for loans.
``(3) Administration.--On the establishment of a No Net
Cost Tobacco Account for an association, any amount in the No
Net Cost Tobacco Fund established within the association under
section 106A shall be applied or disposed of in such manner as
the Secretary may approve or prescribe, except that the amount
shall, to the extent necessary, first be applied or used for
the purposes specified in that section.
``(d) Use.--Amounts deposited in a No Net Cost Tobacco Account
established for an association shall be used by the Secretary for the
purpose of ensuring, insofar as practicable, that the Corporation under
its loan agreements with the association will suffer, with respect to
the crop involved, no net losses (including recovery of the amount of
loans extended to cover the overhead costs of the association), after
any net gains are applied to net losses of the Corporation under
subsection (g).
``(e) Excess Amounts.--If the Secretary determines that the amount
in the No Net Cost Tobacco Account or the net gains referred to in
subsection (g) exceed the total amount necessary to carry out this
section, the Secretary shall suspend the transfer of amounts from the
Trust Fund to the No Net Cost Tobacco Account under this section.
``(f) Termination of Agreement or Association.--In the case of an
association for which a No Net Cost Tobacco Account is established
under subsection (b)(2), if a loan agreement between the Corporation
and the association is terminated, if the association is dissolved or
merges with another association that has entered into a loan agreement
with the Corporation to make price support available to producers of
the kind of tobacco involved, or if the No Net Cost Tobacco Account
terminates by operation of law, amounts in the No Net Cost Tobacco
Account and the net gains referred to in subsection (g) shall be
applied to or disposed of in such manner as the Secretary may
prescribe, except that the net gains shall, to the extent necessary,
first be applied to or used for the purposes specified in this section.
``(g) Net Gains.--The provisions of section 106A(d)(3) relating to
net gains shall apply to any loan agreement between an association and
the Corporation entered into on or after the establishment of a No Net
Cost Tobacco Account for the association under subsection (b)(2).
``(h) Regulations.--The Secretary shall issue such regulations as
are necessary to carry out this section.''.
(3) Conforming amendments.--
(A) Section 314(a) of the Agricultural Adjustment
Act of 1938 (7 U.S.C. 1314(a)) is amended in the first
sentence--
(i) by striking ``(1)''; and
(ii) by striking ``, or (2)'' and all that
follows through ``106B(d)(1) of that Act''.
(B) Section 320B(c)(1) of the Agricultural
Adjustment Act of 1938 (7 U.S.C. 1314h(c)(1)) is
amended by inserting after ``1445-2)'' the following:
``(as in effect before the effective date of the
amendments made by section 831(c) of the Tobacco
Transition Act)''.
(d) Administrative Costs.--Section 1109 of the Agriculture and Food
Act of 1981 (Public Law 97-98; 7 U.S.C. 1445 note) is repealed.
(e) Crops.--This section and the amendments made by this section
shall apply with respect to the 1999 and subsequent crops of the kind
of tobacco involved.
SEC. 832. TERMINATION OF TOBACCO PRICE SUPPORT PROGRAM.
(a) Parity Price Support.--Section 101 of the Agricultural Act of
1949 (7 U.S.C. 1441) is amended--
(1) in the first sentence of subsection (a), by striking
``tobacco (except as otherwise provided herein), corn,'' and
inserting ``corn'';
(2) by striking subsections (c), (g), (h), and (i);
(3) in subsection (d)(3)--
(A) by striking ``, except tobacco,''; and
(B) by striking ``and no price support shall be
made available for any crop of tobacco for which
marketing quotas have been disapproved by producers;'';
and
(4) by redesignating subsections (d) and (e) as subsections
(c) and (d), respectively.
(b) Termination of Tobacco Price Support and No Net Cost
Provisions.--Sections 106, 106A, and 106B of the Agricultural Act of
1949 (7 U.S.C. 1445, 1445-1, 1445-2) are repealed.
(c) Definition of Basic Agricultural Commodity.--Section 408(c) of
the Agricultural Act of 1949 (7 U.S.C. 1428(c)) is amended by striking
``tobacco,''.
(d) Review of Burley Tobacco Imports.--Section 3 of Public Law 98-
59 (7 U.S.C. 625) is repealed.
