[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1415 Amendment Ordered to be Printed Senate (AS)]

                           Amendment No. 2420

                                S. 1415
S 1415 AMDT 2420
                                                                   IIIA
AMENDMENT NO. 2420
                                                       Calendar No. 370
Purpose: Modification of the Commerce Committee amendment.

       IN THE SENATE OF THE UNITED STATES--105th Cong., 2d Sess.

                                S. 1415

                              May 18, 1998

          (    ) Ordered to lie on the table and to be printed

Amendment intended to be proposed by Mr. Lott for Mr. McCain
Viz: Strike out all after the enacting clause and insert the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``National Tobacco 
Policy and Youth Smoking Reduction Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Purpose.
Sec. 4. Scope and effect.
Sec. 5. Relationship to other, related Federal, State, local, and 
                            Tribal laws.
Sec. 6. Definitions.
Sec. 7. Notification if youthful cigarette smoking restrictions 
                            increase youthful pipe and cigar smoking.
Sec. 8. FTC jurisdiction not affected.
Sec. 9. Congressional review provisions.
              TITLE I--REGULATION OF THE TOBACCO INDUSTRY

Sec. 101. Amendment of Federal Food, Drug, and Cosmetic Act of 1938.
Sec. 102. Conforming and other amendments to general provisions.
Sec. 103. Construction of current regulations.
              TITLE II--REDUCTIONS IN UNDERAGE TOBACCO USE

                        Subtitle A--Underage Use

Sec. 201. Findings.
Sec. 202. Purpose.
Sec. 203. Goals for reducing underage tobacco use.
Sec. 204. Look-back assessment.
Sec. 205. Definitions.
     Subtitle B--State Retail Licensing and Enforcement Incentives

Sec. 231. State retail licensing and enforcement block grants.
Sec. 232. Block grants for compliance bonuses.
Sec. 233. Conforming change.
      Subtitle C--Tobacco Use Prevention and Cessation Initiatives

Sec. 261. Tobacco use prevention and cessation initiatives.
  TITLE III--TOBACCO PRODUCT WARNINGS AND SMOKE CONSTITUENT DISCLOSURE

          Subtitle A--Product Warnings, Labeling and Packaging

Sec. 301. Cigarette label and advertising warnings.
Sec. 302. Authority to revise cigarette warning label Statements.
Sec. 303. Smokeless tobacco labels and advertising warnings.
Sec. 304. Authority to revise smokeless tobacco product warning label 
                            statements.
Sec. 305. Tar, nicotine, and other smoke constituent disclosure to the 
                            public.
Subtitle B--Testing and Reporting of Tobacco Product Smoke Constituents

Sec. 311. Regulation requirement.
                 TITLE IV--NATIONAL TOBACCO TRUST FUND

Sec. 401. Establishment of trust fund.
Sec. 402. Payments by industry.
Sec. 403. Adjustments.
Sec. 404. Payments to be passed through to consumers.
Sec. 405. Tax treatment of payments.
Sec. 406. Enforcement for nonpayment.
                Subtitle B--General Spending Provisions

Sec. 451. Allocation accounts.
Sec. 452. Grants to States.
Sec. 453. Indian health service.
Sec. 454. Research at the National Science Foundation.
Sec. 455. Medicare cancer patient demonstration project; evaluation and 
                            report to Congress.
   TITLE V--STANDARDS TO REDUCE INVOLUNTARY EXPOSURE TO TOBACCO SMOKE

Sec. 501. Definitions.
Sec. 502. Smoke-free environment policy.
Sec. 503. Citizen actions.
Sec. 504. Preemption.
Sec. 505. Regulations.
Sec. 506. Effective date.
Sec. 507. State choice.
                 TITLE VI--APPLICATION TO INDIAN TRIBES

Sec. 601. Short title.
Sec. 602. Findings and purposes.
Sec. 603. Application of title to Indian lands and to Native Americans.
                       TITLE VII--TOBACCO CLAIMS

Sec. 701. Definitions.
Sec. 702. Application; preemption.
Sec. 703. Rules governing tobacco claims.
 TITLE VIII--TOBACCO INDUSTRY ACCOUNTABILITY REQUIREMENTS AND EMPLOYEE 
                       PROTECTION FROM REPRISALS

Sec. 801. Accountability requirements and oversight of the tobacco 
                            industry.
Sec. 802. Tobacco product manufacturer employee protection.
       TITLE IX--PUBLIC DISCLOSURE OF TOBACCO INDUSTRY DOCUMENTS

Sec. 901. Findings.
Sec. 902. Applicability.
Sec. 903. Document disclosure.
Sec. 904. Document review.
Sec. 905. Resolution of disputed privilege and trade secret claims.
Sec. 906. Appeal of panel decision.
Sec. 907. Miscellaneous.
Sec. 908. Penalties.
Sec. 909. Definitions.
           TITLE X--LONG-TERM ECONOMIC ASSISTANCE FOR FARMERS

Sec. 1001. Short title.
Sec. 1002. Definitions.
              Subtitle A--Tobacco Community Revitalization

Sec. 1011. Authorization of appropriations.
Sec. 1012. Expenditures.
Sec. 1013. Budgetary treatment.
            Subtitle B--Tobacco Market Transition Assistance

Sec. 1021. Payments for lost tobacco quota.
Sec. 1022. Industry payments for all department costs associated with 
                            tobacco production.
Sec. 1023. Tobacco community economic development grants.
Sec. 1024. Flue-cured tobacco production permits.
Sec. 1025. Modifications in Federal tobacco programs.
          Subtitle C--Farmer and Worker Transition Assistance

Sec. 1031. Tobacco worker transition program.
Sec. 1032. Farmer opportunity grants.
                          Subtitle D--Immunity

Sec. 1041. General immunity for tobacco producers and tobacco warehouse 
                            owners.
                   TITLE XI--MISCELLANEOUS PROVISIONS

                  Subtitle A--International Provisions

Sec. 1101. Policy.
Sec. 1102. Tobacco control negotiations.
Sec. 1103. Report to Congress.
Sec. 1104. Funding.
Sec. 1105. Prohibition of funds to facilitate the exportation or 
                            promotion of tobacco.
Sec. 1106. Health labeling of tobacco products for export.
Sec. 1107. International tobacco control awareness.
                 Subtitle B--Anti-smuggling Provisions

Sec. 1131. Definitions.
Sec. 1132. Tobacco product labeling requirements.
Sec. 1133. Tobacco product licenses.
Sec. 1134. Prohibitions.
Sec. 1135. Labeling of products sold by Native Americans.
Sec. 1136. Limitation on activities involving tobacco products in 
                            foreign trade zones.
Sec. 1137. Jurisdiction; penalties; compromise of liability.
Sec. 1138. Amendments to the Contraband Cigarette Trafficking Act.
Sec. 1139. Funding.
Sec. 1140. Rules and regulations.
                      Subtitle C--Other Provisions

Sec. 1161. Improving child care and early childhood development.
Sec. 1162. Ban of sale of tobacco products through the use of vending 
                            machines.
Sec. 1163. Amendments to the Employee Retirement Income Security Act of 
                            1974.
               TITLE XII--ASBESTOS-RELATED TOBACCO CLAIMS

Sec. 1201. National tobacco trust funds available under future 
                            legislation.
                     TITLE XIII--VETERANS' BENEFITS

Sec. 1301. Recovery by Secretary of Veterans' Affairs.
             TITLE XIV--EXCHANGE OF BENEFITS FOR AGREEMENT

Sec. 1401. Conferral of benefits on participating tobacco product 
                            manufacturers in return for their 
                            assumption of specific obligations.
Sec. 1402. Participating tobacco product manufacturer.
Sec. 1403. General provisions of protocol.
Sec. 1404. Tobacco product labeling and advertising requirements of 
                            protocol.
Sec. 1405. Point-of-sale requirements.
Sec. 1406. Application of title.
Sec. 1407. Governmental claims.
Sec. 1408. Addiction and dependency claims; Castano Civil Actions.
Sec. 1409. Substantial non-attainment of required reductions.
Sec. 1410. Public health emergency.
Sec. 1411. Tobacco claims brought against participating tobacco product 
                            manufacturers.
Sec. 1412. Payment of tobacco claim settlements and judgments.
Sec. 1413. Attorneys' fees and expenses.
Sec. 1414. Effect of court decisions.
Sec. 1415. Criminal laws not affected.
Sec. 1416. Congress reserves the right to enact laws in the future.
Sec. 1417. Definitions.
                      TITLE XV--TOBACCO TRANSITION

Sec. 1501. Short title.
Sec. 1502. Purposes.
Sec. 1503. Definitions.
               Subtitle A--Tobacco Production Transition

                Chapter 1--Tobacco Transition Contracts

Sec. 1511. Tobacco community revitalization trust fund.
Sec. 1512. Offer and terms of tobacco transition contracts.
Sec. 1513. Elements of contracts.
Sec. 1514. Buyout payments to owners.
Sec. 1515. Transition payments to producers.
           Chapter 2--Rural Economic Assistance Block Grants

Sec. 1521. Rural economic assistance block grants.
  Subtitle B--Tobacco Price Support and Production Adjustment Programs

                Chapter 1--Tobacco Price Support Program

Sec. 1531. Interim reform of tobacco price support program.
Sec. 1532. Termination of tobacco price support program.
           Chapter 2--Tobacco Production Adjustment Programs

Sec. 1541. Termination of tobacco production adjustment programs.
                          Subtitle C--Funding

Sec. 1551. Trust fund.
Sec. 1552. Tobacco related administrative costs and subsidies.
Sec. 1553. Commodity credit corporation.
                       Subtitle D--Miscellaneous

Sec. 1561. Liability for obligations of tobacco product manufacturers.
Sec. 1562. FDA regulation of tobacco production and farms.


SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) The use of tobacco products by the Nation's children is 
        a pediatric disease of epic and worsening proportions that 
        results in new generations of tobacco-dependent children and 
        adults.
            (2) A consensus exists within the scientific and medical 
        communities that tobacco products are inherently dangerous and 
        cause cancer, heart disease, and other serious adverse health 
        effects.
            (3) Nicotine is an addictive drug.
            (4) Virtually all new users of tobacco products are under 
        the minimum legal age to purchase such products.
            (5) Tobacco advertising and marketing contribute 
        significantly to the use of nicotine-containing tobacco 
        products by adolescents.
            (6) Because past efforts to restrict advertising and 
        marketing of tobacco products have failed adequately to curb 
        tobacco use by adolescents, comprehensive restrictions on the 
        sale, promotion, and distribution of such products are needed.
            (7) Federal and State governments have lacked the legal and 
        regulatory authority and resources they need to address 
        comprehensively the public health and societal problems caused 
        by the use of tobacco products.
            (8) Federal and State public health officials, the public 
        health community, and the public at large recognize that the 
        tobacco industry should be subject to ongoing oversight.
            (9) Under Article I, Section 8 of the Constitution, the 
        Congress is vested with the responsibility for regulating 
        interstate commerce and commerce with Indian tribes.
            (10) The sale, distribution, marketing, advertising, and 
        use of tobacco products are activities in and substantially 
        affecting interstate commerce because they are sold, marketed, 
        advertised, and distributed in interstate commerce on a 
        nationwide basis, and have a substantial effect on the Nation's 
        economy.
            (11) The sale, distribution, marketing, advertising, and 
        use of such products substantially affect interstate commerce 
        through the health care and other costs attributable to the use 
        of tobacco products.
            (12) The citizens of the several States are exposed to, and 
        adversely affected by, environmental smoke in public buildings 
        and other facilities which imposes a burden on interstate 
        commerce.
            (13) Civil actions against tobacco product manufacturers 
        and others are pending in Federal and State courts arising from 
        the use, marketing, and sale of tobacco products. Among these 
        actions are cases brought by the attorneys general of more than 
        40 States, certain cities and counties, and the Commonwealth of 
        Puerto Rico, and other parties, including Indian tribes, and 
        class actions brought by private claimants (such as in the 
        Castano Civil Actions), seeking to recover monies expended to 
        treat tobacco-related diseases and for the protection of minors 
        and consumers, as well as penalties and other relief for 
        violations of antitrust, health, consumer protection, and other 
        laws.
            (14) Civil actions have been filed throughout the United 
        States against tobacco product manufacturers and their 
        distributors, trade associations, law firms, and consultants on 
        behalf of individuals or classes of individuals claiming to be 
        dependent upon and injured by tobacco products.
            (15) These civil actions are complex, time-consuming, 
        expensive, and burdensome for both the litigants and Federal 
        and State courts. To date, these civil actions have not 
        resulted in sufficient redress for smokers or non-governmental 
        third-party payers. To the extent that governmental entities 
        have been or may in the future be compensated for tobacco-
        related claims they have brought, it is not now possible to 
        identify what portions of such past or future recoveries can be 
        attributed to their various antitrust, health, consumer 
        protection, or other causes of action.
            (16) It is in the public interest for Congress to adopt 
        comprehensive public health legislation because of tobacco's 
        unique position in the Nation's history and economy; the need 
        to prevent the sale, distribution, marketing and advertising of 
        tobacco products to persons under the minimum legal age to 
        purchase such products; and the need to educate the public, 
        especially young people, regarding the health effects of using 
        tobacco products.
            (17) The public interest requires a timely, fair, 
        equitable, and consistent result that will serve the public 
        interest by (A) providing that a portion of the costs of 
        treatment for diseases and adverse health effects associated 
        with the use of tobacco products is borne by the manufacturers 
        of these products, and (B) restricting throughout the Nation 
        the sale, distribution, marketing, and advertising of tobacco 
        products only to persons of legal age to purchase such 
        products.
            (18) Public health authorities estimate that the benefits 
        to the Nation of enacting Federal legislation to accomplish 
        these goals would be significant in human and economic terms.
            (19) Reducing the use of tobacco by minors by 50 percent 
        would prevent well over 60,000 early deaths each year and save 
        up to $43 billion each year in reduced medical costs, improved 
        productivity, and the avoidance of premature deaths.
            (20) Advertising, marketing, and promotion of tobacco 
        products have been especially directed to attract young persons 
        to use tobacco products and these efforts have resulted in 
        increased use of such products by youth. Past efforts to 
        oversee these activities have not been successful in adequately 
        preventing such increased use.
            (21) In 1995, the tobacco industry spent close to 
        $4,900,000,000 to attract new users, retain current users, 
        increase current consumption, and generate favorable long-term 
        attitudes toward smoking and tobacco use.
            (22) Tobacco product advertising often misleadingly 
        portrays the use of tobacco as socially acceptable and 
        healthful to minors.
            (23) Tobacco product advertising is regularly seen by 
        persons under the age of 18, and persons under the age of 18 
        are regularly exposed to tobacco product promotional efforts.
            (24) Through advertisements during and sponsorship of 
        sporting events, tobacco has become strongly associated with 
        sports and has become portrayed as an integral part of sports 
        and the healthy lifestyle associated with rigorous sporting 
        activity.
            (25) Children are exposed to substantial and unavoidable 
        tobacco advertising that leads to favorable beliefs about 
        tobacco use, plays a role in leading young people to 
        overestimate the prevalence of tobacco use, and increases the 
        number of young people who begin to use tobacco.
            (26) Tobacco advertising increases the size of the tobacco 
        market by increasing consumption of tobacco products including 
        increasing tobacco use by young people.
            (27) Children are more influenced by tobacco advertising 
        than adults, they smoke the most advertised brands, and 
        children as young as 3 to 6 years old can recognize a character 
        associated with smoking at the same rate as they recognize 
        cartoons and fast food characters.
            (28) Tobacco company documents indicate that young people 
        are an important and often crucial segment of the tobacco 
        market.
            (29) Comprehensive advertising restrictions will have a 
        positive effect on the smoking rates of young people.
            (30) Restrictions on advertising are necessary to prevent 
        unrestricted tobacco advertising from undermining legislation 
        prohibiting access to young people and providing for education 
        about tobacco use.
            (31) International experience shows that advertising 
        regulations that are stringent and comprehensive have a greater 
        impact on overall tobacco use and young people's use than 
        weaker or less comprehensive ones. Text-only requirements, 
        while not as stringent as a ban, will help reduce underage use 
        of tobacco products while preserving the informational function 
        of advertising.
            (32) It is in the public interest for Congress to adopt 
        legislation to address the public health crisis created by 
        actions of the tobacco industry.
            (33) If, as a direct or indirect result of this Act, the 
        consumption of tobacco products in the United States is reduced 
        significantly, then tobacco farmers, their families, and their 
        communities may suffer economic hardship and displacement, 
        notwithstanding their lack of involvement in the manufacturing 
        and marketing of tobacco products.
            (34) The use of tobacco products in motion pictures and 
        other mass media glamorizes its use for young people and 
        encourages them to use tobacco products.

SEC. 3. PURPOSE.

    The purposes of this Act are--
            (1) to clarify the authority of the Food and Drug 
        Administration to regulate tobacco products under the Federal 
        Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.), by 
        recognizing it as the primary Federal regulatory authority with 
        respect to the manufacture, marketing, and distribution of 
        tobacco products;
            (2) to require the tobacco industry to fund both Federal 
        and State oversight of the tobacco industry from on-going 
        payments by tobacco product manufacturers;
            (3) to require tobacco product manufacturers to provide 
        ongoing funding to be used for an aggressive Federal, State, 
        and local enforcement program and for a nationwide licensing 
        system to prevent minors from obtaining tobacco products and to 
        prevent the unlawful distribution of tobacco products, while 
        expressly permitting the States to adopt additional measures 
        that further restrict or eliminate the products' use;
            (4) to ensure that the Food and Drug Administration and the 
        States may continue to address issues of particular concern to 
        public health officials, especially the use of tobacco by young 
        people and dependence on tobacco;
            (5) to impose financial surcharges on tobacco product 
        manufacturers if tobacco use by young people does not 
        substantially decline;
            (6) to authorize appropriate agencies of the Federal 
        government to set national standards controlling the 
        manufacture of tobacco products and the identity, public 
        disclosure, and amount of ingredients used in such products;
            (7) to provide new and flexible enforcement authority to 
        ensure that the tobacco industry makes efforts to develop and 
        introduce less harmful tobacco products;
            (8) to confirm the Food and Drug Administration's authority 
        to regulate the levels of tar, nicotine, and other harmful 
        components of tobacco products;
            (9) in order to ensure that adults are better informed, to 
        require tobacco product manufacturers to disclose research 
        which has not previously been made available, as well as 
        research generated in the future, relating to the health and 
        dependency effects or safety of tobacco products;
            (10) to impose on tobacco product manufacturers the 
        obligation to provide funding for a variety of public health 
        initiatives;
            (11) to establish a minimum Federal standard for stringent 
        restrictions on smoking in public places, while also to permit 
        State, Tribal, and local governments to enact additional and 
        more stringent standards or elect not to be covered by the 
        Federal standard if that State's standard is as protective, or 
        more protective, of the public health;
            (12) to authorize and fund from payments by tobacco product 
        manufacturers a continuing national counter-advertising and 
        tobacco control campaign which seeks to educate consumers and 
        discourage children and adolescents from beginning to use 
        tobacco products, and which encourages current users of tobacco 
        products to discontinue using such products;
            (13) to establish a mechanism to compensate the States in 
        settlement of their various claims against tobacco product 
        manufacturers;
            (14) to authorize and to fund from payments by tobacco 
        product manufacturers a nationwide program of smoking cessation 
        administered through State and Tribal governments and the 
        private sector;
            (15) to establish and fund from payments by tobacco product 
        manufacturers a National Tobacco Fund;
            (16) to affirm the rights of individuals to access to the 
        courts, to civil trial by jury, and to damages to compensate 
        them for harm caused by tobacco products;
            (17) to continue to permit the sale of tobacco products to 
        adults in conjunction with measures to ensure that they are not 
        sold or accessible to underage purchasers;
            (18) to impose appropriate regulatory controls on the 
        tobacco industry; and
            (19) to protect tobacco farmers and their communities from 
        the economic impact of this Act by providing full funding for 
        and the continuation of the Federal tobacco program and by 
        providing funds for farmers and communities to develop new 
        opportunities in tobacco-dependent communities.

SEC. 4. SCOPE AND EFFECT.

    (a) Intended Effect.--This Act is not intended to--
            (1) establish a precedent with regard to any other 
        industry, situation, circumstance, or legal action; or
            (2) except as provided in this Act, affect any action 
        pending in State, Tribal, or Federal court, or any agreement, 
        consent decree, or contract of any kind.
    (b) Taxation.--Notwithstanding any other provision of law, this Act 
and the amendments made by this Act shall not affect any authority of 
the Secretary of the Treasury (including any authority assigned to the 
Bureau of Alcohol, Tobacco and Firearms) or of State or local 
governments with regard to taxation for tobacco or tobacco products.
    (c) Agricultural Activities.--The provisions of this Act which 
authorize the Secretary to take certain actions with regard to tobacco 
and tobacco products shall not be construed to affect any authority of 
the Secretary of Agriculture under existing law regarding the growing, 
cultivation, or curing of raw tobacco.

SEC. 5. RELATIONSHIP TO OTHER, RELATED FEDERAL, STATE, LOCAL, AND 
              TRIBAL LAWS.

    (a) Age Restrictions.--Nothing in this Act or the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 301 et seq.), as amended by this Act, 
shall prevent a Federal agency (including the Armed Forces), a State or 
its political subdivisions, or the government of an Indian tribe from 
adopting and enforcing additional measures that further restrict or 
prohibit tobacco product sale to, use by, and accessibility to persons 
under the legal age of purchase established by such agency, State, 
subdivision, or government of an Indian tribe.
    (b) Additional Measures.--Except as otherwise expressly provided in 
this Act, nothing in this Act, the Federal Food, Drug, and Cosmetic Act 
(21 U.S.C. 301 et seq.), or rules promulgated under such Acts, shall 
limit the authority of a Federal agency (including the Armed Forces), a 
State or its political subdivisions, or the government of an Indian 
tribe to enact, adopt, promulgate, and enforce any law, rule, 
regulation, or other measure with respect to tobacco products, 
including laws, rules, regulations, or other measures relating to or 
prohibiting the sale, distribution, possession, exposure to, or use of 
tobacco products by persons of any age that are in addition to the 
provisions of this Act and the amendments made by this Act. No 
provision of this Act or amendment made by this Act shall limit or 
otherwise affect any State, Tribal, or local taxation of tobacco 
products.
    (c) No Less Stringent.--Nothing in this Act or the amendments made 
by this Act is intended to supersede any State, local, or Tribal law 
that is not less stringent than this Act, or other Acts as amended by 
this Act.
    (d) State Law Not Affected.--Except as otherwise expressly provided 
in this Act, nothing in this Act, the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 301 et seq.), or rules promulgated under such Acts, 
shall supersede the authority of the States, pursuant to State law, to 
expend funds provided by this Act.

SEC. 6. DEFINITIONS.

    In this Act:
            (1) Brand.--The term ``brand'' means a variety of tobacco 
        product distinguished by the tobacco used, tar content, 
        nicotine content, flavoring used, size, filtration, or 
        packaging, logo, registered trademark or brand name, 
        identifiable pattern of colors, or any combination of such 
        attributes.
            (2) Cigarette.--The term ``cigarette'' has the meaning 
        given that term by section 3(1) of the Federal Cigarette 
        Labeling and Advertising Act (15 U.S.C. 1332(1)), but also 
        includes tobacco, in any form, that is functional in the 
        product, 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 or as 
        roll-your-own tobacco.
            (3) Cigarette tobacco.--The term ``cigarette tobacco'' 
        means any product that consists of loose tobacco that is 
        intended for use by consumers in a cigarette. Unless otherwise 
        stated, the requirements for cigarettes shall also apply to 
        cigarette tobacco.
            (4) Commerce.--The term ``commerce'' has the meaning given 
        that term by section 3(2) of the Federal Cigarette Labeling and 
        Advertising Act (15 U.S.C. 1332(2)).
            (5) Distributor.--The term ``distributor'' as regards a 
        tobacco product means any person who furthers the distribution 
        of cigarette or smokeless tobacco, 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. Common carriers are not 
        considered distributors for purposes of this Act.
            (6) Indian country; Indian lands.--The terms ``Indian 
        country'' and ``Indian lands'' have the meaning given the term 
        ``Indian country'' by section 1151 of title 18, United States 
        Code, and includes lands owned by an Indian tribe or a member 
        thereof over which the United States exercises jurisdiction on 
        behalf of the tribe or tribal member.
            (7) Indian tribe.--The term ``Indian tribe'' has the 
        meaning given such term in section 4(e) of the Indian Self 
        Determination and Education Assistance Act (25 U.S.C. 450b(e)).
            (8) Little cigar.--The term ``little cigar'' has the 
        meaning given that term by section 3(7) of the Federal 
        Cigarette Labeling and Advertising Act (15 U.S.C. 1332(7)).
            (9) Nicotine.--The term ``nicotine'' means the chemical 
        substance named 3-(1-Methyl-2-pyrrolidinyl) pyridine or 
        C[10]H[14]N[2], including any salt or complex of nicotine.
            (10) Package.--The term ``package'' means a pack, box, 
        carton, or container of any kind or, if no other container, any 
        wrapping (including cellophane), in which cigarettes or 
        smokeless tobacco are offered for sale, sold, or otherwise 
        distributed to consumers.
            (11) Point-of-sale.--The term ``point-of-sale'' means any 
        location at which a consumer can purchase or otherwise obtain 
        cigarettes or smokeless tobacco for personal consumption.
            (12) Retailer.--The term ``retailer'' means any person who 
        sells cigarettes or smokeless tobacco to individuals for 
        personal consumption, or who operates a facility where self-
        service displays of tobacco products are permitted.
            (13) Roll-your-own tobacco.--The term ``roll-your-own 
        tobacco'' means any tobacco which, because of its appearance, 
        type, packaging, or labeling, is suitable for use and likely to 
        be offered to, or purchased by, consumers as tobacco for making 
        cigarettes.
            (14) Secretary.--Except in title VII and where the context 
        otherwise requires, the term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (15) Smokeless tobacco.--The term ``smokeless tobacco'' 
        means any product that consists of cut, ground, powdered, or 
        leaf tobacco and that is intended to be placed in the oral or 
        nasal cavity.
            (16) State.--The term ``State'' means any State of the 
        United States and, for purposes of this Act, includes the 
        District of Columbia, the Commonwealth of Puerto Rico, Guam, 
        the Virgin Islands, American Samoa, Wake Island, Midway 
        Islands, Kingman Reef, Johnston Atoll, the Northern Mariana 
        Islands, and any other trust territory or possession of the 
        United States.
            (17) Tobacco product.--The term ``tobacco product'' means 
        cigarettes, cigarette tobacco, smokeless tobacco, little 
        cigars, roll-your-own tobacco, and fine cut products.
            (18) Tobacco product manufacturer.--Except in titles VII, 
        X, and XIV, the term ``tobacco product manufacturer'' means any 
        person, including any repacker or relabeler, who--
                    (A) manufactures, fabricates, assembles, processes, 
                or labels a finished cigarette or smokeless tobacco 
                product; or
                    (B) imports a finished cigarette or smokeless 
                tobacco product for sale or distribution in the United 
                States.
            (19) United states.--The term ``United States'' means the 
        50 States of the United States of America and the District of 
        Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin 
        Islands, American Samoa, Wake Island, Midway Islands, Kingman 
        Reef, Johnston Atoll, the Northern Mariana Islands, and any 
        other trust territory or possession of the United States.

