Everything For Everybody Concerned About Smoking
and Protecting the Rights of Nonsmokers
The McCain Comprehensive Tobacco Bill, S. 1414 [long download]
Calendar No. 286
105th CONGRESS
1st Session
S. 1414
_______________________________________________________________________
A BILL
To reform and restructure the processes by which tobacco products are
manufactured, marketed, and distributed, to prevent the use of tobacco
products by minors, to redress the adverse health effects of tobacco
use, and for other purposes.
_______________________________________________________________________
November 8, 1997
Read the second time and placed on the calendar
Calendar No. 286
105th CONGRESS
1st Session
S. 1414
To reform and restructure the processes by which tobacco products are
manufactured, marketed, and distributed, to prevent the use of tobacco
products by minors, to redress the adverse health effects of tobacco
use, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
November 7, 1997
Mr. McCain (for himself, Mr. Hollings, Mr. Breaux, and Mr. Gorton)
introduced the following bill; which was read the first time
November 8, 1997
Read the second time and placed on the calendar
_______________________________________________________________________
A BILL
To reform and restructure the processes by which tobacco products are
manufactured, marketed, and distributed, to prevent the use of tobacco
products by minors, to redress the adverse health effects of tobacco
use, and for other purposes.
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 ``Universal Tobacco
Settlement 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. Purposes.
TITLE I--REGULATION OF THE TOBACCO INDUSTRY
Sec. 100. Definitions.
Subtitle A--Restriction on Marketing and Advertising
Sec. 101. Prohibitions on advertising.
Sec. 102. General restrictions.
Sec. 103. Format and content requirements for labeling and advertising.
Sec. 104. Statement of intended use.
Sec. 105. Ban on nontobacco items and services, contests and games of
chance, and sponsorship of events.
Sec. 106. Use of product descriptors.
Subtitle B--Warnings, Labeling and Packaging
Sec. 111. Cigarette warnings.
Sec. 112. Smokeless tobacco warnings.
Sec. 113. Ingredients.
Sec. 114. Enforcement, regulations, and construction.
Sec. 115. Preemption.
Sec. 116. Reports.
Sec. 117. Exports.
Sec. 118. Repeals.
Subtitle C--Restriction on Access to Tobacco Products
Sec. 121. Requirements relating to retailers.
Sec. 122. Manufacture, sale, and distribution.
Subtitle D--Licensing of Retail Tobacco Sellers
Sec. 131. Establishment of program.
Sec. 132. Requirements.
Sec. 133. Penalties, revocations and suspensions.
Sec. 134. Federal licensing of military and other entities.
Subtitle E--Regulation of Tobacco Product Development and Manufacturing
Sec. 141. Reference.
Sec. 142. Treatment of tobacco products as drugs.
Sec. 143. Health and safety regulation of tobacco products.
Subtitle F--Compliance Plans and Corporate Culture
Sec. 151. Compliance plans.
Sec. 152. Compliance programs.
Sec. 153. Whistleblower protections.
Sec. 154. Provisions relating to lobbying.
Sec. 155. Termination of certain entities.
Sec. 156. Enforcement.
TITLE II--REDUCTION IN UNDERAGE TOBACCO USE
Sec. 201. Purpose.
Sec. 202. Determination of underage use base percentages.
Sec. 203. Annual daily incidence of underage use of tobacco products.
Sec. 204. Required reduction in underage tobacco use.
Sec. 205. Application of surcharges.
Sec. 206. Abatement procedures.
TITLE III--STANDARDS TO REDUCE INVOLUNTARY EXPOSURE TO TOBACCO SMOKE
Sec. 301. Definitions.
Sec. 302. Smoke-free environment policy.
Sec. 303. Citizen actions.
Sec. 304. Preemption.
Sec. 305. Regulations.
Sec. 306. Effective date.
TITLE IV--NATIONAL TOBACCO SETTLEMENT TRUST FUND
Sec. 401. Establishment of Trust Fund.
Sec. 402. Liability of industry sources.
Sec. 403. Enforcement.
TITLE V--PUBLIC HEALTH AND OTHER PROGRAMS
Subtitle A--Public Health Block Grant Program
Sec. 501. Public Health Trust Fund.
Sec. 502. Block grants to States.
Sec. 503. Allotments.
Sec. 504. Use of funds.
Sec. 505. Withholding of funds.
Subtitle B--Other Programs
Sec. 511. National Smoking Cessation Program.
Sec. 512. National Reduction in Tobacco Usage Program.
Sec. 513. National Tobacco-Free Public Education Program.
Sec. 514. National Event Sponsorship Program.
Sec. 515. National Community Action Program.
Sec. 516. National Cessation Research Program.
Sec. 517. Use of surcharge payments.
TITLE VI--CONSENT DECREES, NON-PARTICIPATING MANUFACTURERS, AND STATE
ENFORCEMENT
Sec. 601. Purposes.
Subtitle A--Consent Decrees and Non-Participating Manufacturers
Sec. 611. Consent decrees.
Sec. 612. National tobacco control protocol.
Sec. 613. Non-participating manufacturers.
Subtitle B--State Enforcement
Sec. 621. Requirement of no sale to minors law.
Sec. 622. State reporting.
Sec. 623. Reduction in State payments.
TITLE VII--PROVISIONS RELATING TO TOBACCO-RELATED CIVIL ACTIONS
Sec. 701. General immunity.
Sec. 702. Civil liability for past conduct.
Sec. 703. Civil liability for future conduct.
Sec. 704. Non-participating manufacturers.
TITLE VIII--PUBLIC DISCLOSURE OF HEALTH RESEARCH
Sec. 801. Purpose.
Sec. 802. National Tobacco Document Depository.
TITLE IX--ASSISTANCE TO TOBACCO GROWERS AND COMMUNITIES
Sec. 901. Short title.
Sec. 902. Definitions.
Subtitle A--Tobacco Community Revitalization Trust Fund
Sec. 911. Establishment of Trust Fund.
Sec. 912. Contributions by tobacco product manufacturers and importers.
Subtitle B--Agricultural Market Transition Assistance
Sec. 921. Payments for lost tobacco quota.
Sec. 922. Industry payments for all Department costs associated with
tobacco production.
Sec. 923. Tobacco community economic development grants.
Sec. 924. Modifications in Federal tobacco programs.
Subtitle C--Farmer and Worker Transition Assistance
Sec. 931. Tobacco worker transition program.
Sec. 932. Farmer opportunity grants.
Subtitle D--Immunity
Sec. 941. General immunity for tobacco producers and warehousers.
TITLE X--EFFECTIVE DATES AND OTHER PROVISIONS
Sec. 1001. Effective dates.
Sec. 1002. Native Americans.
Sec. 1003. Preemption.
SEC. 2. FINDINGS.
(a) General Findings.--Congress makes the following findings:
(1) The Food and Drug Administration and other public
health authorities view the use of tobacco products by the
nation's children as a ``pediatric disease'' of epic and
worsening proportions that results in new generations of
tobacco-dependent children and adults.
(2) There is a consensus within the scientific and medical
communities that tobacco products are inherently dangerous and
cause cancer, heart disease, and other serious adverse health
effects.
(3) The Food and Drug Administration and other health
authorities have concluded that virtually all new users of
tobacco products are under the age of 18. Virtually all
Federal, State, and local officials and entities believe that
tobacco advertising and marketing contribute significantly to
the use of nicotine-containing tobacco products by adolescents
and as such, sweeping new restriction on the sale, promotion,
and distribution of such products are needed.
(4) Federal, State, and local governments lack many of the
legal means and resources needed to address the societal
problems caused by the use of tobacco products.
(5) Public health authorities believe that the societal
benefits of enacting tobacco settlement legislation in human
and economic terms would be vast. The Food and Drug
Administration found that reducing underage tobacco use 50
percent ``would prevent well over 60,000 early deaths''. The
Food and Drug Administration has estimated that the monetary
value of the regulations promulgated as a result of this Act
will be worth up to $43,000,000,000 per year in reduced medical
costs, improved productivity, and the benefit of avoiding the
premature death of loved ones.
(6) 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 need to avoid 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 educate the public
(especially young people) of the health effects of using
tobacco products all dictate that it would be in the public
interest to enact legislation to facilitate a 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. Such products are sold, marketed,
advertised, and distributed in interstate commerce on a
nationwide basis and 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 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. PURPOSES.
It is the purpose of this Act to--
(1) reiterate and enhance the authority of the Food and
Drug Administration to regulate tobacco products and provide
for tobacco industry funding of the oversight activities of the
Administration;
(2) ban all outdoor tobacco advertising and ban all cartoon
characters and human figures used in connection with tobacco
advertising;
(3) 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;
(4) subject the tobacco industry to severe financial
penalties in the event that underage tobacco usage does not
decline radically over the next 10 years;
(5) provide for the establishment of national standards to
control the manufacturing of tobacco products and the
ingredients used in such products;
(6) provide certain regulatory powers to the Food and Drug
Administration 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;
(7) require the manufacturers of tobacco products to
disclose all present and future non-public internal laboratory
research regarding tobacco products;
(8) establish a minimum Federal standard to limit smoking
in public places;
(9) 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;
(10) provide for the establishment of a national education-
oriented counter advertising and tobacco control campaign to be
funded through the National Tobacco Settlement Trust Fund;
(11) provide annual payments to States to fund health
benefits programs and to create a tobacco products liability
judgments and settlements fund to be funded through the
National Tobacco Settlement Trust Fund; and
(12) provide for the establishment of a national program of
smoking cessation to be funded through the National Tobacco
Settlement Trust Fund.
TITLE I--REGULATION OF THE TOBACCO INDUSTRY
SEC. 100. 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) Cigar.--The term ``cigar'' means any roll of tobacco
wrapped in leaf tobacco or in any substance containing tobacco
(other than any roll of tobacco which is a cigarette or
cigarillo within the meaning of paragraph (3) or (4)).
(3) 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).
(4) Cigarillos.--The term ``cigarillos'' means any roll of
tobacco wrapped in leaf tobacco or any substance containing
tobacco (other than any roll of tobacco which is a cigarette
within the meaning of paragraph (3)) and as to which 1,000
units weigh not more than 3 pounds.
(5) 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.
(6) 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.
(7) Commissioner.--The term ``Commissioner'' means the
Commissioner of Food and Drugs.
(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) Little cigar.--The term ``little cigar'' means any roll
of tobacco wrapped in leaf tobacco or any substance containing
tobacco (other than any roll of tobacco which is a cigarette
within the meaning of subsection (1)) and as to which 1,000
units weigh not more than 3 pounds.
(10) Manufacturer.--The term ``manufacturer'' means any
person, including any repacker or relabeler, who manufactures,
fabricates, assembles, processes, or labels a finished tobacco product.
(11) Nicotine.--The term ``nicotine'' means the chemical
substance named 3-(1-Methyl-2-pyrrolidinyl) pyridine or
C<INF>10</INF>H<INF>14</INF>N<INF>2</INF>, including any salt
or complex of nicotine.
(12) 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.
(13) Person.--The term ``person'' means an individual,
partnership, corporation, or any other business or legal
entity.
(14) Pipe tobacco.--The term ``pipe tobacco'' means any
loose tobacco that, because of its appearance, type, packaging,
or labeling, is likely to be offered to, or purchased by,
consumers as a tobacco product to be smoked in a pipe.
(15) 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.
(16) 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 title.
(17) 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.
(18) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(19) 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.
(20) 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.
(21) Tobacco.--The term ``tobacco'' means tobacco in its
unmanufactured form.
(22) Tobacco product.--The term ``tobacco product'' means
cigars, cigarettes, cigarillos, cigarette tobacco, little
cigars, pipe tobacco, and smokeless tobacco.
(23) Trust fund.--The term ``Trust Fund'' means the
National Tobacco Settlement Trust Fund established under
section 401.
Subtitle A--Restriction on Marketing and Advertising
SEC. 101. PROHIBITIONS ON 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.--A retailer may have not more than 1
point-of-sale advertisement relating to the retailer's
own or its wholesaler's contracted retailer or private
label brand of tobacco product. No manufacturer or
distributor may enter into any arragenment 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 or distributor.
(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 103(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. 102. GENERAL 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 or before
January 1, 1995.
(b) Advertising Limited to FDA Specified Media.--
(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 in 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
101(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.--
(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.
(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. 103. FORMAT AND CONTENT REQUIREMENTS FOR LABELING AND ADVERTISING.
(a) In General.--Except as provided in subsections (b) and (c),
each manufacturer, distributor, and 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, limited, or controlled distribution) that the
manufacturer, distributor, or retailer demonstrates 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, and
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. 104. STATEMENT OF INTENDED USE.
(a) Requirement.--Each manufacturer, distributor, and retailer
advertising or causing to be advertised, disseminating or causing to be
disseminated, advertising concerning cigarettes, cigarette tobacco, or
smokeless tobacco products otherwise permitted under this title shall
include, as provided in section 502 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 352), the established name of the product and a
statement of the intended use of the product as provided for in
subsection (b).
(b) Use Statements.--
(1) Cigarettes.--A statement of intended use for cigarettes
or cigarette tobacco is as follows (whichever is appropriate):
Cigarettes--A Nicotine-Delivery Device for Persons 18
or Older.
Cigarette Tobacco--A Nicotine-Delivery Device for
Persons 18 or Older.
(2) Smokeless tobacco.--A statement of intended use for a
smokeless tobacco product is as follows (whichever is
appropriate):
Loose Leaf Chewing Tobacco--A Nicotine-Delivery Device
for Persons 18 or Older.
Plug Chewing Tobacco--A Nicotine-Delivery Device for
Persons 18 or Older.
Twist Chewing Tobacco--A Nicotine-Delivery Device for
Persons 18 or Older.
Moist Snuff--A Nicotine-Delivery Device for Persons 18
or Older.
Dry Snuff--A Nicotine-Delivery Device for Persons 18 or
Older.
(c) Type and Location.--Requirements with respect to type size,
style, font, and location shall be determined by the Commissioner.
SEC. 105. BAN ON NONTOBACCO ITEMS AND SERVICES, CONTESTS AND GAMES OF
CHANCE, AND SPONSORSHIP OF EVENTS.
(a) Ban on All Nontobacco 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.
SEC. 106. USE OF PRODUCT DESCRIPTORS.
(a) In General.--With respect to a tobacco product, the label of
which bears a product description (such as ``light'' or ``low tar''),
such label shall also contain, and any advertisement concerning such
product shall contain, a mandatory disclaimer, to be established by the
Secretary, that states that such product has not been shown to be less
hazardous than another product of that type.
(b) Rule of Construction.--Nothing in this section shall be
construed to limit the authority of the Food and Drug Administration
with respect to words used as product descriptors.
Subtitle B--Warnings, Labeling and Packaging
SEC. 111. CIGARETTE WARNINGS.
(a) In General.--
(1) 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 section, one
of the following labels:
WARNING: Cigarettes Are Addictive.
WARNING: Tobacco Smoke Can Harm Your Children.
WARNING: Cigarettes Cause Fatal Lung Disease.
WARNING: Cigarettes Cause Cancer.
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) 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
section, one of the following labels:
WARNING: Cigarettes Are Addictive.
WARNING: Tobacco Smoke Can Harm Your Children.
WARNING: Cigarettes Cause Fatal Lung Disease.
WARNING: Cigarettes Cause Cancer.
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) Requirements for Labeling.--
(1) Location.--Each label statement required by paragraph
(1) of subsection (a) 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.
(2) Type and color.--With respect to each label statement
required by paragraph (1) of subsection (a), 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 Commissioner to reflect the
length of the required statement. All the letters in the label
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 Commissioner.
(3) Exception.--The provisions of paragraph (1) shall not
apply in the case of a flip-top cigarette package (offered for
sale on the date of enactment of this Act) 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 paragraph (1) of subsection (a) shall
occupy the entire front portion of the flip top.
(c) Requirements for Advertising.--
(1) Location.--Each label statement required by paragraph
(2) of subsection (a) shall occupy not less than 20 percent of
the area of the advertisement involved.
(2) Type and color.--
(A) Type.--With respect to each label statement
required by paragraph (2) of subsection (a), 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 Commissioner may revise the required type sizes as
the Commissioner determines appropriate within the 20
percent requirement.
(B) Color.--All the letters in the label under this
paragraph 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 Commissioner.
(d) Rotation of Label Statements.--
(1) In general.--Except as provided in paragraph (2), the
label statements specified in paragraphs (1) and (2) of
subsection (a) 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 Federal Trade
Commission. The Federal Trade Commission shall approve a plan
submitted by a manufacturer or importer of cigarettes which
will provide the rotation required by this subsection and which
assures that all of the labels required by paragraphs (1) and
(2) will be displayed by the manufacturer or importer at the
same time.
(2) Application of other rotation requirements.--
(A) In general.--A manufacturer or importer of
cigarettes may apply to the Federal Trade Commission to
have the label rotation described in subparagraph (C)
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 clause (i).
If an application is approved by the Commission, the
label rotation described in subparagraph (C) shall
apply with respect to the applicant during the 1-year
period beginning on the date of the application
approval.
(B) Plan.--An applicant under subparagraph (A)
shall include in its application a plan under which the
label statements specified in paragraph (1) of subsection (a) will be
rotated by the applicant manufacturer or importer in accordance with
the label rotation described in subparagraph (C).
