[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1414 Placed on Calendar Senate (PCS)]





                                                       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.