SEC. 7. NOTIFICATION IF YOUTHFUL CIGARETTE SMOKING RESTRICTIONS 
              INCREASE YOUTHFUL PIPE AND CIGAR SMOKING.

    The Secretary shall notify the Congress if the Secretary determines 
that underage use of pipe tobacco and cigars is increasing.

SEC. 8. FTC JURISDICTION NOT AFFECTED.

    (a) In General.--Except where expressly provided in this Act, 
nothing in this Act shall be construed as limiting or diminishing the 
authority of the Federal Trade Commission to enforce the laws under its 
jurisdiction with respect to the advertising, sale, or distribution of 
tobacco products.
    (b) Enforcement by FTC.--Any advertising that violates this Act or 
part 897 of title 21, Code of Federal Regulations, is an unfair or 
deceptive act or practice under section 5(a) of the Federal Trade 
Commission Act (15 U.S.C. 45(a)) and shall be considered a violation of 
a rule promulgated under section 18 of that Act (15 U.S.C. 57a).

SEC. 9. CONGRESSIONAL REVIEW PROVISIONS.

    In accordance with section 801 of title 5, United States Code, the 
Congress shall review, and may disapprove, any rule under this Act that 
is subject to section 801. This section does not apply to the rule set 
forth in part 897 of title 21, Code of Federal Regulations.

              TITLE I--REGULATION OF THE TOBACCO INDUSTRY

SEC. 101. AMENDMENT OF FEDERAL FOOD, DRUG, AND COSMETIC ACT OF 1938.

    (a) Definition of Tobacco Products.--Section 201 of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 321) is amended by adding at 
the end the following:
            ``(kk) The term `tobacco product' means any product made or 
        derived from tobacco that is intended for human consumption, 
        including any component, part, or accessory of a tobacco 
        product (except for raw materials other than tobacco used in 
        manufacturing a component, part, or accessory of a tobacco 
        product).''.
    (b) FDA Authority over Tobacco Products.--The Federal Food, Drug, 
and Cosmetic Act (21 U.S.C. 301 et seq.) is amended--
            (1) by redesignating chapter IX as chapter X;
            (2) by redesignating sections 901 through 907 as sections 
        1001 through 1007; and
            (3) by inserting after section 803 the following:

                     ``CHAPTER IX--TOBACCO PRODUCTS

``SEC. 901. FDA AUTHORITY OVER TOBACCO PRODUCTS

     ``(a) In General.--Tobacco products shall be regulated by the 
Secretary under this chapter and shall not be subject to the provisions 
of chapter V, unless--
            ``(1) such products are intended for use in the diagnosis, 
        cure, mitigation, treatment, or prevention of disease (within 
        the meaning of section 201(g)(1)(B) or section 201(h)(2)); or
            ``(2) a health claim is made for such products under 
        section 201(g)(1)(C) or 201(h)(3).
    ``(b) Applicability.--This chapter shall apply to all tobacco 
products subject to the provisions of part 897 of title 21, Code of 
Federal Regulations, and to any other tobacco products that the 
Secretary by regulation deems to be subject to this chapter.
    ``(c) Scope.--
            ``(1) Nothing in this chapter, any policy issued or 
        regulation promulgated thereunder, or the National Tobacco 
        Policy and Youth Smoking Reduction Act, shall be construed to 
        affect the Secretary's authority over, or the regulation of, 
        products under this Act that are not tobacco products under 
        chapter V of the Federal Food, Drug and Cosmetic Act or any 
        other chapter of that Act.
            ``(2) The provisions of this chapter shall not apply to 
        tobacco leaf that is not in the possession of the manufacturer, 
        or to the producers of tobacco leaf, including tobacco growers, 
        tobacco warehouses, and tobacco grower cooperatives, nor shall 
        any employee of the Food and Drug Administration have any 
        authority whatsoever to enter onto a farm owned by a producer 
        of tobacco leaf without the written consent of such producer. 
        Notwithstanding any other provision of this subparagraph, if a 
        producer of tobacco leaf is also a tobacco product manufacturer 
        or controlled by a tobacco product manufacturer, the producer 
        shall be subject to this chapter in the producer's capacity as 
        a manufacturer. Nothing in this chapter shall be construed to 
        grant the Secretary authority to promulgate regulations on any 
        matter that involves the production of tobacco leaf or a 
        producer thereof, other than activities by a manufacturer 
        affecting production. For purposes of the preceding sentence, 
        the term `controlled by' means a member of the same controlled 
        group of corporations as that term is used in section 52(a) of 
        the Internal Revenue Code of 1986, or under common control 
        within the meaning of the regulations promulgated under section 
        52(b) of such Code.

``SEC. 902. ADULTERATED TOBACCO PRODUCTS.

    ``A tobacco product shall be deemed to be adulterated if--
            ``(1) it consists in whole or in part of any filthy, 
        putrid, or decomposed substance, or is otherwise contaminated 
        by any poisonous or deleterious substance that may render the 
        product injurious to health;
            ``(2) it has been prepared, packed, or held under 
        insanitary conditions whereby it may have been contaminated 
        with filth, or whereby it may have been rendered injurious to 
        health;
            ``(3) its container is composed, in whole or in part, of 
        any poisonous or deleterious substance which may render the 
        contents injurious to health;
            ``(4) it is, or purports to be or is represented as, a 
        tobacco product which is subject to a performance standard 
        established under section 907 unless such tobacco product is in 
        all respects in conformity with such standard;
            ``(5) it is required by section 910(a) to have premarket 
        approval, is not exempt under section 906(f), and does not have 
        an approved application in effect;
            ``(6) the methods used in, or the facilities or controls 
        used for, its manufacture, packing or storage are not in 
        conformity with applicable requirements under section 906(e)(1) 
        or an applicable condition prescribed by an order under section 
        906(e)(2); or
            ``(7) it is a tobacco product for which an exemption has 
        been granted under section 906(f) for investigational use and 
        the person who was granted such exemption or any investigator 
        who uses such tobacco product under such exemption fails to 
        comply with a requirement prescribed by or under such section.

``SEC. 903. MISBRANDED TOBACCO PRODUCTS.

    ``(a) In General.--A tobacco product shall be deemed to be 
misbranded--
            ``(1) if its labeling is false or misleading in any 
        particular;
            ``(2) if in package form unless it bears a label 
        containing--
                    ``(A) the name and place of business of the tobacco 
                product manufacturer, packer, or distributor; and
                    ``(B) an accurate statement of the quantity of the 
                contents in terms of weight, measure, or numerical 
                count,
        except that under subparagraph (B) of this paragraph reasonable 
        variations shall be permitted, and exemptions as to small 
        packages shall be established, by regulations prescribed by the 
        Secretary;
            ``(3) if any word, statement, or other information required 
        by or under authority of this chapter to appear on the label or 
        labeling is not prominently placed thereon with such 
        conspicuousness (as compared with other words, statements or 
        designs in the labeling) and in such terms as to render it 
        likely to be read and understood by the ordinary individual 
        under customary conditions of purchase and use;
            ``(4) if it has an established name, unless its label 
        bears, to the exclusion of any other nonproprietary name, its 
        established name prominently printed in type as required by the 
        Secretary by regulation;
            ``(5) if the Secretary has issued regulations requiring 
        that its labeling bear adequate directions for use, or adequate 
        warnings against use by children, that are necessary for the 
        protection of users unless its labeling conforms in all 
        respects to such regulations;
            ``(6) if it was manufactured, prepared, propagated, 
        compounded, or processed in any State in an establishment not 
        duly registered under section 905(b), if it was not included in 
        a list required by section 905(i), if a notice or other 
        information respecting it was not provided as required by such 
        section or section 905(j), or if it does not bear such symbols 
        from the uniform system for identification of tobacco products 
        prescribed under section 905(e) as the Secretary by regulation 
        requires;
            ``(7) if, in the case of any tobacco product distributed or 
        offered for sale in any State--
                    ``(A) its advertising is false or misleading in any 
                particular; or
                    ``(B) it is sold, distributed, or used in violation 
                of regulations prescribed under section 906(d);
            ``(8) unless, in the case of any tobacco product 
        distributed or offered for sale in any State, the manufacturer, 
        packer, or distributor thereof includes in all advertisements 
        and other descriptive printed matter issued or caused to be 
        issued by the manufacturer, packer, or distributor with respect 
        to that tobacco product--
                    ``(A) a true statement of the tobacco product's 
                established name as defined in paragraph (4) of this 
                subsection, printed prominently; and
                    ``(B) a brief statement of--
                            ``(i) the uses of the tobacco product and 
                        relevant warnings, precautions, side effects, 
                        and contraindications; and
                            ``(ii) in the case of specific tobacco 
                        products made subject to a finding by the 
                        Secretary after notice and opportunity for 
                        comment that such action is necessary to 
                        protect the public health, a full description 
                        of the components of such tobacco product or 
                        the formula showing quantitatively each 
                        ingredient of such tobacco product to the 
                        extent required in regulations which shall be 
                        issued by the Secretary after an opportunity 
                        for a hearing;
            ``(9) if it is a tobacco product subject to a performance 
        standard established under section 907, unless it bears such 
        labeling as may be prescribed in such performance standard; or
            ``(10) if there was a failure or refusal--
                    ``(A) to comply with any requirement prescribed 
                under section 904 or 908;
                    ``(B) to furnish any material or information 
                required by or under section 909; or
                    ``(C) to comply with a requirement under section 
                912.
    ``(b) Prior Approval of Statements on Label.--The Secretary may, by 
regulation, require prior approval of statements made on the label of a 
tobacco product. No regulation issued under this subsection may require 
prior approval by the Secretary of the content of any advertisement and 
no advertisement of a tobacco product, published after the date of 
enactment of the National Tobacco Policy and Youth Smoking Reduction 
Act shall, with respect to the matters specified in this section or 
covered by regulations issued hereunder, be subject to the provisions 
of sections 12 through 15 of the Federal Trade Commission Act (15 
U.S.C. 52 through 55). This subsection does not apply to any printed 
matter which the Secretary determines to be labeling as defined in 
section 201(m).

``SEC. 904. SUBMISSION OF HEALTH INFORMATION TO THE SECRETARY.

    ``(a) Requirement.--Not later than 6 months after the date of 
enactment of the National Tobacco Policy and Youth Smoking Reduction 
Act, each tobacco product manufacturer or importer of tobacco products, 
or agents thereof, shall submit to the Secretary the following 
information:
            ``(1) A listing of all tobacco ingredients, substances and 
        compounds that are, on such date, added by the manufacturer to 
        the tobacco, paper, filter, or other component of each tobacco 
        product by brand and by quantity in each brand and subbrand.
            ``(2) A description of the content, delivery, and form of 
        nicotine in each tobacco product measured in milligrams of 
        nicotine.
            ``(3) All documents (including underlying scientific 
        information) relating to research activities, and research 
        findings, conducted, supported, or possessed by the 
        manufacturer (or agents thereof) on the health, behavioral, or 
        physiologic effects of tobacco products, their constituents, 
        ingredients, and components, and tobacco additives, described 
        in paragraph (1).
            ``(4) All documents (including underlying scientific 
        information) relating to research activities, and research 
        findings, conducted, supported, or possessed by the 
        manufacturer (or agents thereof) that relate to the issue of 
        whether a reduction in risk to health from tobacco products can 
        occur upon the employment of technology available or known to 
        the manufacturer.
            ``(5) All documents (including underlying scientific 
        information) relating to marketing research involving the use 
        of tobacco products.
An importer of a tobacco product not manufactured in the United States 
shall supply the information required of a tobacco product manufacturer 
under this subsection.
    ``(b) Annual Submission.--A tobacco product manufacturer or 
importer that is required to submit information under subsection (a) 
shall update such information on an annual basis under a schedule 
determined by the Secretary.
    ``(c) Time for Submission.--
            ``(1) New products.--At least 90 days prior to the delivery 
        for introduction into interstate commerce of a tobacco product 
        not on the market on the date of enactment of this chapter, the 
        manufacturer of such product shall provide the information 
        required under subsection (a) and such product shall be subject 
        to the annual submission under subsection (b).
            ``(2) Modification of existing products.--If at any time a 
        tobacco product manufacturer adds to its tobacco products a new 
        tobacco additive, increases or decreases the quantity of an 
        existing tobacco additive or the nicotine content, delivery, or 
        form, or eliminates a tobacco additive from any tobacco 
        product, the manufacturer shall within 60 days of such action 
        so advise the Secretary in writing and reference such 
        modification in submissions made under subsection (b).

``SEC. 905. ANNUAL REGISTRATION.

    ``(a) Definitions.--As used in this section--
            ``(1) the term `manufacture, preparation, compounding, or 
        processing' shall include repackaging or otherwise changing the 
        container, wrapper, or labeling of any tobacco product package 
        in furtherance of the distribution of the tobacco product from 
        the original place of manufacture to the person who makes final 
        delivery or sale to the ultimate consumer or user; and
            ``(2) the term `name' shall include in the case of a 
        partnership the name of each partner and, in the case of a 
        corporation, the name of each corporate officer and director, 
        and the State of incorporation.
    ``(b) Registration by Owners and Operators.--On or before December 
31 of each year every person who owns or operates any establishment in 
any State engaged in the manufacture, preparation, compounding, or 
processing of a tobacco product or tobacco products shall register with 
the Secretary the name, places of business, and all such establishments 
of that person.
    ``(c) Registration of New Owners and Operators.--Every person upon 
first engaging in the manufacture, preparation, compounding, or 
processing of a tobacco product or tobacco products in any 
establishment owned or operated in any State by that person shall 
immediately register with the Secretary that person's name, place of 
business, and such establishment.
    ``(d) Registration of Added Establishments.--Every person required 
to register under subsection (b) or (c) shall immediately register with 
the Secretary any additional establishment which that person owns or 
operates in any State and in which that person begins the manufacture, 
preparation, compounding, or processing of a tobacco product or tobacco 
products.
    ``(e) Uniform Product Identification System.--The Secretary may by 
regulation prescribe a uniform system for the identification of tobacco 
products and may require that persons who are required to list such 
tobacco products under subsection (i) of this section shall list such 
tobacco products in accordance with such system.
    ``(f) Public Access to Registration Information.--The Secretary 
shall make available for inspection, to any person so requesting, any 
registration filed under this section.
    ``(g) Biennial Inspection of Registered Establishments.--Every 
establishment in any State registered with the Secretary under this 
section shall be subject to inspection under section 704, and every 
such establishment engaged in the manufacture, compounding, or 
processing of a tobacco product or tobacco products shall be so 
inspected by one or more officers or employees duly designated by the 
Secretary at least once in the 2-year period beginning with the date of 
registration of such establishment under this section and at least once 
in every successive 2-year period thereafter.
    ``(h) Foreign Establishments May Register.--Any establishment 
within any foreign country engaged in the manufacture, preparation, 
compounding, or processing of a tobacco product or tobacco products, 
may register under this section under regulations promulgated by the 
Secretary. Such regulations shall require such establishment to provide 
the information required by subsection (i) of this section and shall 
include provisions for registration of any such establishment upon 
condition that adequate and effective means are available, by 
arrangement with the government of such foreign country or otherwise, 
to enable the Secretary to determine from time to time whether tobacco 
products manufactured, prepared, compounded, or processed in such 
establishment, if imported or offered for import into the United 
States, shall be refused admission on any of the grounds set forth in 
section 801(a).
    ``(i) Registration Information.--
            ``(1) Product list.--Every person who registers with the 
        Secretary under subsection (b), (c), or (d) of this section 
        shall, at the time of registration under any such subsection, 
        file with the Secretary a list of all tobacco products which 
        are being manufactured, prepared, compounded, or processed by 
        that person for commercial distribution and which has not been 
        included in any list of tobacco products filed by that person 
        with the Secretary under this paragraph or paragraph (2) before 
        such time of registration. Such list shall be prepared in such 
        form and manner as the Secretary may prescribe and shall be 
        accompanied by--
                    ``(A) in the case of a tobacco product contained in 
                the applicable list with respect to which a performance 
                standard has been established under section 907 or 
                which is subject to section 910, a reference to the 
                authority for the marketing of such tobacco product and 
                a copy of all labeling for such tobacco product;
                    ``(B) in the case of any other tobacco product 
                contained in an applicable list, a copy of all consumer 
                information and other labeling for such tobacco 
                product, a representative sampling of advertisements 
                for such tobacco product, and, upon request made by the 
                Secretary for good cause, a copy of all advertisements 
                for a particular tobacco product; and
                    ``(C) if the registrant filing a list has 
                determined that a tobacco product contained in such 
                list is not subject to a performance standard 
                established under section 907, a brief statement of the 
                basis upon which the registrant made such determination 
                if the Secretary requests such a statement with respect 
                to that particular tobacco product.
            ``(2) Biannual report of any change in product list.--Each 
        person who registers with the Secretary under this section 
        shall report to the Secretary once during the month of June of 
        each year and once during the month of December of each year 
        the following:
                    ``(A) A list of each tobacco product introduced by 
                the registrant for commercial distribution which has 
                not been included in any list previously filed by that 
                person with the Secretary under this subparagraph or 
                paragraph (1) of this subsection. A list under this 
                subparagraph shall list a tobacco product by its 
                established name and shall be accompanied by the other 
                information required by paragraph (1).
                    ``(B) If since the date the registrant last made a 
                report under this paragraph that person has 
                discontinued the manufacture, preparation, compounding, 
                or processing for commercial distribution of a tobacco 
                product included in a list filed under subparagraph (A) 
                or paragraph (1), notice of such discontinuance, the 
                date of such discontinuance, and the identity of its 
                established name.
                    ``(C) If since the date the registrant reported 
                under subparagraph (B) a notice of discontinuance that 
                person has resumed the manufacture, preparation, 
                compounding, or processing for commercial distribution 
                of the tobacco product with respect to which such 
                notice of discontinuance was reported, notice of such 
                resumption, the date of such resumption, the identity 
                of such tobacco product by established name, and other 
                information required by paragraph (1), unless the 
                registrant has previously reported such resumption to 
                the Secretary under this subparagraph.
                    ``(D) Any material change in any information 
                previously submitted under this paragraph or paragraph 
                (1).
    ``(j) Report Preceding Introduction of Certain Substantially-
equivalent Products Into Interstate Commerce.--
            ``(1) In general.--Each person who is required to register 
        under this section and who proposes to begin the introduction 
        or delivery for introduction into interstate commerce for 
        commercial distribution of a tobacco product intended for human 
        use that was not commercially marketed (other than for test 
        marketing) in the United States as of August 11, 1995, as 
        defined by the Secretary by regulation shall, at least 90 days 
        before making such introduction or delivery, report to the 
        Secretary (in such form and manner as the Secretary shall by 
        regulation prescribe)--
                    ``(A) the basis for such person's determination 
                that the tobacco product is substantially equivalent, 
                within the meaning of section 910, to a tobacco product 
                commercially marketed (other than for test marketing) 
                in the United States as of August 11, 1995, that is in 
                compliance with the requirements of this Act; and
                    ``(B) action taken by such person to comply with 
                the requirements under section 907 that are applicable 
                to the tobacco product.
            ``(2) Application to certain post-august 11th products.--A 
        report under this subsection for a tobacco product that was 
        first introduced or delivered for introduction into interstate 
        commerce for commercial distribution in the United States after 
        August 11, 1995, and before the date of enactment of the 
        National Tobacco Policy and Youth Smoking Reduction Act shall 
        be submitted to the Secretary within 6 months after the date of 
        enactment of that Act.

``SEC. 906. GENERAL PROVISIONS RESPECTING CONTROL OF TOBACCO PRODUCTS.

    ``(a) In General.--Any requirement established by or under section 
902, 903, 905, or 909 applicable to a tobacco product shall apply to 
such tobacco product until the applicability of the requirement to the 
tobacco product has been changed by action taken under section 907, 
section 910, or subsection (d) of this section, and any requirement 
established by or under section 902, 903, 905, or 909 which is 
inconsistent with a requirement imposed on such tobacco product under 
section 907, section 910, or subsection (d) of this section shall not 
apply to such tobacco product.
    ``(b) Information on Public Access and Comment.--Each notice of 
proposed rulemaking under section 907, 908, 909, or 910, or under this 
section, any other notice which is published in the Federal Register 
with respect to any other action taken under any such section and which 
states the reasons for such action, and each publication of findings 
required to be made in connection with rulemaking under any such 
section shall set forth--
            ``(1) the manner in which interested persons may examine 
        data and other information on which the notice or findings is 
        based; and
            ``(2) the period within which interested persons may 
        present their comments on the notice or findings (including the 
        need therefor) orally or in writing, which period shall be at 
        least 60 days but may not exceed 90 days unless the time is 
        extended by the Secretary by a notice published in the Federal 
Register stating good cause therefor.
    ``(c) Limited Confidentiality of Information.--Any information 
reported to or otherwise obtained by the Secretary or the Secretary's 
representative under section 904, 907, 908, 909, or 910 or 704, or 
under subsection (e) or (f) of this section, which is exempt from 
disclosure under subsection (a) of section 552 of title 5, United 
States Code, by reason of subsection (b)(4) of that section shall be 
considered confidential and shall not be disclosed, except that the 
information may be disclosed to other officers or employees concerned 
with carrying out this chapter, or when relevant in any proceeding 
under this chapter.
    ``(d) Restrictions.--
            ``(1) The Secretary may by regulation require that a 
        tobacco product be restricted to sale, distribution, or use 
        upon such conditions, including restrictions on the access to, 
        and the advertising and promotion of, the tobacco product, as 
        the Secretary may prescribe in such regulation if, because of 
        its potentiality for harmful effect or the collateral measures 
        necessary to its use, the Secretary determines that such 
        regulation would be appropriate for the protection of the 
        public health. The finding as to whether such regulation would 
        be appropriate for the protection of the public health shall be 
        determined with respect to the risks and benefits to the 
        population as a whole, including users and non-users of the 
        tobacco product, and taking into account--
                    ``(A) the increased or decreased likelihood that 
                existing users of tobacco products will stop using such 
                products; and
                    ``(B) the increased or decreased likelihood that 
                those who do not use tobacco products will start using 
                such products.
        No such condition may require that the sale or distribution of 
        a tobacco product be limited to the written or oral 
        authorization of a practitioner licensed by law to prescribe 
        medical products.
            ``(2) The label of a tobacco product shall bear such 
        appropriate statements of the restrictions required by a 
        regulation under subsection (a) as the Secretary may in such 
        regulation prescribe.
            ``(3) No restriction under paragraph (1) may prohibit the 
        sale of any tobacco product in face-to face transactions by a 
        specific category of retail outlets.
    ``(e) Good Manufacturing Practice Requirements.--
            ``(1) Methods, facilities, and controls to conform.--
                    ``(A) The Secretary may, in accordance with 
                subparagraph (B), 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 assure that the public health is 
                protected and that the tobacco product is in compliance 
                with this chapter.
                    ``(B) The Secretary shall--
                            ``(i) before promulgating any regulation 
                        under subparagraph (A), afford an advisory 
                        committee an opportunity to submit 
                        recommendations with respect to the regulation 
                        proposed to be promulgated;
                            ``(ii) before promulgating any regulation 
                        under subparagraph (A), afford opportunity for 
                        an oral hearing;
                            ``(iii) provide the advisory committee a 
                        reasonable time to make its recommendation with 
                        respect to proposed regulations under 
                        subparagraph (A); and
                            ``(iv) in establishing the effective date 
                        of a regulation promulgated under this 
                        subsection, take into account the differences 
                        in the manner in which the different types of 
                        tobacco products have historically been 
                        produced, the financial resources of the 
                        different tobacco product manufacturers, and 
                        the state of their existing manufacturing 
                        facilities; and shall provide for a reasonable 
                        period of time for such manufacturers to 
                        conform to good manufacturing practices.
            ``(2) Exemptions; variances.--
                    ``(A) Any person subject to any requirement 
                prescribed under paragraph (1) may petition the 
                Secretary for a permanent or temporary 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--
                            ``(i) 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 assure that the tobacco product will be in 
                        compliance with this chapter;
                            ``(ii) 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 tobacco product in lieu of the methods, 
                        facilities, and controls prescribed by the 
                        requirement; and
                            ``(iii) contain such other information as 
                        the Secretary shall prescribe.
                    ``(B) The Secretary may refer to an advisory 
                committee any petition submitted under subparagraph 
                (A). The advisory committee shall report its 
                recommendations to the Secretary with respect to a 
                petition referred to it within 60 days after the date 
                of the petition's referral. Within 60 days after--
                            ``(i) the date the petition was submitted 
                        to the Secretary under subparagraph (A); or
                            ``(ii) the day after the petition was 
                        referred to an advisory committee,
                whichever occurs later, the Secretary shall by order 
                either deny the petition or approve it.
                    ``(C) 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 
                        tobacco product will be in compliance 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 tobacco product in lieu of the methods, 
                        controls, and facilities prescribed by the 
                        requirement are sufficient to assure that the 
                        tobacco product will be in compliance with this 
                        chapter.
                    ``(D) 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 
                assure that the tobacco product will be in compliance 
                with this chapter.
                    ``(E) After the issuance of an order under 
                subparagraph (B) respecting a petition, the petitioner 
                shall have an opportunity for an informal hearing on 
                such order.
            ``(3) Compliance with requirements under this subsection 
        shall not be required before the period ending 3 years after 
        the date of enactment of the National Tobacco Policy and Youth 
        Smoking Reduction Act.
    ``(f) Exemption for Investigational Use.--The Secretary may exempt 
tobacco products intended for investigational use from this chapter 
under such conditions as the Secretary may prescribe by regulation.
    ``(g) Research and Development.--The Secretary may enter into 
contracts for research, testing, and demonstrations respecting tobacco 
products and may obtain tobacco products for research, testing, and 
demonstration purposes without regard to section 3324(a) and (b) of 
title 31, United States Code, and section 5 of title 41, United States 
Code.

``SEC. 907. PERFORMANCE STANDARDS.