(C) Other rotation requirements.--Under the label
rotation which the manufacturer or importer with an
approved application may put into effect, each of the
labels specified in paragraph (1) of subsection (a)
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
Commission of the application.
(e) Application of Requirement.--Subsection (a) does not apply to a
distributor, a retailer of cigarettes who does not manufacture,
package, or import cigarettes for sale or distribution within the
United States.
(f) 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.
SEC. 112. SMOKELESS TOBACCO WARNINGS.
(a) In General.--
(1) 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 section, one of the following labels:
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) 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 section, one of the following labels:
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) Requirements for Labeling.--
(1) Location.--Each label statement required by paragraph
(1) of subsection (a) shall be located on the principal display
panel of the product and occupy not less than 25 percent of
such panel.
(2) Type and color.--With respect to each label statement
required by paragraph (1) of subsection (a), 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 Commissioner to reflect the
length of the required statement. All the letters in the label
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
Commissioner.
(c) Advertising and Rotation.--The provisions of subsections (c)
and (d)(1) of section 111 shall apply to advertisements for smokeless
tobacco products and the rotation of the label statements required
under subsection (a)(1) on such products.
(d) Application of Requirement.--Subsection (a) does not apply to a
distributor or a retailer of smokeless tobacco products who does not
manufacture, package, or import such products for sale or distribution
within the United States.
(e) 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.
SEC. 113. INGREDIENTS.
Each person who manufactures, packages, or imports cigarettes or
smokeless tobacco products shall annually provide the Secretary with
the information required under section 910 of the Federal Food, Drug,
and Cosmetic Act (as added by section 143(3) of this Act).
SEC. 114. ENFORCEMENT, REGULATIONS, AND CONSTRUCTION.
(a) Enforcement.--
(1) In general.--A violation of section 111 or 112 or the
regulations promulgated pursuant to this subtitle shall be
considered a violation of section 5 of the Federal Trade
Commission Act.
(2) Fines.--Any person who is found to violate any
provision of sections 111, 112, or 113(a) shall be guilty of a
misdemeanor and shall, on conviction thereof, be subject to a
fine of not more than $10,000.
(b) Injunctions.--The several district courts of the United States
are vested with jurisdiction, for cause shown, to prevent and restrain
violations of this subtitle upon the application of the Federal Trade
Commission in the case of a violation of section 111 or 112 or upon
application of the Attorney General of the United States acting through
the several United States attorneys in their several districts in the
case of a violation of section 113.
(c) Regulations.--Not later than 180 days after the date of the
enactment of this Act, the Federal Trade Commission shall promulgate
such regulations as it may require to implement sections 111 and 112.
(d) Construction.--Nothing in this subtitle (other than the
requirements of sections 111, 112, and 113) shall be construed to
limit, restrict, or expand the authority of the Federal Trade
Commission with respect to unfair or deceptive acts or practices in the
advertising of cigarettes or smokeless tobacco products.
SEC. 115. PREEMPTION.
(a) Federal Action.--No statement relating to the use of cigarettes
or smokeless tobacco products and health, other than the statements
required by sections 111 or 112, shall be required by any Federal
agency to appear on any package or in any advertisement of cigarettes
or a smokeless tobacco product.
(b) State and Local Action.--No statement relating to the use of
cigarettes or smokeless tobacco products and health, other than the
statements required by sections 111 and 112, shall be required by any
State or local statute or regulation to be included on any package or
in any advertisement of cigarettes or a smokeless tobacco product.
(c) Effect on Liability Law.--Except as otherwise provided in this
Act, nothing in this subtitle shall relieve any person from liability
at common law or under State statutory law to any other person.
SEC. 116. REPORTS.
(a) Secretary's Report.--Not later than 6 months after the date of
enactment of this Act, and biennially thereafter, the Secretary shall
prepare and submit to Congress a report containing--
(1) a description of the effects of health education
efforts on the use of cigarettes and smokeless tobacco
products;
(2) a description of the use by the public of cigarettes
and smokeless tobacco products;
(3) an evaluation of the health effects of cigarettes and
smokeless tobacco products and the identification of areas
appropriate for further research; and
(4) such recommendations for legislation and administrative
action as the Secretary considers appropriate.
(b) FTC Report.--Not later than 6 months after the date of
enactment of this Act, and biennially thereafter, the Federal Trade
Commission shall prepare and submit to Congress a report containing--
(1) a description of the current sales, advertising, and
marketing practices associated with cigarettes and smokeless
tobacco products; and
(2) such recommendations for legislation and administrative
action as the Commission deems appropriate.
SEC. 117. 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 subtitle, 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. 118. REPEALS.
The following Acts are repealed:
(1) The Federal Cigarette Labeling and Advertising Act (15
U.S.C. 1331 et seq.).
(2) The Comprehensive Smokeless Tobacco Health Education
Act of 1986 (15 U.S.C. 4401 et seq.).
Subtitle C--Restriction on Access to Tobacco Products
SEC. 121. REQUIREMENTS RELATING TO RETAILERS.
(a) Sales to Minors Prohibited.--No retailer may distribute a
tobacco product to any individual who is under 18 years of age.
(b) 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 section
122(d), a retailer shall ensure that all tobacco products are
located in areas where customers do not have access to the
products.
(c) Face-to-Face Transactions.--Except as provided in section
122(c)(1), a retailer may sell tobacco products only in a direct, face-
to-face exchange without the assistance of any electronic or mechanical
device.
(d) 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).
(e) 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 title are removed or are brought into compliance
with the requirements of this title.
SEC. 122. MANUFACTURE, SALE, AND DISTRIBUTION.
(a) 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.
(b) Prohibition on Sampling.--No manufacturer, distributor, or
retailer may distribute or cause to be distributed any free samples of
any tobacco product.
(c) Prohibition on Distribution Through Self-Service Modes of
Sale.--
(1) Vending machines.--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
(d)(1)(B), no manufacturer, distributor, or retailer may
distribute or cause to be distributed any tobacco product
through a self-service display.
(d) Permitted Self-Service Modes of Sale.--
(1) In general.--Notwithstanding this subtitle, 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) 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 commissioner.--Not later than 2 years
after the date of enactment of this Act, the
Commissioner 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 Commissioner
determines that a significant number of underage
individuals are obtaining such products through the
mail, the Commissioner may promulgate regulations to
ban the distribution of tobacco products through the
mail.
Subtitle D--Licensing of Retail Tobacco Sellers
SEC. 131. ESTABLISHMENT OF PROGRAM.
(a) In General.--The Commissioner, after consultation with the
Secretary, shall establish a program under which an entity would be
required to obtain a State or local license to sell or otherwise
distribute tobacco products directly to consumers.
(b) Prohibition on Distribution.--No entity shall sell or otherwise
distribute tobacco products directly to consumers unless such entity
has in effect a tobacco license issued or renewed in accordance with
the laws of the State in which the products are to be sold or otherwise
distributed.
(c) Eligibility of State for Payments.--To be eligible to receive a
block grant under section 502, a State shall have in effect laws that
meet the standards described in this subtitle that provide for the
licensing of entities engaged in the sale or distribution of tobacco
products directly to consumers and shall enforce such laws in
accordance with section 133.
SEC. 132. REQUIREMENTS.
(a) Licensure and Notice.--
(1) In general.--The State shall require that each person
engaged in the sale or distribution of tobacco products
directly to consumers obtain a license that is issued by the
State. A separate license shall be required for each place of
business where tobacco products are distributed or sold at
retail.
(2) 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 shall have obtained a license in
order to distribute such products.
(b) Fee.--The State may assess an annual licensing fee with respect
to each entity that desires to obtain a license under subsection (a).
Amounts derived from such fees shall be used to offset the
administrative costs incurred by the State in issuing and renewing
licenses under this subtitle.
(c) Application.--
(1) In general.--An entity shall prepare and submit to the
State an application for a license (including the renewal of a
license) under this section, on such form as the State may
require, that 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.
(2) Action by state.--
(A) In general.--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 licensing fee.
The State shall provide notice to an applicant of an
action on an application denying the issuance of a
license or refusing to renew a license.
(B) Finding by state.--The State shall deny the
issuance or renewal of a license upon an application if
the State determines that the applicant has failed to
comply with the requirements of this title.
(3) Scope and renewal.--Every license issued by the State
shall be valid for a period determined by the State and shall
be renewed upon application except as otherwise provided in
this section.
SEC. 133. PENALTIES, REVOCATIONS AND SUSPENSIONS.
(a) Penalties.--
(1) Criminal penalties applicable to unlicensed sellers.--
Any individual who sells or otherwise distributes tobacco
products to a consumer without a tobacco license in effect as
provided for in this subtitle shall be subject, under the
applicable State law, to a fine of not less than $1,000, or
imprisonment of not less than 6 months, or both. With respect
to any corporate employer of such an individual, the
corporation shall be subject to a fine of not more than
$50,000.
(2) Civil penalties applicable to sellers in violation of
license.--
(A) In general.--In addition to any criminal
penalties that may be imposed under paragraph (1), a
State may, in accordance with subsection (b), impose
civil penalties on any entity that has sold or
distributed tobacco products in the State in violation
of the State tobacco licensing laws.
(B) Limitations.--The civil penalties that may be
imposed under subparagraph (A) shall not exceed the
following:
(i) For the first offense within any 2-year
period, $500, or a 3-day suspension of the
tobacco license, or both.
(ii) For a second offense within any 2-year
period, $1,000, or a 7-day suspension of the
tobacco license, or both.
(iii) For a third offense within any 2-year
period, $2,000, or a 30-day suspension of the
tobacco license, or both.
(iv) For a fourth offense within any 2-year
period, $5,000, or a 6-month suspension of the
tobacco license, or both.
(v) For a fifth offense within any 2-year
period, $10,000, or a 1-year suspension of the
tobacco license, or both.
(vi) For a sixth and any subsequent offense
within any 2-year period, $25,000, or a 3-year
revocation of the tobacco license.
(vii) For a tenth offense within any 2-year
period, the permanent revocation of the tobacco
license.
(b) Revocation and Suspensions.--
(1) Notice.--Upon a finding that a tobacco licensee has
been determined by a court of competent jurisdiction to have
violated a provision of State law under this subtitle during
the license term, the State shall notify the licensee in
writing, served personally or by registered mail at the
principal place of business of the licensee, that any
subsequent violation of such law at the same place of business
may result in an administrative action to suspend the license
for a period determined by the State in accordance with
subsection (a)(2)(B).
(2) Suspension.--Upon finding that a further violation by
the tobacco licensee has occurred involving the same place of
business for which the license was issued and the licensee has
been provided notice under paragraph (1), the State may
initiate an administrative action to suspend the license for a
period to be determined in accordance with subsection
(a)(2)(B). If an administrative action to suspend a license is
initiated, the State shall immediately notify the licensee, in
writing at the principal place of business of the licensee, 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.
(3) Revocation.--The State may initiate an administrative
action to revoke a tobacco license that previously has been
suspended under paragraph (2) if, during the 2-year period
described in subsection (a)(2)(B), a further violation of this
subtitle 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 principal place of business of the licensee, 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.
(c) Judicial Review.--A tobacco 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 involved is received by the
licensee. The court shall review the evidence de novo.
SEC. 134. FEDERAL LICENSING OF MILITARY AND OTHER ENTITIES.
(a) In General.--The Commissioner, 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 Commissioner.
(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 (as such terms are defined in section 4 of the Indian Self
Determination and Education Assistance Act (25 U.S.C. 450b)) shall be
treated as a State.
Subtitle E--Regulation of Tobacco Product Development and Manufacturing
SEC. 141. REFERENCE.
Whenever in this subtitle an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et
seq.).
SEC. 142. TREATMENT OF TOBACCO PRODUCTS AS DRUGS.
(a) Definitions.--
(1) Drug.--
(A) In general.--Section 201(g)(1) (21 U.S.C.
321(g)(1)) is amended by inserting before the first
period ``; and (E) tobacco products''.
(B) Exception.--Section 201(p) of such Act is
amended in paragraphs (1) and (2) by striking ``(except
a new animal drug'' and inserting ``(except a tobacco
product, a new animal drug,''.
(2) Devices.--Section 201(h) (21 U.S.C. 321(h)) is amended
by adding at the end the following: ``Such term includes a
tobacco product which shall be classified as a class II
device.''.
(3) Other definitions.--Section 201 (21 U.S.C. 321) is
amended by adding at the end thereof the following new
paragraphs:
``(ii) 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.
``(jj) Tar.--The term `tar' means mainstream total articulate
matter minus nicotine and water.
``(kk) Tobacco Product.--The term `tobacco product' has the meaning
given such term in section 100(22) of the Universal Tobacco Settlement
Act.''.
(b) Enforcement.--Section 301 (21 U.S.C. 331) is amended by adding
at the end thereof the following new subsection:
``(x) The manufacture, labeling, distribution, and sale of any
adulterated or misbranded tobacco product in violation of--
``(1) regulations issued pursuant to section 903;
``(2) title I of the Universal Tobacco Settlement Act.''.
(c) Adulterated or Misbranded Provisions.--
(1) Adulteration.--Section 501 (21 U.S.C. 351) is amended
by adding at the end the following:
``(j) If it is a tobacco product and it does not comply with the
provisions of chapter IX.''.
(2) Misbranding.--Section 502 (21 U.S.C. 352) is amended by
adding at the end the following:
``(u) If it is a tobacco product and its labeling does not comply
with the provisions of chapter IX and the provisions of title I of the
Universal Tobacco Settlement Act.''.
(d) Classification of Tobacco Products.--Section 512(a)(1)(B) (21
U.S.C. 360c(a)(1)(B)) is amended by adding at the end the following:
``For purposes of this Act, a tobacco product shall be classified as a
class II device with performance standards applicable under chapter
IX.''.
SEC. 143. HEALTH AND SAFETY REGULATION OF TOBACCO PRODUCTS.
The 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--TOBACCO PRODUCTS
``SEC. 901. DEFINITIONS.
``For purposes of this chapter and in addition to the definitions
contained in section 201, the definitions under section 100 of the
Universal Tobacco Settlement Act shall apply.
``SEC. 902. PURPOSE.
``It is the purpose of this chapter to impose a regulatory scheme
applicable to the development and manufacturing of cigarettes and
smokeless tobacco products/tobacco products. Such scheme shall include
the approval of the ingredients used in such products and the
imposition of standards to reduce the level of certain constituents
contained in such products, including nicotine.
``SEC. 903. PROMULGATION OF REGULATIONS.
``The Commissioner shall promulgate regulations governing the
misbranding, adulteration, and dispensing of tobacco products that are
consistent with this chapter and with the manner in which other
products that are ingested into the body are regulated under this Act,
except that the Commissioner may not promulgate a regulation that
prohibits the sale and distribution of a tobacco product solely on the
basis of the fact that tobacco causes disease. Such regulations shall
be promulgated not later than 6 months after the date of enactment of
the Universal Tobacco Settlement Act.
``SEC. 904. MINIMUM REQUIREMENTS.
``(a) Misbranding.--The regulations promulgated under section 903
shall at a minimum require that a tobacco product be deemed to be
misbranded if the labeling of the package of such product is not in
compliance with the provisions of this chapter, of other applicable
provisions of this Act, or of sections 102(a), 103, 111, 112, and 113
(as applicable to the type of product involved) of the Universal
Tobacco Settlement Act.
``(b) Adulteration.--The regulations promulgated under section 903
shall at a minimum require that a tobacco product be deemed to be
adulterated if the Commissioner determines that any tobacco additive in
such product, regardless of the amount of such tobacco additive, either
by itself or in conjunction with any other tobacco additive or
ingredient significantly increases the risk to human health or the risk
of addiction to such product.
``SEC. 905. PERFORMANCE STANDARDS FOR TOBACCO PRODUCTS.
``(a) In General.--With respect to tobacco products, the special
controls required by section 513(a)(1)(B) shall include performance
standards for such products as established in accordance with this
section.
``(b) Requirements.--A performance standard established under this
section for a tobacco product--
``(1) shall include provisions to require the modification
of the product to minimize the illness or injury that may
result in consumers as a result of the use of such products,
including the components of such products that produce
dependence among such consumers; and
``(2) include, where appropriate--
``(A) provisions with respect to the construction,
components, ingredients, and properties of the tobacco
product;
``(B) provisions for the testing (on a sample basis
or, if necessary, on an individual basis) of the
tobacco product or, if it is determined that no other
more practicable means are available to the Secretary
to assure the conformity of the device to the standard,
provisions for the testing (on a sample basis or, if
necessary, on an individual basis) by the Secretary or
by another person at the direction of the Secretary;
``(C) provisions for the measurement of the
performance characteristics of the tobacco product;
``(D) provisions requiring that the results of each
or of certain of the tests of the device required to be
made under subparagraph (B) demonstrate that the
tobacco product is in conformity with the portions of
the standard for which the test or tests were required;
and
``(E) a provision requiring that the sale and
distribution of the device be restricted but only to
the extent that the sale and distribution of a device
may be otherwise restricted under this Act of title I
of the Universal Tobacco Settlement Act.
``(c) Evaluation.--The Secretary shall provide for the periodic
evaluation of a performance standard established under this section to
determine if such standards should be changed to reflect new medical,
scientific, or other technological data.