(e) Powers of Commodity Credit Corporation.--Section 5 of the
Commodity Credit Corporation Charter Act (15 U.S.C. 714c) is amended by
inserting ``(other than tobacco)'' after ``agricultural commodities''
each place it appears.
(f) Transition Provisions.--
(1) Liability.--The amendments made by this section shall
not affect the liability of any person under any provision of
law as in effect before the effective date of this section.
(2) Tobacco stocks and loans.--The Secretary shall issue
regulations that require--
(A) the orderly disposition of tobacco stocks; and
(B) the repayment of all tobacco price support
loans by not later than 1 year after the effective date
of this section.
(g) Crops.--This section and the amendments made by this section
shall apply with respect to the 2002 and subsequent crops of the kind
of tobacco involved.
CHAPTER 2--TOBACCO PRODUCTION ADJUSTMENT PROGRAMS
SEC. 835. TERMINATION OF TOBACCO PRODUCTION ADJUSTMENT PROGRAMS.
(a) Declaration of Policy.--Section 2 of the Agricultural
Adjustment Act of 1938 (7 U.S.C. 1282) is amended by striking
``tobacco,''.
(b) Definitions.--Section 301(b) of the Agricultural Adjustment Act
of 1938 (7 U.S.C. 1301(b)) is amended--
(1) in paragraph (3)--
(A) by striking subparagraph (C); and
(B) by redesignating subparagraph (D) as
subparagraph (C);
(2) in paragraph (6)(A), by striking ``tobacco,'';
(3) in paragraph (7), by striking the following:
``tobacco (flue-cured), July 1-June 30;
``tobacco (other than flue-cured), October 1-
September 30;'';
(4) in paragraph (10)--
(A) by striking subparagraph (B); and
(B) by redesignating subparagraph (C) as
subparagraph (B);
(5) in paragraph (11)(B), by striking ``and tobacco'';
(6) in paragraph (12), by striking ``tobacco,'';
(7) in paragraph (14)--
(A) in subparagraph (A), by striking ``(A)''; and
(B) by striking subparagraphs (B), (C), and (D);
(8) by striking paragraph (15);
(9) in paragraph (16)--
(A) by striking subparagraph (B); and
(B) by redesignating subparagraph (C) as
subparagraph (B); and
(10) by redesignating paragraphs (16) and (17) as
paragraphs (15) and (16), respectively.
(c) Parity Payments.--Section 303 of the Agricultural Adjustment
Act of 1938 (7 U.S.C. 1303) is amended in the first sentence by
striking ``rice, or tobacco,'' and inserting ``or rice,''.
(d) Marketing Quotas.--Part I of subtitle B of title III of the
Agricultural Adjustment Act of 1938 (7 U.S.C. 1311 et seq.) is
repealed.
(e) Administrative Provisions.--Section 361 of the Agricultural
Adjustment Act of 1938 (7 U.S.C. 1361) is amended by striking
``tobacco,''.
(f) Adjustment of Quotas.--Section 371 of the Agricultural
Adjustment Act of 1938 (7 U.S.C. 1371) is amended--
(1) in the first sentence of subsection (a), by striking
``peanuts, or tobacco'' and inserting ``or peanuts''; and
(2) in the first sentence of subsection (b), by striking
``peanuts or tobacco'' and inserting ``or peanuts''.
(g) Reports and Records.--Section 373 of the Agricultural
Adjustment Act of 1938 (7 U.S.C. 1373) is amended--
(1) by striking ``peanuts, or tobacco'' each place it
appears in subsections (a) and (b) and inserting ``or
peanuts''; and
(2) in subsection (a)--
(A) in the first sentence, by striking ``all
persons engaged in the business of redrying, prizing,
or stemming tobacco for producers,''; and
(B) in the last sentence, by striking ``$500;'' and
all that follows through the period at the end of the
sentence and inserting ``$500.''.
(h) Regulations.--Section 375(a) of the Agricultural Adjustment Act
of 1938 (7 U.S.C. 1375(a)) is amended by striking ``peanuts, or
tobacco'' and inserting ``or peanuts''.