    ``(a) In General.--
            ``(1) Finding required.--The Secretary may adopt 
        performance standards for a tobacco product if the Secretary 
        finds that a performance standard is appropriate for the 
        protection of the public health. This finding shall be 
        determined with respect to the risks and benefits to the 
        population as a whole, including users and non-users of the 
        tobacco product, and taking into account--
                    ``(A) the increased or decreased likelihood that 
                existing users of tobacco products will stop using such 
                products; and
                    ``(B) the increased or decreased likelihood that 
                those who do not use tobacco products will start using 
                such products.
            ``(2) Content of performance standards.--A performance 
        standard established under this section for a tobacco product--
                    ``(A) shall include provisions to provide 
                performance that is appropriate for the protection of 
                the public health, including provisions, where 
                appropriate--
                            ``(i) for the reduction or elimination of 
                        nicotine yields of the product;
                            ``(ii) for the reduction or elimination of 
                        other constituents or harmful components of the 
                        product; or
                            ``(iii) relating to any other requirement 
                        under (B);
                    ``(B) shall, where necessary to be appropriate for 
                the protection of the public health, include--
                            ``(i) provisions respecting the 
                        construction, components, ingredients, and 
                        properties of the tobacco product;
                            ``(ii) provisions for the testing (on a 
                        sample basis or, if necessary, on an individual 
                        basis) of the tobacco product;
                            ``(iii) provisions for the measurement of 
                        the performance characteristics of the tobacco 
                        product;
                            ``(iv) provisions requiring that the 
                        results of each or of certain of the tests of 
                        the tobacco product required to be made under 
                        clause (ii) show that the tobacco product is in 
                        conformity with the portions of the standard 
                        for which the test or tests were required; and
                            ``(v) a provision requiring that the sale 
                        and distribution of the tobacco product be 
                        restricted but only to the extent that the sale 
                        and distribution of a tobacco product may be 
                        restricted under a regulation under section 
                        906(d); and
                    ``(C) shall, where appropriate, require the use and 
                prescribe the form and content of labeling for the 
                proper use of the tobacco product.
            ``(3) Periodic re-evaluation of performance standards.--The 
        Secretary shall provide for periodic evaluation of performance 
        standards established under this section to determine whether 
        such standards should be changed to reflect new medical, 
        scientific, or other technological data. The Secretary may 
        provide for testing under paragraph (2) by any person.
            ``(4) Involvement of other agencies; informed persons.--In 
        carrying out duties under this section, the Secretary shall, to 
        the maximum extent practicable--
                    ``(A) use personnel, facilities, and other 
                technical support available in other Federal agencies;
                    ``(B) consult with other Federal agencies concerned 
                with standard-setting and other nationally or 
                internationally recognized standard-setting entities; 
                and
                    ``(C) 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 Secretary's judgment can make a significant 
                contribution.
    ``(b) Establishment of Standards.--
            ``(1) Notice.--
                    (A) The Secretary shall publish in the Federal 
                Register a notice of proposed rulemaking for the 
                establishment, amendment, or revocation of any 
                performance standard for a tobacco product.
                    ``(B) A notice of proposed rulemaking for the 
                establishment or amendment of a performance standard 
                for a tobacco product shall--
                            ``(i) set forth a finding with supporting 
                        justification that the performance standard is 
                        appropriate for the protection of the public 
                        health;
                            ``(ii) set forth proposed findings with 
                        respect to the risk of illness or injury that 
                        the performance standard is intended to reduce 
                        or eliminate; and
                            ``(iii) invite interested persons to submit 
                        an existing performance standard for the 
                        tobacco product, including a draft or proposed 
                        performance standard, for consideration by the 
                        Secretary.
                    ``(C) A notice of proposed rulemaking for the 
                revocation of a performance standard shall set forth a 
                finding with supporting justification that the 
                performance standard is no longer necessary to be 
                appropriate for the protection of the public health.
                    ``(D) The Secretary shall consider all information 
                submitted in connection with a proposed standard, 
                including information concerning the countervailing 
                effects of the performance standard on the health of 
                adolescent tobacco users, adult tobacco users, or non-
                tobacco users, such as the creation of a significant 
                demand for contraband or other tobacco products that do 
                not meet the requirements of this chapter and the 
                significance of such demand, and shall issue the 
                standard if the Secretary determines that the standard 
                would be appropriate for the protection of the public 
                health.
                    ``(E) The Secretary shall provide for a comment 
                period of not less than 60 days.
            ``(2) Promulgation.--
                    ``(A) After the expiration of the period for 
                comment on a notice of proposed rulemaking published 
                under paragraph (1) respecting a performance standard 
                and after consideration of such comments and any report 
                from an advisory committee, the Secretary shall--
                            ``(i) promulgate a regulation establishing 
                        a performance standard and publish in the 
                        Federal Register findings on the matters 
                        referred to in paragraph (1); or
                            ``(ii) publish a notice terminating the 
                        proceeding for the development of the standard 
                        together with the reasons for such termination.
                    ``(B) A regulation establishing a performance 
                standard shall set forth the date or dates upon which 
                the standard shall take effect, but no such regulation 
                may take effect before one year after the date of its 
                publication unless the Secretary determines that an 
                earlier effective date is necessary for the protection 
                of the public health. Such date or dates shall be 
                established so as to minimize, consistent with the 
                public health, economic loss to, and disruption or 
                dislocation of, domestic and international trade.
            ``(3) Special rule for standard banning class of product or 
        eliminating nicotine content.--Because of the importance of a 
        decision of the Secretary to issue a regulation establishing a 
        performance standard--
                    ``(A) eliminating all cigarettes, all smokeless 
                tobacco products, or any similar class of tobacco 
                products, or
                    ``(B) requiring the reduction of nicotine yields of 
                a tobacco product to zero,
        it is appropriate for the Congress to have the opportunity to 
        review such a decision. Therefore, any such standard may not 
        take effect before a date that is 2 years after the President 
        notifies the Congress that a final regulation imposing the 
        restriction has been issued.
            ``(4) Amendment; revocation.--
                    ``(A) The Secretary, upon the Secretary's own 
                initiative or upon petition of an interested person may 
                by a regulation, promulgated in accordance with the 
                requirements of paragraphs (1) and (2)(B) of this 
                subsection, amend or revoke a performance standard.
                    ``(B) The Secretary may declare a proposed 
                amendment of a performance standard to be effective on 
                and after its publication in the Federal Register and 
                until the effective date of any final action taken on 
                such amendment if the Secretary determines that making 
                it so effective is in the public interest.
            ``(5) Reference to advisory committee.--The Secretary--
                    ``(A) may, on the Secretary's own initiative, refer 
                a proposed regulation for the establishment, amendment, 
                or revocation of a performance standard; or
                    ``(B) shall, upon the request of an interested 
                person which demonstrates good cause for referral and 
                which is made before the expiration of the period for 
                submission of comments on such proposed regulation,
refer such proposed regulation to an advisory committee, for a report 
and recommendation with respect to any matter involved in the proposed 
regulation which requires the exercise of scientific judgment. If a 
proposed regulation is referred under this subparagraph to the advisory 
committee, the Secretary shall provide the advisory committee with the 
data and information on which such proposed regulation is based. The 
advisory committee shall, within 60 days after the referral of a 
proposed regulation and after independent study of the data and 
information furnished to it by the Secretary and other data and 
information before it, submit to the Secretary a report and 
recommendation respecting such regulation, together with all underlying 
data and information and a statement of the reason or basis for the 
recommendation. A copy of such report and recommendation shall be made 
public by the Secretary.

``SEC. 908. NOTIFICATION AND OTHER REMEDIES

    ``(a) Notification.--If the Secretary determines that--
            ``(1) a tobacco product which is introduced or delivered 
        for introduction into interstate commerce for commercial 
        distribution presents an unreasonable risk of substantial harm 
        to the public health; and
            ``(2) notification under this subsection is necessary to 
        eliminate the unreasonable risk of such harm and no more 
        practicable means is available under the provisions of this 
        chapter (other than this section) to eliminate such risk,
the Secretary may issue such order as may be necessary to assure that 
adequate notification is provided in an appropriate form, by the 
persons and means best suited under the circumstances involved, to all 
persons who should properly receive such notification in order to 
eliminate such risk. The Secretary may order notification by any 
appropriate means, including public service announcements. Before 
issuing an order under this subsection, the Secretary shall consult 
with the persons who are to give notice under the order.
    ``(b) No Exemption from Other Liability.--Compliance with an order 
issued under this section shall not relieve any person from liability 
under Federal or State law. In awarding damages for economic loss in an 
action brought for the enforcement of any such liability, the value to 
the plaintiff in such action of any remedy provided under such order 
shall be taken into account.
    ``(c) Recall Authority.--
            ``(1) In general.--If the Secretary finds that there is a 
        reasonable probability that a tobacco product contains a 
        manufacturing or other defect not ordinarily contained in 
        tobacco products on the market that would cause serious, 
        adverse health consequences or death, the Secretary shall issue 
        an order requiring the appropriate person (including the 
        manufacturers, importers, distributors, or retailers of the 
        tobacco product) to immediately cease distribution of such 
        tobacco product. The order shall provide the person subject to 
        the order with an opportunity for an informal hearing, to be 
        held not later than 10 days after the date of the issuance of 
        the order, on the actions required by the order and on whether 
        the order should be amended to require a recall of such tobacco 
        product. If, after providing an opportunity for such a hearing, 
        the Secretary determines that inadequate grounds exist to 
        support the actions required by the order, the Secretary shall 
        vacate the order.
            ``(2) Amendment of order to require recall.--
                    ``(A) If, after providing an opportunity for an 
                informal hearing under paragraph (1), the Secretary 
                determines that the order should be amended to include 
                a recall of the tobacco product with respect to which 
                the order was issued, the Secretary shall, except as 
                provided in subparagraph (B), amend the order to 
                require a recall. The Secretary shall specify a 
                timetable in which the tobacco product recall will 
                occur and shall require periodic reports to the 
                Secretary describing the progress of the recall.
                    ``(B) An amended order under subparagraph (A)--
                            ``(i) shall not include recall of a tobacco 
                        product from individuals; and
                            ``(ii) shall provide for notice to persons 
                        subject to the risks associated with the use of 
                        such tobacco product.
                In providing the notice required by clause (ii), the 
                Secretary may use the assistance of retailers and other 
                persons who distributed such tobacco product. If a 
                significant number of such persons cannot be 
                identified, the Secretary shall notify such persons 
                under section 705(b).
            ``(3) Remedy not exclusive.--The remedy provided by this 
        subsection shall be in addition to remedies provided by 
        subsection (a) of this section.

``SEC. 909. RECORDS AND REPORTS ON TOBACCO PRODUCTS.

    ``(a) In General.--Every person who is a tobacco product 
manufacturer or importer of a tobacco product shall establish and 
maintain such records, make such reports, and provide such information, 
as the Secretary may by regulation reasonably require to assure that 
such tobacco product is not adulterated or misbranded and to otherwise 
protect public health. Regulations prescribed under the preceding 
sentence--
            ``(1) may require a tobacco product manufacturer or 
        importer to report to the Secretary whenever the manufacturer 
        or importer receives or otherwise becomes aware of information 
        that reasonably suggests that one of its marketed tobacco 
        products may have caused or contributed to a serious unexpected 
        adverse experience associated with the use of the product or 
        any significant increase in the frequency of a serious, 
        expected adverse product experience;
            ``(2) shall require reporting of other significant adverse 
        tobacco product experiences as determined by the Secretary to 
        be necessary to be reported;
            ``(3) shall not impose requirements unduly burdensome to a 
        tobacco product manufacturer or importer, taking into account 
        the cost of complying with such requirements and the need for 
        the protection of the public health and the implementation of 
        this chapter;
            ``(4) when prescribing the procedure for making requests 
        for reports or information, shall require that each request 
        made under such regulations for submission of a report or 
        information to the Secretary state the reason or purpose for 
        such request and identify to the fullest extent practicable 
        such report or information;
            ``(5) when requiring submission of a report or information 
        to the Secretary, shall state the reason or purpose for the 
        submission of such report or information and identify to the 
        fullest extent practicable such report or information; and
            ``(6) may not require that the identity of any patient or 
        user be disclosed in records, reports, or information required 
        under this subsection unless required for the medical welfare 
        of an individual, to determine risks to public health of a 
        tobacco product, or to verify a record, report, or information 
        submitted under this chapter.
In prescribing regulations under this subsection, the Secretary shall 
have due regard for the professional ethics of the medical profession 
and the interests of patients. The prohibitions of paragraph (6) of 
this subsection continue to apply to records, reports, and information 
concerning any individual who has been a patient, irrespective of 
whether or when he ceases to be a patient.
    ``(b) Reports of Removals and Corrections.--
            (1) Except as provided in paragraph (3), the Secretary 
        shall by regulation require a tobacco product manufacturer or 
        importer of a tobacco product to report promptly to the 
        Secretary any corrective action taken or removal from the 
        market of a tobacco product undertaken by such manufacturer or 
        importer if the removal or correction was undertaken--
                    ``(A) to reduce a risk to health posed by the 
                tobacco product; or
                    ``(B) to remedy a violation of this chapter caused 
                by the tobacco product which may present a risk to 
                health.
A tobacco product manufacturer or importer of a tobacco product who 
undertakes a corrective action or removal from the market of a tobacco 
product which is not required to be reported under this subsection 
shall keep a record of such correction or removal.
            ``(2) No report of the corrective action or removal of a 
        tobacco product may be required under paragraph (1) if a report 
of the corrective action or removal is required and has been submitted 
under subsection (a) of this section.

``SEC. 910. PREMARKET REVIEW OF CERTAIN TOBACCO PRODUCTS.

    ``(a) In General.--
            ``(1) Premarket approval required.--
                    ``(A) New products.--Approval under this section of 
                an application for premarket approval for any tobacco 
                product that is not commercially marketed (other than 
                for test marketing) in the United States as of August 
                11, 1995, is required unless the manufacturer has 
                submitted a report under section 905(j), and the 
                Secretary has issued an order that the tobacco product 
                is substantially equivalent to a tobacco product 
                commercially marketed (other than for test marketing) 
                in the United States as of August 11, 1995, that is in 
                compliance with the requirements of this Act.
                    ``(B) Products introduced between august 11, 1995, 
                and enactment of this chapter.--Subparagraph (A) does 
                not apply to a tobacco product that--
                            ``(i) was first introduced or delivered for 
                        introduction into interstate commerce for 
                        commerce for commercial distribution in the 
                        United States after August 11, 1995, and before 
                        the date of enactment of the National Tobacco 
                        Policy and Youth Smoking Reduction Act; and
                            ``(ii) for which a report was submitted 
                        under section 905(j) within 6 months after such 
                        date,
                until the Secretary issues an order that the tobacco 
                product is substantially equivalent for purposes of 
                this section or requires premarket approval.
            ``(2) Substantially equivalent defined.--
                    ``(A) For purposes of this section and section 
                905(j), the term `substantially equivalent' or 
                `substantial equivalence' mean, with respect to the 
                tobacco product being compared to the predicate tobacco 
                product, that the Secretary by order has found that the 
                tobacco product--
                            ``(i) has the same characteristics as the 
                        predicate tobacco product; or
                            ``(ii) has different characteristics and 
                        the information submitted contains information, 
                        including clinical data if deemed necessary by 
                        the Secretary, that demonstrates that it is not 
                        appropriate to regulate the product under this 
                        section because the product does not raise 
                        different questions of public health.
                    ``(B) For purposes of subparagraph (A), the term 
                `characteristics' means the materials, ingredients, 
                design, composition, heating source, or other features 
                of a tobacco product.
                    ``(C) A tobacco product may not be found to be 
                substantially equivalent to a predicate tobacco product 
                that has been removed from the market at the initiative 
                of the Secretary or that has been determined by a 
                judicial order to be misbranded or adulterated.
            ``(3) Health information.--
                    ``(A) As part of a submission under section 905(j) 
                respecting a tobacco product, the person required to 
                file a premarket notification under such section shall 
                provide an adequate summary of any health information 
                related to the tobacco product or state that such 
                information will be made available upon request by any 
                person.
                    ``(B) Any summary under subparagraph (A) respecting 
                a tobacco product shall contain detailed information 
                regarding data concerning adverse health effects and 
                shall be made available to the public by the Secretary 
                within 30 days of the issuance of a determination that 
                such tobacco product is substantially equivalent to 
                another tobacco product.
    ``(b) Application.--
            ``(1) Contents.--An application for premarket approval 
        shall contain--
                    ``(A) full reports of all information, published or 
                known to or which should reasonably be known to the 
                applicant, concerning investigations which have been 
                made to show the health risks of such tobacco product 
                and whether such tobacco product presents less risk 
                than other tobacco products;
                    ``(B) a full statement of the components, 
                ingredients, and properties, and of the principle or 
                principles of operation, of such tobacco product;
                    ``(C) a full description of the methods used in, 
                and the facilities and controls used for, the 
                manufacture, processing, and, when relevant, packing 
                and installation of, such tobacco product;
                    ``(D) an identifying reference to any performance 
                standard under section 907 which would be applicable to 
                any aspect of such tobacco product, and either adequate 
                information to show that such aspect of such tobacco 
                product fully meets such performance standard or 
                adequate information to justify any deviation from such 
                standard;
                    ``(E) such samples of such tobacco product and of 
                components thereof as the Secretary may reasonably 
                require;
                    ``(F) specimens of the labeling proposed to be used 
                for such tobacco product; and
                    ``(G) such other information relevant to the 
                subject matter of the application as the Secretary may 
                require.
            ``(2) Reference to advisory committee.--Upon receipt of an 
        application meeting the requirements set forth in paragraph 
        (1), the Secretary--
                    ``(A) may, on the Secretary's own initiative; or
                    ``(B) shall, upon the request of an applicant,
        refer such application to an advisory committee and for 
        submission (within such period as the Secretary may establish) 
        of a report and recommendation respecting approval of the 
        application, together with all underlying data and the reasons 
        or basis for the recommendation.
    ``(c) Action on Application.--
            ``(1) Deadline.--
                    ``(A) As promptly as possible, but in no event 
                later than 180 days after the receipt of an application 
                under subsection (b) of this section, the Secretary, 
                after considering the report and recommendation 
                submitted under paragraph (2) of such subsection, 
                shall--
                            ``(i) issue an order approving the 
                        application if the Secretary finds that none of 
                        the grounds for denying approval specified in 
                        paragraph (2) of this subsection applies; or
                            ``(ii) deny approval of the application if 
                        the Secretary finds (and sets forth the basis 
                        for such finding as part of or accompanying 
                        such denial) that one or more grounds for 
                        denial specified in paragraph (2) of this 
                        subsection apply.
                    ``(B) An order approving an application for a 
                tobacco product may require as a condition to such 
                approval that the sale and distribution of the tobacco 
                product be restricted but only to the extent that the 
                sale and distribution of a tobacco product may be 
                restricted under a regulation under section 906(d).
            ``(2) Denial of approval.--The Secretary shall deny 
        approval of an application for a tobacco product if, upon the 
        basis of the information submitted to the Secretary as part of 
        the application and any other information before the Secretary 
        with respect to such tobacco product, the Secretary finds 
        that--
                    ``(A) there is a lack of a showing that permitting 
                such tobacco product to be marketed would be 
                appropriate for the protection of the public health;
                    ``(B) the methods used in, or the facilities or 
                controls used for, the manufacture, processing, or 
                packing of such tobacco product do not conform to the 
                requirements of section 906(e);
                    ``(C) based on a fair evaluation of all material 
                facts, the proposed labeling is false or misleading in 
                any particular; or
                    ``(D) such tobacco product is not shown to conform 
                in all respects to a performance standard in effect 
                under section 907, compliance with which is a condition 
                to approval of the application, and there is a lack of 
                adequate information to justify the deviation from such 
                standard.
            ``(3) Denial information.--Any denial of an application 
        shall, insofar as the Secretary determines to be practicable, 
        be accompanied by a statement informing the applicant of the 
        measures required to place such application in approvable form 
        (which measures may include further research by the applicant 
        in accordance with one or more protocols prescribed by the 
        Secretary).
            ``(4) Basis for finding.--For purposes of this section, the 
        finding as to whether approval of a tobacco product is 
        appropriate for the protection of the public health shall be 
        determined with respect to the risks and benefits to the 
        population as a whole, including users and non-users of the 
        tobacco product, and taking into account--
                    ``(A) the increased or decreased likelihood that 
                existing users of tobacco products will stop using such 
                products; and
                    ``(B) the increased or decreased likelihood that 
                those who do not use tobacco products will start using 
                such products.
            ``(5) Basis for action.--
                    ``(A) For purposes of paragraph (2)(A), whether 
                permitting a tobacco product to be marketed would be 
                appropriate for the protection of the public health 
                shall, when appropriate, be determined on the basis of 
                well-controlled investigations, which may include one 
                or more clinical investigations by experts qualified by 
                training and experience to evaluate the tobacco 
                product.
                    ``(B) If the Secretary determines that there exists 
                valid scientific evidence (other than evidence derived 
                from investigations described in subparagraph (A)) 
                which is sufficient to evaluate the tobacco product the 
                Secretary may authorize that the determination for 
                purposes of paragraph (2)(A) be made on the basis of 
                such evidence.
    ``(d) Withdrawal and Temporary Suspension.--
            ``(1) In general.--The Secretary shall, upon obtaining, 
        where appropriate, advice on scientific matters from an 
        advisory committee, and after due notice and opportunity for 
        informal hearing to the holder of an approved application for a 
        tobacco product, issue an order withdrawing approval of the 
        application if the Secretary finds--
                    ``(A) that the continued marketing of such tobacco 
                product no longer is appropriate for the protection of 
                the public health;
                    ``(B) that the application contained or was 
                accompanied by an untrue statement of a material fact;
                    ``(C) that the applicant--
                            ``(i) has failed to establish a system for 
                        maintaining records, or has repeatedly or 
                        deliberately failed to maintain records or to 
                        make reports, required by an applicable 
                        regulation under section 909;
                            ``(ii) has refused to permit access to, or 
                        copying or verification of, such records as 
                        required by section 704; or
                            ``(iii) has not complied with the 
                        requirements of section 905;
                    ``(D) on the basis of new information before the 
                Secretary with respect to such tobacco product, 
                evaluated together with the evidence before the 
                Secretary when the application was approved, that the 
                methods used in, or the facilities and controls used 
                for, the manufacture, processing, packing, or 
                installation of such tobacco product do not conform 
                with the requirements of section 906(e) and were not 
                brought into conformity with such requirements within a 
                reasonable time after receipt of written notice from 
                the Secretary of nonconformity;
                    ``(E) on the basis of new information before the 
                Secretary, evaluated together with the evidence before 
                the Secretary when the application was approved, that 
                the labeling of such tobacco product, based on a fair 
                evaluation of all material facts, is false or 
                misleading in any particular and was not corrected 
                within a reasonable time after receipt of written 
                notice from the Secretary of such fact; or
                    ``(F) on the basis of new information before the 
                Secretary, evaluated together with the evidence before 
                the Secretary when the application was approved, that 
                such tobacco product is not shown to conform in all 
                respects to a performance standard which is in effect 
                under section 907, compliance with which was a 
                condition to approval of the application, and that 
                there is a lack of adequate information to justify the 
                deviation from such standard.
            ``(2) Appeal.--The holder of an application subject to an 
        order issued under paragraph (1) withdrawing approval of the 
        application may, by petition filed on or before the thirtieth 
        day after the date upon which he receives notice of such 
        withdrawal, obtain review thereof in accordance with subsection 
        (e) of this section.
            ``(3) Temporary suspension.--If, after providing an 
        opportunity for an informal hearing, the Secretary determines 
        there is reasonable probability that the continuation of 
        distribution of a tobacco product under an approved application 
        would cause serious, adverse health consequences or death, that 
        is greater than ordinarily caused by tobacco products on the 
        market, the Secretary shall by order temporarily suspend the 
        approval of the application approved under this section. If the 
        Secretary issues such an order, the Secretary shall proceed 
        expeditiously under paragraph (1) to withdraw such application.
    ``(e) Service of Order.--An order issued by the Secretary under 
this section shall be served--
            ``(1) in person by any officer or employee of the 
        department designated by the Secretary; or
            ``(2) by mailing the order by registered mail or certified 
        mail addressed to the applicant at the applicant's last known 
        address in the records of the Secretary.

``SEC. 911. JUDICIAL REVIEW.

    ``(a) In General.--Not later than 30 days after--
            ``(1) the promulgation of a regulation under section 907 
        establishing, amending, or revoking a performance standard for 
        a tobacco product; or
            ``(2) a denial of an application for approval under section 
        910(c),
any person adversely affected by such regulation or order may file a 
petition with the United States Court of Appeals for the District of 
Columbia or for the circuit wherein such person resides or has his 
principal place of business for judicial review of such regulation or 
order. A copy of the petition shall be transmitted by the clerk of the 
court to the Secretary or other officer designated by the Secretary for 
that purpose. The Secretary shall file in the court the record of the 
proceedings on which the Secretary based the Secretary's regulation or 
order and each record or order shall contain a statement of the reasons 
for its issuance and the basis, on the record, for its issuance. For 
purposes of this section, the term `record' means all notices and other 
matter published in the Federal Register with respect to the regulation 
or order reviewed, all information submitted to the Secretary with 
respect to such regulation or order, proceedings of any panel or 
advisory committee with respect to such regulation or order, any 
hearing held with respect to such regulation or order, and any other 
information identified by the Secretary, in the administrative 
proceeding held with respect to such regulation or order, as being 
relevant to such regulation or order.
    ``(b) Court May Order Secretary to Make Additional Findings.--If 
the petitioner applies to the court for leave to adduce additional 
data, views, or arguments respecting the regulation or order being 
reviewed and shows to the satisfaction of the court that such 
additional data, views, or arguments are material and that there were 
reasonable grounds for the petitioner's failure to adduce such data, 
views, or arguments in the proceedings before the Secretary, the court 
may order the Secretary to provide additional opportunity for the oral 
presentation of data, views, or arguments and for written submissions. 
The Secretary may modify the Secretary's findings, or make new findings 
by reason of the additional data, views, or arguments so taken and 
shall file with the court such modified or new findings, and the 
Secretary's recommendation, if any, for the modification or setting 
aside of the regulation or order being reviewed, with the return of 
such additional data, views, or arguments.
    ``(c) Standard of Review.--Upon the filing of the petition under 
subsection (a) of this section for judicial review of a regulation or 
order, the court shall have jurisdiction to review the regulation or 
order in accordance with chapter 7 of title 5, United States Code, and 
to grant appropriate relief, including interim relief, as provided in 
such chapter. A regulation or order described in paragraph (1) or (2) 
of subsection (a) of this section shall not be affirmed if it is found 
to be unsupported by substantial evidence on the record taken as a 
whole.
    ``(d) Finality of Judgment.--The judgment of the court affirming or 
setting aside, in whole or in part, any regulation or order shall be 
final, subject to review by the Supreme Court of the United States upon 
certiorari or certification, as provided in section 1254 of title 28, 
United States Code.
    ``(e) Other Remedies.--The remedies provided for in this section 
shall be in addition to and not in lieu of any other remedies provided 
by law.
    ``(f) Regulations and Orders Must Recite Basis in Record.--To 
facilitate judicial review under this section or under any other 
provision of law of a regulation or order issued under section 906, 
907, 908, 909, 910, or 914, each such regulation or order shall contain 
a statement of the reasons for its issuance and the basis, in the 
record of the proceedings held in connection with its issuance, for its 
issuance.