``(d) Procedures.--In carrying out this section, the Secretary
shall, to the maximum extent practicable--
``(1) use personnel, facilities, and other technical
support available in other Federal agencies;
``(2) consult with the Scientific Advisory Committee
established under section 906 and other Federal agencies
concerned with standard-setting and other nationally or
internationally recognized standard-setting entities; and
``(3) invite appropriate participation, through joint or
other conferences, workshops, or other means, by informed
persons representative of scientific, professional, industry,
or consumer organizations who in the judgment of the Secretary
can make a significant contribution.
``(e) Procedures.--
``(1) In general.--The Secretary shall publish in the
Federal Register a notice of proposed rulemaking for the
establishment, amendment, or revocation of any performance
standard under this section.
``(2) Notice requirements.--A notice of proposed rulemaking
for the establishment or amendment of a performance standard
under this section shall--
``(A) set forth a finding with supporting
justification that the performance standard is
appropriate under subsection (b)(1) with respect to the
product; and
``(B) invite interested persons to submit an
existing performance standard for the product,
including a draft or proposed performance standard, for
consideration by the Secretary.
``(3) Comment period.--The Secretary shall provide for a
comment period of not less than 60 days.
``(4) Applicability of section 514.--The provisions of
paragraphs (3) and (4) of section 514(b) shall apply to the
establishment, amendment, or revocation of any performance
standard under this section, except that any reference to an
advisory committee shall be deemed to be a reference the
Scientific Advisory Committee established under section 906.
``(f) Nicotine.--Except as provided in section 907, a performance
standard established under this section may not require the elimination
of nicotine from tobacco products.
``(g) Limitation.--The Commissioner may not establish a performance
standard under this section that has the effect of prohibiting the sale
and distribution, to individuals who are at least 18 years of age, of
traditional tobacco products in the basic form of the particular
product as described in the definition of the particular product under
section 100 of the Universal Tobacco Settlement Act.
``SEC. 906. SCIENTIFIC ADVISORY COMMITTEE.
``(a) Establishment.--Not later than 1 year after the date of
enactment of the Universal Tobacco Settlement Act, the Secretary shall
establish an advisory committee, to be known as the `Scientific
Advisory Committee', to assist the Secretary in establishing, amending,
or revoking a performance standard under section 905.
``(b) Membership.--The Secretary shall appoint as members of the
Scientific Advisory Committee any individuals with expertise in the
medical, scientific, or other technological data involving the
manufacture and use of tobacco products, and of appropriately
diversified professional backgrounds. The Secretary may not appoint to
the Committee any individual who is in the regular full-time employ of
the Federal Government. The Secretary shall designate one of the
members of each advisory committee to serve as chairperson of the
Committee. The Committee shall include as nonvoting members a
representative of consumer interests and a representative of interests
of the device manufacturing industry.
``(c) Compensation and Expenses.--
``(1) Compensation.--Members of the Scientific Advisory
Committee who are not officers or employees of the United
States, while attending conferences or meetings of the
Committee 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.
``(2) Expenses.--While conducting the business of the
Scientific Advisory Committee 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.
``(d) Duties.--The Scientific Advisory Committee shall--
``(1) assist the Secretary in establishing, amending, or
revoking performance standards under section 905;
``(2) examine and determine the effects of the alteration
of the nicotine yield levels in tobacco products;
``(3) examine and determine 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 determined appropriate by the
Secretary.
``SEC. 907. REQUIREMENTS RELATING TO NICOTINE AND OTHER CONSTITUENTS.
``(a) General Rule.--Except as provided in subsection (d), the
Secretary, based on a finding under subsection (b), may adopt a
performance standard under section 905 that requires the modification
of a tobacco product in a manner that involves--
``(1) the gradual reduction of nicotine yields of the
product; or
``(2) the reduction or elimination of other constituents or
harmful components of the product.
``(b) Required Finding.--
``(1) In general.--A modification described in subsection
(a) shall not be adopted unless the Secretary determines that
the modification--
``(A) will result in a significant reduction in the
health risks associated with the use of the tobacco
product involved;
``(B) is technologically feasible; and
``(C) will not result in the creation of a
significant demand for contraband products or other
tobacco products that do not meet the performance
standard that requires the modification.
``(2) Contraband products.--For purposes of paragraph
(1)(C), the Secretary, in determining whether a significant
demand for contraband products will be created, shall take in
account--
``(A) the estimated number of dependent tobacco
product users residing in the United States on the date
on which the proposed modification is being considered;
``(B) the availability to such users, or lack
thereof, of alternative products; and
``(C) any other factors determined appropriate by
the Secretary.
``(3) Substantial evidence.--A determination under
paragraph (2) shall be based upon substantial evidence as
demonstrated through an administrative record developed through
formal rulemaking procedures as required under title 5, United
States Code. Any such determination, and any determination by
the Secretary with respect to a petition filed for an
administrative review of the modification, shall be subject to
judicial review in the United States District Court for the
District of Columbia.
``(c) Limitation.--Effective on the date that is 3 years after the
date of enactment of the Universal Tobacco Settlement Act, and
notwithstanding any performance standard established under this
chapter, no cigarette or tobacco product shall be sold or otherwise
distributed in the United States that exceeds a 12 milligram tar yield,
as determined using the testing methodology used by the Federal Trade
Commission on such date of enactment.
``(d) 12-Year Prohibition.--During the 12-year period beginning on
the date of enactment of the Universal Tobacco Settlement Act, the
Secretary shall not adopt any performance standard under section 905
that requires the complete elimination of nicotine yields in a tobacco
product.
``(e) Action After Prohibition.--
``(1) In general.--After the expiration of the 12-year
period referred to in subsection (d), the Secretary may
establish or amend any performance standard to completely
eliminate nicotine yields in a tobacco product.
``(2) Determination.--Any performance standard described in
paragraph (1) shall not be adopted unless the Secretary
determines that the standard--
``(A) will result in a significant overall
reduction in the health risks associated with the use
of the tobacco product involved by consumers, including
individuals who continue to use tobacco products but
use such products less often and individuals who stop
using such products;
``(B) is technologically feasible; and
``(C) will not result in the creation of a
significant demand for contraband products or other
tobacco products that do not meet the performance
standard.
``(3) Health benefits.--In making a determination with
respect to health risks under paragraph (2)(A), the Secretary
shall consider--
``(A) the number of dependent tobacco users
residing in the United States on the date on which the
proposed performance standard is being considered;
``(B) the availability and demonstrated market
acceptance of alternative products;
``(C) the effectiveness of tobacco product
cessation techniques and devices on the market on the
date on which the proposed performance standard is
being considered; and
``(D) any other factors determined appropriate by
the Secretary.
``(4) Preponderance of the evidence.--A determination under
paragraph (2) with respect to the elimination of nicotine, or
an action that would have an effect comparable to the
elimination of nicotine, shall be based upon a preponderance of
the evidence as demonstrated, upon the request of a
manufacturer, through a Part 12 hearing or notice and comment
rulemaking as required under title 5, United States Code. Any
such determination, and any determination by the Secretary with
respect to a petition filed for an administrative review of the
modification, shall be subject to judicial review in the United
States District Court for the District of Columbia.
``(5) Phase-in.--A performance standard described in
paragraph (1) shall be implemented during a 2-year phase-in
period beginning on the date on which all administrative or
judicial action provided for under this chapter with respect to
the standard is completed.
``(f) Tobacco Constituents.--The Secretary shall promulgate
regulations for the testing, reporting and disclosure of tobacco smoke
constituents that the Secretary determines the public should be
informed of to protect public health, including tar, nicotine, and
carbon monoxide. Such regulations may require label and advertising
disclosures relating to tar and nicotine.
``SEC. 908. REDUCED RISK PRODUCTS.
``(a) Misbranding.--Except as provided in subsection (b), the
regulations promulgated in accordance with section 904(a) shall require
that a tobacco product be deemed to be misbranded if the labeling of
the package of the product, or the claims of the manufacturer in
connection with the product, can reasonably be interpreted by an
objective consumer as stating or implying that the product presents a
reduced health risk as compared to other similar products.
``(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 Commissioner that the
product significantly reduces the risk to the health of
the user as compared to other similar tobacco products;
and
``(B) the Commissioner 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 harm.--The Commissioner 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 Commissioner determines
that the inclusion or making of such claims would reduce harm
to consumers and otherwise promote public health.
``(c) Development of Reduced Risk Product Technology.--
``(1) Notification of commissioner.--The manufacturer of a
tobacco product shall provide written notice to the
Commissioner 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.
``(2) Confidentiality.--The Commissioner 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
developed or acquired 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 Commissioner 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 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
Commissioner that the manufacture of a tobacco product that is
less hazardous to the health of users is technologically
feasible, the Commissioner may, in accordance with this
subsection, require that certain manufacturers of such products
manufacture and market such less hazardous products.
``(3) Manufacturer.--
``(A) Requirement.--Except as provided in
subparagraph (B), the requirement under paragraph (2)
shall apply to any manufacturer that provides a
notification to the Commissioner under subsection
(c)(1) concerning the technology that is the subject of
the determination of the Commissioner.
``(B) Exception.--The requirement under
subparagraph (A) shall not apply to a manufacturer if--
``(i) the manufacturer elects not to
manufacture such products and provides notice
to the Commissioner of such election; and
``(ii) the manufacturer agrees to provide
the technology involved, for a commercially
reasonable fee, to other manufacturers that
enter into agreements to use such technology to
manufacture and market tobacco products that
are less hazardous to the health of users.
``(4) Action by public health service.--If no manufacturer
elects or agrees to manufacture and market tobacco products
that are less hazardous to the health of users through the use
of technology available pursuant to this subsection within a
reasonable period of time, as determined appropriate by the
Commissioner, the Commissioner, in consultation with the
Secretary and acting through the Public Health Service, shall,
either directly or through grants or contracts, provide for the
manufacture and marketing of such products.
``SEC. 909. GOOD MANUFACTURING PRACTICE STANDARDS.
``(a) Authority.--
``(1) In general.--The Secretary may, in accordance with
paragraph (2), prescribe regulations requiring that the methods
used in, and the facilities and controls used for, the
manufacture, pre-production design validation (including a
process to assess the performance of a tobacco product),
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) Requirements prior to regulations.--Prior to the
Secretary promulgating any regulation under paragraph (1) the
Secretary shall--
``(A) afford the Scientific Advisory Committee
established under section 906 an opportunity (with a
reasonable time period) to submit recommendations with
respect to the regulations proposed to be promulgated;
and
``(B) afford opportunity for an oral hearing.
``(b) Minimum Requirements.--The regulations promulgated under
subsection (a) shall at a minimum require--
``(1) the implementation of a quality control system by the
manufacturer of a tobacco product;
``(2) a process for the inspection of tobacco product
material prior to the packaging of such product to be
determined by the Commissioner;
``(3) procedures for the proper handling and storage of the
packaged tobacco product;
``(4) after consultation with the Administrator of the
Environmental Protection Agency, the development and adherence
to applicable tolerances with respect to pesticide chemical
residues in or on commodities used by the manufacturer in the
manufacture of the finished tobacco product;
``(5) the inspection of facilities by officials of the Food
and Drug Administration as otherwise provided for in this Act;
and
``(6) record keeping and the reporting of certain
information.
``(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 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 device
is in compliance with this chapter;
``(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) Scientific advisory committee.--The Secretary may
refer to the Scientific Advisory Committee established under
section 906 any petition submitted under paragraph (1). The
Scientific Advisory Committee shall report its recommendations
to the Secretary with respect to a petition referred to it
within 60 days of the date of the petition's referral. Within
60 days after--
``(A) the date the petition was submitted to the
Secretary under paragraph (1); or
``(B) if the petition was referred to the
Scientific Advisory Committee, the expiration of the
60-day period beginning on the date the petition was
referred to such Committee;
whichever occurs later, the Secretary shall by order either
deny the petition or approve it.
``(3) Approval of petition.--
``(A) In general.--The Secretary may approve--
``(i) a petition for an exemption for a
tobacco product from a requirement if the
Secretary determines that compliance with such
requirement is not required to assure that the
product will comply with this chapter; 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 chapter.
``(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 chapter.
``(4) Informal hearing.--After the issuance of an order
under paragraph (2) respecting a petition, the petitioner shall
have an opportunity for an informal hearing on such order.
``(d) 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. 910. DISCLOSURE AND REPORTING OF NONTOBACCO INGREDIENTS.
``(a) 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
to the tobacco (and the paper or filter of the product
if applicable) in the manufacture of the tobacco
product, for each brand of tobacco product so
manufactured; and
``(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.
``(2) 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 the Universal Tobacco
Settlement Act, 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
section.
``(b) Safety Assessments.--
``(1) Requirement.--Not later than 5 years after the date
of enactment of the Universal Tobacco Settlement Act, and
annually thereafter, each manufacturer shall submit to the
Secretary a safety assessment for each ingredient, substance,
or compound that is listed under subsection (a)(1)(A) with
respect to each brand of tobacco product manufactured by each
such manufacturer.
``(2) Basis of assessment.--The safety assessment of an
ingredient, substance, or compound described in paragraph (1)
shall--
``(A) be based on the best scientific evidence
available at the time of the submission of the
assessment; and
``(B) result in a finding that 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.
``(c) Prohibition.--
``(1) Regulations.--Not later than 12 months after the date
of enactment of the Universal Tobacco Settlement Act, the
Secretary shall promulgate regulations to prohibit the use of
any ingredient, substance, or compound in the tobacco product
of a manufacturer--
``(A) if no safety assessment has been submitted by
the manufacturer for the ingredient, substance, or
compound; or
``(B) if the Secretary disapproves of the safety of
the ingredient, substance, or compound that was the
subject of the assessment under paragraph (2).
``(2) Review of assessments.--
``(A) General review.--Not later than 90 days after
the receipt of a safety assessment under subsection
(b), the Secretary shall review the findings contained
in such assessment.
``(B) Approval or disapproval.--Not later than 90
days after the completion of a review under
subparagraph (A), the Secretary shall approve or
disapprove of the safety of the ingredient, substance,
or compound that was the subject of the assessment and provide notice
to the manufacturer of such action.
``(C) Inaction by secretary.--If the Secretary
fails to act with respect to an assessment during the
90-day period referred to in subparagraph (B), the
safety of the ingredient, substance, or compound
involved shall be deemed to be approved.
``(d) Disclosure of Ingredients to the Public.--
``(1) Initial disclosure.--The regulations promulgated in
accordance with section 904(a) shall, at a minimum, require
that, during the 5-year period beginning on the date that is 6
months after the date of enactment of the Universal Tobacco
Settlement Act, a tobacco product be deemed to be misbranded if
the labeling of the package of such product does not disclose
the ingredients of the product in accordance with the labeling
provisions applicable to food ingredients under this Act.
``(2) Disclosure of all ingredients.--The regulations
referred to in paragraph (1) shall, at a minimum, require that,
subsequent to the 5-year period referred to in such paragraph,
a tobacco product be deemed to be misbranded if the labeling of
the package of such product does not disclose all ingredients,
substances, or compounds contained in the product in accordance
with the labeling provisions applicable to food ingredients
under this Act.
``(3) Exception.--Notwithstanding paragraph (1), the
Secretary may require that any ingredient, substance, or
compound contained in a tobacco product that is otherwise
exempt from disclosure be disclosed if the Secretary determines
that such ingredient, substance, or compound is not safe as
provided for in subsection (c).
``(e) Confidentiality.--Any information reported to or otherwise
obtained by the Secretary under this section, and that is not required
to be disclosed to the public under subsection (d), 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,
shall be considered confidential and shall not be disclosed and may not
be used by the Secretary as the basis for the establishment or
amendment of a performance standard under section 905, except that such
information may be disclosed to other officers or employees concerned
with carrying out this Act or when relevant in any proceeding under
this Act.
``SEC. 911. NONAPPLICATION OF CERTAIN PROVISIONS.
``Sections 502(j), 516, 518, and 520(f) shall not apply to tobacco
products to which this chapter applies.''.
Subtitle F--Compliance Plans and Corporate Culture
SEC. 151. COMPLIANCE PLANS.
(a) In General.--Not later than 1 year after the date of enactment
of this Act, and annually thereafter, each manufacturer of a tobacco
product shall prepare and submit to the Secretary a plan to ensure that
the manufacturer complies with all applicable Federal, State, and local
laws with respect to the manufacture and distribution of tobacco
products.
(b) Requirements.--A compliance plan submitted under subsection (a)
shall--
(1) contain the assurances of the manufacturer that tobacco
products will only be manufactured and distributed in
accordance with this Act and the amendments made by this Act;
(2) identify methods to achieve the goals of--
(A) reducing the access of individuals under 18
years of age to tobacco products; and
(B) reducing the incidence of the underage
consumption of tobacco products;
(3) provide for the implementation of internal incentives
for achieving the reductions described in paragraph (2);
(4) provide for the implementation of internal incentives
for the development of tobacco products with a reduced health
risk;
(5) contain a description of the compliance programs
implemented under section 152 and the effectiveness of such
programs; and
(6) contain such other information as the Secretary may
require.
SEC. 152. COMPLIANCE PROGRAMS.
(a) In General.--Not later than 1 year after the date of enactment
of this Act, each manufacturer of a tobacco product shall establish and
implement one or more compliance programs designed to ensure the
compliance of the manufacturer with Federal, State, and local laws that
limit the access of individuals under 18 years of age to tobacco
products.