(i) Eminent Domain.--Section 378 of the Agricultural Adjustment Act
of 1938 (7 U.S.C. 1378) is amended--
(1) in the first sentence of subsection (c), by striking
``cotton, tobacco, and peanuts'' and inserting ``cotton and
peanuts''; and
(2) by striking subsections (d), (e), and (f).
(j) Burley Tobacco Farm Reconstitution.--Section 379 of the
Agricultural Adjustment Act of 1938 (7 U.S.C. 1379) is amended--
(1) in subsection (a)--
(A) by striking ``(a)''; and
(B) in paragraph (6), by striking ``, but this
clause (6) shall not be applicable in the case of
burley tobacco''; and
(2) by striking subsections (b) and (c).
(k) Acreage-Poundage Quotas.--Section 4 of the Act entitled ``An
Act to amend the Agricultural Adjustment Act of 1938, as amended, to
provide for acreage-poundage marketing quotas for tobacco, to amend the
tobacco price support provisions of the Agricultural Act of 1949, as
amended, and for other purposes'', approved April 16, 1965 (Public Law
89-12; 7 U.S.C. 1314c note), is repealed.
(l) Burley Tobacco Acreage Allotments.--The Act entitled ``An Act
relating to burley tobacco farm acreage allotments under the
Agricultural Adjustment Act of 1938, as amended'', approved July 12,
1952 (7 U.S.C. 1315), is repealed.
(m) Transfer of Allotments.--Section 703 of the Food and
Agriculture Act of 1965 (7 U.S.C. 1316) is repealed.
(n) Advance Recourse Loans.--Section 13(a)(2)(B) of the Food
Security Improvements Act of 1986 (7 U.S.C. 1433c-1(a)(2)(B)) is
amended by striking ``tobacco and''.
(o) Tobacco Field Measurement.--Section 1112 of the Omnibus Budget
Reconciliation Act of 1987 (Public Law 100-203) is amended by striking
subsection (c).
(p) Liability.--The amendments made by this section shall not
affect the liability of any person under any provision of law as in
effect before the effective date under subsection (q).
(q) Crops.--This section and the amendments made by this section
shall apply with respect to the 1999 and subsequent crops of the kind
of tobacco involved.
Subtitle C--Funding
SEC. 841. TRUST FUND.
(a) Request.--The Secretary of Agriculture shall request the
Trustees to transfer to the Tobacco Transition Account, amounts
authorized or necessary under sections 814, 815, 816, 817, and 821, and
the amendments made by section 831, to the account of the Commodity
Credit Corporation.
(b) Transfer.--On receipt of such a request, the Trustees shall
transfer amounts requested under subsection (a).
(c) Use.--The Secretary of Agriculture shall use the amounts
transferred under subsection (b) to carry out the activities described
in subsection (a).
(d) Termination of Authority.--The authority provided under this
section shall expire on September 30, 2001.
SEC. 842. COMMODITY CREDIT CORPORATION.
The Secretary may use the funds, facilities, and authorities of the
Commodity Credit Corporation to carry out this title and the amendments
made by this title.
TITLE IX--MISCELLANEOUS PROVISIONS
SEC. 901. PROVISIONS RELATING TO NATIVE AMERICANS.
(a) Indian Country.--
(1) In general.--The provisions of this Act (or an
amendment made by this Act) shall apply to the manufacture,
distribution, and sale of tobacco products within Indian
country.
(2) Definition.--As used in this section, the term ``Indian
country'' has the meaning given such term in section 1151 of
title 18, United States Code.
(b) Indian Tribes.--
(1) In general.--To the extent that an Indian tribe or
tribal organization engages in the manufacture, distribution,
or sale of tobacco products, the provisions of this Act (or an
amendment made by this Act) shall apply to such tribe or
organization.
(2) Religious practice exception.--In recognition of the
religious and ceremonial uses of tobacco and tobacco products
by many Indian tribes and the members of such tribes, nothing
in this Act (or and amendment made by this Act) shall be
construed to infringe upon the rights of such tribes or members
to transfer, acquire, possess, or use any tobacco or tobacco
products for such purposes. The preceding sentence shall only
be construed to apply to those quantities of tobacco products
necessary to fulfill recognized religious or ceremonial
purposes and not to permit the general marketing of tobacco
products not in compliance with chapter IX of the Federal Food,
Drug and Cosmetic Act.