``SEC. 912. POSTMARKET SURVEILLANCE

    ``(a) Discretionary Surveillance.--The Secretary may require a 
tobacco product manufacturer to conduct postmarket surveillance for a 
tobacco product of the manufacturer if the Secretary determines that 
postmarket surveillance of the tobacco product is necessary to protect 
the public health or is necessary to provide information regarding the 
health risks and other safety issues involving the tobacco product.
    ``(b) Surveillance Approval.--Each tobacco product manufacturer 
required to conduct a surveillance of a tobacco product under 
subsection (a) of this section shall, within 30 days after receiving 
notice that the manufacturer is required to conduct such surveillance, 
submit, for the approval of the Secretary, a protocol for the required 
surveillance. The Secretary, within 60 days of the receipt of such 
protocol, shall determine if the principal investigator proposed to be 
used in the surveillance has sufficient qualifications and experience 
to conduct such surveillance and if such protocol will result in 
collection of useful data or other information necessary to protect the 
public health. The Secretary may not approve such a protocol until it 
has been reviewed by an appropriately qualified scientific and 
technical review committee established by the Secretary.

``SEC. 913. REDUCED RISK TOBACCO PRODUCTS.

    ``(a) Requirements.--
            ``(1) In general.--For purposes of this section, the term 
        `reduced risk tobacco product' means a tobacco product 
        designated by the Secretary under paragraph (2).
            ``(2) Designation.--
                    ``(A) In general.--A product may be designated by 
                the Secretary as a reduced risk tobacco product if the 
                Secretary finds that the product will significantly 
                reduce harm to individuals caused by a tobacco product 
                and is otherwise appropriate to protect public health, 
                based on an application submitted by the manufacturer 
                of the product (or other responsible person) that--
                            ``(i) demonstrates through testing on 
                        animals and short-term human testing that use 
                        of such product results in ingestion or 
                        inhalation of a substantially lower yield of 
                        toxic substances than use of conventional 
                        tobacco products in the same category as the 
                        proposed reduced risk product; and
                            ``(ii) if required by the Secretary, 
                        includes studies of the long-term health 
                        effects of the product.
                If such studies are required, the manufacturer may 
                consult with the Secretary regarding protocols for 
                conducting the studies.
                    ``(B) Basis for finding.--In making the finding 
                under subparagraph (A), the Secretary shall take into 
                account--
                            ``(i) the risks and benefits to the 
                        population as a whole, including both users of 
                        tobacco products and non-users of tobacco 
                        products;
                            ``(ii) the increased or decreased 
                        likelihood that existing users of tobacco 
                        products will stop using such products 
                        including reduced risk tobacco products;
                            ``(iii) the increased or decreased 
                        likelihood that those who do not use tobacco 
                        products will start to use such 
products, including reduced risk tobacco products; and
                            ``(iv) the risks and benefits to consumers 
                        from the use of a reduced risk tobacco product 
                        as compared to the use of products approved 
                        under chapter V to reduce exposure to tobacco.
            ``(3) Marketing requirements.--A tobacco product may be 
        marketed and labeled as a reduced risk tobacco product if it--
                    ``(A) has been designated as a reduced risk tobacco 
                product by the Secretary under paragraph (2);
                    ``(B) bears a label prescribed by the Secretary 
                concerning the product's contribution to reducing harm 
                to health; and
                    ``(C) complies with requirements prescribed by the 
                Secretary relating to marketing and advertising of the 
                product, and other provisions of this chapter as 
                prescribed by the Secretary.
    ``(b) Revocation of Designation.--At any time after the date on 
which a tobacco product is designated as a reduced risk tobacco product 
under this section the Secretary may, after providing an opportunity 
for an informal hearing, revoke such designation if the Secretary 
determines, based on information not available at the time of the 
designation, that--
            ``(1) the finding made under subsection (a)(2) is no longer 
        valid; or
            ``(2) the product is being marketed in violation of 
        subsection (a)(3).
    ``(c) Limitation.--A tobacco product that is designated as a 
reduced risk tobacco product that is in compliance with subsection (a) 
shall not be regulated as a drug or device.
    ``(d) Development of reduced risk tobacco product Technology.--A 
tobacco product manufacturer shall provide written notice to the 
Secretary upon the development or acquisition by the manufacturer of 
any technology that would reduce the risk of a tobacco product to the 
health of the user for which the manufacturer is not seeking 
designation as a `reduced risk tobacco product' under subsection (a).

``SEC. 914. PRESERVATION OF STATE AND LOCAL AUTHORITY.

    ``(a) Additional Requirements.--
            ``(1) In general.--Except as provided in paragraph (2), 
        nothing in this Act shall be construed as prohibiting a State 
        or political subdivision thereof from adopting or enforcing a 
        requirement applicable to a tobacco product that is in addition 
        to, or more stringent than, requirements established under this 
        chapter.
            ``(2) Preemption of certain state and local requirements.--
                    ``(A) Except as provided in subparagraph (B), no 
                State or political subdivision of a State may establish 
                or continue in effect with respect to a tobacco product 
                any requirement which is different from, or in addition 
                to, any requirement applicable under the provisions of 
                this chapter relating to performance standards, 
                premarket approval, adulteration, misbranding, 
                registration, reporting, good manufacturing standards, 
                or reduced risk products.
                    ``(B) Subparagraph (A) does not apply to 
                requirements relating to the sale, use, or distribution 
                of a tobacco product including requirements related to 
                the access to, and the advertising and promotion of, a 
                tobacco product.
    ``(b) Rule of Construction Regarding Product Liability.--No 
provision of this chapter relating to a tobacco product shall be 
construed to modify or otherwise affect any action or the liability of 
any person under the product liability law of any State.
    ``(c) Waivers.--Upon the application of a State or political 
subdivision thereof, the Secretary may, by regulation promulgated after 
notice and an opportunity for an oral hearing, exempt from subsection 
(a), under such conditions as may be prescribed in such regulation, a 
requirement of such State or political subdivision applicable to a 
tobacco product if--
            ``(1) the requirement is more stringent than a requirement 
        applicable under the provisions described in subsection (a)(3) 
        which would be applicable to the tobacco product if an 
        exemption were not in effect under this subsection; or
            ``(2) the requirement--
                    ``(A) is required by compelling local conditions; 
                and
                    ``(B) compliance with the requirement would not 
                cause the tobacco product to be in violation of any 
                applicable requirement of this chapter.

``SEC. 915. EQUAL TREATMENT OF RETAIL OUTLETS.

    -``The Secretary shall issue regulations to require that retail 
establishments for which the predominant business is the sale of 
tobacco products comply with any advertising restrictions applicable to 
retail establishments accessible to individuals under the age of 18.''.

SEC. 102. CONFORMING AND OTHER AMENDMENTS TO GENERAL PROVISIONS.

    (a) Amendment of Federal Food, Drug, and Cosmetic Act.--Except as 
otherwise expressly provided, whenever in this section an amendment is 
expressed in terms of an amendment to, or repeal of, a section or other 
provision, the reference is to a section or other provision of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.).
    (b) Section 301.--Section 301 (21 U.S.C. 331) is amended--
            (1) by inserting ``tobacco product,'' in subsection (a) 
        after ``device,'';
            (2) by inserting ``tobacco product,'' in subsection (b) 
        after ``device,'';
            (3) by inserting ``tobacco product,'' in subsection (c) 
        after ``device,'';
            (4) by striking ``515(f), or 519'' in subsection (e) and 
        inserting ``515(f), 519, or 909'';
            (5) by inserting ``tobacco product,'' in subsection (g) 
        after ``device,'';
            (6) by inserting ``tobacco product,'' in subsection (h) 
        after ``device,'';
            (7) by striking ``708, or 721'' in subsection (j) and 
        inserting ``708, 721, 904, 905, 906, 907, 908, or 909'';
            (8) by inserting ``tobacco product,'' in subsection (k) 
        after ``device,'';
            (9) by striking subsection (p) and inserting the following:
    ``(p) The failure to register in accordance with section 510 or 
905, the failure to provide any information required by section 510(j), 
510(k), 905(i), or 905(j), or the failure to provide a notice required 
by section 510(j)(2) or 905(J)(2).'';
            (10) by striking subsection (q)(1) and inserting the 
        following:
    ``(q)(1) The failure or refusal--
            ``(A) to comply with any requirement prescribed under 
        section 518, 520(g), 906(f), or 908;
            ``(B) to furnish any notification or other material or 
        information required by or under section 519, 520(g), 904, 
        906(f), or 909; or
            ``(C) to comply with a requirement under section 522 or 
        912.'';
            (11) by striking ``device,'' in subsection (q)(2) and 
        inserting ``device or tobacco product,'';
            (12) by inserting ``or tobacco product'' in subsection (r) 
        after ``device'' each time that it appears; and
            (13) by adding at the end thereof the following:
            ``(aa) The sale of tobacco products in violation of a no-
        tobacco-sale order issued under section 303(f).''.
    (c) Section 303.--Section 303(f) (21 U.S.C. 333(f)) is amended--
            (1) by amending the caption to read as follows:
    ``(f) Civil Penalties; No-tobacco-sale Orders.--'';
            (2) by inserting ``or tobacco products'' after ``devices'' 
        in paragraph (1)(A);
            (3) by redesignating paragraphs (3), (4), and (5) as 
        paragraphs (4), (5), and (6), and inserting after paragraph (2) 
        the following:
            ``(3) If the Secretary finds that a person has committed 
        repeated violations of restrictions promulgated under section 
        906(d) at a particular retail outlet then the Secretary may 
        impose a no-tobacco-sale order on that person prohibiting the 
        sale of tobacco products in that outlet. A no-tobacco-sale 
        order may be imposed with a civil penalty under paragraph 
        (1).'';
            (4) by striking ``assessed'' the first time it appears in 
        subparagraph (A) of paragraph (4), as redesignated, and 
        inserting ``assessed, or a no-tobacco-sale order may be 
        imposed,'';
            (5) by striking ``penalty'' in such subparagraph and 
        inserting ``penalty, or upon whom a no-tobacco-order is to be 
        imposed,'';
            (6) by inserting after ``penalty,'' in subparagraph (B) of 
        paragraph (4), as redesignated, the following: ``or the period 
        to be covered by a no-tobacco-sale order,'';
            (7) by adding at the end of such subparagraph the 
        following: ``A no-tobacco-sale order permanently prohibiting an 
        individual retail outlet from selling tobacco products shall 
        include provisions that allow the outlet, after a specified 
        period of time, to request that the Secretary compromise, 
        modify, or terminate the order.'';
            (8) by adding at the end of paragraph (4), as redesignated, 
        the following:
                    ``(D) The Secretary may compromise, modify, or 
                terminate, with or without conditions, any no-tobacco-
                sale order.'';
            (9) by striking ``(3)(A)'' in paragraph (5), as 
        resdesignated, and inserting ``(4)(A)'';
            (10) by inserting ``or the imposition of a no-tobacco-sale 
        order'' after ``penalty'' the first 2 places it appears in such 
        paragraph;
            (11) by striking ``issued.'' in such paragraph and 
        inserting ``issued, or on which the no-tobacco-sale order was 
        imposed, as the case may be.''; and
            (12) by striking ``paragraph (4)'' each place it appears in 
        paragraph (6), as redesignated, and inserting ``paragraph 
        (5)''.
    (d) Section 304.--Section 304 (21 U.S.C. 334) is amended--
            (1) by striking ``and'' before ``(D)'' in subsection 
        (a)(2);
            (2) by striking ``device.'' in subsection (a)(2) and 
        inserting a comma and ``(E) Any adulterated or misbranded 
        tobacco product.'';
            (3) by inserting ``tobacco product,'' in subsection (d)(1) 
        after ``device,'';
            (4) by inserting ``or tobacco product'' in subsection 
        (g)(1) after ``device'' each place it appears; and
            (5) by inserting ``or tobacco product'' in subsection 
        (g)(2)(A) after ``device'' each place it appears.
    (e) Section 702.--Section 702(a) (21 U.S.C. 372(a)) is amended--
            (1) by inserting ``(1)'' after ``(a)''; and
            (2) by adding at the end thereof the following:
    ``(2) For a tobacco product, to the extent feasible, the Secretary 
shall contract with the States in accordance with paragraph (1) to 
carry out inspections of retailers in connection with the enforcement 
of this Act.''.
    (f) Section 703.--Section 703 (21 U.S.C. 373) is amended--
            (1) by inserting ``tobacco product,'' after ``device,'' 
        each place it appears; and
            (2) by inserting ``tobacco products,'' after ``devices,'' 
        each place it appears.
    (g) Section 704.--Section 704 (21 U.S.C. 374) is amended--
            (1) by inserting ``tobacco products,'' in subsection 
        (a)(1)(A) after ``devices,'' each place it appears;
            (2) by inserting ``or tobacco products'' in subsection 
        (a)(1)(B) after ``restricted devices'' each place it appears; 
        and
            (3) by inserting ``tobacco product,'' in subsection (b) 
        after ``device,''.
    (h) Section 705.--Section 705(b) (21 U.S.C. 375(b)) is amended by 
inserting ``tobacco products,'' after ``devices,''.
    (i) Section 709.--Section 709 (21 U.S. C. 379) is amended by 
inserting ``or tobacco product'' after ``device''.
    (j) Section 801.--Section 801 (21 U.S.C. 381) is amended--
            (1) by inserting ``tobacco products,'' after ``devices,'' 
        in subsection (a) the first time it appears;
            (2) by inserting ``or subsection (j) of section 905'' in 
        subsection (a) after ``section 510''; and
            (3) by striking ``drugs or devices'' each time it appears 
        in subsection (a) and inserting ``drugs, devices, or tobacco 
        products'';
            (4) by inserting ``tobacco product,'' in subsection (e)(1) 
        after ``device,'';
            (5) by redesignating paragraph (4) of subsection (e) as 
        paragraph (5) and inserting after paragraph (3), the following:
            ``(4) Paragraph (1) does not apply to any tobacco product--
                    ``(A) which does not comply with an applicable 
                requirement of section 907 or 910; or
                    ``(B) which under section 906(f) is exempt from 
                either such section.
        This paragraph does not apply if the Secretary has determined 
        that the exportation of the tobacco product is not contrary to 
        the public health and safety and has the approval of the 
        country to which it is intended for export or the tobacco 
product is eligible for export under section 802.''.
    (k) Section 802.--Section 802 (21 U.S.C. 382) is amended--
            (1) by striking ``device--'' in subsection (a) and 
        inserting ``device or tobacco product--'';
            (2) by striking ``and'' after the semicolon in subsection 
        (a)(1)(C);
            (3) by striking subparagraph (C) of subsection (a)(2) and 
        all that follows in that subsection and inserting the 
        following:
                    ``(C) is a banned device under section 516; or
            ``(3) which, in the case of a tobacco product--
                    ``(A) does not comply with an applicable 
                requirement of section 907 or 910; or
                    ``(B) under section 906(f) is exempt from either 
                such section,
        is adulterated, misbranded, and in violation of such sections 
        or Act unless the export of the drug, device, or tobacco 
        product is, except as provided in subsection (f), authorized 
        under subsection (b), (c), (d), or (e) of this section or 
        section 801(e)(2) or 801(e)(4). If a drug, device, or tobacco 
        product described in paragraph (1), (2), or (3) may be exported 
        under subsection (b) and if an application for such drug or 
        device under section 505, 515, or 910 of this Act or section 
        351 of the Public Health Service Act (42 U.S.C. 262) was 
        disapproved, the Secretary shall notify the appropriate public 
        health official of the country to which such drug, device, or 
        tobacco product will be exported of such disapproval.'';
            (4) by inserting ``or tobacco product'' in subsection 
        (b)(1)(A) after ``device'' each time it appears;
            (5) by inserting ``or tobacco product'' in subsection (c) 
        after ``device'' and inserting ``or section 906(f)'' after 
        ``520(g).'';
            (6) by inserting ``or tobacco product'' in subsection (f) 
        after ``device'' each time it appears; and
            (7) by inserting ``or tobacco product'' in subsection (g) 
        after ``device'' each time it appears.
    (l) Section 1003.--Section 1003(d)(2)(C) (as redesignated by 
section 101(a)) is amended--
            (1) by striking ``and'' after ``cosmetics,''; and
            (2) inserting a comma and ``and tobacco products'' after 
        ``devices''.
    (m) Effective Date for No-Tobacco-Sale Order Amendments.--The 
amendments made by subsection (c), other than the amendment made by 
paragraph (2) thereof, shall take effect only upon the promulgation of 
final regulations by the Secretary--
            (1) defining the term ``repeated violation'', as used in 
        section 303(f) of the Federal Food, Drug, and Cosmetic Act (21 
        U.S.C. 333(f)) as amended by subsection (c), by identifying the 
        number of violations of particular requirements over a 
        specified period of time that constitute a repeated violation;
            (2) providing for notice to the retailer of each violation 
        at a particular retail outlet;
            (3) providing that a person may not be charged with a 
        violation at a particular retail outlet unless the Secretary 
        has provided notice to the retailer of all previous violations 
        at that outlet;
            (4) establishing a period of time during which, if there 
        are no violations by a particular retail outlet, that outlet 
        will not considered to have been the site of repeated 
        violations when the next violation occurs; and
            (5) providing that good faith reliance on false 
        identification does not constitute a violation of any minimum 
        age requirement for the sale of tobacco products.

SEC. 103. CONSTRUCTION OF CURRENT REGULATIONS.

    (a) In General.--The final regulations promulgated by the Secretary 
in the August 28, 1996, issue of the Federal Register (62 Fed. Reg. 
44615-44618) and codified at part 897 of title 21, Code of Federal 
Regulations, are hereby deemed to be lawful and to have been lawfully 
promulgated by the Secretary under chapter IX and section 701 of the 
Federal Food, Drug, and Cosmetic Act, as amended by this Act, and not 
under chapter V of the Federal Food, Drug, and Cosmetic Act. The 
provisions of part 897 that are not in effect on the date of enactment 
of this Act shall take effect as in such part or upon such later date 
as determined by the Secretary by order. The Secretary shall amend the 
designation of authority in such regulations in accordance with this 
subsection.
    (b) Limitation on Advisory Opinions.--As of the date of enactment 
of this Act, the following documents issued by the Food and Drug 
Administration shall not constitute advisory opinions under section 
10.85(d)(1) of title 21, Code of Federal Regulations, except as they 
apply to tobacco products, and shall not be cited by the Secretary or 
the Food and Drug Administration as binding precedent.
            (1) The preamble to the proposed rule in the document 
        entitled ``Regulations Restricting the Sale and Distribution of 
        Cigarettes and Smokeless Tobacco Products to Protect Children 
        and Adolescents'' (60 Fed. Reg. 41314-41372 (August 11, 1995)).
            (2) The document entitled ``Nicotine in Cigarettes and 
        Smokeless Tobacco Products is a Drug and These Products Are 
        Nicotine Delivery Devices Under the Federal Food, Drug, and 
        Cosmetic Act;; (60 Fed. Reg. 41453-41787 (August 11, 1995)).
            (3) The preamble to the final rule in the document entitled 
        ``Regulations Restricting the Sale and Distribution of 
        Cigarettes and Smokeless Tobacco to Protect Children and 
        Adolescents'' (61 Fed. Reg. 44396-44615 (August 28, 1996)).
            (4) The document entitled ``Nicotine in Cigarettes and 
        Smokeless Tobacco is a Drug and These Products are Nicotine 
        Delivery Devices Under the Federal Food, Drug, and Cosmetic 
        Act; Jurisdictional Determination; (61 Fed. Reg. 44619-45318 
        (August 28, 1996)).

              TITLE II--REDUCTIONS IN UNDERAGE TOBACCO USE

                        Subtitle A--Underage Use

SEC. 201. FINDINGS.

    The Congress finds the following:
            (1) Reductions in the underage use of tobacco products are 
        critically important to the public health.
            (2) Achieving this critical public health goal can be 
        substantially furthered by increasing the price of tobacco 
        products to discourage underage use if reduction targets are 
        not achieved and by creating financial incentives for 
        manufacturers to discourage youth from using their tobacco 
        products.
            (3) When reduction targets in underage use are not achieved 
        on an industry-wide basis, the price increases that will result 
        from an industry-wide assessment will provide an additional 
        deterrence to youth tobacco use.
            (4) Manufacturer-specific incentives that will be imposed 
        if reduction targets are not met by a manufacturer provide a 
        strong incentive for each manufacturer to make all efforts to 
        discourage youth use of its brands and ensure the effectiveness 
        of the industry-wide assessments.

SEC. 202. PURPOSE.

    This title is intended to ensure that, in the event that other 
measures contained in this Act prove to be inadequate to produce 
substantial reductions in tobacco use by minors, tobacco companies will 
pay additional assessments. These additional assessments are designed 
to lower youth tobacco consumption in a variety of ways: by triggering 
further increases in the price of tobacco products, by encouraging 
tobacco companies to work to meet statutory targets for reductions in 
youth tobacco consumption, and providing support for further reduction 
efforts.

SEC. 203. GOALS FOR REDUCING UNDERAGE TOBACCO USE.

    (a) Goals.--As part of a comprehensive national tobacco control 
policy, the Secretary, working in cooperation with State, Tribal, and 
local governments and the private sector, shall take all actions under 
this Act necessary to ensure that the required percentage reductions in 
underage use of tobacco products set forth in this title are achieved.
    (b) Required Reductions for Cigarettes.--With respect to 
cigarettes, the required percentage reduction in underage use, as set 
forth in section 204, means--

----------------------------------------------------------------------------------------------------------------
                                                                   Required Percentage Reduction as a Percentage
                Calendar Year After Date of Enactment                 of Base Incidence Percentage in Underage  
                                                                                   Cigarette Use                
----------------------------------------------------------------------------------------------------------------
Years 3 and 4                                                                                         15 percent
Years 5 and 6                                                                                         30 percent
Years 7, 8, and 9                                                                                     50 percent
Year 10 and thereafter                                                                                60 percent
----------------------------------------------------------------------------------------------------------------

    (c) Required Reductions for Smokeless Tobacco.--With respect to 
smokeless tobacco products, the required percentage reduction in 
underage use, as set forth in section 204, means--

----------------------------------------------------------------------------------------------------------------
                                                                   Required Percentage Reduction as a Percentage
                Calendar Year After Date of Enactment                 of Base Incidence Percentage in Underage  
                                                                               Smokeless Tobacco Use            
----------------------------------------------------------------------------------------------------------------
Years 3 and 4                                                                                       12.5 percent
Years 5 and 6                                                                                         25 percent
Years 7, 8, and 9                                                                                     35 percent
Year 10 and thereafter                                                                                45 percent
----------------------------------------------------------------------------------------------------------------

SEC. 204. LOOK-BACK ASSESSMENT.