(b) Requirements.--A compliance program established under
subsection (a) shall--
(1) implement standards and procedures to be adhered to by
employees and agents that are designed to reduce the incidence
of violations of the laws described in subsection (a);
(2) provide for the assignment to 1 or more specific
corporate executives of the overall responsibility for ensuring
that the manufacturer complies with the standards and
procedures applicable under this Act;
(3) ensure that due care is taken by the corporate
executives designated under paragraph (2) to avoid delegating
substantial discretionary authority to individuals who the
executives know (or should have known through the exercise of
due diligence) have a propensity to disregard corporate policy;
(4) include procedures to inform all employees and agents
of the relevant standards and procedures applicable to the
manufacturer and the tobacco products manufactured under this
Act, including procedures for the implementation of training
programs or the dissemination of informational materials;
(5) provide for the conduct of internal audits, and the
establishment of hotlines and other measures to promote
compliance with the laws described in subsection (a);
(6) provide for the application of appropriate disciplinary
mechanisms and measures to employees who are directly or
indirectly violating the laws described in subsection (a) or
otherwise not complying with this Act;
(7) include measures to respond appropriately where
violations of laws described in subsection (a) are alleged to
have occurred or are occurring;
(8) include the promulgation of corporate policy statements
that express and explain the commitment of the manufacturer
to--
(A) compliance with applicable Federal, State, and
local laws;
(B) reducing the use of tobacco products by
individuals who are under 18 years of age; and
(C) developing tobacco products that pose a reduced
risk to the health of the user;
(9) provide for the designation of a specific corporate
executive to serve as the compliance officer to promote efforts
to fulfill the commitment of the manufacturer;
(10) include provisions for compiling reports on compliance
with this Act and the laws described in paragraph (1) and
including those reports in materials provided to stockholders;
and
(11) include any other measures determined appropriate by
the Secretary.
(c) Reporting of Noncompliance.--Under the compliance program of a
manufacturer, the manufacturer's employees shall be encouraged to
report to the compliance officer any known or alleged violations of
this Act (or an amendment made by this Act), including violations by
distributors or retailers. The compliance officer shall furnish a copy
of all such reports to the Secretary for reference to the appropriate
Federal or State enforcement authority.
(d) Retail Establishments.--As part of the compliance program
established under this section, a manufacturer shall carry out efforts
to encourage and assist (including retail compliance checks and
financial incentives) retailers of the tobacco products manufactured by
the manufacturer in compliance with the Federal, State, and local laws
described in subsection (a).
SEC. 153. 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 State or local regulatory or enforcement authority.
SEC. 154. 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, distributor, or retailer
of a tobacco product shall require that any lobbyist or lobbying firm
employed or retained by the manufacturer, distributor, or retailer, or
any other individual who performs lobbying activities on behalf of the
manufacturer, distributor, or retailer, 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,
distributor, or retailer.
(c) Additional Agreements.--An individual shall not be employed or
retained to perform lobbying activities on behalf of a manufacturer,
distributor, or retailer of a tobacco product unless such individual
enters into a signed agreement with the manufacturer, distributor, or
retailer 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 title VI as that decree applies to
the manufacturer, distributor, or retailer 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, distributor, or retailer involved.
SEC. 155. TERMINATION OF CERTAIN ENTITIES.
(a) Requirement.--Not later than 90 days after the date of
enactment of this Act, manufacturers, distributors, or retailers 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, distributors, or retailers
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.
SEC. 156. ENFORCEMENT.
(a) Assessment.--
(1) In general.--The Secretary may assess a civil penalty
against any manufacturer of a tobacco product of up to $25,000
per day of violation whenever, on the basis of any available
information, the Secretary finds that such manufacturer has
violated or is violating any requirement of this subtitle.
(2) Limitation.--The authority of the Secretary under this
subsection shall be limited to matters where the total penalty
sought does not exceed $200,000 and the first alleged date of
violation occurred not more than 12 months prior to the
initiation of the administrative action, except where the
Secretary and the Attorney General jointly determine that a
matter involving a larger penalty amount or longer period of
violation is appropriate for action.
(3) Judicial review.--Any determination by the
Administrator and the Attorney General under paragraph (2)
shall not be subject to judicial review.
(b) Procedure.--
(1) In general.--A civil penalty under subsection (a) shall
be assessed by the Secretary by an order made after an
opportunity for a hearing on the record in accordance with
sections 554 and 556 of title 5 of the United States Code. The
Secretary shall issue reasonable rules for discovery and other
procedures for hearings under this paragraph. Before issuing
such an order, the Secretary shall give written notice to the
manufacturer against whom the assessment is being made of the
Secretary's proposal to issue such an order and provide such
manufacturer with an opportunity to request such a hearing on
the order, within 30 days of the date the notice is received by
such manufacturer.
(2) Modifications.--The Secretary may compromise, modify,
or remit, with or without conditions, any penalty which may be
imposed under this section.
(c) Field Citation Program.--
(1) Implementation.--The Secretary may provide for the
implementation, after consultation with the Attorney General
and the States, of a field citation program through regulations
establishing appropriate minor violations of this subtitle for
which field citations, assessing civil penalties not to exceed
$5,000 per day of violation, may be issued by officers or
employees designated by the Secretary.
(2) Hearing.--Any manufacturer to which a field citation is
assessed may, within a reasonable time as prescribed by the
Secretary through regulation, elect to pay the penalty
assessment or to request a hearing on the field citation. If a
request for a hearing is not made within the time specified in
the regulation, the penalty assessment in the field citation
shall be final. Such hearing shall not be subject to section
554 or 556 of title 5 of the United States Code, but shall
provide a reasonable opportunity to be heard and to present
evidence.
(3) No defense.--Payment of a civil penalty required by a
field citation under this paragraph shall not be a defense to
further enforcement by the United States or a State to correct
a violation, or to assess the statutory maximum penalty
pursuant to other authorities in the subtitle, if the violation
continues.
(d) Judicial Review.--
(1) Right.--Any manufacturer against whom a civil penalty
is assessed under subsection (c) or to which a penalty order is
issued under subsection (a) may seek review of such assessment
in the United States District Court for the District of
Columbia or for the district in which the violation is alleged
to have occurred or in which the principal place of business of
the manufacturer is located, by filing in such court within 30
days following the date the penalty order becomes final under
subsection paragraph (b), the assessment becomes final under
subsection (c), or a final decision following a hearing under
subsection (c) is rendered, and by simultaneously sending a
copy of the filing by certified mail to the Secretary and the
Attorney General.
(2) Filing.--Within 30 days after a filing under paragraph
(1), the Secretary shall file in the court involved a certified
copy, or certified index, as appropriate, of the record on
which the penalty order or assessment was issued.
(3) Action by court.--A court shall not set aside or remand
a penalty order or assessment under this section unless there
is not substantial evidence in the record, taken as a whole, to
support the finding of a violation or unless the order or
penalty assessment constitutes an abuse of discretion.
(4) Limitation.--A penalty order or assessment under this
section shall not be subject to review by any court except as
provided in this subsection. In any such proceedings, the
United States may seek to recover civil penalties ordered or
assessed under this section.
(e) Failure To Pay.--
(1) In general.--If any manufacturer fails to pay an
assessment of a civil penalty or fails to comply with an
penalty order under this section--
(A) after the order or assessment has become final;
or
(B) after a court, in an action brought under
subsection (d), has entered a final judgment in favor
of the Secretary;
the Secretary shall request the Attorney General to bring a
civil action in an appropriate district court to enforce the
order or to recover the amount ordered or assessed (plus
interest at rates established pursuant to section 6621(a)(2) of
the Internal Revenue Code of 1986 from the date of the final
order or decision or the date of the final judgment, as the
case may be). In such an action, the validity, amount, and
appropriateness of such order or assessment shall not be
subject to review.
(2) Enforcement expenses.--Any manufacturer who fails to
pay on a timely basis a civil penalty ordered or assessed under
this section shall be required to pay, in addition to such
penalty and interest, the United States enforcement expenses,
including attorneys fees and costs incurred by the United
States for collection proceedings and a quarterly nonpayment
penalty for each quarter during which such failure to pay
persists. Such nonpayment penalty shall be 10 percent of the
aggregate amount of such manufacturer's outstanding penalties
and nonpayment penalties accrued as of the beginning of such
quarter.
(f) Scarlet Letter Advertising.--
TITLE II--REDUCTION IN UNDERAGE TOBACCO USE
SEC. 201. PURPOSE.
It is the purpose of this title 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 manufacturers if certain underage tobacco-use reduction
targets are not met.
SEC. 202. 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. 203. 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 methodoloy 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. 204. REQUIRED REDUCTION IN UNDERAGE TOBACCO USE.
(a) In General.--For purposes of assessing surcharges under section
205, 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 203(b)) as compared to the underage
use base percentage for cigarette products (as determined under
section 202(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 203(c)) as compared to the
underage use base percentage for smokeless tobacco products (as
determined under section 202(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 according to the following tables:
(1) Cigarettes.--
``Calender year after enactment-- The percentage decrease in the use
of cigarette products--
Fifth......................................... 30
Sixth......................................... 30
Seventh....................................... 50
Eighth........................................ 50
Ninth......................................... 50
Tenth and thereafter.......................... 60 .
(2) Smokeless tobacco products.--
``Calender year after enactment-- The percentage decrease in the use
of smokeless tobacco
products--
Fifth......................................... 25
Sixth......................................... 25
Seventh....................................... 35
Eighth........................................ 35
Ninth......................................... 35
Tenth and thereafter.......................... 45 .
SEC. 205. 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 204, the Secretary shall impose
a surcharge on the manufacturers of the tobacco products involved.
(b) Amount of Surcharge.--
(1) In general.--The amount of any surcharge to be imposed
under this section for a calendar year shall be equal to the
product of--
(A) $80,000,000; and
(B) the number of applicable surcharge percentage
points as determined under subsection (c).
(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
tobacco manufacturers for the tobacco product
involved (as determined by the Secretary
through a contract with a nationally recognized
accounting firm having no connection to tobacco
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 206.
(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 manufacturers
to the Securities and Exchange Commission.
(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 204(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 203) is less than the underage use base
percentage for such products (as determined under section 202).
(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 203) is greater
than the underage use base percentage for such products (as
determined under section 202), 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 203) is
greater that the underage use base percentage for such
products (as determined under section 202).
(3) Type of product.--Separate determinations shall be made
under this section for cigarette products and smokeless tobacco
products.
(d) Limitation.--The total amount of surcharges imposed with
respect to each type of tobacco product (cigarette products or
smokeless tobacco products) under this section shall not exceed
$2,000,000,000 (adjusted each year by the Secretary to account for
inflation) for any calendar year.
(e) 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 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
actual Federal excise tax payments made by such manufacturers for each
such product under the Internal Revenue Code of 1986.
(f) Assessment.--Not later than May 1 of each year in which a
surcharge will be imposed under this section, the Secretary shall
assess to each 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.
(g) Use of Amounts.--Amounts received under this section shall be
used as provided for in section 517.
(h) 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. 206. ABATEMENT PROCEDURES.
(a) Petitions.--Upon payment by a manufacturer of the amount
assessed to the manufacturer under section 205(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 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 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 manufacturer has pursued all reasonably available
measures to attain the reductions;
(3) there is any evidence of any direct or indirect action
by the manufacturer to undermine the achievement of the
reductions required under section 204 or to undermine any other
provision of this Act (or amendment); and
(4) the 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 not to exceed 75
percent of the amount paid by the manufacturer, 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 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 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 205(f).
TITLE III--STANDARDS TO REDUCE INVOLUNTARY EXPOSURE TO TOBACCO SMOKE
SEC. 301. 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. Such term shall not include
any building or portion thereof regularly used for
residential purposes.
(B) Exclusions.--Such term does not include a
building which is used as a restaurant (other than a
fast food restaurant), bar, private club, hotel guest
room, casino, bingo parlor, tobacco merchant, or
prison.
(C) Fast food restaurant.--The term ``fast food
restaurant'' means any restaurant or chain of
restaurants that primarily distributes food through a
customer pick-up (either at a counter or drive-through
window). The Administrator of the Occupational Safety
and Health Administration may promulgate regulations to
clarify this subparagraph to ensure that the intended
inclusion of establishments catering largely to
individuals under 18 years of age is achieved.
(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.
SEC. 302. 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).
(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.--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).
(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.
SEC. 303. CITIZEN ACTIONS.
(a) In General.--An action may be brought to enforce the
requirements of this title by any aggrieved person, any State or local
government agency, or the Administrator.
(b) Venue.--Any action to enforce this title may be brought in any
United States district court for the district in which the defendant
resides or is doing business to enjoin any violation of this title or
to impose a civil penalty for any such violation in the amount of not
more than $5,000 per day of violation. The district courts shall have
jurisdiction, without regard to the amount in controversy or the
citizenship of the parties, to enforce this title and to impose civil
penalties under this title.
(c) Notice.--An aggrieved person shall give any alleged violator
notice of at least 60 days prior to commencing an action under this
section. No action may be commenced by an aggrieved person under this
section if such alleged violator complies with the requirements of this
title within such 60-day period and thereafter.
(d) Costs.--The court, in issuing any final order in any action
brought pursuant to this section, may award costs of litigation
(including reasonable attorney and expert witness fees) to any
prevailing plaintiff, whenever the court determines such award is
appropriate.
(e) Penalties.--The court, in any action under this section to
apply civil penalties, shall have discretion to order that such civil
penalties be used for projects which further the policies of this
title. The court shall obtain the view of the Administrator in
exercising such discretion and selecting any such projects.
SEC. 304. PREEMPTION.
Nothing in this title shall preempt or otherwise affect any other
Federal, State or local law which provides protection from health
hazards from environmental tobacco smoke.
SEC. 305. REGULATIONS.
The Administrator is authorized to promulgate such regulations as
the Administrator deems necessary to carry out this title.
SEC. 306. EFFECTIVE DATE.
The provisions of this title shall take effect on the date that is
1 year after the date of enactment of this Act.
TITLE IV--NATIONAL TOBACCO SETTLEMENT TRUST FUND
SEC. 401. ESTABLISHMENT OF TRUST FUND.
(a) Creation.--
(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'', consisting of such amounts as
may be appropriated or credited to the Trust Fund.
(2) Trustees.--The trustees of the Trust Fund shall be the
Commissioner and the Secretary.
(b) Transfers.--There are hereby appropriated and transferred to
the Trust Fund--
(1) amounts repaid or recovered under section 205,
including interest thereon;
(2) amounts equivalent to amounts received under section
402; and
(3) amounts paid as fines or penalties, including interest
thereon, under section 403.
(c) Repayable Advances.--
(1) Authorization.--There are authorized to be appropriated
to the Trust Fund, as repayable advances, such sums as may from
time to time be necessary to make the expenditures described in
subsection (d).
(2) Repayment with interest.--Repayable advances made to
the Trust Fund shall be repaid, and interest on such advances
shall be paid, to the general fund of the Treasury when the
Secretary of the Treasury determined that moneys are available
in the Trust Fund for such purposes.
(3) Rate of interest.--Interest on advances made pursuant
to this subsection shall be at a rate determined by the
Secretary of the Treasury (as of the close of the calendar
month proceeding the month in which the advance is made) to be
equal to the current average market yield on outstanding
marketable obligations of the United States with remaining
period to maturity comparable to the anticipated period during
which the advance will be outstanding.
(d) Expenditures From Trust Fund.--Amounts in the Trust Fund shall
be available in each calendar year, as provided by appropriations Act,
as follows:
(1) With respect to--
(A) the first and second years following the
establishment of the Trust Fund, not less than
$2,500,000,000 each year;
(B) the third year following the establishment of
the Trust Fund, not less than $3,500,000,000;
(C) the fourth year following the establishment of
the Trust Fund, not less than $4,000,000,000;
(D) the fifth year following the establishment of
the Trust Fund, not less than $5,000,000,000; and
(E) the sixth year following the establishment of
the Trust Fund, and each year thereafter, not less than
$2,500,000,000;
of the amounts available in the Trust Fund shall be made
available to the Secretary to make grants to States to carry
out subtitle A of title V.
(2) With respect to each of the first 4 years following the
establishment of the Trust Fund, not less than $1,000,000,000,
and with respect to each year thereafter, not less than
$1,500,000,000, of the amounts available in the Trust Fund
shall be made available to the Secretary to carry out the
National Smoking Cessation Program under section 511.
(3) With respect to each of the first 3 years following the
establishment of the Trust Fund, not less than $125,000,000,
and with respect to each year thereafter, not less than
$225,000,000, of the amounts available in the Trust Fund shall
be made available to the Secretary to carry out the National
Reduction in Tobacco Usage Program under section 512.
(4) Not less than $500,000,000 of the amounts available in
the Trust Fund each year shall be made available to the
Tobacco-Free Education Board to carry out activities under
section 513.
(5) With respect to each of the first 10 years following
the establishment of the Trust Fund, not less than $75,000,000
of the amounts available in the Trust Fund shall be made
available to the Secretary to carry out the National Event
Sponsorship Program under section 514.
(6) With respect to each of the first 2 years following the
establishment of the Trust Fund, not less than $75,000,000,
with respect to the third such year, not less than
$100,000,000, and with respect to each year thereafter, not
less than $125,000,000, of the amounts available in the Trust
Fund shall be made available to the Secretary to carry out the
National Community Action Program under section 515.