(c) Payments to Trust Fund.--Any Indian tribe or tribal
organization that engages in the manufacturer of tobacco products shall
be subject to liability for fee payments under section 102, or shall be
considered a non-participating manufacturer and shall be subject to
surcharges under subtitle B of title III.
(d) Application of Federal Food, Drug and Cosmetic Act
Requirements.--
(1) In general.--The Secretary, in consultation with the
Secretary of the Interior, shall promulgate regulations to
provide for the waiver of any requirements of the Food, Drug
and Cosmetic Act with respect to tobacco products manufactured,
distributed, or sold within Indian country as appropriate to
comply with subsection (b)(1).
(2) Eligibility for assistance.--Under the regulations
promulgated under paragraph (1), the Secretary, after
consultation with the Secretary of the Interior, may provide
assistance to an Indian tribe or tribal organization in meeting
and enforcing the requirements under such regulations if--
(A) the tribe or organization has a governing body
that has powers and carries out duties that are similar
to the powers and duties of State or local governments;
(B) the functions to be exercised through the use
of such assistance relate to activities within the
exterior boundaries of the reservation or other areas
within the jurisdiction of the tribe involved; and
(C) the tribe or organization is reasonably
expected to be capable of carrying out the functions
required by the Secretary.
(3) Determinations.--The Secretary shall make
determinations concerning the eligibility of an Indian tribe or
tribal organization for assistance under regulations under
paragraph (1) not later than 90 days after the date on which
such tribe or organization submits an application for such
assistance.
(e) Retail Licensing Requirements.--
(1) In general.--The requirements of subtitle C of title I
shall apply to retailers that sell tobacco products within
Indian country.
(2) Self-regulation.--Not later than 6 months after the
date of enactment of this Act, the Secretary shall promulgate
regulations to permit the Indian tribe or tribal organization
to implement a tribal licensing program within the exterior
boundaries of the reservation or other areas within the
jurisdiction of the tribe.
(3) Implementation by secretary.--If the Secretary
determines that the Indian tribe or tribal organization is not
qualified to administer the requirements of subtitle C of title
I, the Secretary, in consultation with the Secretary of the
Interior, shall implement such requirements on behalf of the
tribe or organization.
(f) Eligibility for Public Health Payments.--
(1) In general.--For each fiscal year the Secretary shall
pay to each Indian tribe that has an approved tribal anti-
smoking plan a tribal grant for the fiscal year in an amount
equal to the amount determined under paragraph (2), and shall
reduce the amounts payable under section 501 to any State in
which the service area or areas of the Indian tribe are located
by the amount so determined.
(2) Amount determined.--The amount of any funds for which
an Indian tribe is eligible under paragraph (1) shall be
determined by the Secretary based on the proportion of the
total number of Indians residing on such tribe's reservation in
the State as compared to the total population of the State and
the amount allocated to Indian tribes under section 501.
(3) Use.--Amounts provided to a tribe or organization under
this paragraph shall be used to further the purposes of this
Act and in accordance with a plan submitted by the tribe or
organization and approved by the Secretary as being in
compliance with this Act. Tribes and tribal organizations shall
have the flexibility to utilize such amounts to meet the unique
health needs of such tribes within the context of tribal health
programs if such programs meet the fundamental Federal
requirements under this Act as determined by the Secretary.
(4) Reallotment.--Any amounts set-aside and not expended
under this paragraph shall be reallotted among other eligible
tribes and organizations.
(g) Obligation of Manufacturers.--A participating manufacturer
shall not engage in any activity within Indian country that is
prohibited under the Protocol.
(h) Indian Health Service.--Amounts made available under section
101(c)(3)(F) shall be provided to the Indian Health Service to be used
for anti-tobacco-related consumption and cessation activities
including--
(1) clinic and facility design, construction, repair,
renovation, maintenance and improvement;
(2) provider services and equipment;
(3) domestic and community sanitation associated with
clinic and facility construction and improvement;
(4) inpatient and outpatient services; and
(5) other programs and services provided through the Indian
Health Service or through tribal contracts, compacts, grants or
cooperative agreements with the Indian Health Service and which
are deemed appropriate to raising the health status of Indians.