    (a) Annual Performance Survey.--Beginning no later than 1999 and 
annually thereafter the Secretary shall conduct a survey, in accordance 
with the methodology in subsection (d)(1), to determine--
            (1) the percentage of all young individuals who used a type 
        of tobacco product within the past 30 days; and
            (2) the percentage of young individuals who identify each 
        brand of each type of tobacco product as the usual brand of 
        that type smoked or used within the past 30 days.
    (b) Annual Determination.--The Secretary shall make an annual 
determination, based on the annual performance survey conducted under 
subsection (a), of whether the required percentage reductions in 
underage use of tobacco products for a year have been achieved for the 
year involved. The determination shall be based on the annual percent 
prevalence of the use of tobacco products, for the industry as a whole 
and of particular manufacturers, by young individuals (as determined by 
the surveys conducted by the Secretary) for the year involved as 
compared to the base incidence percentages.
    (c) Confidentiality of Data.--The Secretary may conduct a survey 
relating to tobacco use involving minors. If the information collected 
in the course of conducting the annual performance survey results in 
the individual supplying the information or described in it to be 
identifiable, the information may not be used for any purpose other 
than the purpose for which it was supplied unless that individual (or 
that individual's guardian) consents to its use for such other purpose. 
The information may not be published or released in any other form if 
the individual supplying the information or described in it is 
identifiable unless that individual (or that individual's guardian) 
consents to its publication or release in other form.
    (d) Methodolgy.--
            (1) In general.--The survey required by subsection (a) 
        shall--
                    (A) be based on a nationally representative sample 
                of young individuals;
                    (B) be a household-based, in person survey (which 
                may include computer-assisted technology);
                    (C) measure use of each type of tobacco product 
                within the past 30 days;
                    (D) identify the usual brand of each type of 
                tobacco product used within the past 30 days; and
                    (E) permit the calculation of the actual percentage 
                reductions in underage use of a type of tobacco product 
                (or, in the case of the manufacturer-specific 
                surcharge, the use of a type of tobacco product of a 
                manufacturer) based on the point estimates of the 
                percentage of young individuals reporting use of a type 
                of tobacco product (or, in the case of the 
                manufacturer-specific surcharge, the use of a type of 
                tobacco product of a manufacturer) from the annual 
                performance survey.
            (2) Criteria for deeming point estimates correct.--Point 
        estimates under paragraph (1)(E) are deemed conclusively to be 
        correct and accurate for calculating actual percentage 
        reductions in underage use of a type of tobacco product (or, in 
        the case of the manufacturer-specific surcharge, the use of a 
        type of tobacco product of a particular manufacturer) for the 
        purpose of measuring compliance with percent reduction targets 
        and calculating surcharges provided that the precision of 
        estimates (based on sampling error) of the percentage of young 
        individuals reporting use of a type of tobacco product (or, in 
        the case of the manufacturer-specific surcharge, the use of a 
        type of tobacco product of a manufacturer) is such that the 95-
        percent confidence interval around such point estimates is no 
        more than plus or minus 1 percent.
            (3) Survey deemed correct, proper, and accurate.--A survey 
        using the methodology required by this subsection is deemed 
        conclusively to be proper, correct, and accurate for purposes 
        of this Act.
            (4) Secretary may adopt different methodology.--The 
        Secretary by notice and comment rulemaking may adopt a survey 
        methodology that is different than the methodology described in 
        paragraph (1) if the different methodology is at least as 
        statistically precise as that methodology.
    (e) Industry-wide Non-attainment Surcharges.--
            (1) Secretary to determine industry-wide non-attainment 
        percentage.--The Secretary shall determine the industry-wide 
        non-attainment percentage for cigarettes and for smokeless 
        tobacco for each calendar year.
            (2) Non-attainment surcharge for cigarettes.--For each 
        calendar year in which the percentage reduction in underage use 
        required by section 203b) is not attained, the Secretary shall 
        assess a surcharge on cigarette manufacturers as follows:

----------------------------------------------------------------------------------------------------------------
                 If the non-attainment percentage is:                            The surcharge is:              
----------------------------------------------------------------------------------------------------------------
Not more than 5 percent                                             $80,000,000 multiplied by the non-attainment
                                                                                                      percentage
More than 5% but not more than 10%                                 $400,000,000, plus $160,000,000 multiplied by
                                                                   the non-attainment percentage in excess of 5%
                                                                                        but not in excess of 10%
More than 10%                                                       $1,200,000,000, plus $240,000,000 multiplied
                                                                   by the non-attainment percentage in excess of
                                                                                                             10%
More than 21.6%                                                                                   $4,000,000,000
----------------------------------------------------------------------------------------------------------------

            (3) Non-attainment surcharge for smokeless tobacco.--For 
        each year in which the percentage reduction in underage use 
        required by section 203c) is not attained, the Secretary shall 
        assess a surcharge on smokeless tobacco product manufacturers 
        as follows:

----------------------------------------------------------------------------------------------------------------
                 If the non-attainment percentage is:                            The surcharge is:              
----------------------------------------------------------------------------------------------------------------
Not more than 5 percent                                              $8,000,000 multiplied by the non-attainment
                                                                                                      percentage
More than 5% but not more than 10%                                   $40,000,000, plus $16,000,000 multiplied by
                                                                   the non-attainment percentage in excess of 5%
                                                                                        but not in excess of 10%
More than 10%                                                       $120,000,000, plus $24,000,000 multiplied by
                                                                      the non-attainment percentage in excess of
                                                                                                             10%
More than 21.6%                                                                                     $400,000,000
----------------------------------------------------------------------------------------------------------------

            (4) Strict liability; joint and several liability.--
        Liability for any surcharge imposed under subsection (e) shall 
        be--
                    (A) strict liability; and
                    (B) joint and several liability--
                            (i) among all cigarette manufacturers for 
                        surcharges imposed under subsection (e)(2); and
                            (ii) among all smokeless tobacco 
                        manufacturers for surcharges imposed under 
                        subsection (e)(3).
            (5) Surcharge liability among manufacturers.--A tobacco 
        product manufacturer shall be liable under this subsection to 
        one or more other manufacturers if the plaintiff tobacco 
        product manufacturer establishes by a preponderance of the 
        evidence that the defendant tobacco product manufacturer, 
        through its acts or omissions, was responsible for a 
        disproportionate share of the non-attainment surcharge as 
        compared to the responsibility of the plaintiff manufacturer.
            (6) Exemptions for small manufacturers.--
                    (A) Allocation by market share.--The Secretary 
                shall make such allocations according to each 
                manufacturer's share of the domestic cigarette or 
                domestic smokeless tobacco market, as appropriate, in 
                the year for which the surcharge is being assessed, 
                based on actual Federal excise tax payments.
                    (B) Exemption.--In any year in which a surcharge is 
                being assessed, the Secretary shall exempt from payment 
                any tobacco product manufacturer with less than 1 
                percent of the domestic market share for a specific 
                category of tobacco product unless the Secretary finds 
                that the manufacturer's products are used by underage 
                individuals at a rate equal to or greater than the 
                manufacturer's total market share for the type of 
                tobacco product.
    (f) Manufacturer-specific Surcharges.--
            (1) Required percentage reductions.--Each manufacturer 
        which manufactured a brand or brands of tobacco product on or 
        before the date of the enactment of this Act shall reduce the 
        percentage of young individuals who use such manufacturer's 
        brand or brands as their usual brand in accordance with the 
        required percentage reductions described under subsections (b) 
        (with respect to cigarettes) and (c ) (with respect to 
        smokeless tobacco).
            (2) Application to less popular brands.--Each manufacturer 
        which manufactured a brand or brands of tobacco product on or 
        before the date of the enactment of this Act for which the base 
        incidence percentage is equal to or less than the de minimis 
        level shall ensure that the percent prevalence of young 
        individuals who use the manufacturer's tobacco products as 
        their usual brand remains equal to or less than the de minimis 
        level described in paragraph (4).
            (3) New entrants.--Each manufacturer of a tobacco product 
        which begins to manufacture a tobacco product after the date of 
        the enactment of this Act shall ensure that the percent 
        prevalence of young individuals who use the manufacturer's 
        tobacco products as their usual brand is equal to or less than 
        the de minimis level.
            (4) De minimis level defined.--The de minimis level is 
        equal to 1 percent prevalence of the use of each manufacturer's 
        brands of tobacco product by young individuals (as determined 
        on the basis of the annual performance survey conducted by the 
        Secretary) for a year.
            (5) Target reduction levels.--
                    (A) Existing manufacturers.-- For purposes of this 
                section, the target reduction level for each type of 
                tobacco product for a year for a manufacturer is the 
                product of the required percentage reduction for a type 
                of tobacco product for a year and the manufacturers 
                base incidence percentage for such tobacco product.
                    (B) New manufacturers; manufacturers with low base 
                incidence percentages.--With respect to a manufacturer 
                which begins to manufacture a tobacco product after the 
                date of the enactment of this Act or a manufacturer for 
                which the baseline level as measured by the annual 
                performance survey is equal to or less than the de 
                minimis level described in paragraph (4), the base 
                incidence percentage is the de minimis level, and the 
                required percentage reduction in underage use for a 
                type of tobacco product with respect to a manufacturer 
                for a year shall be deemed to be the number of 
                percentage points necessary to reduce the actual 
                percent prevalence of young individuals identifying a 
                brand of such tobacco product of such manufacturer as 
the usual brand smoked or used for such year to the de minimis level.
            (6) Surcharge amount.--
                    (A) In general.--If the Secretary determines that 
                the required percentage reduction in use of a type of 
                tobacco product has not been achieved by such 
                manufacturer for a year, the Secretary shall impose a 
                surcharge on such manufacturer under this paragraph.
                    (B) Amount.--The amount of the manufacturer-
                specific surcharge for a type of tobacco product for a 
                year under this paragraph is $1,000, multiplied by the 
                number of young individuals for which such firm is in 
                noncompliance with respect to its target reduction 
                level.
                    (C) Determination of number of young individuals.--
                For purposes of subparagraph (B) the number of young 
                individuals for which a manufacturer is in 
                noncompliance for a year shall be determined by the 
                Secretary from the annual performance survey and shall 
                be calculated based on the estimated total number of 
                young individuals in such year and the actual 
                percentage prevalence of young individuals identifying 
                a brand of such tobacco product of such manufacturer as 
                the usual brand smoked or used in such year as compared 
                to such manufacturer's target reduction level for the 
                year.
            (7) De minimis rule.--The Secretary may not impose a 
        surcharge on a manufacturer for a type of tobacco product for a 
        year if the Secretary determines that actual percent prevalence 
        of young individuals identifying that manufacturer's brands of 
        such tobacco product as the usual products smoked or used for 
        such year is less than 1 percent.
    (g) Surcharges To Be Adjusted for Inflation.--
            (1) In general.--Beginning with the fourth calendar year 
        after the date of enactment of this Act, each dollar amount in 
        the tables in subsections (e)(2), (e)(3), and (f)(6)(B) shall 
        be increased by the inflation adjustment.
            (2) Inflation adjustment.--For purposes of paragraph (1), 
        the inflation adjustment for any calendar year is the 
        percentage (if any) by which--
                    (A) the CPI for the preceding calendar year, 
                exceeds
                    (B) the CPI for the calendar year 1998.
            (3) CPI.--For purposes of paragraph (2), the CPI for any 
        calendar year is the average of the Consumer Price Index for 
        all-urban consumers published by the Department of Labor.
            (4) Rounding.--If any increase determined under paragraph 
        (1) is not a multiple of $1,000, the increase shall be rounded 
        to the nearest multiple of $1,000.
    (h) Method of Surcharge Assessment.--The Secretary shall assess a 
surcharge for a specific calendar year on or before May 1 of the 
subsequent calendar year. Surcharge payments shall be paid on or before 
July 1 of the year in which they are assessed. The Secretary may 
establish, by regulation, interest at a rate up to 3 times the 
prevailing prime rate at the time the surcharge is assessed, and 
additional charges in an amount up to 3 times the surcharge, for late 
payment of the surcharge.
    (i) Business Expense Deduction.--Any surcharge paid by a tobacco 
product manufacturer under this section shall not be deductible as an 
ordinary and necessary business expense or otherwise under the Internal 
Revenue Code of 1986.
    (j) Appeal Rights.--The amount of any surcharge is committed to the 
sound discretion of the Secretary and shall be subject to judicial 
review by the United States Court of Appeals for the District of 
Columbia Circuit, based on the arbitrary and capricious standard of 
section 706(2)(A) of title 5, United States Code. Notwithstanding any 
other provisions of law, no court shall have authority to stay any 
surcharge payments due the Secretary under this Act pending judicial 
review.
    (k) Responsibility for Agents.--In any action brought under this 
subsection, a tobacco product manufacturer shall be held responsible 
for any act or omission of its attorneys, advertising agencies, or 
other agents that contributed to that manufacturer's responsibility for 
the surcharge assessed under this section.

SEC. 205. DEFINITIONS.

    In this subtitle:
            (1) Base incidence percentage.--The term ``base incidence 
        percentage'' means, with respect to each type of tobacco 
        product, the percentage of young individuals determined to have 
        used such tobacco product in the first annual performance 
        survey for 1999.
            (2) Manufacturers base incidence percentage.--The term 
        ``manufacturers base incidence percentage'' is, with respect to 
        each type of tobacco product, the percentage of young 
        individuals determined to have identified a brand of such 
        tobacco product of such manufacturer as the usual brand smoked 
        or used in the first annual performance survey for 1999.
            (3) Young individuals.--The term ``young individuals'' 
        means individuals who are over 11 years of age and under 18 
        years of age.
            (4) Cigarette manufacturers.--The term ``cigarette 
        manufacturers'' means manufacturers of cigarettes sold in the 
        United States.
            (5) Non-attainment percentage for cigarettes.--The term 
        ``non-attainment percentage for cigarettes'' means the number 
        of percentage points yielded--
                    (A) for a calendar year in which the percent 
                incidence of underage use of cigarettes is less than 
                the base incidence percentage, by subtracting--
                            (i) the percentage by which the percent 
                        incidence of underage use of cigarettes in that 
                        year is less than the base incidence 
                        percentage, from
                            (ii) the required percentage reduction 
                        applicable in that year; and
                    (B) for a calendar year in which the percent 
                incidence of underage use of cigarettes is greater than 
the base incidence percentage, adding--
                            (i) the percentage by which the percent 
                        incidence of underage use of cigarettes in that 
                        year is greater than the base incidence 
                        percentage; and
                            (ii) the required percentage reduction 
                        applicable in that year.
            (6) Non-attainment percentage for smokeless tobacco 
        products.--The term ``non-attainment percentage for smokeless 
        tobacco products'' means the number of percentage points 
        yielded--
                    (A) for a calendar year in which the percent 
                incidence of underage use of smokeless tobacco products 
                is less than the base incidence percentage, by 
                subtracting--
                            (i) the percentage by which the percent 
                        incidence of underage use of smokeless tobacco 
                        products in that year is less than the base 
                        incidence percentage, from
                            (ii) the required percentage reduction 
                        applicable in that year; and
                    (B) for a calendar year in which the percent 
                incidence of underage use of smokeless tobacco products 
                is greater than the base incidence percentage, by 
                adding--
                            (i) the percentage by which the percent 
                        incidence of underage use of smokeless tobacco 
                        products in that year is greater than the base 
                        incidence percentage; and
                            (ii) the required percentage reduction 
                        applicable in that year.
            (7) Smokeless tobacco product manufacturers.--The term 
        ``smokeless tobacco product manufacturers'' means manufacturers 
        of smokeless tobacco products sold in the United States.

     Subtitle B--State Retail Licensing and Enforcement Incentives

SEC. 231. STATE RETAIL LICENSING AND ENFORCEMENT BLOCK GRANTS.

    (a) In General.--The Secretary shall make State retail licensing 
and enforcement block grants in accordance with the provisions of this 
section. There are authorized to be appropriated to the Secretary from 
the National Tobacco Trust Fund $200,000,000 for each fiscal year to 
carry out the provisions of this section.
    (b) Requirements.--
            (1) Establishment.--The Secretary shall provide a block 
        grant, based on population, under this subtitle to each State 
        that has in effect a law that--
                    (A) provides for the licensing of entities engaged 
                in the sale or distribution of tobacco products 
                directly to consumers;
                    (B) makes it illegal to sell or distribute tobacco 
                products to individuals under 18 years of age; and
                    (C) meets the standards described in this section.
            (2) State agreement required.--In order to receive a block 
        grant under this section, a State--
                    (A) shall enter into an agreement with the 
                Secretary to assume responsibilities for the 
                implementation and enforcement of a tobacco retailer 
                licensing program;
                    (B) shall prohibit retailers from selling or 
                otherwise distributing tobacco products to individuals 
                under 18 years of age in accordance with the Youth 
                Access Restrictions regulations promulgated by the 
                Secretary (21 C.F.R. 897.14(a) and (b));
                    (C) shall make available to appropriate Federal 
                agencies designated by the Secretary requested 
                information concerning retail establishments involved 
                in the sale or distribution of tobacco products to 
                consumers; and
                    (D) shall establish to the satisfaction of the 
                Secretary that it has a law or regulation that includes 
                the following:
                            (i) Licensure; sources; and notice.--A 
                        requirement for a State license for each retail 
                        establishment involved in the sale or 
                        distribution of tobacco products to consumers. 
                        A requirement that a retail establishment may 
                        purchase tobacco products only from Federally-
                        licensed manufacturers, importers, or 
                        wholesalers. A program under which notice is 
                        provided to such establishments and their 
                        employees of all licensing requirements and 
                        responsibilities under State and Federal law 
                        relating to the retail distribution of tobacco 
                        products.
                            (ii) Penalties.--
                                    (I) Criminal.--Criminal penalties 
                                for the sale or distribution of tobacco 
                                products to a consumer without a 
                                license.
                                    (II) Civil.--Civil penalties for 
                                the sale or distribution of tobacco 
                                products in violation of State law, 
                                including graduated fines and 
                                suspension or revocation of licenses 
                                for repeated violations.
                                    (III) Other.--Other programs, 
                                including such measures as fines, 
                                suspension of driver's license 
                                privileges, or community service 
                                requirements, for underage youths who 
                                possess, purchase, or attempt to 
                                purchase tobacco products.
                            (iii) Judicial review.--Judicial review 
                        procedures for an action of the State 
                        suspending, revoking, denying, or refusing to 
                        renew any license under its program.
    (c) Enforcement.--
            (1) Undertaking.--Each State that receives a grant under 
        this subtitle shall undertake to enforce compliance with its 
        tobacco retailing licensing program in a manner that can 
        reasonably be expected to reduce the sale and distribution of 
        tobacco products to individuals under 18 years of age. If the 
        Secretary determines that a State is not enforcing the law in 
        accordance with such an undertaking, the Secretary may withhold 
        a portion of any unobligated funds under this section otherwise 
        payable to that State.
            (2) Activities and reports regarding enforcement.--A State 
        that receives a grant under this subtitle shall--
                    (A) conduct monthly random, unannounced inspections 
                of sales or distribution outlets in the State to ensure 
                compliance with a law prohibiting sales of tobacco 
                products to individuals under 18 years of age;
                    (B) annually submit to the Secretary a report 
                describing in detail--
                            (i) the activities carried out by the State 
                        to enforce underage access laws during the 
                        fiscal year;
                            (ii) the extent of success the State has 
                        achieved in reducing the availability of 
                        tobacco products to individuals under the age 
                        of 18 years;
                            (iii) how the inspections described in 
                        subparagraph (A) were conducted and the methods 
                        used to identify outlets, with appropriate 
                        protection for the confidentiality of 
information regarding the timing of inspections and other investigative 
techniques whose effectiveness depends on continued confidentiality; 
and
                            (iv) the identity of the single State 
                        agency designated by the Governor of the State 
                        to be responsible for the implementation of the 
                        requirements of this section.
            (3) Minimum inspection standards.--Inspections conducted by 
        the State shall be conducted by the State in such a way as to 
        ensure a scientifically sound estimate (with a 95 percent 
        confidence interval that such estimates are accurate to within 
        plus or minus 3 percentage points), using an accurate list of 
        retail establishments throughout the State. Such inspections 
        shall cover a range of outlets (not preselected on the basis of 
        prior violations) to measure overall levels of compliance as 
        well as to identify violations. The sample must reflect the 
        distribution of the population under the age of 18 years 
        throughout the State and the distribution of the outlets 
        throughout the State accessible to youth. Except as provided in 
        this paragraph, any reports required by this paragraph shall be 
        made public. As used in this paragraph, the term ``outlet'' 
        refers to any location that sells at retail or otherwise 
        distributes tobacco products to consumers, including to 
        locations that sell such products over-the-counter.
    (d) Noncompliance.--
            (1) Inspections.--The Secretary shall withhold from any 
        State that fails to meet the requirements of subsection (b) in 
        any calendar year an amount equal to 5 percent of the amount 
        otherwise payable under this subtitle to that State for the 
        next fiscal year.
            (2) Compliance rate.--The Secretary shall withhold from any 
        State that fails to demonstrate a compliance rate of--
                    (A) at least the annual compliance targets that 
                were negotiated with the Secretary under section 1926 
                of the Public Health Service Act (42 U.S.C. 300x--26) 
                as such section was in effect before its repeal by this 
                Act through the third fiscal year after the date of 
                enactment of this Act;
                    (B) at least 80 percent in the fourth fiscal year 
                after such date;
                    (C) at least 85 percent in the fifth and sixth 
                fiscal years after such date; and
                    (D) at least 90 percent in every fiscal year 
                beginning with the seventh fiscal year after such date,
        an amount equal to one percentage point for each percentage 
        point by which the State failed to meet the percentage set 
        forth in this subsection for that year from the amount 
        otherwise payable under this subtitle for that fiscal year.
    (e) Release and Disbursement.--
            (1) Upon notice from the Secretary that an amount payable 
        under this section has been ordered withheld under subsection 
        (d), a State may petition the Secretary for a release and 
        disbursement of up to 75 percent of the amount withheld, and 
        shall give timely written notice of such petition to the 
        attorney general of that State and to all tobacco product 
        manufacturers.
            (2) The agency shall conduct a hearing on such a petition, 
        in which the attorney general of the State may participate and 
        be heard.
            (3) The burden shall be on the State to prove, by a 
        preponderance of the evidence, that the release and 
        disbursement should be made. The Secretary's decision on 
        whether to grant such a release, and the amount of any such 
        disbursement, shall be based on whether--
                    (A) the State presents scientifically sound survey 
                data showing that the State is making significant 
                progress toward reducing the use of tobacco products by 
                individuals who have not attained the age of 18 years;
                    (B) the State presents scientifically-based data 
                showing that it has progressively decreased the 
                availability of tobacco products to such individuals;
                    (C) the State has acted in good faith and in full 
                compliance with this Act, and any rules or regulations 
                promulgated under this Act;
                    (D) the State provides evidence that it plans to 
                improve enforcement of these laws in the next fiscal 
                year; and
                    (E) any other relevant evidence.
            (4) A State is entitled to interest on any withheld amount 
        released at the average United States 52-Week Treasury Bill 
        rate for the period between the withholding of the amount and 
        its release.
          (5) Any State attorney general or tobacco product 
        manufacturer aggrieved by a final decision on a petition filed 
        under this subsection may seek judicial review of such decision 
        within 30 days in the United States Court of Appeals for the 
        District of Columbia Circuit. Unless otherwise specified in 
        this Act, judicial review under this section shall be governed 
        by sections 701 through 706 of title 5, United States Code.
            (6) No stay or other injunctive relief enjoining a 
        reduction in a State's allotment pending appeal or otherwise 
        may be granted by the Secretary or any court.
    (f) Non-participating States Licensing Requirements.--For retailers 
in States which have not established a licensing program under 
subsection (a), the Secretary shall promulgate regulations establishing 
Federal retail licensing for retailers engaged in tobacco sales to 
consumers in those States. The Secretary may enter into agreements with 
States for the enforcement of those regulations. A State that enters 
into such an agreement shall receive a grant under this section to 
reimburse it for costs incurred in carrying out that agreement.
    (g) Definition.--For the purposes of this section, the term ``first 
applicable fiscal year'' means the first fiscal year beginning after 
the fiscal year in which funding is made available to the States under 
this section.

SEC. 232. BLOCK GRANTS FOR COMPLIANCE BONUSES.

    (a) In General.--The Secretary shall make block grants to States 
determined to be eligible under subsection (b) in accordance with the 
provisions of this section. There are authorized to be appropriated to 
the Secretary from the National Tobacco Trust Fund $100,000,000 for 
each fiscal year to carry out the provisions of this section.
    (b) Eligible States.--To be eligible to receive a grant under 
subsection (a), a State 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; and
            (2) with respect to the year involved, demonstrate to the 
        satisfaction of the Secretary that fewer than 5 percent of all 
        individuals under 18 years of age who attempt to purchase 
        tobacco products in the State in such year are successful in 
        such purchase.
    (c) Payout.--
            (1) Payment to state.--If one or more States are eligible 
        to receive a grant under this section for any fiscal year, the 
        amount payable for that fiscal year shall be apportioned among 
        such eligible States on the basis of population.
            (2) Year in which no state receives grant.--If in any 
        fiscal year no State is eligible to receive a grant under this 
        section, then the Secretary may use not more than 25 percent of 
        the amount appropriated to carry out this section for that 
        fiscal year to support efforts to improve State and local 
        enforcement of laws regulating the use, sale, and distribution 
        of tobacco products to individuals under the age of 18 years.
            (3) Amounts available without fiscal year limitation.--Any 
        amount appropriated under this section remaining unexpended and 
        unobligated at the end of a fiscal year shall remain available 
        for obligation and expenditure in the following fiscal year.

SEC. 233. CONFORMING CHANGE.

    Section 1926 of the Public Health Service Act (42 U.S.C. 300x--26) 
is hereby repealed.

      Subtitle C--Tobacco Use Prevention and Cessation Initiatives

SEC. 261. TOBACCO USE PREVENTION AND CESSATION INITIATIVES.

    Title XIX of the Public Health Service Act (42 U.S.C. 300w et seq.) 
is amended by adding at the end the following:

       ``Part D--Tobacco Use Prevention and Cessation Initiatives

   ``Subpart I--Cessation and Community-Based Prevention Block Grants

``SEC. 1981. FUNDING FROM TOBACCO SETTLEMENT TRUST FUND.

    ``(a) In General.--From amounts contained in the Public Health 
Allocation Account under section 451(b)(2)(A) and (C) of the National 
Tobacco Policy and Youth Smoking Reduction Act for a fiscal year, there 
are authorized to be appropriated (under subsection (d) of such 
section) to carry out this subpart--
            ``(1) for cessation activities, the amounts appropriated 
        under section 451(b)(2)(A); and
            ``(2) for prevention and education activities, the amounts 
        appropriated under section 451(b)(2)(C).
    ``(b) National Activities.--
            ``(1) Not more than 10 percent of the amount made available 
        for any fiscal year under subsection (a) shall be made 
        available to the Secretary to carry out activities under 
        section 1981B and 1981D(d).
            ``(2) Not more than 10 percent of the amount available for 
        any fiscal year under subsection (a)(1) shall be available to 
        the Secretary to carry out activities under section 1981D(d).

``SEC. 1981A. ALLOTMENTS.

    ``(a) Amount.--
            ``(1) In general.--From the amount made available under 
        section 1981 for any fiscal year the Secretary, acting through 
        the Director of the Centers for Disease Control and Prevention 
        (referred to in this subpart as the `Director'), shall allot to 
        each State an amount based on a formula to be developed by the 
        Secretary that is based on the tobacco prevention and cessation 
        needs of each State including the needs of the State's minority 
        populations.
            ``(2) Minimum amount.--In determining the amount of 
        allotments under paragraph (1), the Secretary shall ensure that 
        no State receives less than \1/2\ of 1 percent of the amount 
        available under section 1981(a) for the fiscal year involved.
    ``(b) Reallotment.--To the extent that amounts made available under 
section 1981 for a fiscal year are not otherwise allotted to States 
because--
            ``(1) 1 or more States have not submitted an application or 
        description of activities in accordance with section 1981D for 
        the fiscal year;
            ``(2) 1 or more States have notified the Secretary that 
        they do not intend to use the full amount of their allotment; 
        or
            ``(3) the Secretary has determined that the State is not in 
        compliance with this subpart, and therefore is subject to 
        penalties under section 1981D(g);
such excess amount shall be reallotted among each of the remaining 
States in proportion to the amount otherwise allotted to such States 
for the fiscal year involved without regard to this subsection.
    ``(c) Payments.--
            ``(1) In general.--The Secretary, acting through the 
        Director of the Centers for Disease Control and Prevention, 
        shall utilize the funds made available under this section to 
        make payments to States under allotments under this subpart as 
        provided for under section 203 of the Intergovernmental 
        Cooperation Act of 1968.
            ``(2) Federal grantees.--From amounts available under 
        section 1981(b)(2), the Secretary may make grants, or 
        supplement existing grants, to entities eligible for funds 
        under the programs described in section 1981C(d)(1) and (10) to 
        enable such entities to carry out smoking cessation activities 
        under this subpart, except not less than 25 percent of this 
        amount shall be used for the program described in 1981C(d)(6).
            ``(3) Availability of funds.--Any amount paid to a State 
        for a fiscal year under this subpart and remaining unobligated 
        at the end of such year shall remain available to such State 
        for the next fiscal year for the purposes for which such 
        payment was made.
    ``(d)  Regulations.--Not later than 9 months after the date of 
enactment of this part, the Secretary shall promulgate regulations to 
implement this subpart. This subpart shall take effect regardless of 
the date on which such regulations are promulgated.

``SEC. 1981B. TECHNICAL ASSISTANCE AND PROVISION OF SUPPLIES AND 
              SERVICES IN LIEU OF FUNDS.