(7) Not less than $100,000,000 of the amounts available in
the Trust Fund each year shall be made available to the
Secretary to carry out the National Cessation Research Program
under section 516.
(8) Not less than $300,000,000 of the amounts available in
the Trust Fund each year shall be made available to the
Commissioner as reimbursement for the costs incurred by the
Food and Drug Administration in implementing and enforcing
requirements relating to tobacco products.
(9) Not less than the amount collected under section 205
and available each year shall be made available to the
Secretary for use as provided for in section 517.
SEC. 402. LIABILITY OF INDUSTRY SOURCES.
(a) Definition.--As used in this subtitle, the term ``industry
sources'' means all entities which are signatories to the National
Tobacco Control Protocol under section 612.
(b) Payments.--
(1) Initial payment.--Each industry source shall pay to the
Trust Fund on the date of enactment of this Act, an amount that
bears the same ratio to $10,000,000,000 as the relevant
domestic tobacco product unit sales volume of the industry
source (as defined in paragraph (3)) bears to the relevant
domestic tobacco product unit volume of all industry sources
for 1996.
(2) Annual payments.--Each industry source shall pay to the
Trust Fund for each calendar year, beginning on December 31 of
the year following the year in which this Act is enacted, and
each December 31 thereafter, an annual payment equal to--
(A) with respect to the first year for which
payments are to be made, an amount that bears the same
ratio to $8,500,000,000 as the relevant domestic
tobacco product unit sales volume of the industry
source (as defined in paragraph (3)) for the year
involved bears to the relevant domestic tobacco product
unit sales volume of all industry sources for such
year;
(B) with respect to the second year for which
payments are to be made, an amount that bears the same
ratio to $9,500,000,000 as the relevant domestic
tobacco product unit sales volume of the industry
source (as defined in paragraph (3)) for the year
involved bears to the relevant domestic tobacco product
unit sales volume of all industry sources for such
year;
(C) with respect to the third year for which
payments are to be made, an amount that bears the same
ratio to $11,500,000,000 as the relevant domestic
tobacco product unit sales volume of the industry
source (as defined in paragraph (3)) for the year
involved bears to the relevant domestic tobacco product
unit sales volume of all industry sources for such
year;
(D) with respect to the fourth year for which
payments are to be made, an amount that bears the same
ratio to $14,000,000,000 as the relevant domestic
tobacco product unit sales volume of the industry
source (as defined in paragraph (3)) for the year
involved bears to the relevant domestic tobacco product
unit sales volume of all industry sources for such
year; and
(E) with respect to each of the fifth through 25th
years for which payments are to be made, an amount that
bears the same ratio to $15,000,000,000 as the relevant
domestic tobacco product unit sales volume of the
industry source (as defined in paragraph (3)) for the
year involved bears to the relevant domestic tobacco
product unit sales volume of all industry sources for
such year.
(3) Relevant domestic tobacco product unit sales volume.--
(A) In general.--For purposes of this subsection,
the relevant domestic tobacco product unit sales volume
of an industry source for a year shall be determined by
the Commissioner based on data submitted by industry sources and other
appropriate data.
(4) Adjustments.--
(A) Volume decrease.--If the Commissioner makes a
determination under paragraph (3)(B) that the total
relevant domestic tobacco product unit sales volume has
decreased, the Commissioner shall in subsequent years,
make determinations as to sales volume based solely on
adult use.
(B) Increase in profits.--
(i) In general.--With respect to an
industry source that experiences a decrease in
the amount owed under paragraph (2) for a year
as compared to the previous year, the industry
source shall be subject to an increase in such
amount (as provided for under clause (ii)) if
the Commissioner determines that the net
operating profits of the source derived from
domestic sales of tobacco products has
increased over that of the previous year.
(ii) Amount of increase.--The amount by
which the amount owed by an industry source is
increased under clause (i) shall be equal to 25
percent of the amount of the decrease involved.
(C) Inflation.--Each of the amounts described in
subparagraphs (B) through (E) of paragraph (2) shall be
increased by 3 percent each year, or adjusted each year
to reflect the increase in the Consumer Price Index for
all urban consumers (as published by the Bureau of
Labor Statistics) from the year previous to the year
for which the adjustment is being applied, whichever is
greater.
(c) Affect of Bankruptcy.--Section 507(a) of title 11, United
States Code, is amended by inserting after paragraph (9) the following:
``Tenth, payments required to be paid into the National
Tobacco Settlement Trust Fund under section 402 of the
Universal Tobacco Settlement Act.''.
(d) Pass-Through.--An industry source that is required to make
payments under this section shall annually adjust the prices of the
tobacco products sold by such source to reflect the amounts of such
payments.
(e) Tax Treatment of Payments.--For purposes of section 162 of the
Internal Revenue Code of 1986, any payment to the Tobacco Settlement
Trust Fund under section 401 shall be considered to be an ordinary and
necessary expense in carrying on a trade or business and shall be
deductible in the taxable year in which paid.
SEC. 403. ENFORCEMENT.
(a) General Rule.--There is hereby imposed a penalty on the failure
of any industry source to make any payment required under section 402.
(b) Amount of Penalty.--The amount of the penalty imposed by
subsection (a) on any failure with respect to an industry source shall
be established by the Commissioner 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 makes
the payment required under section 402, 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 payment under section 402 during any
period for which it is established to the satisfaction of the
Commissioner 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 payment under section 402
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 payment
under section 402 that is due to reasonable cause and not to
willful neglect, the Commissioner may waive all or part of the
penalty imposed under subsection (a) to the extent that the
Commissioner determines that the payment of such penalty would
be excessive relative to the failure involved.
TITLE V--PUBLIC HEALTH AND OTHER PROGRAMS
Subtitle A--Public Health Block Grant Program
SEC. 501. PUBLIC HEALTH TRUST FUND.
(a) Establishment.--
(1) In general.--The Secretary shall establish, as a
separate fund within the Trust Fund established under section
401, a trust fund to be known as the ``Public Health Trust
Fund'', consisting of such amounts as may be appropriated or
credited to the Trust Fund.
(2) Trustees.--The trustees of the Trust Fund shall be the
Commissioner and the Secretary.
(b) Transfers.--There are hereby appropriated and transferred to
the Trust Fund the amounts described in section 401(d)(1) with respect
to the year involved.
(c) Expenditures from Trust Fund.--Amounts in the Public Health
Trust Fund shall be available in each calendar year, as provided by
appropriations Act, for block grants under section 502.
SEC. 502. BLOCK GRANTS TO STATES.
(a) In General.--For the purpose described in subsection (b), the
Secretary shall award a block grant to each State in each fiscal year
in an amount based on the allotment of the State as determined in
accordance with section 503.
(b) Authorized Activities.--A State shall use amounts received
under a block grant only for the purpose of planning, carrying out, and
evaluating activities as provided for in section 504.
(c) Application.--To be eligible to receive a grant under this
subtitle a State shall prepare and submit to the Secretary an
application at such time, in such manner, and containing such
information as the Secretary may require, including such assurances as
the Secretary may require regarding the compliance of the State with
the requirements of this Act.
SEC. 503. ALLOTMENTS.
(a) In General.--Of the amounts appropriated and available for
block grants for a fiscal year under section 502, the Secretary shall
allot to each State an amount determined under the allotment formula
under subsection (b).
(b) Allotment Formula.--
(c) Reallotments.--To the extent that all the funds appropriated
under section 501(c) for a fiscal year and available for allotment in
such fiscal year are not otherwise allotted to States because--
(1) one or more States have not submitted an application in
accordance with section 502(c) for the fiscal year; or
(2) one or more States have notified the Secretary that
they do not intend to use the full amount of their allotment;
such excess shall be reallotted among each of the remaining States in
proportion to the amount otherwise allotted to such States for the
fiscal year without regard to this subsection.
(d) Indian Tribes and Tribal Organizations.--
(1) In general.--If the Secretary--
(A) receives a request from the governing body of
an Indian tribe or tribal organization within any State
that funds under this subtitle be provided directly by
the Secretary to such tribe or organization; and
(B) determines that the members of such tribe or
tribal organization would be better served by means of
grants made directly by the Secretary under this
subtitle;
the Secretary shall reserve from amounts which would otherwise
be allotted to such State under subsection (a) for the fiscal
year the amount determined under paragraph (2).
(2) Amount.--The Secretary shall reserve for the purpose of
paragraph (1) from amounts that would otherwise be allotted to
such State under subsection (a) an amount to be determined by a
formula developed by the Secretary after consultation with the
Secretary of the Interior.
(3) Grant.--The amount reserved by the Secretary on the
basis of a determination under this subsection shall be granted
to the Indian tribe or tribal organization serving the
individuals for whom such a determination has been made.
(4) Plan.--In order for an Indian tribe or tribal
organization to be eligible for a grant for a fiscal year under
this subsection, it shall submit to the Secretary a plan for
such fiscal year which meets such criteria as the Secretary may
prescribe.
(5) Definitions.--The terms ``Indian tribe'' and ``tribal
organization'' shall have the same meaning given such terms in
section 4(b) and section 4(c) of the Indian Self-Determination
and Education Assistance Act (25 U.S.C. 450b(b) and (c)).
SEC. 504. USE OF FUNDS.
(a) In General.--Amounts provided to a State under a grant under
this subtitle shall be used--
(1) to reimburse the State for expenses incurred by the
State under the State program under title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.) relating to the treatment
of tobacco-related illnesses or conditions;
(2) to reimburse the State for other expenses incurred by
the State in providing directly, or reimbursing others for the
provision of, treatment for tobacco-related illnesses or
conditions;
(3) to provide health care coverage, either directly or
through arrangements with other entities, for uninsured
individuals under 18 years of age who reside in the State;
(4) to establish a State tobacco products liability
judgments and settlement fund, as provided for in subsection
(c);
(5) to reimburse the State for expenses incurred in
carrying out the tobacco licensure requirements of subtitle D
of title I; and
(6) to carry out any other activities determined
appropriate by the State.
(b) Limitations on Uses.--A State may not use amounts provided
under a grant under this subtitle for programs or projects not approved
of by the Secretary.
(c) Judgment and Settlement Fund.--
(1) In general.--Each State that receives a grant under
this subtitle shall establish a fund for the purpose of making
payments under paragraph (2).
(2) Payments.--The fund established under paragraph (1)
shall be used to make payments to individuals who have obtained
a judgment in a tobacco-related action brought in a State
court, or who have entered into a settlement of such an action,
of the amount of any award under such judgment or settlement
that represents punitive damages.
SEC. 505. WITHHOLDING OF FUNDS.
(a) Authority.--
(1) In general.--The Secretary shall, after adequate notice
and an opportunity for a hearing conducted within the affected
State, withhold funds from any State which does not use its
allotment in accordance with the requirements of this subtitle.
The Secretary shall withhold such funds until the Secretary
finds that the reason for the withholding has been removed and
there is reasonable assurance that it will not recur.
(2) Investigation.--The Secretary may not institute
proceedings to withhold funds under paragraph (1) unless the
Secretary has conducted an investigation concerning whether the
State has used its allotment in accordance with the
requirements of this subtitle. Investigations required by this
paragraph shall be conducted within the affected State by
qualified investigators.
(3) Response to complaints.--The Secretary shall respond in
an expeditious manner to complaints of a substantial or serious
nature that a State has failed to use funds in accordance with
the requirements of this subtitle.
(4) Minor failure.--The Secretary may not withhold funds
under paragraph (1) from a State for a minor failure to comply
with the requirements of this subtitle.
(b) Investigations.--The Secretary shall conduct in several States
in each fiscal year investigations of the use of funds received by the
States under this subtitle in order to evaluate compliance with the
requirements of this subtitle.
(c) Availability of Information.--Each State, and each entity which
has received funds from an allotment made to a State under this
subtitle, shall make available to the Secretary, for examination,
copying, or mechanical reproduction on or off the premises, appropriate
books, documents, papers, and records of the entity upon a reasonable
request therefore.
Subtitle B--Other Programs
SEC. 511. NATIONAL SMOKING CESSATION PROGRAM.
(a) Establishment.--The Secretary shall establish a program to be
known as the ``National Smoking Cessation Program'' under which the
Secretary may award grants to eligible public and nonprofit entities
and individuals for smoking cessation purposes.
(b) Eligibility.--
(1) Of entities.--To be eligible to receive a grant under
this section an entity shall--
(A) be a public or nonprofit private entity;
(B) prepare and submit to the Secretary an
application at such time, in such manner, and
containing such information as the Secretary may
require;
(C) provide assurances that amounts received under
the grant will be used in accordance with subsection
(c)(1); and
(D) meet any other requirements determined
appropriate by the Secretary.
(2) Of individuals.--To be eligible to receive a grant
under this section an individual shall--
(A) prepare and submit to the Secretary an
application at such time, in such manner, and
containing such information as the Secretary may
require;
(B) provide assurances that amounts received under
the grant will be used only in accordance with
subsection (c)(2); and
(C) meet any other requirements determined
appropriate by the Secretary.
(c) Use of Funds.--
(1) By entities.--An entity that receives a grant under
this section shall use amounts provided under the grant to
establish or administer tobacco product use cessation programs
that are approved in accordance with subsection (d).
(2) By individuals.--An individual that receive a grant
under this section shall use amounts provided under the grant
to enroll in a tobacco product use cessation program or to
purchase a tobacco product cessation device that has been
approved in accordance with subsection (d). Grants to
individuals under this section may be in the form of vouchers
that may be used to pay the costs of enrollment in an approved
program or to purchase an approved device.
(d) Approval of Cessation Program or Devices.--Using the best
available scientific information, the Secretary shall promulgate
regulations to provide for the approval of tobacco product use
cessation programs and devices. Such regulations shall be designed to
ensure that tobacco product users, if requested, are provided with
reasonable access to safe and effective cessation programs and devices.
Such regulations shall ensure that such individuals have access to a
broad range of cessation options that are tailored to the needs of the
individual tobacco user.
(e) Funding.--The Secretary shall use amounts available under
section 401(d)(2) to carry out this section.
SEC. 512. NATIONAL REDUCTION IN TOBACCO USAGE PROGRAM.
(a) Establishment.--The Secretary shall establish a program to be
known as the ``National Reduction in Tobacco Usage Program'' under
which the Secretary may award grants to eligible public and nonprofit
entities to carry out activities designed to reduce the use of tobacco
products.
(b) Eligibility.--To be eligible to receive a grant under this
section an entity shall--
(1) be a State health department, other public entity, or a
nonprofit private entity;
(2) prepare and submit to the Secretary an application at
such time, in such manner, and containing such information as
the Secretary may require;
(3) provide assurances that amounts received under the
grant will be used in accordance with subsection (c); and
(4) meet any other requirements determined appropriate by
the Secretary.
(c) Use of Funds.--An entity that receives a grant under this
section shall use amounts provided under the grant to--
(1) carry out media-based and nonmedia-based education,
prevention and cessation campaigns designed to discourage the
use of tobacco products by individuals who are under 18 years
of age and to encourage those who use such products to quit;
(2) carry out research concerning, and provide for the
development and public dissemination of, technologies and
methods to reduce the risk of dependence and injury from
tobacco product usage and exposure;
(3) provide for the identification, testing, and evaluation
of the health effects of both tobacco and non-tobacco
constituents of tobacco products; or
(4) carry out any other activities determined by the
Secretary to be consistent with the purposes of this Act.
(d) Funding.--The Secretary shall use amounts available under
section 401(d)(3) to carry out this section.
SEC. 513. NATIONAL TOBACCO-FREE PUBLIC EDUCATION PROGRAM.
(a) Establishment of Board.--
(1) In general.--The Secretary shall establish an
independent board to be known as the ``Tobacco-Free Education
Board'' (referred to in this section as the ``Board'') to enter
into contracts with or award grants to eligible public and
nonprofit private entities to carry out public informational
and educational activities designed to reduce the use of
tobacco products.
(2) Appointment.--The Board shall be composed of 9 members
to be appointed by the Secretary, of which--
(A) at least 3 such members shall be an individual
who is widely recognized by the general public for
achievement in the athletic, cultural, entertainment,
educational, business, or political field; and
(B) at least 3 of whom shall be individuals who are
heads of a major public health organizations.
(3) Terms and vacancies.--The members of the Board shall
serve staggered terms as determined appropriate at the time of
appointment by the Secretary. Any vacancy in the Board shall
not affect its powers, but shall be filled in the same manner
as the original appointment.
(4) Powers.--
(A) Hearings.--The Board may hold such hearings,
sit and act at such times and places, take such
testimony, and receive such evidence as the Board
considers advisable to carry out the purposes of this
section.
(B) Information from federal agencies.--The Board
may secure directly from any Federal department or
agency such information as the Board considers
necessary to carry out the provisions of this section.
(5) Personnel matters.--
(A) Compensation.--Each member of the Board who is
not an officer or employee of the Federal Government
shall be compensated at a rate equal to the daily
equivalent of the annual rate of basic pay prescribed
for level IV of the Executive Schedule under section
5315 of title 5, United States Code, for each day
(including travel time) during which such member is
engaged in the performance of the duties of the Board.
All members of the 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 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 Board.