(i) Preemption.--
(1) General preemption.--Except as otherwise provided for
in this section, nothing in this Act shall be construed as
prohibiting an Indian tribe or tribal organization from
imposing requirements, prohibitions, penalties or other
measures to further the purposes of this Act that are in
addition to the requirements, prohibitions, or penalties
required under this Act.
(2) Public exposure to smoke.--Nothing in title VI shall be
construed to preempt or otherwise affect any Indian tribe or
tribal organization rule or practice that provides greater
protection from the health hazards of environmental tobacco smoke.
(3) Native americans.--Except as provided in this section,
a State may not impose obligations or requirements relating to
the application of this Act to Indian tribes and tribal
organizations.
SEC. 902. WHISTLEBLOWER PROTECTIONS.
(a) Prohibition of Reprisals.--An employee of any manufacturer,
distributor, or retailer of a tobacco product may not be discharged,
demoted, or otherwise discriminated against (with respect to
compensation, terms, conditions, or privileges of employment) as a
reprisal for disclosing to an employee of the Food and Drug
Administration, the Department of Justice, or any State or local
regulatory or enforcement authority, information relating to a
substantial violation of law related to this Act (or an amendment made
by this Act) or a State or local law enacted to further the purposes of
this Act.
(b) Enforcement.--Any employee or former employee who believes that
such employee has been discharged, demoted, or otherwise discriminated
against in violation of subsection (a) may file a civil action in the
appropriate United States district court before the end of the 2-year
period beginning on the date of such discharge, demotion, or
discrimination.
(c) Remedies.--If the district court determines that a violation
has occurred, the court may order the manufacturer, distributor, or
retailer involved to--
(1) reinstate the employee to the employee's former
position;
(2) pay compensatory damages; or
(3) take other appropriate actions to remedy any past
discrimination.
(d) Limitation.--The protections of this section shall not apply to
any employee who--
(1) deliberately causes or participates in the alleged
violation of law or regulation; or
(2) knowingly or recklessly provides substantially false
information to the Food and Drug Administration, the Department
of Justice, or any other Federal, State or local regulatory or
enforcement authority.
SEC. 903. LIMITED ANTITRUST EXEMPTION.
(a) In General.--The Federal antitrust laws, and any similar laws
of any State, shall not apply to any joint discussion, consideration,
review, action or agreement by or among any participating
manufacturers, or any individuals acting on behalf of any participating
manufacturers, for the purposes of, and limited to--
(1) entering into the Protocol under section 201 or a
consent decree under section 241;
(2) refusing to deal with a distributor, retailer, or other
seller of tobacco products who distributes such products for
sale to, or offers for sale or sells such products to, underage
individuals, or who otherwise fails to comply with applicable
requirements of this Act, the Protocol or a consent decree; or
(3) submitting an application relating to, entering into,
or complying with or otherwise carrying out the terms of any
plan or program that has been approved under subsection (b).
(b) Programs for Reductions in Underage Use.--
(1) In general.--The Attorney General may approve, upon the
application of 1 or more participating manufacturers, a plan or
program to reduce the use of tobacco products by underage
individuals.
(2) Determination.--Not later than 90 days after the date
on which a plan or program is received under paragraph (1), the
Attorney General shall approve or disapprove such plan or
program. In determining whether to approve a plan or program
under paragraph (1), the Secretary shall consider whether the
plan or program is appropriate as part of the effort to reduce
the use of tobacco products by underage individuals and will
not have the effect of unduly restraining competition.
(3) Withdrawing of approval.--Subsection (a)(3) shall not
apply with respect to any plan or program that has not been
approved by the Attorney General or that has had such an
approval subsequently withdrawn.
SEC. 904. PASS-THROUGH.
Nothing in this Act shall be construed as prohibiting a
manufacturer from passing the costs of the amount of any payments,
including surcharges, assessed under this Act on to consumers of
tobacco products as a further economic deterrent to the use of such
products.
SEC. 905. EFFECTIVE DATE.
This Act shall become effective on the date of enactment of this
Act.<?pre>
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