    ``(a) Technical Assistance.--The Secretary, acting through the 
Director of the Centers for Disease Control and Prevention, shall, 
without charge to a State receiving an allotment under section 1981A, 
provide to such State (or to any public or nonprofit private entity 
within the State) technical assistance and training with respect to the 
planning, development, operation, and evaluation of any program or 
service carried out pursuant to the program involved. The Secretary may 
provide such technical assistance or training directly, through 
contract, or through grants.
    ``(b) Provision of Supplies and Service in Lieu of Grant Funds.--
The Secretary, at the request of a State, may reduce the amount of 
payments to the State under section 1981A(c) by--
            ``(1) the fair market value of any supplies or equipment 
        furnished by the Secretary to the State; and
            ``(2) the amount of the pay, allowances, and travel 
        expenses of any officer or employee of the Federal Government 
        when detailed to the State and the amount of any other costs 
        incurred in connection with the detail of such officer or 
        employee;
when the furnishing of such supplies or equipment or the detail of such 
an officer or employee is for the convenience of and at the request of 
the State and for the purpose of conducting activities described in 
section 1981C. The amount by which any payment is so reduced shall be 
available for payment by the Secretary of the costs incurred in 
furnishing the supplies or equipment or in detailing the personnel, on 
which reduction of the payment is based, and the amount shall be deemed 
to be part of the payment and shall be deemed to have been paid to the 
State.

``SEC. 1981C. PERMITTED USERS OF CESSATION BLOCK GRANTS AND OF 
              COMMUNITY-BASED PREVENTION BLOCK GRANTS.

    ``(a) Tobacco Use Cessation Activities.--Except as provided in 
subsections (d) and (e), amounts described in subsection (a)(1) may be 
used for the following:
            ``(1) Evidence-based cessation activities described in the 
        plan of the State, submitted in accordance with section 1981D, 
        including--
                    ``(A) evidence-based programs designed to assist 
                individuals, especially young people and minorities who 
                have been targeted by tobacco product manufacturers, to 
                quit their use of tobacco products;
                    ``(B) training in cessation intervention methods 
                for health plans and health professionals, including 
                physicians, nurses, dentists, health educators, public 
                health professionals, and other health care providers;
                    ``(C) programs to encourage health insurers and 
                health plans to provide coverage for evidence-based 
                tobacco use cessation interventions and therapies, 
                except that the use of any funds under this clause to 
                offset the cost of providing a smoking cessation 
                benefit shall be on a temporary demonstration basis 
                only;
                    ``(D) culturally and linguistically appropriate 
                programs targeted toward minority and low-income 
                individuals, individuals residing in medically 
                underserved areas, uninsured individuals, and pregnant 
                women;
                    ``(E) programs to encourage employer-based wellness 
                programs to provide evidence-based tobacco use 
                cessation intervention and therapies; and
                    ``(F) programs that target populations whose 
                smoking rate is disproportionately high in comparison 
                to the smoking rate population-wide in the State.
            ``(2) Planning, administration, and educational activities 
        related to the activities described in paragraph (1).
            ``(3) The monitoring and evaluation of activities carried 
        out under paragraphs (1) and (2), and reporting and 
        disseminating resulting information to health professionals and 
        the public.
            ``(4) Targeted pilot programs with evaluation components to 
        encourage innovation and experimentation with new 
        methodologies.
    ``(b) State and Community Action Activities.--Except as provided in 
subsections (d) and (e), amounts described in subsection (a)(2) may be 
used for the following:
            ``(1) Evidence-based activities for tobacco use prevention 
        and control described in the plan of the State, submitted in 
        accordance with section 1981D, including--
                    ``(A) State and community initiatives;
                    ``(B) community-based prevention programs, similar 
                to programs currently funded by NIH;
                    ``(C) programs focused on those populations within 
                the community that are most at risk to use tobacco 
                products or that have been targeted by tobacco 
                advertising or marketing;
                    ``(D) school programs to prevent and reduce tobacco 
                use and addiction, including school programs focused in 
                those regions of the State with high smoking rates and 
                targeted at populations most at risk to start smoking;
                    ``(E) culturally and linguistically appropriate 
                initiatives targeted towards minority and low-income 
                individuals, individuals residing in medically 
                underserved areas, and women of child-bearing age;
                    ``(F) the development and implementation of 
                tobacco-related public health and health promotion 
                campaigns and public policy initiatives;
                    ``(G) assistance to local governmental entities 
                within the State to conduct appropriate anti-tobacco 
                activities.
                    ``(H) strategies to ensure that the State's smoking 
                prevention activities include minority, low-income, and 
                other undeserved populations; and
                    ``(I) programs that target populations whose 
                smoking rate is disproportionately high in comparison 
                to the smoking rate population-wide in the State.
            ``(2) Planning, administration, and educational activities 
        related to the activities described in paragraph (1).
            ``(3) The monitoring and evaluation of activities carried 
        out under paragraphs (1) and (2), and reporting and 
        disseminating resulting information to health professionals and 
        the public.
            ``(4) Targeted pilot programs with evaluation components to 
        encourage innovation and experimentation with new 
        methodologies.
    ``(c) Coordination.--Tobacco use cessation and community-based 
prevention activities permitted under subsections (b) and (c) may be 
conducted in conjunction with recipients of other Federally--funded 
programs within the State, including--
            ``(1) the special supplemental food program under section 
        17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786);
            ``(2) the Maternal and Child Health Services Block Grant 
        program under title V of the Social Security Act (42 U.S.C. 701 
        et seq.);
            ``(3) the State Children's Health Insurance Program of the 
        State under title XXI of the Social Security Act (42 U.S.C. 
        13397aa et seq.);
            ``(4) the school lunch program under the National School 
        Lunch Act (42 U.S.C. 1751 et seq.);
            ``(5) an Indian Health Service Program;
            ``(6) the community, migrant, and homeless health centers 
        program under section 330 of the Public Health Service Act (42 
        U.S.C. 254b);
            ``(7) state-initiated smoking cessation programs that 
        include provisions for reimbursing individuals for medications 
        or therapeutic techniques;
            ``(8) the substance abuse and mental health services block 
        grant program, and the preventive health services block grant 
        program, under title XIX of the Public Health Service Act (42 
        U.S.C. 300w et seq.);
            ``(9) the Medicaid program under title XIX of the Social 
        Security Act (42 U.S.C. 1396 et seq.); and
            ``(10) programs administered by the Department of Defense 
        and the Department of Veterans Affairs.
    ``(d) Limitation.--A State may not use amounts paid to the State 
under section 1981A(c) to--
            ``(1) make cash payments except with appropriate 
        documentation to intended recipients of tobacco use cessation 
        services;
            ``(2) fund educational, recreational, or health activities 
        not based on scientific evidence that the activity will prevent 
        smoking or lead to success of cessation efforts
            ``(3) purchase or improve land, purchase, construct, or 
        permanently improve (other than minor remodeling) any building 
        or other facility, or purchase major medical equipment;
            ``(4) satisfy any requirement for the expenditure of non-
        Federal funds as a condition of the receipt of Federal funds; 
        or
            ``(5) provide financial assistance to any entity other than 
        a public or nonprofit private entity or a private entity 
        consistent with subsection (b)(1)(C).
This subsection shall not apply to the support of targeted pilot 
programs that use innovative and experimental new methodologies and 
include an evaluation component.
    ``(e) Administration.--Not more than 5 percent of the allotment of 
a State for a fiscal year under this subpart may be used by the State 
to administer the funds paid to the State under section 1981A(c). The 
State shall pay from non-Federal sources the remaining costs of 
administering such funds.

``SEC. 1981D. ADMINISTRATIVE PROVISIONS.

    ``(a) Application.--The Secretary may make payments under section 
1981A(c) to a State for a fiscal year only if--
            ``(1) the State submits to the Secretary an application, in 
        such form and by such date as the Secretary may require, for 
        such payments;
            ``(2) the application contains a State plan prepared in a 
        manner consistent with section 1905(b) and in accordance with 
        tobacco-related guidelines promulgated by the Secretary;
            ``(3) the application contains a certification that is 
        consistent with the certification required under section 
        1905(c); and
            ``(4) the application contains such assurances as the 
        Secretary may require regarding the compliance of the State 
        with the requirements of this subpart (including assurances 
        regarding compliance with the agreements described in 
        subsection (c)).
    ``(b) State Plan.--A State plan under subsection (a)(2) shall be 
developed in a manner consistent with the plan developed under section 
1905(b) except that such plan--
            ``(1) with respect to activities described in section 
        1981C(b)--
                    ``(A) shall provide for tobacco use cessation 
                intervention and treatment consistent with the tobacco 
                use cessation guidelines issued by the Agency for 
                Health Care Policy and Research, or another evidence-
                based guideline approved by the Secretary, or 
                treatments using drugs, human biological products, or 
                medical devices approved by the Food and Drug 
                Administration, or otherwise legally marketed under the 
                Federal Food, Drug and Cosmetic Act for use as tobacco 
                use cessation therapies or aids;
                    ``(B) may, to encourage innovation and 
                experimentation with new methodologies, provide for or 
                may include a targeted pilot program with an evaluation 
                component;
                    ``(C) shall provide for training in tobacco use 
                cessation intervention methods for health plans and 
                health professionals, including physicians, nurses, 
                dentists, health educators, public health 
                professionals, and other health care providers;
                    ``(D) shall ensure access to tobacco use cessation 
                programs for rural and underserved populations;
                    ``(E) shall recognize that some individuals may 
                require more than one attempt for successful cessation; 
                and
                    ``(F) shall be tailored to the needs of specific 
                populations, including minority populations; and
            ``(2) with respect to State and community-based prevention 
        activities described in section 1981C(c), shall specify the 
        activities authorized under such section that the State intends 
        to carry out.
    ``(c) Certification.--The certification referred to in subsection 
(a)(3) shall be consistent with the certification required under 
section 1905(c), except that
            ``(1) the State shall agree to expend payments under 
        section 1981A(c) only for the activities authorized in section 
        1981C;
            ``(2) paragraphs (9) and (10) of such section shall not 
        apply; and
            ``(3) the State is encouraged to establish an advisory 
        committee in accordance with section 1981E.
    ``(d) Reports, Data, and Audits.--The provisions of section 1906 
shall apply with respect to a State that receives payments under 
section 1981A(c) and be applied in a manner consistent with the manner 
in which such provisions are applied to a State under part, except that 
the data sets referred to in section 1905(a)(2) shall be developed for 
uniformly defining levels of youth and adult use of tobacco products, 
including uniform data for racial and ethnic groups, for use in the 
reports required under this subpart.
    ``(e) Withholding.--The provisions of 1907 shall apply with respect 
to a State that receives payments under section 1981A(c) and be applied 
in a manner consistent with the manner in which such provisions are 
applied to a State under part A.
    ``(f) Nondiscrimination.--The provisions of 1908 shall apply with 
respect to a State that receives payments under section 1981A(c) and be 
applied in a manner consistent with the manner in which such provisions 
are applied to a State under part A.
    ``(g) Criminal Penalties.--The provisions of 1909 shall apply with 
respect to a State that receives payments under section 1981A(c) and be 
applied in a manner consistent with the manner in which such provisions 
are applied to a State under part A.

``SEC. 1981E. STATE ADVISORY COMMITTEE.

    ``(a) In General.--For purposes of sections 1981D(c)(3), an 
advisory committee is in accordance with this section if such committee 
meets the conditions described in this subsection.
    ``(b) Duties.--The recommended duties of the committee are--
            ``(1) to hold public hearings on the State plans required 
        under sections 1981D; and
            ``(2) to make recommendations under this subpart regarding 
        the development and implementation of such plans, including 
        recommendations on--
                    ``(A) the conduct of assessments under the plans;
                    ``(B) which of the activities authorized in section 
                1981C should be carried out in the State;
                    ``(C) the allocation of payments made to the State 
                under section 1981A(c);
                    ``(D) the coordination of activities carried out 
                under such plans with relevant programs of other 
                entities; and
                    ``(E) the collection and reporting of data in 
                accordance with section 1981D.
    ``(c) Composition.--
            ``(1) In general.--The recommended composition of the 
        advisory committee is members of the general public, such 
        officials of the health departments of political subdivisions 
        of the State, public health professionals, teenagers, 
        minorities, and such experts in tobacco product research as may 
        be necessary to provide adequate representation of the general 
        public and of such health departments, and that members of the 
        committee shall be subject to the provisions of sections 201, 
        202, and 203 of title 18, United States Code.
            ``(2) Representatives.--With respect to compliance with 
        paragraph (1), the membership of the advisory committee may 
        include representatives of community-based organizations 
(including minority community-based organizations), schools of public 
health, and entities to which the State involved awards grants or 
contracts to carry out activities authorized under section 1981C.

        ``Subpart II--Tobacco-Free Counter-Advertising Programs

``SEC. 1982. FEDERAL-STATE COUNTER-ADVERTISING PROGRAMS.

    ``(a) National Campaign.--
            ``(1) In general.--The Secretary shall conduct a national 
        campaign to reduce tobacco usage through media-based (such as 
        counter-advertising campaigns) and nonmedia-based education, 
        prevention and cessation campaigns designed to discourage the 
        use of tobacco products by individuals, to encourage those who 
        use such products to quit, and to educate the public about the 
        hazards of exposure to environmental tobacco smoke.
            ``(2) Requirements.--The national campaign under paragraph 
        (1) shall--
                    ``(A) target those populations that have been 
                targeted by tobacco industry advertising using 
                culturally and linguistically appropriate means;
                    ``(B) include a research and evaluation component; 
                and
                    ``(C) be designed in a manner that permits the 
                campaign to be modified for use at the State or local 
                level.
    ``(b) Establishment of an Advisory Board.--
            ``(1) In general.--The Secretary shall establish a board to 
        be known as the `National Tobacco Free Education Advisory 
        Board' (referred to in this section as the `Board') to evaluate 
        and provide long range planning for the development and 
        effective dissemination of public informational and educational 
        campaigns and other activities that are part of the campaign 
        under subsection (a).
            ``(2) Composition.--The Board shall be composed of--
                    ``(A) 9 non-Federal members to be appointed by the 
                President, after consultation and agreement with the 
                Majority and Minority Leaders of the Senate and the 
                Speaker and Minority Leader of the Health or 
                Representatives, of which--
                            ``(i) at least 3 such members shall be 
                        individuals who are widely recognized by the 
                        general public for cultural, educational, 
                        behavioral science or medical achievement;
                            ``(ii) at least 3 of whom shall be 
                        individuals who hold positions of leadership in 
                        major public health organizations, including 
                        minority public health organizations; and
                            ``(iii) at least 3 of whom shall be 
                        individuals recognized as experts in the field 
                        of advertising and marketing, of which--
                                    ``(I) 1 member shall have specific 
                                expertise in advertising and marketing 
                                to children and teens; and
                                    ``(II) 1 member shall have 
                                expertise in marketing research and 
                                evaluation; and
                    ``(B) the Surgeon General, the Director of the 
                Centers for Disease Control and Prevention, or their 
                designees, shall serve as an ex officio members of the 
                Board.
            ``(3) Terms and vacancies.--The members of the Board shall 
        serve for a term of 3 years. Such terms shall be staggered 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) 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.
            ``(5) Awards.--In carrying out subsection (a), the 
        Secretary may--
                    ``(A) enter into contracts with or award grants to 
                eligible entities to develop messages and campaigns 
                designed to prevent and reduce the use of tobacco 
                products that are based on effective strategies to 
                affect behavioral changes in children and other 
                targeted populations, including minority populations;
                    ``(B) enter into contracts with or award grants to 
                eligible entities to carry out public informational and 
                educational activities designed to reduce the use of 
                tobacco products;
            ``(6) Powers and duties.--The Board may--
                    ``(A) 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; and
                    ``(B) secure directly from any Federal department 
                or agency such information as the Board considers 
                necessary to carry out the provisions of this section.
    ``(c) Eligibility.--To be eligible to receive funding under this 
section an entity shall--
            ``(1) be a--
                    ``(A) public entity or a State health department; 
                or
                    ``(B) private or nonprofit private entity that--
                            ``(i)(I) is not affiliated with a tobacco 
                        product manufacturer or importer;
                            ``(II) has a demonstrated record of working 
                        effectively to reduce tobacco product use; or
                            ``(III) has expertise in conducting a 
                        multi-media communications campaign; and
                            ``(ii) has expertise in developing 
                        strategies that affect behavioral changes in 
                        children and other targeted populations, 
                        including minority populations;
            ``(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 this 
        section will be used in accordance with subsection (c); and
            ``(4) meet any other requirements determined appropriate by 
        the Secretary.
    ``(d) Use of Funds.--An entity that receives funds under this 
section shall use amounts provided under the grant or contract to 
conduct multi-media and non-media public educational, informational, 
marketing and promotional campaigns that are designed to discourage and 
de-glamorize the use of tobacco products, encourage those using such 
products to quit, and educate the public about the hazards of exposure 
to environmental tobacco smoke. Such amounts may be used to design and 
implement such activities and shall be used to conduct research 
concerning the effectiveness of such programs.
    ``(e) Needs of Certain Populations.--In awarding grants and 
contracts under this section, the Secretary shall take into 
consideration the needs of particular populations, including minority 
populations, and use methods that are culturally and linguistically 
appropriate.
    ``(f) Coordination.--The Secretary shall ensure that programs and 
activities under this section are coordinated with programs and 
activities carried out under this title.
    ``(g) Allocation of Funds.--Not to exceed--
            ``(1) 25 percent of the amount made available under 
        subsection (h) for each fiscal year shall be provided to States 
        for State and local media-based and nonmedia-based education, 
        prevention and cessation campaigns;
            ``(2) no more than 20 percent of the amount made available 
        under subsection (h) for each fiscal year shall be used 
        specifically for the development of new messages and campaigns;
            ``(3) the remainder shall be used specifically to place 
        media messages and carry out other dissemination activities 
        described in subsection (d); and
            ``(4) half of 1 percent for administrative costs and 
        expenses.
    ``(h) Trigger.--No expenditures shall be made under this section 
during any fiscal year in which the annual amount appropriated for the 
Centers for Disease Control and Prevention is less than the amount so 
appropriated for the prior fiscal year.''.

 ``Part E--Reducing Youth Smoking and Tobacco-Related Diseases Through 
                                Research

``SEC. 1991. FUNDING FROM TOBACCO SETTLEMENT TRUST FUND.

    No expenditures shall be made under sections 451(b) or (c)--
            ``(1) for the National Institutes of Health during any 
        fiscal year in which the annual amount appropriated for such 
        Institutes is less than the amount so appropriated for the 
        prior fiscal year;
            ``(2) for the Centers for Disease Control and Prevention 
        during any fiscal year in which the annual amount appropriated 
        for such Centers is less than the amount so appropriated for 
        the prior fiscal year; or
            ``(3) for the Agency for Health Care Policy and Research 
        during any fiscal year in which the annual amount appropriated 
        for such Agency is less than the amount so appropriated for the 
        prior fiscal year.

``SEC. 1991A. STUDY BY THE INSTITUTE OF MEDICINE.

    ``(a) Contract.--Not later than 60 days after the date of enactment 
of this title, the Secretary shall enter into a contract with the 
Institute of Medicine for the conduct of a study on the framework for a 
research agenda and research priorities to be used under this part.
    ``(b) Considerations.--
            ``(1) In general.--In developing the framework for the 
        research agenda and research priorities under subsection (a) 
        the Institute of Medicine shall focus on increasing knowledge 
        concerning the biological, social, behavioral, public health, 
        and community factors involved in the prevention of tobacco 
        use, reduction of tobacco use, and health consequences of 
        tobacco use.
            ``(2) Specific considerations.--In the study conducted 
        under subsection (a), the Institute of Medicine shall 
        specifically include research on--
                    ``(A) public health and community research relating 
                to tobacco use prevention methods, including public 
                education, media, community strategies;
                    ``(B) behavioral research relating to addiction, 
                tobacco use, and patterns of smoking, including risk 
                factors for tobacco use by children, women, and racial 
                and ethnic minorities;
                    ``(C) health services research relating to tobacco 
                product prevention and cessation treatment 
                methodologies;
                    ``(D) surveillance and epidemiology research 
                relating to tobacco;
                    ``(E) biomedical, including clinical, research 
                relating to prevention and treatment of tobacco-related 
                diseases, including a focus on minorities, including 
                racial and ethnic minorities;
                    ``(F) the effects of tobacco products, ingredients 
                of tobacco products, and tobacco smoke on the human 
                body and methods of reducing any negative effects, 
                including the development of non-addictive, reduced 
                risk tobacco products;
                    ``(G) differentials between brands of tobacco 
                products with respect to health effects or addiction;
                    ``(H) risks associated with environmental exposure 
                to tobacco smoke, including a focus on children and 
                infants;
                    ``(I) effects of tobacco use by pregnant women; and
                    ``(J) other matters determined appropriate by the 
                Institute.
    ``(c) Report.--Not later than 10 months after the date on which the 
Secretary enters into the contract under subsection (a), the Institute 
of Medicine shall prepare and submit to the Secretary, the Committee on 
Labor and Human Resources, and the Committee on Appropriations of the 
Senate, and the Committee on Commerce of the House of Representatives, 
a report that shall contain the findings and recommendations of the 
Institute for the purposes described in subsection (b).

``SEC. 1991B. RESEARCH COORDINATION.

    ``(a) In General.--The Secretary shall foster coordination among 
Federal research agencies, public health agencies, academic bodies, and 
community groups that conduct or support tobacco-related biomedical, 
clinical, behavioral, health services, public health and community, and 
surveillance and epidemiology research activities.
    ``(b) Report.--The Secretary shall prepare and submit a report on a 
biennial basis to the Committee on Labor and Human Resources, and the 
Committee on Appropriations of the Senate, and the Committee on 
Commerce of the House of Representatives on the current and planned 
tobacco-related research activities of participating Federal agencies.

``SEC. 1991C. RESEARCH ACTIVITIES OF THE CENTERS FOR DISEASE CONTROL 
              AND PREVENTION.

    ``(a) Duties.--The Director of the Centers for Disease Control and 
Prevention shall, from amounts provided under section 451(c), and after 
review of the study of the Institute of Medicine, carry out tobacco-
related surveillance and epidemiologic studies and develop tobacco 
control and prevention strategies; and
    ``(b) Youth Surveillance Systems.--From amounts provided under 
section 451(b), the Director of the Centers for Disease Control and 
Prevention shall provide for the use of youth surveillance systems to 
monitor the use of all tobacco products by individuals under the age of 
18, including brands-used to enable determinations to be made of 
company-specific youth market share.

``SEC. 1991D. RESEARCH ACTIVITIES OF THE NATIONAL INSTITUTES OF HEALTH.

    ``(a) Funding.--There are authorized to be appropriated, from 
amounts in the National Tobacco Settlement Trust Fund established by 
section 401 of the National Tobacco Policy and Youth Smoking Reduction 
Act.
    ``(b) Expenditure of Funds.--The Director of the National 
Institutes of Health shall provide funds to conduct or support 
epidemiological, behavioral, biomedical, and social science research, 
including research related to the prevention and treatment of tobacco 
addiction, and the prevention and treatment of diseases associated with 
tobacco use.
    ``(c) Guaranteed Minimum.--Of the funds made available to the 
National Institutes of Health under this section, such sums as may be 
necessary, may be used to support epidemiological, behavioral, and 
social science research related to the prevention and treatment of 
tobacco addiction.
    ``(d) Nature of Research.--Funds made available under subsection 
(d) may be used to conduct or support research with respect to one or 
more of the following--
            ``(1) the epidemiology of tobacco use;
            ``(2) the etiology of tobacco use;
            ``(3) risk factors for tobacco use by children;
            ``(4) prevention of tobacco use by children, including 
        school and community-based programs, and alternative 
        activities;
            ``(5) the relationship between tobacco use, alcohol abuse 
        and illicit drug abuse;
            ``(6) behavioral and pharmacological smoking cessation 
        methods and technologies, including relapse prevention;
            ``(7) the toxicity of tobacco products and their 
        ingredients;
            ``(8) the relative harmfulness of different tobacco 
        products;
            ``(9) environmental exposure to tobacco smoke;
            ``(10) the impact of tobacco use by pregnant women on their 
        fetuses;
            ``(11) the redesign of tobacco products to reduce risks to 
        public health and safety; and
            ``(12) other appropriate epidemiological, behavioral, and 
        social science research.
    ``(e) Coordination.--In carrying out tobacco-related research under 
this section, the Director of the National Institutes of Health shall 
ensure appropriate coordination with the research of other agencies, 
and shall avoid duplicative efforts through all appropriate means.
    ``(h) Administration.--The director of the NIH Office of Behavioral 
and Social Sciences Research may--
            ``(1) identify tobacco-related research initiatives that 
        should be conducted or supported by the research institutes, 
        and develop such projects in cooperation with such institutes;
            ``(2) coordinate tobacco-related research that is conducted 
        or supported by the National Institutes of Health;
            ``(3) annually recommend to Congress the allocation of 
        anti-tobacco research funds among the national research 
        institutes; and
            ``(4) establish a clearinghouse for information about 
        tobacco-related research conducted by governmental and non-
        governmental bodies.
    ``(f) Trigger.--No expenditure shall be made under subsection (a) 
during any fiscal year in which the annual amount appropriated for the 
National Institutes of Health is less than the amount so appropriated 
for the prior fiscal year.
    ``(g) Report.--The Director of the NIH shall every 2 years prepare 
and submit to the Congress a report -------- research activities, 
including funding levels, for research made available under subsection 
(c).
    (b) Medicaid Coverage of Outpatient Smoking Cessation Agents.--
Paragraph (2) of section 1927(d) of the Public Health Service Act (42 
U.S.C. 1396r-8(d)) is amended--
            (1) by striking subparagraph (E) and redesignating 
        subparagraphs (F) through (J) as subparagraphs (E) through (I); 
        and
            (2) by striking ``drugs.'' in subparagraph (F), as 
        redesignated, and inserting ``drugs, except agents, approved by 
        the Food and Drug Administration, when used to promote smoking 
        cessation.''.

``SEC. 1991E. RESEARCH ACTIVITIES OF THE AGENCY FOR HEALTH CARE POLICY 
              AND RESEARCH.

    ``(a) In General.--The Administrator of the Agency for Health Care 
Policy and Research shall carry out outcomes, effectiveness, cost-
effectiveness, and other health services research related to effective 
interventions for the prevention and cessation of tobacco use and 
appropriate strategies for implementing those services, the outcomes 
and delivery of care for diseases related to tobacco use, and the 
development of quality measures for evaluating the provision of those 
services.
    ``(b) Analyses and Special Programs.--The Secretary, acting through 
the Administrator of the Agency for Health Care Policy and Research, 
shall support--
            ``(1) and conduct periodic analyses and evaluations of the 
        best scientific information in the area of smoking and other 
        tobacco product use cessation; and
            ``(2) the development and dissemination of special programs 
        in cessation intervention for health plans and national health 
        professional societies.''.