(b) Establishment of Program.--The Secretary shall establish a
program to be known as the ``National Tobacco-Free Public Education
Program'' under which the Board may enter into contracts with or award
grants to eligible public and nonprofit private entities to carry out
public informational and educational activities designed to reduce the
use of tobacco products.
(c) Eligibility.--To be eligible to receive a grant under this
section an entity shall--
(1) be a--
(A) public entity or a State health department; or
(B) nonprofit private entity that--
(i) is not affiliated with a tobacco
product manufacturer or importer;
(ii) has a demonstrated record of working
effectively to reduce tobacco product use; and
(iii) has expertise in conducting a multi-
media communications campaign;
(2) prepare and submit to the Secretary an application at
such time, in such manner, and containing such information as
the Secretary may require, including a description of the
activities to be conducted using amounts received under the
grant or contract;
(3) provide assurances that amounts received under the
grant will be used in accordance with subsection (d); and
(4) meet any other requirements determined appropriate by
the Secretary.
(d) Use of Funds.--An entity that receives a grant or contract
under this section shall use amounts provided under the grant or
contract to conduct multi-media public educational or informational
campaigns that are designed to discourage and de-glamorize the use of
tobacco products. Such campaigns shall be designed to discourage the
initiation of tobacco use by minors and encourage those using such
products to quit.
(e) Needs of Certain Populations.--In awarding grants and contracts
under this section, the Board shall take into consideration the needs
of particular populations.
(f) Funding.--The Secretary shall use amounts available under
section 401(d)(4) to carry out this section.
SEC. 514. NATIONAL EVENT SPONSORSHIP PROGRAM.
(a) Establishment.--The Secretary shall establish a program to be
known as the ``National Event Sponsorship Program'' under which the
Secretary may award grants to eligible entities or individuals for the
sponsorship of activities described in subsection (c).
(b) Eligibility.--To be eligible to receive a grant under this
section an entity or individual shall--
(1) prepare and submit to the Secretary an application at
such time, in such manner, and containing such information as
the Secretary may require, including--
(A) a description of the event, activity, team, or
entry for which the grant is to be provided;
(B) documentation that the event, activity, team,
or entry involved was sponsored or otherwise funded by
a tobacco manufacturer or distributor prior to the date
of the application; and
(C) a certification that the applicant is unable to
secure funding for the event, activity, team, or entry
involved from sources other than those described in
paragraph (2);
(2) provide assurances that amounts received under the
grant will be used in accordance with subsection (d); and
(3) meet any other requirements determined appropriate by
the Secretary.
(c) Permissible Sponsorship Activities.--Events, activities, teams,
or entries for which a grant may be provided under this section
include--
(1) an athletic, musical, artistic, or other social or
cultural event or activity that was sponsored in whole or in
part by a tobacco manufacturer or distributor prior to the date
of enactment of this Act;
(2) the participation of a team that was sponsored in whole
or in part by a tobacco manufacturer or distributor prior to
the date of enactment of this Act, in an athletic event or
activity; and
(3) the payment of a portion or all of the entry fees of,
or other financial or technical support provided to, an
individual or team by a tobacco manufacturer or distributor
prior to the date of enactment of this Act, for participation
of the individual in an athletic, musical, artistic, or other
social or cultural event.
(d) Use of Funds.--Amounts received under a grant under this
section shall be used to--
(1)(A) pay the costs associated with the sponsorship of an
event or activity described in subsection (c)(1);
(B) provide for the sponsorship of an individual or team;
(C) pay the required entry fees associated with the
participation of an individual or team in an event or activity
described in subsection (c)(3);
(D) provide financial or technical support to an individual
or team in connection with the participation of that individual
or team in an activity described in subsection (c)(3); or
(E) for any other purposes determined appropriate by the
Secretary; and
(2) promote images or activities to discourage individuals
from using tobacco products or encourage individuals who use
such products to quit.
(e) Allocation of Unexpended Funds.--Amounts available for purposes
of carrying out this section and remaining available at the end of the
10-year period described in section 401(d)(5), shall be used as
follows:
(1) 50 percent of such amounts shall be used to supplement
amounts available for multi-media campaigns under section 512;
(2) 25 percent of such amounts shall be used to supplement
amounts available for enforcement purposes under section
401(d)(8); and
(3) 25 percent of such amounts shall be used to supplement
amounts available for community action programs under section
515.
(f) Funding.--The Secretary shall use amounts available under
section 401(d)(5) to carry out this section.
SEC. 515. NATIONAL COMMUNITY ACTION PROGRAM.
(a) Establishment.--The Secretary shall establish a program to be
known as the ``National Community Action Program'' under which the
Secretary may award grants to eligible State and local governmental
entities to carry out community-based tobacco control efforts that are
designed to encourage community involvement in reducing tobacco product
use.
(b) Eligibility.--To be eligible to receive a grant under this
section an entity shall--
(1) be a State or local public entity;
(2) prepare and submit to the Secretary an application at
such time, in such manner, and containing such information as
the Secretary may require;
(3) provide assurances that amounts received under the
grant will be used in accordance with the purposes of this
section; and
(4) meet any other requirements determined appropriate by
the Secretary.
(c) Funding.--The Secretary shall use amounts available under
section 401(d)(6) to carry out this section.
SEC. 516. NATIONAL CESSATION RESEARCH PROGRAM.
(a) Establishment.--The Secretary shall establish a program to be
known as the ``National Cessation Research Program'' under which the
Secretary may award grants to eligible entities for research
concerning, and the development of methods, drugs, and devices to
discourage individuals from using tobacco products and to assist
individuals who use such products in quitting such use.
(b) Eligibility.--
(c) Use of Funds.--
(d) Additional Requirements.--
(e) Funding.--The Secretary shall use amounts available under
section 401(d)(7) to carry out this section.
SEC. 517. USE OF SURCHARGE PAYMENTS.
(a) In General.--Of the amount made available to the Secretary each
year under section 401(d)(9), the Secretary shall--
(1) use not less than 90 percent of such amount to award
grants to State and local governmental and public health
agencies to carry out activities to further reduce the use of
tobacco products by individuals who are under 18 years of age;
and
(2) use not more than 10 percent of such amount for the
administrative costs associated with the administration of
title II and of chapter IX of the Federal Food, Drug and
Cosmetic Act (as added by section 143(3)).
(b) Transfer of Certain Amounts.--If the Secretary determines that
the administrative costs described in subsection (a)(2) are less than
the amount available under section subsection, the Secretary may--
(1) transfer any such excess amount to other Federal,
State, or local agencies to meet the needs associated with the
reduction of underage tobacco usage; or
(2) expend such amounts directly for activities to expedite
the reduction of underage tobacco use.
(c) Eligibility.--To be eligible to receive a grant under this
section an entity shall--
(1) be a State or local governmental or public health
agency;
(2) prepare and submit to the Secretary an application at
such time, in such manner, and containing such information as
the Secretary may require;
(3) provide assurances that amounts received under the
grant will be used in accordance with this section; and
(4) meet any other requirements determined appropriate by
the Secretary.
(d) Funding.--The Secretary shall use amounts available under
section 401(d)(9) to carry out this section.
TITLE VI--CONSENT DECREES, NON-PARTICIPATING MANUFACTURERS, AND STATE
ENFORCEMENT
SEC. 601. PURPOSES.
It is the purpose of this title to provide for the establishment of
consent decrees and the imposition of certain payment provisions, in
addition to those otherwise provided for under Federal or State laws,
to encourage manufacturers, distributors, and retailers to comply with
this Act, and to otherwise provide for the enforcement of this Act with
respect to non-participating manufacturers.
Subtitle A--Consent Decrees and Non-Participating Manufacturers
SEC. 611. CONSENT DECREES.
(a) Requirement.--To be eligible to receive payments under title V,
a State, and to be eligible to receive liability protections under
title VII, a tobacco manufacturer or distributor, 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), including 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) compliance and corporate culture;
(H) the obligation of manufacturers to make
payments for the benefit of States;
(I) 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;
(J) 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 required percentage reductions in the
underage use of tobacco products for a year under
section 204.
(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 Secretary 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 Secretary, in consultation
with 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. 612. NATIONAL TOBACCO CONTROL PROTOCOL.
(a) Requirement.--Not later than 6 months after the date of
enactment of this Act, each tobacco manufacturer to which this Act
applies shall enter into a National Tobacco Control Protocol.
(b) Terms and Conditions.--The Protocol referred to in subsection
(a) shall be--
(1) developed by the Secretary as a binding and enforceable
contract that embodies the terms of this Act; and
(2) designed to be enforceable in Federal or State courts.
SEC. 613. NON-PARTICIPATING MANUFACTURERS.
(a) In General.--With respect to a manufacturer that elects not to
enter into a consent decree under section 602, such manufacturer shall
not be eligible to receive the liability protections under title VII.
(b) Imposition of User Fee.--
(1) In general.--Each manufacturer that elects not to enter
into a consent decree under section 602 and not to become a
signatory to the National Tobacco Control Protocol under
section 603 shall be subject to an annual fee established under
this subsection.
(2) Amount of fee.--
(A) Total.--The total amount of all fees
established under this subsection for a year shall be
equal to the amounts provided under paragraphs (1) and
(8) of section 401(d) for the year.
(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.
(c) Settlement Reserve Fund.--
(1) In general.--Each 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 402 (except for that
portion of the payments that would have been made available
under paragraphs (1) and (8) of section 401(d)) for the year in
which the manufacturer is making such deposit if the
manufacturer had been a signatory to the National Tobacco
Control Protocol under section 603.
(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 B--State Enforcement
SEC. 621. REQUIREMENT OF NO SALE TO MINORS LAW.
(a) Relevant Law.--
(1) In general.--Subject to paragraph (2), for each
calendar year, the Secretary may not make any payments to a
State under section 403 unless the State involved has in effect
a law providing that it is unlawful for any manufacturer,
retailer, or distributor of tobacco products to sell or
distribute any such product to any individual under the age of
18 that meets the requirements of this section.
(2) Delayed applicability for certain states.--In the case
of a State whose legislature does not convene a regular session
in fiscal year 1997, and in the case of a State whose
legislature does not convene a regular session in fiscal year
1998, the requirement described in paragraph (1) as a condition
of a receipt of payments under section 403 shall apply only for
fiscal year 1999 and subsequent fiscal years.
(b) Requirements.--A State law described in subsection (a) shall
comply with the following:
(1) Prohibition on sale.--Such law shall provide that it is
unlawful for any manufacturer, retailer, or distributor of
tobacco products to sell or distribute any such product within
the State to any individual under the age of 18 years.
(2) Purchase, receipt or possession.--
(A) In general.--Such law shall provide that 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.
(B) Employment.--Such law may permit an individual
under the age of 18 to possess 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.
(3) Inspections.--
(A) In general.--Such law shall provide that the
State Police of a State, or such local law enforcement
authority duly designated by the State Police, shall
enforce this law 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, at least monthly, conduct random,
unannounced inspections in accordance with regulations
promulgated by the Secretary under this section to
ensure compliance with this law.
(B) Conduct.--Inspections under this paragraph
shall be conducted in communities geographically and
statistically representative of the entire State and
the youth population of the State. Not less than 250
such inspections shall be conducted with respect to
each 1,000,000 residents of the State.
SEC. 622. STATE REPORTING.
(a) In General.--Not later than 2 years after the date of enactment
of this Act, and annually thereafter, the State shall prepare and
submit to the Secretary a reduction in tobacco product usage report.
Such report shall, except as provided in subsection (b)(3), be made
available to the general public of the State.
(b) Contents.--A report submitted under subsection (a) shall
include--
(1) a detailed description of the enforcement activities
undertaken by the State and the political subdivisions of the
State concerning tobacco product usage laws for the year for
which the report is being prepared;
(2) a detailed description of the progress of the State in
reducing the availability of tobacco products to individuals
under 18 years of age, including the detailed statistical
results of the compliance inspection required under section
621;
(3) a detailed description of the methods used in such
compliance inspection and in identifying outlets which were
tested (the Secretary shall provide protections for the confidentiality
of information provided under this paragraph);
(4) a detailed description of the strategies that the State
intends to utilize in the current and succeeding years to make
further progress on reducing the availability of tobacco
products to individuals under 18 years of age; and
(5) the identity of a single State agency that is
responsible for administering the requirements of title III in
the State.
SEC. 623. REDUCTION IN STATE PAYMENTS.
(a) Annual Determination.--Beginning with respect to the fifth full
fiscal year after the date of enactment of this Act, and each fiscal
year thereafter the Secretary shall make a determination as to whether
each State has pursued all reasonably available measures to enforce the
law described in section 621.
(b) Presumptive Finding.--The Secretary shall find presumptively
that a State has not pursued all reasonably available measures to
enforce the law described in section 621 if the Secretary determines
that the State has not achieved the following compliance rate results
based on the findings of the retail compliance inspections conducted
under the State law:
(1) With respect to each of the fifth and sixth fiscal
years following the date of enactment, 75 percent compliance
with State law.
(2) With respect to each of the seventh through ninth
fiscal years following the date of enactment, 85 percent
compliance with State law.
(3) With respect to the tenth and each subsequent fiscal
year following the date of enactment, 90 percent compliance
with State law.
(c) Amount of Reduction.--
(1) In general.--With respect to a State that the Secretary
determines does not meet the compliance rates described in
subsection (b), the Secretary may reduce the amount that the
State may be eligible for under section 501. The amount of any
such reduction shall not exceed an amount equal to 1 percent of
the amount for which the State is eligible for under section
501 for the fiscal year involved for each 1 percentage point by
which the State's compliance performance is below the
applicable compliance rate.
(2) Limitation.--In no event shall the amount of any
reduction under this section exceed an amount equal to 20
percent of the amount for which the State is eligible for under
section 501 for the fiscal year involved.
(3) Reallotment.--The Secretary shall reallot any amounts
withheld under this subsection to States with compliance rates
that exceed the rates applicable under subsection (b) in
amounts to be determined by the Secretary as appropriate to
reward States with the highest compliance rates.
(d) Review.--
(1) Petition for release.--Not later than 90 days after the
date on which a notice from the Secretary that the Secretary
intends to make a reduction under subsection (c) is received, a
State may petition the Secretary for a release and disbursement
of such amount (referred to in this subsection as the
``withhold amount''). The State shall give prompt written
notice of such petition to the State attorney general.
(2) Action by secretary.--
(A) Holding and investing of funds.--Upon receipt
of a petition under paragraph (1), the Secretary shall
designate the withhold amount as subject to a petition
and invest such amount in interest-bearing securities
of the United States subject to a final disposition of
the petition.
(B) Basis for determination.--In considering a
petition received under paragraph (1), the Secretary
shall consider--
(i) whether the State has acted in good
faith and in full compliance with the
provisions of this Act (and the amendments made
by this Act) and any regulations promulgated in
furtherance of this Act;
(ii) whether the State has pursued all
reasonably available measures to achieve the
compliance rates applicable under subsection
(b) and the goals of this Act for reducing the
underage use of tobacco products;
(iii) whether there is any evidence of any
direct or indirect action taken by the State to
undermine the achievement of the compliance
rates and goals described in clause (ii); and
(iv) any other evidence determined
appropriate by the Secretary.
(C) Burden.--With respect to any action by the
Secretary on a petition under paragraph (1), the burden
shall be on the State to prove, by a preponderance of
the evidence, that the State should be granted a
release and disbursement under the petition.
(D) Hearing.--The Secretary shall hold a hearing,
with notice and an opportunity to be heard provided to
the attorney general of the State and to manufacturers,
prior to making any determination as to a petition
under paragraph (1).
(E) Release of funds.--Upon a determination by the
Secretary that the State has met the burden imposed
under subparagraph (C) with respect to a petition, the
Secretary shall disburse not to exceed 75 percent of
the withhold amount (and any interest accrued on such
amount) to the State. The Secretary may consider all
relevant evidence in determining the amount to disburse
to the State under this subparagraph.
(3) Appeals.--
(A) In general.--Any manufacturer or State attorney
general aggrieved by a decision of the Secretary under
paragraph (2) may, within 30 days of the date of such
decision, seek judicial review of the decision in the
United States Court of Appeals for the District of
Columbia Circuit. The provisions of sections 701
through 706 of title 5, United States Code, shall apply
to appeals filed under this paragraph.
(B) Limitation.--No stay or other injunctive relief
that has the effect of enjoining the withholding of
amounts under this section shall be permitted during
the pendency of an appeal filed under this paragraph.
(C) Finality.--The decision of the Court of Appeals
in an action under this paragraph shall be final.
TITLE VII--PROVISIONS RELATING TO TOBACCO-RELATED CIVIL ACTIONS
SEC. 701. GENERAL IMMUNITY.
(a) State Attorney General Actions.--
(1) Pending actions.--Civil actions that have been
commenced by a State or local governmental entity, or on behalf
of such an entity, against a manufacturer, distributor, or
retailer that is a signatory to the National Tobacco Control
Protocol under section 612, and that are pending on the date of
enactment of this Act are terminated.
(2) Future actions.--A manufacturer, distributor or
retailer that is a signatory to the National Tobacco Control
Protocol under section 612 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 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, distributor, or
retailer that is a signatory to the National Tobacco
Control Protocol under section 612, are terminated.
(B) Future actions.--A manufacturer, distributor,
or retailer that is a signatory to the National Tobacco
Control Protocol under section 612 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 addition to or dependence on a tobacco product
that are pending against a manufacturer, distributor,
or retailer that is a signatory to the National Tobacco
Control Protocol under section 612, are terminated.