  TITLE III--TOBACCO PRODUCT WARNINGS AND SMOKE CONSTITUENT DISCLOSURE

          Subtitle A--Product Warnings, Labeling and Packaging

SEC. 301. CIGARETTE LABEL AND ADVERTISING WARNINGS.

    (a) In General.--Section 4 of the Federal Cigarette Labeling and 
Advertising Act (15 U.S.C. 1333) is amended to read as follows:

``SEC. 4. LABELING.

    ``(a) Label Requirements.--
            ``(1) In general.--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 non-
        smokers''
        ``WARNING: Quitting smoking now greatly reduces serious risks 
        to your health''
            ``(2) Placement; typography; etc.--
                    ``(A) In general.--Each label statement required by 
                paragraph (1) shall be located in the upper portion of 
                the front and rear panels of the package, directly on 
                the package underneath the cellophane or other clear 
                wrapping. Except as provided in subparagraph (B), each 
                label statement shall comprise at least the top 25 
                percent of the front and rear panels of the package. 
                The word ``WARNING'' shall appear in capital letters 
                and all text shall be in conspicuous and legible 17-
                point type, unless the text of the label statement 
                would occupy more than 70 percent of such area, in 
                which case the text may be in a smaller conspicuous and 
                legible type size, provided that at least 60 percent of 
                such area is occupied by required text. The text shall 
                be black on a white background, or white on a black 
                background, in a manner that contrasts, by typography, 
                layout, or color, with all other printed material on 
                the package, in an alternating fashion under the plan 
                submitted under subsection (b)(4).
                    ``(B) Flip-top boxes.--For any cigarette brand 
                package manufactured or distributed before January 1, 
                2000, which employs a flip-top style (if such packaging 
                was used for that brand in commerce prior to June 21, 
                1997), the label statement required by paragraph (1) 
                shall be located on the flip-top area of the package, 
                even if such area is less than 25 percent of the area 
                of the front panel. Except as provided in this 
                paragraph, the provisions of this subsection shall 
                apply to such packages.
            ``(3) Does not apply to foreign distribution.--The 
        provisions of this subsection do not apply to a tobacco product 
        manufacturer or distributor of cigarettes which does not 
        manufacture, package, or import cigarettes for sale or 
        distribution within the United States.
    ``(b) Advertising Requirements.--
            ``(1) In general.--It shall be unlawful for any tobacco 
        product manufacturer, importer, distributor, or retailer of 
        cigarettes to advertise or cause to be advertised within the 
        United States any cigarette unless its advertising bears, in 
        accordance with the requirements of this section, one of the 
        labels specified in subsection (a) of this section.
            ``(2) Typography, etc.--Each label statement required by 
        subsection (a) of this section in cigarette advertising shall 
        comply with the standards set forth in this paragraph. For 
        press and poster advertisements, each such statement and (where 
        applicable) any required statement relating to tar, nicotine, 
        or other constituent yield shall comprise at least 20 percent 
        of the area of the advertisement and shall appear in a 
        conspicuous and prominent format and location at the top of 
        each advertisement within the trim area. The Secretary may 
        revise the required type sizes in such area in such manner as 
        the Secretary determines appropriate. The word ``WARNING'' 
        shall appear in capital letters, and each label statement shall 
        appear in conspicuous and legible type. The text of the label 
        statement shall be black if the background is white and white 
        if the background is black, under the plan submitted under 
        paragraph (4) of this subsection. The label statements shall be 
        enclosed by a rectangular border that is the same color as the 
        letters of the statements and that is the width of the first 
        downstroke of the capital ``W'' of the word ``WARNING'' in the 
        label statements. The text of such label statements shall be in 
        a typeface pro rata to the following requirements: 45-point 
        type for a whole-page broadsheet newspaper advertisement; 39-
        point type for a half-page broadsheet newspaper advertisement; 
        39-point type for a whole-page tabloid newspaper advertisement; 
        27-point type for a half-page tabloid newspaper advertisement; 
        31.5-point type for a double page spread magazine or whole-page 
        magazine advertisement; 22.5-point type for a 28 centimeter by 
        3 column advertisement; and 15-point type for a 20 centimeter 
        by 2 column advertisement. The label statements shall be in 
        English, except that in the case of--
                    ``(A) an advertisement that appears in a newspaper, 
                magazine, periodical, or other publication that is not 
                in English, the statements shall appear in the 
                predominant language of the publication; and
                    ``(B) in the case of any other advertisement that 
                is not in English, the statements shall appear in the 
                same language as that principally used in the 
                advertisement.
            ``(3) Adjustment by secretary.--The Secretary may, through 
        a rulemaking under section 553 of title 5, United States Code, 
        adjust the format and type sizes for the label statements 
        required by this section or the text, format, and type sizes of 
        any required tar, nicotine yield, or other constituent 
        disclosures, or to establish the text, format, and type sizes 
        for any other disclosures required under the Federal Food, 
        Drug, and Cosmetic Act (21 U.S.C. 301 et. seq.). The text of 
        any such label statements or disclosures shall be required to 
        appear only within the 20 percent area of cigarette 
        advertisements provided by paragraph (2) of this subsection. 
        The Secretary shall promulgate regulations which provide for 
        adjustments in the format and type sizes of any text required 
        to appear in such area to ensure that the total text required 
        to appear by law will fit within such area.
            ``(4) Marketing requirements.--
                    ``(A) The label statements specified in subsection 
                (a)(1) shall be randomly displayed in each 12-month 
                period, in as equal a number of times as is possible on 
                each brand of the product and be randomly distributed 
                in all areas of the United States in which the product 
                is marketed in accordance with a plan submitted by the 
                tobacco product manufacturer, importer, distributor, or 
                retailer and approved by the Secretary.
                    ``(B) The label statements specified in subsection 
                (a)(1) shall be rotated quarterly in alternating 
                sequence in advertisements for each brand of cigarettes 
                in accordance with a plan submitted by the tobacco 
                product manufacturer, importer, distributor, or 
                retailer to, and approved by, the Secretary.
                    ``(C) The Secretary shall review each plan 
                submitted under subparagraph (B) and approve it if the 
                plan--
                            ``(i) will provide for the equal 
                        distribution and display on packaging and the 
                        rotation required in advertising under this 
                        subsection; and
                            ``(ii) assures that all of the labels 
                        required under this section will be displayed 
                        by the tobacco product manufacturer, importer, 
                        distributor, or retailer at the same time.''.
    (b) Repeal of Prohibition on State Restriction.--Section 5 of the 
Federal Cigarette Labeling and Advertising Act (15 U.S.C. 1334) is 
amended--
            (1) by striking ``(a) Additional statements.--'' in 
        subsection (a); and
            (2) by striking subsection (b).

SEC. 302. AUTHORITY TO REVISE CIGARETTE WARNING LABEL STATEMENTS.

    Section 4 of the Federal Cigarette Labeling and Advertising Act ( 
15 U.S.C. 1333), as amended by section 301 of this title, is further 
amended by adding at the end the following:
    ``(c) Change in Required Statements.--The Secretary may, by a 
rulemaking conducted under section 553 of title 5, United States Code, 
adjust the format, type size, and text of any of the warning label 
statements required by subsection (a) of this section, or establish the 
format, type size, and text of any other disclosures required under the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.), if the 
Secretary finds that such a change would promote greater public 
understanding of the risks associated with the use of smokeless tobacco 
products.''.

SEC. 303. SMOKELESS TOBACCO LABELS AND ADVERTISING WARNINGS.

    Section 3 of the Comprehensive Smokeless Tobacco Health Education 
Act of 1986 (15 U.S.C. 4402) is amended to read as follows:

``SEC. 3. SMOKELESS TOBACCO WARNING.

    ``(a) General Rule.--
            ``(1) It shall be unlawful for any person to manufacture, 
        package, or import for sale or distribution within the United 
        States any smokeless tobacco product unless the product package 
        bears, in accordance with the requirements of this Act, one of 
        the following labels:
        ``WARNING: This product can cause mouth cancer''
        ``WARNING: This product can cause gum disease and tooth loss''
        ``WARNING: This product is not a safe alternative to 
        cigarettes''
        ``WARNING: Smokeless tobacco is addictive''
            ``(2) Each label statement required by paragraph (1) shall 
        be--
                    ``(A) located on the 2 principal display panels of 
                the package, and each label statement shall comprise at 
                least 25 percent of each such display panel; and
                    ``(B) in 17-point conspicuous and legible type and 
                in black text on a white background, or white text on a 
                black background, in a manner that contrasts by 
                typography, layout, or color, with all other printed 
                material on the package, in an alternating fashion 
                under the plan submitted under subsection (b)(3), 
                except that if the text of a label statement would 
                occupy more than 70 percent of the area specified by 
                subparagraph (A), such text may appear in a smaller 
                type size, so long as at least 60 percent of such 
                warning area is occupied by the label statement.
            ``(3) The label statements required by paragraph (1) shall 
        be introduced by each tobacco product manufacturer, packager, 
        importer, distributor, or retailer of smokeless tobacco 
        products concurrently into the distribution chain of such 
        products.
            ``(4) The provisions of this subsection do not apply to a 
        tobacco product manufacturer or distributor of any smokeless 
        tobacco product that does not manufacture, package, or import 
        smokeless tobacco products for sale or distribution within the 
        United States.
    ``(b) Required Labels.--
            ``(1) It shall be unlawful for any tobacco product 
        manufacturer, packager, importer, distributor, or retailer of 
        smokeless tobacco products to advertise or cause to be 
        advertised within the United States any smokeless tobacco 
        product unless its advertising bears, in accordance with the 
        requirements of this section, one of the labels specified in 
        subsection (a).
            ``(2) Each label statement required by subsection (a) in 
        smokeless tobacco advertising shall comply with the standards 
        set forth in this paragraph. For press and poster 
        advertisements, each such statement and (where applicable) any 
        required statement relating to tar, nicotine, or other 
        constituent yield shall--
                    ``(A) comprise at least 20 percent of the area of 
                the advertisement, and the warning area shall be 
                delineated by a dividing line of contrasting color from 
                the advertisement; and
                    ``(B) the word ``WARNING'' shall appear in capital 
                letters and each label statement shall appear in 
                conspicuous and legible type. The text of the label 
                statement shall be black on a white background, or 
                white on a black background, in an alternating fashion 
                under the plan submitted under paragraph (3).
            ``(3)(A) The label statements specified in subsection 
        (a)(1) shall be randomly displayed in each 12-month period, in 
        as equal a number of times as is possible on each brand of the 
        product and be randomly distributed in all areas of the United 
        States in which the product is marketed in accordance with a 
        plan submitted by the tobacco product manufacturer, importer, 
        distributor, or retailer and approved by the Secretary.
            ``(B) The label statements specified in subsection (a)(1) 
        shall be rotated quarterly in alternating sequence in 
        advertisements for each brand of smokeless tobacco product in 
        accordance with a plan submitted by the tobacco product 
        manufacturer, importer, distributor, or retailer to, and 
        approved by, the Secretary.
            ``(C) The Secretary shall review each plan submitted under 
        subparagraph (B) and approve it if the plan--
                    ``(i) will provide for the equal distribution and 
                display on packaging and the rotation required in 
                advertising under this subsection; and
                    ``(ii) assures that all of the labels required 
                under this section will be displayed by the tobacco 
                product manufacturer, importer, distributor, or 
                retailer at the same time.
    ``(c) Television and Radio Advertising.--It is unlawful to 
advertise smokeless tobacco on any medium of electronic communications 
subject to the jurisdiction of the Federal Communications 
Commission.''.

SEC. 304. AUTHORITY TO REVISE SMOKELESS TOBACCO PRODUCT WARNING LABEL 
              STATEMENTS.

    Section 3 of the Comprehensive Smokeless Tobacco Health Education 
Act of 1986 (15 U.S.C. 4402), as amended by section 303 of this title, 
is further amended by adding at the end the following:
    ``(d) Authority To Revise Warning Label Statements.--The Secretary 
may, by a rulemaking conducted under section 553 of title 5, United 
States Code, adjust the format, type size, and text of any of the 
warning label statements required by subsection (a) of this section, or 
establish the format, type size, and text of any other disclosures 
required under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 
et seq.), if the Secretary finds that such a change would promote 
greater public understanding of the risks associated with the use of 
smokeless tobacco products.''.

SEC. 305. TAR, NICOTINE, AND OTHER SMOKE CONSTITUENT DISCLOSURE TO THE 
              PUBLIC.

    Section 4(a) of the Federal Cigarette Labeling and Advertising Act 
(15 U.S.C. 1333 (a)), as amended by section 301 of this title, is 
further amended by adding at the end the following:
            ``(4)(A) The Secretary shall, by a rulemaking conducted 
        under section 553 of title 5, United States Code, determine (in 
        the Secretary's sole discretion) whether cigarette and other 
        tobacco product manufacturers shall be required to include in 
        the area of each cigarette advertisement specified by 
        subsection (b) of this section, or on the package label, or 
        both, the tar and nicotine yields of the advertised or packaged 
        brand. Any such disclosure shall be in accordance with the 
        methodology established under such regulations, shall conform 
        to the type size requirements of subsection (b) of this 
        section, and shall appear within the area specified in 
        subsection (b) of this section.
            ``(B) Any differences between the requirements established 
        by the Secretary under subparagraph (A) and tar and nicotine 
        yield reporting requirements established by the Federal Trade 
        Commission shall be resolved by a memorandum of understanding 
        between the Secretary and the Federal Trade Commission.
            ``(C) In addition to the disclosures required by 
        subparagraph (A) of this paragraph, the Secretary may, under a 
        rulemaking conducted under section 553 of title 5, United 
        States Code, prescribe disclosure requirements regarding the 
        level of any cigarette or other tobacco product smoke 
        constituent. Any such disclosure may be required if the 
        Secretary determines that disclosure would be of benefit to the 
        public health, or otherwise would increase consumer awareness 
        of the health consequences of the use of tobacco products, 
        except that no such prescribed disclosure shall be required on 
        the face of any cigarette package or advertisement. Nothing in 
        this section shall prohibit the Secretary from requiring such 
        prescribed disclosure through a cigarette or other tobacco 
        product package or advertisement insert, or by any other means 
        under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 
        et seq.).''.

Subtitle B--Testing and Reporting of Tobacco Product Smoke Constituents

SEC. 311. REGULATION REQUIREMENT.

    (a) Testing, Reporting, and Disclosure.--Not later than 24 months 
after the date of enactment of this Act, the Secretary, through the 
Commissioner of the Food and Drug Administration, shall promulgate 
regulations under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
301 et seq.) that meet the requirements of subsection (b) of this 
section.
    (b) Contents of Rules.--The rules promulgated under subsection (a) 
of this section shall require the testing, reporting, and disclosure of 
tobacco product smoke constituents and ingredients that the Secretary 
determines should be disclosed to the public in order to protect the 
public health. Such constituents shall include tar, nicotine, carbon 
monoxide, and such other smoke constituents or ingredients as the 
Secretary may determine to be appropriate. The rule may require that 
tobacco product manufacturers, packagers, or importers make such 
disclosures relating to tar and nicotine through labels or advertising, 
and make such disclosures regarding other smoke constituents or 
ingredients as the Secretary determines are necessary to protect the 
public health.
    (c) Authority.--The Food and Drug Administration shall have 
authority to conduct or to require the testing, reporting, or 
disclosure of tobacco product smoke constituents.

                 TITLE IV--NATIONAL TOBACCO TRUST FUND

SEC. 401. ESTABLISHMENT OF TRUST FUND.

    (a) Creation.--There is established in the Treasury of the United 
States a trust fund to be known as the ``National Tobacco Trust Fund'', 
consisting of such amounts as may be appropriated or credited to the 
trust fund.
    (b) Transfers to National Tobacco Trust Fund.--There shall be 
credited to the trust fund the net revenues resulting from the 
following amounts:
            (1) Amounts paid under section 402.
            (2) Amounts equal to the fines or penalties paid under 
        section 402, 403, or 405, including interest thereon.
            (3) Amounts equal to penalties paid under section 202, 
        including interest thereon.
    (c) Net Revenues.--For purposes of subsection (b), the term ``net 
revenues'' means the amount estimated by the Secretary of the Treasury 
based on the excess of--
            (1) the amounts received in the Treasury under subsection 
        (b), over
            (2) the decrease in the taxes imposed by chapter 1 and 
        chapter 52 of the Internal Revenue Code of 1986, and other 
        offsets, resulting from the amounts received under subsection 
        (b).
    (d) Expenditures From the Trust Fund.--Amounts in the Trust Fund 
shall be available in each fiscal year, as provided in appropriation 
Acts. The authority to allocate net revenues as provided in this title 
and to obligate any amounts so allocated is contingent upon actual 
receipt of net revenues.
    (e) Budgetary Treatment.--The amount of net receipts in excess of 
that amount which is required to offset the direct spending in this Act 
under section 252 of the Balanced Budget and Emergency Deficit Control 
Act of 1985 (2 U.S.C. 902) shall be available exclusively to offset the 
appropriations required to fund the authorizations of appropriations in 
this Act (including the amendments made by this Act), and the amount of 
such appropriations shall not be included in the estimates required 
under section 251 of that Act (2 U.S.C. 901).
    (f) Administrative Provisions.--Section 9602 of the Internal 
Revenue Code of 1986 shall apply to the trust fund to the same extent 
as if it were established by subchapter A of chapter 98 of such Code, 
except that, for purposes of section 9602(b)(3), any interest or 
proceeds shall be covered into the Treasury as miscellaneous receipts.

SEC. 402. PAYMENTS BY INDUSTRY.

    (a) Initial Payment.--
            (1) Certain tobacco product manufacturers.--The following 
        participating tobacco product manufacturers, subject to the 
        provisions of title XIV, shall deposit into the National 
        Tobacco Trust Fund an aggregate payment of $10,000,000,000, 
        apportioned as follows:
                    (A) Phillip Morris Incorporated--65.8 percent.
                    (B) Brown and Williamson Tobacco Corporation--17.3 
                percent.
                    (C) Lorillard Tobacco Company--7.1 percent.
                    (D) R.J. Reynolds Tobacco Company--6.6 percent.
                    (E) United States Tobacco Company--3.2 percent.
            (2) No contribution from other tobacco product 
        manufacturers.--No other tobacco product manufacturer shall be 
        required to contribute to the payment required by this 
        subsection.
            (3) Payment date; interest.--Each tobacco product 
        manufacturer required to make a payment under paragraph (1) of 
        this subsection shall make such payment within 30 days after 
        the date of compliance with this Act and shall owe interest on 
        such payment at the prime rate plus 10 percent per annum, as 
        published in the Wall Street Journal on the latest publication 
        date on or before the date of enactment of this Act, for 
        payments made after the required payment date.
    (b) Annual Payments.--Each calendar year beginning after the 
required payment date under subsection (a)(3) the tobacco product 
manufacturers shall make total payments into the Fund for each calendar 
year in the following applicable base amounts, subject to adjustment as 
provided in section 403:
            (1) year 1--$14,400,000,000.
            (2) year 2--$15,400,000,000.
            (3) year 3--$17,700,000,000.
            (4) year 4--$21,400,000,000.
            (5) year 5--$23,600,000,000.
            (6) year 6 and thereafter--the adjusted applicable base 
        amount under section 403.
    (c) Payment Schedule; Reconciliation.--
            (1) Estimated payments.--Deposits toward the annual payment 
        liability for each calendar year under subsection (d)(2) shall 
        be made in 3 equal installments due on March 1st, on June 1st, 
        and on August 1st of each year. Each installment shall be equal 
        to one-third of the estimated annual payment liability for that 
        calendar year. Deposits of installments paid after the due date 
        shall accrue interest at the prime rate plus 10 percent per 
        annum, as published in the Wall Street Journal on the latest 
        publication date on or before the payment date.
            (2) Reconciliation.--If the liability for a calendar year 
        under subsection (d)(2) exceeds the deposits made during that 
        calendar year, the manufacturer shall pay the unpaid liability 
        on March 1st of the succeeding calendar year, along with the 
        first deposit for that succeeding year. If the deposits during 
        a calendar year exceed the liability for the calendar year 
        under subsection (d)(2), the manufacturer shall subtract the 
        amount of the excess deposits from its deposit on March 1st of 
        the succeeding calendar year.
    (d) Apportionment of Annual Payment.--
            (1) In general.--Each tobacco product manufacturer is 
        liable for its share of the applicable base amount payment due 
        each year under subsection (b). The annual payment is the 
        obligation and responsibility of only those tobacco product 
        manufacturers and their affiliates that directly sell tobacco 
        products in the domestic market to wholesalers, retailers, or 
        consumers, their successors and assigns, and any subsequent 
        fraudulent transferee (but only to the extent of the interest 
        or obligation fraudulently transferred).
            (2) Determination of amount of payment due.--Each tobacco 
        product manufacturer is liable for its share of each 
        installment in proportion to its share of tobacco products sold 
        in the domestic market for the calendar year. One month after 
        the end of the calendar year, the Secretary shall make a final 
        determination of each tobacco product manufacturer's applicable 
        base amount payment obligation.
            (3) Calculation of tobacco product manufacturer's share of 
        annual payment.--The share of the annual payment apportioned to 
        a tobacco product manufacturer shall be equal to that 
        manufacturer's share of adjusted units, taking into account the 
        manufacturer's total production of such units sold in the 
        domestic market. A tobacco product manufacturer's share of 
        adjusted units shall be determined as follows:
                    (A) Units.--A tobacco product manufacturer's number 
                of units shall be determined by counting each--
                            (i) pack of 20 cigarettes as 1 adjusted 
                        unit;
                            (ii) 1.2 ounces of moist snuff as 0.75 
                        adjusted unit; and
                            (iii) 3 ounces of other smokeless tobacco 
                        product as 0.35 adjusted units.
                    (B) Determination of adjusted units.--Except as 
                provided in subparagraph (C), a smokeless tobacco 
                product manufacturer's number of adjusted units shall 
                be determined under the following table:

----------------------------------------------------------------------------------------------------------------
                              For units:                                   Each unit shall be treated as:       
----------------------------------------------------------------------------------------------------------------
Not exceeding 150 million                                                                          70% of a unit
Exceeding 150 million                                                                             100% of a unit
----------------------------------------------------------------------------------------------------------------

                    (C) Adjusted units determined on total domestic 
                production.--For purposes of determining a 
                manufacturer's number of adjusted units under 
                subparagraph (B), a manufacturer's total production of 
                units, whether intended for domestic consumption or 
                export, shall be taken into account.
                    (D) Special rule for large manufacturers.--If a 
                tobacco product manufacturer has more than 200 million 
                units under subparagraph (A), then that manufacturer's 
                number of adjusted units shall be equal to the total 
                number of units, and not determined under subparagraph 
                (B).
                    (E) Smokeless equivalency study.--Not later than 
                January 1, 2003, the Secretary shall submit to the 
                Congress a report detailing the extent to which youths 
                are substituting smokeless tobacco products for 
                cigarettes. If the Secretary determines that 
                significant substitution is occurring, the Secretary 
                shall include in the report recommendations to address 
                substitution, including consideration of modification 
                of the provisions of subparagraph (A).
    (e) Computations.--The determinations required by subsection (d) 
shall be made and certified by the Secretary of Treasury. The parties 
shall promptly provide the Treasury Department with information 
sufficient for it to make such determinations.
    (f) Nonapplication to Certain Manufacturers.--
            (1) Exemption .--A manufacturer described in paragraph (3) 
        is exempt from the payments required by subsection (b).
            (2) Limitation.--Paragraph (1) applies only to assessments 
        on cigarettes to the extent that those cigarettes constitute 
        less than 3 percent of all cigarettes manufactured and 
        distributed to consumers in any calendar year.
            (3) Tobacco product manufacturers to which subsection 
        applies.--A tobacco product manufacturer is described in this 
        paragraph if it--
                    (A) resolved tobacco-related civil actions with 
                more than 25 States before January 1, 1998, through 
                written settlement agreements signed by the attorneys 
                general (or the equivalent chief legal officer if there 
                is no office of attorney general) of those States; and
                    (B) provides to all other States, not later than 
                December 31, 1998, the opportunity to enter into 
                written settlement agreements that--
                            (i) are substantially similar to the 
                        agreements entered into with those 25 States; 
                        and
                            (ii) provide the other States with annual 
                        payment terms that are equivalent to the most 
favorable annual payment terms of its written settlement agreements 
with those 25 States.

SEC. 403. ADJUSTMENTS.

    The applicable base amount under section 402(b) for a given 
calendar year shall be adjusted as follows in determining the annual 
payment for that year:
            (1) Inflation adjustment.--
                    (A) In general.--Beginning with the sixth calendar 
                year after the date of enactment of this Act, the 
                adjusted applicable base amount under section 402(b)(6) 
                is the amount of the annual payment made for the 
                preceding year increased by the greater of 3 percent or 
                the annual increase in the CPI, adjusted (for calendar 
                year 2002 and later years) by the volume adjustment 
                under paragraph (2).
                    (B) CPI.--For purposes of subparagraph (A), the CPI 
                for any calendar year is the average of the Consumer 
                Price Index for all-urban consumers published by the 
                Department of Labor.
                    (C) Rounding.--If any increase determined under 
                subparagraph (A) is not a multiple of $1,000, the 
                increase shall be rounded to the nearest multiple of 
                $1,000.
            (2) Volume adjustment.--Beginning with calendar year 2002, 
        the applicable base amount (as adjusted for inflation under 
        paragraph (1)) shall be adjusted for changes in volume of 
        domestic sales by multiplying the applicable base amount by the 
        ratio of the actual volume for the calendar year to the base 
        volume. For purposes of this paragraph, the term ``base 
        volume'' means 80 percent of the number of units of taxable 
        domestic removals and taxed imports of cigarettes in calendar 
        year 1997, as reported to the Secretary of the Treasury. For 
        purposes of this subsection, the term ``actual volume'' means 
        the number of adjusted unites as defined in section 
        402(d)(3)(A).

SEC. 404. PAYMENTS TO BE PASSED THROUGH TO CONSUMERS.

    Each tobacco product manufacturer shall use its best efforts to 
adjust the price at which it sells each unit of tobacco products in the 
domestic market or to an importer for resale in the domestic market by 
an amount sufficient to pass through to each purchaser on a per-unit 
basis an equal share of the annual payments to be made by such tobacco 
product manufacturer under this Act for the year in which the sale 
occurs.

SEC. 405. TAX TREATMENT OF PAYMENTS.