(B) Future actions.--A manufacturer, distributor,
or retailer that is a signatory to the National Tobacco
Control Protocol under section 612 shall be immune from
any civil action commenced after the date of enactment
of this Act for all claims based on addition 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. 702. CIVIL LIABILITY FOR PAST CONDUCT.
(a) Application.--The provisions of this section shall apply to all
civil actions permitted under section 701 for relief arising from the
conduct of a manufacturer, distributor, or retailer that is a signatory
to the National Tobacco Control Protocol under section 612 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 612, 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 612, 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 a 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) Caps on Settlements.--
(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 612
shall be required to pay, shall not exceed an amount equal to
33 percent of the annual payment required under section 402 for
the year involved.
(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 payment required under section 402
for the year involved, such excess amount shall be paid in the
following year.
(3) Affect 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 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.
(4) 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.
(5) Unused portion of credit.--
(i) Defense Costs.--The signatories of the National Tobacco Control
Protocol under section 612 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. 703. CIVIL LIABILITY FOR FUTURE CONDUCT.
(a) Application.--The provisions of this section shall apply to all
civil actions permitted under section 701 for relief arising from the
conduct of a manufacturer, distributor, or retailer that is a signatory
to the National Tobacco Control Protocol under section 612 that occurs
after the date of enactment of this Act.
(b) General Provisions.--The provisions of subsections (c) and (e)
through (i) of section 702 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. 704. NON-PARTICIPATING MANUFACTURERS.
The provisions of this title shall not apply to any manufacturer,
distributor, or retailer that is not a signatory to the National
Tobacco Control Protocol under section 612.
TITLE VIII--PUBLIC DISCLOSURE OF HEALTH RESEARCH
SEC. 801. 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. 802. NATIONAL TOBACCO DOCUMENT DEPOSITORY.
(a) Establishment.--To be eligible to receive the protections
provided under title VII, 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), shall, not later than 180 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.
(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 180 days of the date of enactment of this Act,
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) the Haines and Cippollone actions; and
(E) the Butler action in Mississippi;
(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 180 days of the date of enactment of this Act,
all documents relating to indices (as defined by the court in
the Minnesota Attorney General action) of documents relating to
smoking and health, including all indices identified by the
manufacturers in the Washington, Texas, and Minnesota Attorney
General actions;
(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; and
(8) 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.
TITLE IX--ASSISTANCE TO TOBACCO GROWERS AND COMMUNITIES
SEC. 901. SHORT TITLE.
This title may be cited as the ``Long-Term Economic Assistance for
Farmers Act'' or the ``LEAF Act''.
SEC. 902. DEFINITIONS.
In this title:
(1) Active tobacco producer.--The term ``active tobacco
producer'' means a quota holder, quota lessee, or quota tenant.
(2) Quota holder.--The term ``quota holder'' means a
producer that owns a farm for which a tobacco farm marketing
quota or farm acreage allotment was established under the
Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.) for
any of the 1994, 1995, or 1996 crop years.
(3) Quota lessee.--The term ``quota lessee'' means--
(A) a producer that owns a farm that produced
tobacco pursuant to a lease and transfer to that farm
of all or part of a tobacco farm marketing quota or
farm acreage allotment established under the
Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et
seq.) for any of the 1994, 1995, or 1996 crop years; or
(B) a producer that rented land from a farm
operator to produce tobacco under a tobacco farm
marketing quota or farm acreage allotment established
under the Agricultural Adjustment Act of 1938 (7 U.S.C.
1281 et seq.) for any of the 1994, 1995, or 1996 crop
years.
(4) Quota tenant.--The term ``quota tenant'' means a
producer who--
(A) is the principal producer, as determined by the
Secretary, of tobacco on a farm where tobacco is
produced pursuant to a tobacco farm marketing quota or
farm acreage allotment established under the
Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et
seq.) for any of the 1994, 1995, or 1996 crop years;
and
(B) is not a quota holder or quota lessee.
(5) Secretary.--The term ``Secretary'' means--
(A) in titles I and II, the Secretary of
Agriculture; and
(B) in section 301, the Secretary of Labor.
(6) Tobacco product importer.--The term ``tobacco product
importer'' has the meaning given the term ``importer'' in
section 5702 of the Internal Revenue Code of 1986.
(7) Tobacco product manufacturer.--
(A) In general.--The term ``tobacco product
manufacturer'' has the meaning given the term
``manufacturer of tobacco products'' in section 5702 of
the Internal Revenue Code of 1986.
(B) Exclusion.--The term ``tobacco product
manufacturer'' does not include a person that
manufactures cigars or pipe tobacco.
(8) Trust fund.--The term ``Trust Fund'' means the Tobacco
Community Revitalization Trust Fund established under section
101.
Subtitle A--Tobacco Community Revitalization Trust Fund
SEC. 911. ESTABLISHMENT OF TRUST FUND.
(a) In General.--There is established in the Treasury of the United
States a trust fund to be known as the ``Tobacco Community
Revitalization Trust Fund'', consisting of such amounts as may be
appropriated or credited to the Trust Fund. The Trust Fund shall be
administered by the Secretary.
(b) Transfers to Trust Fund.--There are appropriated and
transferred to the Trust Fund for each fiscal year--
(1) amounts contributed by tobacco product manufacturers
and tobacco product importers under section 102; and
(2) amounts made available to the Trust Fund out of funds
allocated through national tobacco settlement legislation.
(c) Repayable Advances.--
(1) Authorization.--There are authorized to be appropriated
to the Trust Fund, as repayable advances, such sums as may from
time to time be necessary to make expenditures under subsection
(d).
(2) Repayment with interest.--Repayable advances made to
the Trust Fund shall be repaid, and interest on the advances
shall be paid, to the general fund of the Treasury when the
Secretary of the Treasury determines that moneys are available
in the Trust Fund to make the payments.
(3) Rate of interest.--Interest on an advance made under
this subsection shall be at a rate determined by the Secretary
of Treasury (as of the close of the calendar month preceding
the month in which the advance is made) that is equal to the
current average market yield on outstanding marketable
obligations of the United States with remaining period to
maturity comparable to the anticipated period during which the
advance will be outstanding.
(d) Expenditures From Trust Fund.--Amounts in the Trust Fund shall
be available for making expenditures after October 1, 1998, to meet
those necessary obligations of the Federal Government that are
authorized to be paid under--
(1) section 201 for payments for lost tobacco quota for
each of fiscal years 1999 through 2023, but not to exceed
$1,600,000,000 for any fiscal year except to the extent the
payments are made in accordance with section 201(j);
(2) section 202 for industry payments for all costs of the
Department of Agriculture associated with the production of
tobacco;
(3) section 203 for tobacco community economic development
grants, but not to exceed--
(A) $400,000,000 for each of fiscal years 1999
through 2008, less any amount required to be paid under
section 202 for the fiscal year; and
(B) $450,000,000 for each of fiscal year 2009
through 2023, less any amount required to be paid under
section 202 during the fiscal year;
(4) section 301 for assistance provided under the tobacco
worker transition program, but not to exceed $50,000,000 for
any fiscal year; and
(5) subpart 9 of part A of title IV of the Higher Education
Act of 1965 for farmer opportunity grants, but not to exceed--
(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; and
(E) $72,500,000 for each of the academic years
2019-2020 through 2023-2024.
(e) Budgetary Treatment.--This section constitutes budget authority
in advance of appropriations Acts and represents the obligation of the
Federal Government to provide payments to States and eligible persons
in accordance with this title.
SEC. 912. CONTRIBUTIONS BY TOBACCO PRODUCT MANUFACTURERS AND IMPORTERS.
(a) Definition of Market Share.--In this section, the term ``market
share'' means the ratio of--
(1) the tax liability of a tobacco product manufacturer or
tobacco product importer (as defined in section 2) for a
calendar year under section 5703 of the Internal Revenue Code
of 1986; to
(2) the tax liability of all tobacco product manufacturers
or tobacco product importers (as defined in section 2) for the
calendar year under section 5703 of the Internal Revenue Code
of 1986.
(b) Determinations.--Not later than September 30 of each fiscal
year, the Secretary of the Treasury shall--
(1) determine--
(A) the market share of each tobacco product
manufacturer or tobacco product importer during the
most recent calendar year;
(B) the total amount of assessments payable for the
subsequent fiscal year under subsection (c); and
(C) the amount of an assessment payable by the
tobacco product manufacturer or tobacco product
importer for the fiscal year under subsection (d); and
(2) notify each tobacco product manufacturer and tobacco
product importer of the determinations made under paragraph (1)
with respect to the manufacturer or importer.
(c) Total Amount of Assessments.--
(1) In general.--The total amount of assessments payable by
all tobacco product manufacturers and tobacco product importers
into the Trust Fund for a fiscal year shall be equal to--
(A) the amount of the contribution to the Trust
Fund for the fiscal year required under paragraph (2);
less
(B) any amount made available during the preceding
fiscal year to the Trust Fund out of funds allocated
through national tobacco settlement legislation.
(2) Trust fund contributions.--The amount of the
contribution to the Trust Fund shall be--
(A) $2,100,000,000 for each of fiscal years 1999
through 2008;
(B) $500,000,000 for each of fiscal years 2009
through 2023; and
(C) for fiscal year 2024 and each subsequent fiscal
year, the amount payable under section 202.
(d) Individual Amount of Assessments.--The amount of an assessment
payable by each tobacco product manufacturer and tobacco product
importer into the Trust Fund for a fiscal year shall be equal to the
product obtained by multiplying--
(1) the total amount of assessments payable by all tobacco
product manufacturers and tobacco product importers for the
fiscal year under subsection (c); by
(2) the market share of the tobacco product manufacturer or
tobacco product importer during the most recent calendar year
determined under subsection (b)(1)(A).
Subtitle B--Agricultural Market Transition Assistance
SEC. 921. PAYMENTS FOR LOST TOBACCO QUOTA.
(a) In General.--Beginning with the 1999 marketing year, the
Secretary shall make payments for lost tobacco quota to eligible quota
holders, quota lessees, and quota tenants as reimbursement for lost
tobacco quota as a result of a decrease in demand for domestically
produced tobacco.
(b) Eligibility.--To be eligible to receive payments under this
section, a quota holder, quota lessee, or quota tenant shall--
(1) prepare and submit to the Secretary an application at
such time, in such manner, and containing such information as
the Secretary may require, including information sufficient to
make the demonstration required under paragraph (2); and
(2) demonstrate to the satisfaction of the Secretary that,
with respect to the 1996 marketing year--
(A) the producer was a quota holder and realized
income from the production of tobacco through--
(i) the active production of tobacco;
(ii) the lease and transfer of tobacco
quota to another farm;
(iii) the rental of all or part of the farm
of the quota holder, including the right to
produce tobacco, to another tobacco producer;
or
(iv) the hiring of a quota tenant to
produce tobacco;
(B) the producer was a quota lessee; or
(C) the producer was a quota tenant.
(c) Base Quota Level.--
(1) In general.--The Secretary shall determine, for each
quota holder, quota lessee, and quota tenant, the base quota
level for the 1994 through 1996 marketing years.
(2) Quota holders.--The base quota level for a quota holder
shall be equal to the average tobacco farm marketing quota
established for the farm owned by the quota holder for the 1994
through 1996 marketing years.
(3) Quota lessees.--The base quota level for a quota lessee
shall be equal to--
(A) 50 percent of the average number of pounds of
tobacco quota established for a farm for the 1994
through 1996 marketing years--
(i) that was leased and transferred to a
farm owned by the quota lessee; or
(ii) for which the rights to produce the
tobacco were rented to the quota lessee; less
(B) 25 percent of the average number of pounds of
tobacco quota described in paragraph (A) for which a
quota tenant was the principal producer of the tobacco
quota.
(4) Quota tenants.--The base quota level for a quota tenant
shall be equal to the sum of--
(A) 50 percent of the average number of pounds of
tobacco quota established for a farm for the 1994
through 1996 marketing years--
(i) that was owned by a quota holder; and
(ii) for which the quota tenant was the
principal producer of the tobacco on the farm;
and
(B) 25 percent of the average number of pounds of
tobacco quota for the 1994 through 1996 marketing
years--
(i)(I) that was leased and transferred to a
farm owned by the quota lessee; or
(II) for which the rights to produce the
tobacco were rented to the quota lessee; and
(ii) for which the quota tenant was the
principal producer of the tobacco on the farm.
(5) Marketing quotas other than poundage quotas.--For each
kind of tobacco for which there is a marketing quota or
allotment (on an acreage basis), the base quota level for each
quota holder, quota lessee, or quota tenant shall be determined
in accordance with this subsection (based on a poundage
conversion) in an amount equal to the product obtained by
multiplying--
(A) the average tobacco farm marketing quota or
allotment for the 1994 through 1996 marketing years; by
(B) the average county yield per acre for the
county in which the farm is located for the kind of
tobacco for the marketing years.
(d) Payments.--Except as otherwise provided in this section, during
any marketing year in which the national marketing quota for a kind of
tobacco is less than the average national marketing quota level for the
kind of tobacco for the 1994 through 1996 marketing years, the
Secretary shall make payments for lost tobacco quota to each quota
holder, quota lessee, and quota tenant that is eligible under
subsection (b) in an amount that is equal to the product obtained by
multiplying--
(1) the percentage by which the national marketing quota
for the kind of tobacco is less than the average national
marketing quota level for the kind of tobacco for the 1994
through 1996 marketing years; by
(2) the base quota level for the quota holder, quota
lessee, or quota tenant; by
(3) $4 per pound.
(e) Lifetime Limitation on Payments.--Except as otherwise provided
in this section, the total amount of payments made under this section
to a quota holder, quota lessee, or quota tenant during the lifetime of
the holder, lessee, or tenant shall not exceed the product obtained by
multiplying--
(1) the base quota level for the quota holder, quota
lessee, or quota tenant; by
(2) $8 per pound.
(f) Limitations on Aggregate Annual Payments.--
(1) In general.--Except as otherwise provided in this
subsection, the total amount payable under this section for any
marketing year shall not exceed $1,600,000,000.
(2) Accelerated payments.--Paragraph (1) shall not apply if
accelerated payments for lost tobacco quota are made in
accordance with subsection (j).
(3) Reductions.--If the amount determined under subsection
(d) for a marketing year exceeds the amount described in
paragraph (1), the Secretary shall make a pro rata reduction in
the amounts payable to quota holders, quota lessees, and quota
tenants under this section to ensure that the total amount of
the payments for lost tobacco quota does not exceed the
limitation established under paragraph (1).
(4) Rollover of payments for lost tobacco quota.--Subject
to paragraph (1), if the Secretary makes a reduction in
accordance with paragraph (3), the amount of the reduction
shall be applied to the next marketing year and added to the
payments for lost tobacco for the marketing year.
(g) Subsequent Sale and Transfer of Quota.--Effective beginning
January 1, 1999, on the sale and transfer of a farm marketing quota
under section 316(g) or 319(g) of the Agricultural Adjustment Act of
1938 (7 U.S.C. 1314b(g), 1314e(g))--
(1) the person who sold and transferred the quota shall
have--
(A) the base quota level attributable to the person
reduced by the base quota level attributable to the
quota that is sold and transferred; and
(B) the lifetime limitation on payments established
under subsection (e) attributable to the person reduced
by the product obtained by multiplying--
(i) the base quota level attributable to
the quota; by
(ii) $8 per pound; and
(2) the person who acquired the quota shall have--
(A) the base quota level attributable to the person
increased by the base quota level attributable to the
quota that was sold and transferred; and
(B) the lifetime limitation on payments established
under subsection (e) attributable to the person--
(i) increased by the product obtained by
multiplying--
(I) the base quota level
attributable to the quota; by
(II) $8 per pound; but
(ii) decreased by any payments for lost
tobacco quota previously made that are
attributable to the quota that was sold and
transferred.
(h) Sale or Transfer of Farm.--On the sale or transfer of ownership
of a farm that is owned by a quota holder, the base quota level
established under subsection (c), the right to payments under
subsection (d), and the lifetime limitation on payments established
under subsection (e) shall transfer to the new owner of the farm to the
same extent and in the same manner as those subsections applied to the
previous quota holder.
(i) Death of Quota Lessee or Quota Tenant.--If a quota lessee or
quota tenant who is entitled to payments under this section dies and is
survived by a spouse or 1 or more dependents, the right to receive the
payments shall transfer to the surviving spouse or, if there is no
surviving spouse, to the surviving dependents in equal shares.
(j) Acceleration of Payments.--
(1) In general.--On the occurrence of any of the events
described in paragraph (2), the Secretary shall make an
accelerated lump sum payment for lost tobacco quota to each
quota holder, quota lessee, and quota tenant for any affected
kind of tobacco in accordance with paragraph (3).
(2) Triggering events.--The Secretary shall make
accelerated payments under paragraph (1) if after the date of
enactment of this title--
(A) for 3 consecutive marketing years, the national
marketing quota for a kind of tobacco is less than 50
percent of the national marketing quota for the kind of
tobacco for the 1996 marketing year; or
(B) Congress repeals or makes ineffective, directly
or indirectly, any provision of--
(i) section 316(g) of the Agricultural
Adjustment Act of 1938 (7 U.S.C. 1314b(g));
(ii) section 319(g) of the Agricultural
Adjustment Act of 1938 (7 U.S.C. 1314e(g));
(iii) section 106 of the Agricultural Act
of 1949 (7 U.S.C. 1445);
(iv) section 106A of the Agricultural Act
of 1949 (7 U.S.C. 1445-1); or
(v) section 106B of the Agricultural Act of
1949 (7 U.S.C. 1445-2).
(3) Amount.--The amount of the accelerated payments made to
each quota holder, quota lessee, and quota tenant under this
subsection shall be equal to--
(A) the amount of the lifetime limitation
established for the quota holder, quota lessee, or
quota tenant under subsection (e); less
(B) any payments for lost tobacco quota received by
the quota holder, quota lessee, or quota tenant before
the occurrence of any of the events described in
paragraph (2).
SEC. 922. INDUSTRY PAYMENTS FOR ALL DEPARTMENT COSTS ASSOCIATED WITH
TOBACCO PRODUCTION.
(a) In General.--The Secretary shall use such amounts as are
necessary from the Trust Fund at the end of each fiscal year to
reimburse the Secretary for--
(1) costs associated with the administration of programs
established under this title and amendments made by this title;
(2) costs associated with the administration of the tobacco
quota and price support programs administered by the Secretary;
(3) costs to the Federal Government of carrying out crop
insurance programs for tobacco;
(4) costs associated with all agricultural research,
extension, or education activities associated with tobacco;
(5) costs associated with the administration of loan
association and cooperative programs for tobacco producers, as
approved by the Secretary; and
(6) any other costs incurred by the Department of
Agriculture associated with the production of tobacco.
(b) Limitations.--Amounts made available under subsection (a) may
not be used--
(1) to provide direct benefits to quota holders, quota
lessees, or quota tenants; or
(2) in a manner that results in a decrease, or an increase
relative to other crops, in the amount of the crop insurance
premiums assessed to active tobacco producers under the Federal
Crop Insurance Act (7 U.S.C. 1501 et seq.).
(c) Determinations.--Not later than September 30, 1998, and each
fiscal year thereafter, the Secretary shall determine--
(1) the amount of costs described in subsection (a); and
(2) the amount that will be provided under this section as
reimbursement for the costs.
SEC. 923. TOBACCO COMMUNITY ECONOMIC DEVELOPMENT GRANTS.
(a) Authority.--The Secretary shall make grants to tobacco-growing
States in accordance with this section to enable the States to carry
out economic development initiatives in tobacco-growing communities.
(b) Application.--To be eligible to receive payments under this
section, a State shall prepare and submit to the Secretary an
application at such time, in such manner, and containing such
information as the Secretary may require, including--
(1) a description of the activities that the State will
carry out using amounts received under the grant;
(2) a designation of an appropriate State agency to
administer amounts received under the grant; and
(3) a description of the steps to be taken to ensure that
the funds are distributed in accordance with subsection (e).
(c) Amount of Grant.--
(1) In general.--From the amounts available to carry out
this section for a fiscal year, the Secretary shall allot to
each State an amount that bears the same ratio to the amounts
available as the total income of the State derived from the
production of tobacco during the 1994 through 1996 marketing
years (as determined under paragraph (2)) bears to the total income of
all States derived from the production of tobacco during the 1994
through 1996 marketing years.
(2) Tobacco income.--For the 1994 through 1996 marketing
years, the Secretary shall determine the amount of income
derived from the production of tobacco in each State and in all
States.
(d) Payments.--
(1) In general.--A State that has an application approved
by the Secretary under subsection (b) shall be entitled to a
payment under this section in an amount that is equal to its
allotment under subsection (c).
(2) Form of payments.--The Secretary may make payments
under this section to a State in installments, and in advance
or by way of reimbursement, with necessary adjustments on
account of overpayments or underpayments, as the Secretary may
determine.
(3) Reallotments.--Any portion of the allotment of a State
under subsection (c) that the Secretary determines will not be
used to carry out this section in accordance with an approved
State application required under subsection (b), shall be
reallotted by the Secretary to other States in proportion to
the original allotments to the other States.
(e) Use and Distribution of Funds.--
(1) In general.--Amounts received by a State under this
section shall be used to carry out economic development
activities, including--
(A) rural business enterprise activities described
in subsections (c) and (e) of section 310B of the
Consolidated Farm and Rural Development Act (7 U.S.C.
1932);
(B) down payment loan assistance programs that are
similar to the program described in section 310E of the
Consolidated Farm and Rural Development Act (7 U.S.C.
1935);
(C) activities designed to help create productive
farm or off-farm employment in rural areas to provide a
more viable economic base and enhance opportunities for
improved incomes, living standards, and contributions
by rural individuals to the economic and social
development of tobacco communities;
(D) activities that expand existing infrastructure,
facilities, and services to capitalize on opportunities
to diversify economies in tobacco communities and that
support the development of new industries or commercial
ventures;
(E) activities by agricultural organizations that
provide assistance directly to active tobacco producers
to assist in developing other agricultural activities
that supplement tobacco-producing activities;
(F) initiatives designed to create or expand
locally owned value-added processing and marketing
operations in tobacco communities; and
(G) technical assistance activities by persons to
support farmer-owned enterprises, or agriculture-based
rural development enterprises, of the type described in
section 252 or 253 of the Trade Act of 1974 (19 U.S.C.
2342, 2343).
(2) Tobacco-growing counties.--Assistance may be provided
by a State under this section only to assist a county in the
State that has been determined by the Secretary to have in
excess of $100,000 in income derived from the production of
tobacco during 1 or more of the 1994 through 1996 marketing
years.
(3) Distribution.--
(A) Economic development activities.--Not less than
20 percent of the amounts received by a State under
this section shall be used to carry out--
(i) economic development activities
described in subparagraph (E) or (F) of
paragraph (1); or
(ii) agriculture-based rural development
activities described in paragraph (1)(G).
(B) Technical assistance activities.--Not less than
4 percent of the amounts received by a State under this
section shall be used to carry out technical assistance
activities described in paragraph (1)(G).
(C) Tobacco-growing counties.--To be eligible to
receive payments under this section, a State shall
demonstrate to the Secretary that funding will be
provided, during each 5-year period for which funding
is provided under this section, for activities in each
county in the State that has been determined under
paragraph (2) to have in excess of $100,000 in income
derived from the production of tobacco, in amounts that
are at least equal to the product obtained by
multiplying--
(i) the ratio that the tobacco production
income in the county determined under paragraph
(2) bears to the total tobacco production
income for the State determined under
subsection (c); by
(ii) 50 percent of the total amounts
received by a State under this section during
the 5-year period.
(f) Preferences in Hiring.--A State may require recipients of funds
under this section to provide a preference in employment to--
(1) an individual who--
(A) during the 1996 calendar year, was employed in
the manufacture, processing, or warehousing of tobacco
or tobacco products, or resided, in a county described
in subsection (e)(2); and
(B) is eligible for assistance under the tobacco
worker transition program established under section
301; or
(2) an individual who--
(A) during the 1996 marketing year, carried out
tobacco quota or relevant tobacco production activities
in a county described in subsection (e)(2);
(B) is eligible for a farmer opportunity grant
under subpart 9 of part A of title IV of the Higher
Education Act of 1965; and
(C) has successfully completed a course of study at
an institution of higher education.
SEC. 924. MODIFICATIONS IN FEDERAL TOBACCO PROGRAMS.
(a) Program Referenda.--Section 312(c) of the Agricultural
Adjustment Act of 1938 (7 U.S.C. 1312(c)) is amended--
(1) by striking ``(c) Within thirty'' and inserting the
following:
``(c) Referenda on Quotas.--
``(1) In general.--Not later than 30''; and
(2) by adding at the end the following:
``(2) Referenda on program changes.--
``(A) In general.--In the case of any kind of
tobacco for which marketing quotas are in effect, on
the receipt of a petition from more than 5 percent of
the producers of that kind of tobacco in a State, the
Secretary shall conduct a statewide referendum on any
proposal related to the lease and transfer of tobacco
quota within a State requested by the petition that is
authorized under this part.
``(B) Approval of proposals.--If a majority of
producers of the kind of tobacco in the State approve a
proposal in a referendum conducted under subparagraph
(A), the Secretary shall implement the proposal in a
manner that applies to all producers and quota holders
of that kind of tobacco in the State.''.
(b) Purchase Requirements.--Section 320B of the Agricultural
Adjustment Act of 1938 (7 U.S.C. 1314h) is amended--
(1) in subsection (c), by striking paragraph (1) and
inserting the following:
``(1) 105 percent of the average market price for the kind
of tobacco involved during the preceding marketing year; by'';
and
(2) by striking subsection (d) and inserting the following:
``(d) Use of Penalty Payments.--An amount equivalent to each
penalty collected by the Secretary under this section shall be
transmitted by the Secretary to the Secretary of the Treasury for
deposit in the Tobacco Community Revitalization Trust Fund established
under section 101 of the LEAF Act.''.
(c) Elimination of Tobacco Marketing Assessment.--
(1) In general.--Section 106 of the Agricultural Act of
1949 (7 U.S.C. 1445(g)) is amended by striking subsection (g).
(2) Conforming amendment.--Section 422(c) of the Uruguay
Round Agreements Act (Public Law 103-465; 7 U.S.C. 1445 note)
is amended by striking ``section 106(g), 106A, or 106B of the
Agricultural Act of 1949 (7 U.S.C. 1445(g), 1445-1, or 1445-
2)'' and inserting ``section 106A or 106B of the Agricultural
Act of 1949 (7 U.S.C. 1445-1, 1445-2)''.
Subtitle C--Farmer and Worker Transition Assistance
SEC. 931. 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 payments for lost tobacco
quota under section 201.
(f) Funding.--Of the amounts in the Trust Fund, 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 l, 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. 932. 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 amounts made available under
section 101(d)(5) of the LEAF 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'.
``(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 for each of the academic years
1999-2000 through 2003-2004;
``(ii) $2,000 for each of the academic
years 2004-2005 through 2008-2009;
``(iii) $2,300 for each of the academic
years 2009-2010 through 2013-2014;
``(iv) $2,600 for each of the academic
years 2014-2015 through 2018-2019; and
``(v) $2,900 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 under this subpart shall exceed
the cost of attendance (as described in section 472) 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 attendance for that year, the amount
of the grant shall be reduced to an amount equal to the cost of
attendance 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 401(c).
``(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 (as
defined in section 2 of the LEAF Act); 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.''.
Subtitle D--Immunity
SEC. 941. GENERAL IMMUNITY FOR TOBACCO PRODUCERS AND WAREHOUSERS.
Notwithstanding any other provision of this title, an active
tobacco producer, tobacco-related growers association, or tobacco
warehouse owner or employee may not be subject to liability in any
Federal or State court for any cause of action resulting from the
failure of any tobacco product manufacturer, distributor, or retailer
to comply with national tobacco settlement legislation.
TITLE X--EFFECTIVE DATES AND OTHER PROVISIONS
SEC. 1001. EFFECTIVE DATES.
(a) In General.--Except as provided in subsection (b), and as
otherwise provided in this Act, the provisions of this Act shall take
effect on the date of enactment of this Act.
(b) Exceptions.--The following provisions shall become effective as
follows:
(1) The retail tobacco product display provisions under
subtitle A of title I shall be applicable to retailers on the
date that is 9 months after the date of enactment of this Act.
(2) The provisions relating to the display of tobacco
product signs and displays by retailers under subtitle A of
title I shall be applicable to retailers on the date that is 5
months after the date of enactment of this Act.
(3) The provisions of subtitle A of title I relating to
advertising shall be applicable on the date that is 9 months
after the date of enactment of this Act.
(4) The labeling requirements of subtitle A of title I and
of chapter 9 of the Federal Food, Drug and Cosmetic Act (as
added by section 143(3) of this Act) shall be applicable (as
determined under regulations promulgated by the Secretary) with
respect to--
(A) \1/3\ of all tobacco product packages, on the
date that is 90 days after the date of enactment of
this Act;
(B) \1/3\ of all tobacco product packages, on the
date that is 120 days after the date of enactment of
this Act; and
(C) \1/3\ of all tobacco product packages, on the
date that is 180 days after the date of enactment of
this Act.
(5) The provisions of section 105 relating to the
sponsorship of events shall be applicable on December 31, 1998.
(6) The provisions of section 121 shall be applicable on
the date that is 3 months after the date of enactment of this
Act.
(7) The provisions of section 122 relating to vending
machines shall be applicable on the date that is 12 months
after the date of enactment of this Act.
(8) The provisions of section 122 relating to minimum
package size shall be applicable on the date that is 3 months
after the date of enactment of this Act.
(9) The provisions of section 122 relating to vending
machines shall be applicable on the date that is 12 months
after the date of enactment of this Act.
(10) The provisions of section 122 relating to sampling
shall be applicable on the date that is 3 months after the date
of enactment of this Act.
(11) The provisions of section 909 of the Federal Food,
Drug and Cosmetic Act (as added by section 143(3) of this Act)
relating to good manufacturing practices shall be applicable on
the date that is 24 months after the date of enactment of this
Act or on a date determined appropriate by the Secretary.
(12) The provisions of subtitle F of title I relating to
corporate compliance shall be applicable on the date that is 12
months after the date of enactment of this Act.
SEC. 1002. NATIVE AMERICANS.
(a) Indian Country.--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.
(b) Indian Tribes.--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.
(c) Payments to Trust Fund.--Any Indian tribe or tribal
organization that engages in the manufacturer of tobacco products shall
be subject to liability under section 402, or shall be considered a
non-participating manufacturer for purposes of section 613, and shall
be subject to surcharges under section 205.
(d) Application of FDA Requirements.--
(1) In general.--The Secretary shall promulgate regulations
to provide for the application of the requirements of the Food,
Drug and Cosmetic Act to tobacco products manufactured,
distributed, or sold within Indian country.
(2) Eligibility for assistance.--Under the regulations
promulgated under paragraph (1), the Secretary 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 on lands within
the jurisdiction of the tribe or organization; and
(C) the tribe or organization is reasonably
expected to be capable of carrying out the functions
required by the Secretary.
(e) Retail Licensing Requirements.--
(1) In general.--The requirements of subtitle D of title I
shall apply to retailers that sell tobacco products within
Indian country.
(2) Self-regulation.--The Secretary shall promulgate
regulations to permit the Indian tribe or tribal organization
with jurisdiction over the lands involved to implement a tribal
licensing program that is at least as strict as the program in
operation in the State in which the land involved is located.
(3) Implementation by secretary.--If the Secretary
determines that the Indian tribe or tribal organization is not
qualified to administer the requirements of subtitle D of title
I, the Secretary shall implement such requirements on behalf of
the tribe or organization or delegate such authority to the
State involved.
(f) Eligibility for Public Health Payments.--
(1) In general.--Except as provided in paragraph (2), an
Indian tribe or tribal organization shall be considered a State
for purposes of eligibility under title V.
(2) Public health program.--
(A) In general.--Each State that receives a payment
under section 502 shall set-aside an appropriate
portion, as determined under regulations prescribed by
the Secretary, of such payment for use by Indian tribes
or tribal organizations within the State.
(B) Amount.--The amount of any funds under
subparagraph for which an Indian tribe or tribal
organization is eligible shall be determined by the
State based on the proportion of the registered members
of the tribe involved as compared to the total
population of all such registered members in the State.
(C) Use.--Amounts provided to a tribe or
organization under this paragraph shall be used as
provided for in section 504 and in accordance with a
plan submitted by the tribe or organization and
approved by the Secretary as being in compliance with
this Act.
(D) Reallotment.--Any amounts set-aside and not
expended under this paragraph shall be reallotted among
other eligible tribes and organizations.
(g) Obligation of Manufacturers.--
(1) Prohibition.--A manufacturer shall not engage in any
activity within Indian country that is otherwise prohibited
under this Act (or an amendment made by this Act).
(2) Limitation on sale.--A 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.
(h) Definitions.--In this section:
(1) Indian country.--The term ``Indian country'' has the
meaning given such term by section 1151 of title 18, United
States Code.
(2) Indian tribe.--The term ``Indian tribe'' has the
meaning given to such term by section 4(e) of the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450b(e)).
(3) Tribal organization.--The term ``tribal organization''
has the meaning given such term in section 4 of the Indian Self
Determination and Education Assistance Act (25 U.S.C. 450b).
SEC. 1003. PREEMPTION.
(a) General Preemption.--Except as otherwise provided for in this
section, nothing in this Act shall be construed as prohibiting a State
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. To
the extent not inconsistent with the purposes of this Act, State and
local governments may impose additional tobacco product control
measures to further restrict or limit the use of such products by
minors.
(b) Enforcement.--A State may not impose obligations or
requirements relating to the enforcement of this Act in a manner that
conflicts with the provisions of title VI.
(c) Public Exposure to Smoke.--Nothing in title III shall be
construed to preempt or otherwise affect any other Federal, State or
local law which provides greater protection from the health hazards of
environmental tobacco smoke.
(d) Taxes.--Nothing in this Act shall be construed to prohibit a
State from imposing taxes on tobacco products or tobacco product
manufacturers, distributors, or retailers.
(e) Native Americans.--Except as provided in section 902, a State
may not impose obligations or requirements relating to the application
of this Act to Indian tribes and tribal organizations.
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