    All payments made under section 402 are ordinary and necessary 
business expenses for purposes of chapter 1 of the Internal Revenue 
Code of 1986 for the year in which such payments are made, and no part 
thereof is either in settlement of an actual or potential liability for 
a fine or penalty (civil or criminal) or the cost of a tangible or 
intangible asset or other future benefit.

SEC. 406. ENFORCEMENT FOR NONPAYMENT.

    (a) Penalty.--Any tobacco product manufacturer that fails to make 
any payment required under section 402 or 404 within 60 days after the 
date on which such fee is due is liable for a civil penalty computed on 
the unpaid balance at a rate of prime plus 10 percent per annum, as 
published in the Wall Street Journal on the latest publication date on 
or before the payment date, during the period the payment remains 
unmade.
    (b) Noncompliance Period.--For purposes of this section, the term 
``noncompliance period'' means, with respect to any failure to make a 
payment required under section 402 or 404, 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.
    (c) Limitations.--
            (1) In general.--No penalty shall be imposed by subsection 
        (a) on any failure to make a payment under section 402 during 
        any period for which it is established to the satisfaction of 
        the Secretary of the Treasury that none of the persons 
        responsible for such failure knew or, exercising reasonable 
        diligence, should have known, that such failure existed.
            (2) Corrections.--No penalty shall be imposed under 
        subsection (a) on any failure to make a 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, should have known, 
                that such failure existed.
            (3) Waiver.--In the case of any failure to make a payment 
        under section 402 that is due to reasonable cause and not to 
        willful neglect, the Secretary of the Treasury may waive all or 
        part of the penalty imposed under subsection (a) to the extent 
        that the Secretary determines that the payment of such penalty 
        would be excessive relative to the failure involved.

                Subtitle B--General Spending Provisions

SEC. 451. ALLOCATION ACCOUNTS.

    (a) State Litigation Settlement Account.--
            (1) In general.--There is established within the Trust Fund 
        a separate account, to be known as the State Litigation 
        Settlement Account. Of the net revenues credited to the Trust 
        Fund under section 401(b)(1) for each fiscal year, 40 percent 
        of the amounts designated for allocation under the settlement 
        payments shall be allocated to this account. Such amounts shall 
        be reduced by the additional estimated Federal expenditures 
        that will be incurred as a result of State expenditures under 
        section 452, which amounts shall be transferred to the 
        miscellaneous receipts of the Treasury. If, after 10 years, the 
        estimated 25-year total amount projected to received in this 
        account will be different than amount than $196,500,000,000, 
        then beginning with the eleventh year the 40 percent share will 
        be adjusted as necessary, to a percentage not in excees of 50 
        percent and not less than 30 percent, to achieve that 25-year 
        total amount.
            (2) Appropriation.--Amounts so calculated are hereby 
        appropriated and available until expended and shall be 
        available to States for grants authorized under this Act.
            (3) Distribution formula.--The Secretary of the Treasury 
        shall consult with the National Governors Association, the 
        National Association of Attorneys General, and the National 
        Conference of State Legislators on a formula for the 
        distribution of amounts in the State Litigation Settlement 
        Account and report to the Congress within 90 days after the 
        date of enactment of this Act with recommendations for 
        implementing a distribution formula.
            (4) Use of funds.--A State may use amounts received under 
        this subsection as the State determines appropriate, consistent 
        with the other provisions of this Act.
            (5) Funds not available as medicaid reimbursement.--Funds 
        in the account shall not be available to the Secretary as 
        reimbursement of Medicaid expenditures or considered as 
        Medicaid overpayments for purposes of recoupment.
    (b) Public Health Allocation Account.--
            (1) In general.-- There is established within the trust 
        fund a separate account, to be known as the Public Health 
        Account. Twenty-two percent of the net revenues credited to the 
        trust fund under section 401(b)(1) and all the net revenues 
        credited to the trust fund under section 401(b)(3) shall be 
        allocated to this account.
            (2) Authorization of appropriations.--Amounts in the Public 
        Health Account shall be available to the extent and only in the 
        amounts provided in advance in appropriations Acts, to remain 
        available until expended, only for the purposes of:
                    (A) Cessation and other treatments.--Of the total 
                amounts allocated to this account, not less than 25 
                percent, but not more than 35 percent are to be used to 
                carry out smoking cessation activities under part D of 
                title XIX of the Public Health Service Act, as added by 
                title II of this Act.
                    (B) Indian health service.--Of the total amounts 
                allocated to this account, not less than 3 percent, but 
                not more than 7 percent are to be used to carry out 
                activities under section 453.
                    (C) Education and prevention.--Of the total amounts 
                allocated to this account, not less than 50 percent, 
                but not more than 65 percent are to be used to carry 
                out--
                            (i) counter-advertising activities under 
                        section 1982 of the Public Health Service Act 
                        as amended by this Act;
                            (ii) smoking prevention activities under 
                        section 223;
                            (iii) surveys under section 1991C of the 
                        Public Health Service Act, as added by this Act 
                        (but, in no fiscal year may the amounts used to 
                        carry out such surveys be less than 10 percent 
                        of the amounts available under this 
                        subsection); and
                            (iv) international activities under section 
                        1132.
                    (D) Enforcement.--Of the total amounts allocated to 
                this account, not less than 17.5 percent nor more than 
                22.5 percent are to be used to carry out the following:
                            (i) Food and Drug Administration 
                        activities.
                                    (I) The Food and Drug 
                                Administration shall receive not less 
                                than 15 percent of the funds provided 
                                in subparagraph (D) in the first fiscal 
                                year beginning after the date of 
                                enactment of this Act, 35 percent of 
                                such funds in the second year beginning 
                                after the date of enactment, and 50 
                                percent of such funds for each fiscal 
                                year beginning after the date of 
                                enactment, as reimbursements for the 
                                costs incurred by the Food and Drug 
                                Administration in implementing and 
                                enforcing requirements relating to 
                                tobacco products.
                                    (II) No expenditures shall be made 
                                under subparagraph (D) during any 
                                fiscal year in which the annual amount 
                                appropriated for the Food and Drug 
                                Administration is less than the amount 
                                so appropriated for the prior fiscal 
                                year.
                            (ii) State retail licensing activities 
                        under section 251.
                            (iii) Anti-Smuggling activities under 
                        section 1141.
    (c) Health and Health-related Research Allocation Account.--
            (1) In general.-- There is established within the trust 
        fund a separate account, to be known as the Health and Health-
        Related Research Account. Of the net revenues credited to the 
        trust fund under section 401(b)(1), 22 percent shall be 
        allocated to this account.
            (2) Authorization of appropriations.--Amounts in the Health 
        and Health-Related Research Account shall be available to the 
        extent and in the amounts provided in advance in appropriations 
        acts, to remain available until expended, only for the 
        following purposes:
                    (A) $750,000 shall be made vailable in fiscal year 
                1999 for the study to be conducted under section 1991 
                of the Public Health Service Act.
                    (B) National Institutes of Health Research under 
                section 1991D of the Public Health Service Act, as 
                added by this Act. Of the total amounts allocated to 
                this account, not less than 75 percent, but not more 
                than 87 percent shall be used for this purpose.
                    (C) Centers for Disease Control under section 1991C 
                of the Public Health Service Act, as added by this Act, 
                and Agency for Health Care Policy and Research under 
                section 1991E of the Public Health Service Act, as 
                added by this Act. authorized under sections 2803 of 
                that Act, as so added. Of the total amounts allocated 
                to this account, not less than 12 percent, but not more 
                than 18 percent shall be used for this purpose.
                    (D) National Science Foundation Research under 
                section 454. Of the total amounts allocated to this 
                account, not less than 1 percent, but not more than 1 
                percent shall be used for this purpose.
                    (E) Cancer Clinical Trials under section 455. Of 
                the total amounts allocated to this account, 
                $750,000,000 shall be used for the first 3 fiscal years 
                for this purpose.
    (d) Farmers Assistance Allocation Account.--
            (1) In general.-- There is established within the trust 
        fund a separate account, to be known as the Farmers Assistance 
        Account. Of the net revenues credited to the trust fund under 
        section 401(b)(1) in each fiscal year--
                    (A) 16 percent shall be allocated to this account 
                for the first 10 years after the date of enactment of 
                this Act; and
                    (B) 4 percent shall be allocated to this account 
                for each subsequent year until the account has received 
                a total of $28,500,000,000.
            (2) Appropriation.--Amounts allocated to this account are 
        hereby appropriated and shall be available until expended for 
        the purposes of section 1012.
    (e) Medicare Preservation Account.--There is established within the 
trust fund a separate account, to be known as the Medicare Preservation 
Account. If, in any year, the net amounts credited to the trust fund 
for payments under section 402(b) are greater than the net revenues 
originally estimated under section 401(b), the amount of any such 
excess shall be credited to the Medicare Preservation Account. 
Beginning in the eleventh year beginning after the date of enactment of 
this Act, 12 percent of the net revenues credited to the trust fund 
under seciton 401(b)(1) shall be allocated to this account. Funds 
credited to this account shall be transferred to the Medicare Hospital 
Insurance Trust Fund.

SEC. 452. GRANTS TO STATES.

    (a) Amounts.--From the amount made available under section 402(a) 
for each fiscal year, each State shall receive a grant on a quarterly 
basis according to a formula.
    (b) Use of Funds.--
            (1) Unrestricted funds.--A State may use funds, not to 
        exceed 50 percent of the amount received under this section in 
        a fiscal year, for any activities determined appropriate by the 
        State.
            (2) Restricted funds.--A State shall use not less than 50 
        percent of the amount received under this section in a fiscal 
        year to carry out additional activities or provide additional 
        services under--
                    (A) the State program under the maternal and child 
                health services block grant under title V of the Social 
                Security Act (42 U.S.C. 701 et seq.);
                    (B) funding for child care under section 418 of the 
                Social Security Act, notwithstanding subsection (b)(2) 
                of that section;
                    (C) federally funded child welfare and abuse 
                programs under title IV-B of the Social Security Act;
                    (D) programs administered within the State under 
                the authority of the Substance Abuse and Mental Health 
                Services Administration under title XIX, part B of the 
                Public Health Service Act;
                    (E) Safe and Drug-Free Schools Program under title 
                IV, part A, of the Elementary and Secondary Education 
                Act of 1965 (20 U.S.C. 7111 et seq.);
                    (F) the Department of Education's Dwight D. 
                Eisenhower Professional Development program under title 
                II of the Elementary and Secondary Education Act of 
                1965 (20 U.S.C. 6601 et seq.); and
                    (G) The State Children's Health Insurance Program 
                authorized under title XXI of the Social Security Act 
                (42 U.S.C. 1397aa et seq.), provided that the amount 
                expended on this program does not exceed 6 percent of 
                the total amount of restricted funds available to the 
                State each fiscal year.
    (c) No Substitution of Spending.--Amounts referred to in subsection 
(b)(2) shall be used to supplement and not supplant other Federal, 
State, or local funds provided for any of the programs described in 
subparagraphs (A) through (G) of subsection (b)(2). Restricted funds, 
except as provided for in subsection (b)(2)(G), shall not be used as 
State matching funds. Amounts provided to the State under any of the 
provisions of law referred to in such subparagraph shall not be reduced 
solely as a result of the availability of funds under this section.
    (d) Federal-State Match Rates.--Current (1998) matching 
requirements apply to each program listed under subsection (b)(2), 
except for the program described under subsection (b)(2)(B). For the 
program described under subsection (b)(2)(B), after an individual State 
has expended resources sufficient to receive its full Federal amount 
under section 418(a)(2)(B) of the Social Security Act (subject to the 
matching requirements in section 418(a)(2)(C) of such Act), the Federal 
share of expenditures shall be 80 percent.
    (e) Maintenance of Effort.--To receive funds under this subsection, 
States must demonstrate a maintenance of effort. This maintenance of 
effort is defined as the sum of--
            (1) an amount equal to 95 percent of Federal fiscal year 
        1997 State spending on the programs under subsections 
        (b)(2)(B), (c), and (d); and
            (2) an amount equal to the product of the amount described 
        in paragraph (1) and--
                    (A) for fiscal year 1999, the lower of--
                            (i) general inflation as measured by the 
                        consumer price index for the previous year; or
                            (ii) the annual growth in the Federal 
                        appropriation for the program in the previous 
                        fiscal year; and
                    (B) for subsequent fiscal years, the lower of--
                            (i) the cumulative general inflation as 
                        measured by the consumer price index for the 
                        period between 1997 and the previous year; or
                            (ii) the cumulative growth in the Federal 
                        appropriation for the program for the period 
                        between fiscal year 1997 and the previous 
                        fiscal year.
The 95-percent maintenance-of-effort requirement in paragraph (1), and 
the adjustments in paragraph (2), apply to each program identified in 
paragraph (1) on an individual basis.
    (f) Options for Children's Health Outreach.--In addition to the 
options for the use of grants described in this section, the following 
are new options to be added to States' choices for conducting 
children's health outreach:
            (1) Expansion of presumptive eligibility option for 
        children.--
                    (A) In general.--Section 1920A(b)(3)(A)(I) of the 
                Social Security Act (42 U.S.C. 1396r-1a(b)(3)(A)(I)) is 
                amended--
                            (i) by striking ``described in subsection 
                        (a) or (II) is authorized'' and inserting 
                        ``described in subsection (a), (II) is 
                        authorized''; and
                            (ii) by inserting before the semicolon ``, 
                        eligibility for benefits under part A of title 
                        IV, eligibility of a child to receive benefits 
                        under the State plan under this title or title 
                        XXI, (III) is a staff member of a public 
                        school, child care resource and referral 
                        center, or agency administering a plan under 
                        part D of title IV, or (IV) is so designated by 
                        the State''.
                    (B) Technical amendments.--Section 1920A of that 
                Act (42 U.S.C. 1396r-1a) is amended--
                            (i) in subsection (b)(3)(A)(ii), by 
                        striking ``paragraph (1)(A)'' and inserting 
                        ``paragraph (2)(A)''; and
                            (ii) in subsection (c)(2), in the matter 
                        preceding subparagraph (A), by striking 
                        ``subsection (b)(1)(A)'' and inserting 
                        ``subsection (b)(2)(A)''.
            (2) Removal of requirement that children's health insurance 
        program allotments be reduced by costs related to presumptive 
        eligibility determinations.--
                    (A) In general.--Section 2104(d) of the Social 
                Security Act (42 U.S.C. 1397dd(d)) is amended by 
                striking ``the sum of--'' and all that follows through 
                the paragraph designation ``(2)'' and merging all that 
                remains of subsection (d) into a single sentence.
                    (B) Effective date.--The amendment made by 
                subsection (a) shall be deemed to have taken effect on 
                August 5, 1997.
            (3) Increased funding for administrative costs related to 
        outreach and eligibility determinations for children.--Section 
        1931(h) of the Social Security Act (42 U.S.C. 1396u-1(h)) is 
        amended--
                    (A) by striking the subsection caption and 
                inserting ``(h) Increased Federal Matching Rate for 
                Administrative Costs Related to Outreach and 
                Eligibility Determinations for Children.--'';
                    (B) in paragraph (2), by striking ``eligibility 
                determinations'' and all that follows and inserting 
                ``determinations of the eligibility of children for 
                benefits under the State plan under this title or title 
                XXI, outreach to children likely to be eligible for 
                such benefits, and such other outreach- and 
                eligibility-related activities as the Secretary may 
                approve.'';
                    (C) in paragraph (3), by striking ``and ending with 
                fiscal year 2000 shall not exceed $500,000,000'' and 
                inserting ``shall not exceed $525,000,000''; and
                    (D) by striking paragraph (4).
    (g) Periodic Reassessment of Spending Options.--Spending options 
under subsection (b)(2) will be reassessed jointly by the States and 
Federal government every 5 years and be reported to the Secretary.

SEC. 453. INDIAN HEALTH SERVICE.

    Amounts available under section 451(b)(2)(B) shall be provided to 
the Indian Health Service to be used for anti-tobacco-related 
consumption and cessation activities including--
             (1) clinic and facility design, construction, repair, 
        renovation, maintenance and improvement;
             (2) provider services and equipment;
             (3) domestic and community sanitation associated with 
        clinic and facility construction and improvement; and
             (4) other programs and service provided through the Indian 
        Health Service or through tribal contracts, compacts, grants, 
        or cooperative agreements with the Indian Health Service and 
        which are deemed appropriate to raising the health status of 
        Indians.

SEC. 454. RESEARCH AT THE NATIONAL SCIENCE FOUNDATION.

    Amounts available under section 451(c)(2)(C) shall be made 
available for necessary expenses in carry out the National Science 
Foundation Act of 1950 (U.S.C. 1861-1875), and the Act to establish a 
National Medal of Science (42 U.S.C. 1880-1881).

SEC. 455. MEDICARE CANCER PATIENT DEMONSTRATION PROJECT; EVALUATION AND 
              REPORT TO CONGRESS.

    (a) Establishment.--The Secretary shall establish a 3-year 
demonstration project which provides for payment under the Medicare 
program under title XVIII of the Social Security Act (42 U.S.C. 1395 et 
seq.) of routine patient care costs--
            (1) which are provided to an individual diagnosed with 
        cancer and enrolled in the Medicare program under such title as 
        part of the individual's participation in an approved clinical 
        trial program; and
            (2) which are not otherwise eligible for payment under such 
        title for individuals who are entitled to benefits under such 
        title.
    (b) Application.--The beneficiary cost sharing provisions under the 
Medicare program, such as deductibles, coinsurance, and copayment 
amounts, shall apply to any individual in a demonstration project 
conducted under this section.
    (c) Approved Clinical Trial Program.--
            (1) In general.--For purposes of this section, the term 
        ``approved clinical trial program'' means a clinical trial 
        program which is approved by--
                    (A) the National Institutes of Health;
                    (B) a National Institutes of Health cooperative 
                group or a National Institutes of Health center; and
                    (C) the National Cancer Institute,
        with respect to programs that oversee and coordinate extramural 
        clinical cancer research, trials sponsored by such Institute 
        and conducted at designated cancer centers, clinical trials, 
        and Institute grants that support clinical investigators.
            (2) Modifications in approved trials.--Beginning 1 year 
        after the date of enactment of this Act, the Secretary, in 
        consultation with the Cancer Policy Board of the Institute of 
        Medicine, may modify or add to the requirements of paragraph 
        (1) with respect to an approved clinical trial program.
    (d) Routine Patient Care Costs.--
            (1) In general.--For purposes of this section, the term 
        ``routine patient care costs'' include the costs associated 
        with the provision of items and services that--
                    (A) would otherwise be covered under the Medicare 
                program if such items and services were not provided in 
                connection with an approved clinical trial program; and
                    (B) are furnished according to the design of an 
                approved clinical trial program.
            (2) Exclusion.--For purposes of this section, the term 
        ``routine patient care costs'' does not include the costs 
        associated with the provision of--
                    (A) an investigational drug or device, unless the 
                Secretary has authorized the manufacturer of such drug 
                or device to charge for such drug or device; or
                    (B) any item or service supplied without charge by 
                the sponsor of the approved clinical trial program.
    (e) Study.--The Secretary shall study the impact on the Medicare 
program under title XVIII of the Social Security Act of covering 
routine patient care costs for individuals with a diagnosis of cancer 
and other diagnoses, who are entitled to benefits under such title and 
who are enrolled in an approved clinical trial program.
    (f) Report to Congress.--Not later than 30 months after the date of 
enactment of this Act, the Secretary shall submit a report to Congress 
that contains a detailed description of the results of the study 
conducted under subsection (e) including recommendations regarding the 
extension and expansion of the demonstration project conducted under 
this section.

   TITLE V--STANDARDS TO REDUCE INVOLUNTARY EXPOSURE TO TOBACCO SMOKE

SEC. 501. DEFINITIONS.

    In this title:
            (1) Assistant secretary.--The term ``Assistant Secretary'' 
        means the Assistant Secretary of the Occupational Safety and 
Health Administration of the Department of Labor.
            (2) Public facility.--
                    (A) In general.--The term ``public facility'' means 
                any building used for purposes that affect interstate 
                or foreign commerce that is regularly entered by 10 or 
                more individuals at least 1 day per week including any 
                building owned by or leased to an agency, independent 
                establishment, department, or the executive, 
                legislative, or judicial branch of the United States 
                Government.
                    (B) Exclusions.--The term ``public facility'' does 
                not include a building or portion thereof which is used 
                for residential purposes or as a restaurant (other than 
                a fast food restaurant), bar, private club, hotel guest 
                room or common area, casino, bingo parlor, 
                tobacconist's shop, or prison.
                    (C) Fast food restaurant defined.--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 Assistant Secretary may promulgate 
                regulations to clarify this subparagraph to ensure that 
                the intended inclusion of establishments catering 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 if 
        the lessee is actively engaged in supervising day-to-day 
        activity in the leased space.

SEC. 502. 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.--The responsible entity 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 responsible entity 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 Assistant Secretary 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 adjoining nonsmoking areas, as determined under 
        regulations promulgated by the Assistant Secretary;
            (3) nonsmoking individuals do not have to enter the area 
        for any purpose while smoking is occurring in such area; and
            (4) cleaning and maintenance work are conducted in such 
        area only when no smoking is occurring in the area.

SEC. 503. 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 Assistant Secretary.
    (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 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 under 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 Assistant Secretary in 
exercising such discretion and selecting any such projects.
    (f) Application With OSHA.--Nothing in this section affects 
enforcement of the Occupational Safety and Health Act of 1970.

SEC. 504. PREEMPTION.

    Nothing in this title shall preempt or otherwise affect any other 
Federal, State, or local law which provides greater protection from 
health hazards from environmental tobacco smoke.

SEC. 505. REGULATIONS.

    The Assistant Secretary is authorized to promulgate such 
regulations, after consulting with the Administrator of the 
Environmental Protection Agency, as the Assistant Secretary deems 
necessary to carry out this title.

SEC. 506. EFFECTIVE DATE.

    Except as provided in section 507, the provisions of this title 
shall take effect on the first day of January next following the next 
regularly scheduled meeting of the State legislature occurring after 
the date of enactment of this Act at which, under the procedural rules 
of that legislature, a measure under section 507 may be considered.

SEC. 507. STATE CHOICE.

    Any State or local government may opt out of this title by 
promulgating a State or local law, subject to certification by the 
Assistant Secretary that the law is as or more protective of the 
public's health as this title, based on the best available science. Any 
State or local government may opt to enforce this title itself, subject 
to certification by the Assistant Secretary that the enforcement 
mechanism will effectively protect the public health.

                 TITLE VI--APPLICATION TO INDIAN TRIBES

SEC. 601. SHORT TITLE.

    This title may be cited as the ``Reduction in Tobacco Use and 
Regulation of Tobacco Products in Indian Country Act of 1998''.

SEC. 602. FINDINGS AND PURPOSES.

    (a) Findings.--Congress finds that Native Americans have used 
tobacco products for recreational, ceremonial, and traditional purposes 
for centuries.
    (b) Purpose.--It is the purpose of this title to--
            (1) provide for the implementation of this Act with respect 
        to the regulation of tobacco products, and other tobacco-
        related activities on Indian lands;
            (2) recognize the historic Native American traditional and 
        ceremonial use of tobacco products, and to preserve and protect 
        the cultural, religious, and ceremonial uses of tobacco by 
        members of Indian tribes;
            (3) recognize and respect Indian tribal sovereignty and 
        tribal authority to make and enforce laws regarding the 
        regulation of tobacco distributors and tobacco products on 
        Indian lands; and
            (4) ensure that the necessary funding is made available to 
        tribal governments for licensing and enforcement of tobacco 
        distributors and tobacco products on Indian lands.

SEC. 603. APPLICATION OF TITLE TO INDIAN LANDS AND TO NATIVE AMERICANS.

    (a) In General.--The provisions of this Act shall apply to the 
manufacture, distribution, and sale of tobacco or tobacco products on 
Indian lands, including such activities of an Indian tribe or member of 
such tribe.
    (b) Traditional Use Exception.--
            (1) In general.--In recognition of the religious, 
        ceremonial, and traditional uses of tobacco and tobacco 
        products by Indian tribes and the members of such tribes, 
        nothing in this Act shall be construed to permit an 
        infringement upon upon the right of such tribes or members of 
        such tribes to acquire, possess, use, or transfer any tobacco 
        or tobacco product for such purposes, or to infringe upon the 
        ability of minors to participate and use tobacco products for 
        such religious, ceremonial, or traditional purposes.
            (2) Application of provisions.--Paragraph (1) shall apply 
        only to those quantities of tobacco or tobacco products 
        necessary to fulfill the religious, ceremonial, or traditional 
        purposes of an Indian tribe or the members of such tribe, and 
        shall not be construed to permit the general manufacture, 
        distribution, sale or use of tobacco or tobacco products in a 
        manner that is not in compliance with this Act or the Federal 
        Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.)
    (c) Limitation.--Nothing in this Act shall be construed to permit 
an Indian tribe or member of such a tribe to acquire, possess, use, or 
transfer any tobacco or tobacco product in violation of section 2341 of 
title 18, United States Code, with respect to the transportation of 
contraband cigarettes.
    (d) Application on Indian Lands.--
            (1) In general.--The Secretary, in consultation with the 
        Secretary of Interior, shall promulgate regulations to 
        implement this section as necessary to apply this Act and the 
        Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.) with 
        respect to tobacco products manufactured, distributed, or sold 
        on Indian lands.
            (2) Scope.--This Act and the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 301 et seq.) shall apply to the 
        manufacture, distribution and sale of tobacco products on 
        Indian lands, including such activities by Indian tribes and 
        members of such tribes.
            (3) Tribal Tobacco Retailer Licensing Program.--
                    (A) In general.--The requirements of this Act with 
                respect to the licensing of tobacco retailers shall 
                apply to all retailers that sell tobacco or tobacco 
                products on Indian lands, including Indian tribes, and 
                members thereof.
                    (B) Implementation.--
                            (i) In general.--An Indian tribe may 
                        implement and enforce a tobacco retailer 
                        licensing and enforcement program on its Indian 
                        lands consistent with the provisions of section 
                        231 if the tribe is eligible under subparagraph 
                        (D). For purposes of this clause, section 231 
                        shall be applied to an Indian tribe by 
                        substituting ``Indian tribe'' for ``State'' 
                        each place it appears, and an Indian tribe 
                        shall not be ineligible for grants under that 
                        section if the Secretary applies that section 
                        to the tribe by modifying it to address tribal 
                        population, land base, and jurisdictional 
                        factors.
                            (ii) Cooperation.--An Indian tribe and 
                        State with tobacco retailer licensing programs 
                        within adjacent jurisdictions should consult 
                        and confer to ensure effective implementation 
                        of their respective programs.
                    (C) Enforcement.--The Secretary may vest the 
                responsibility for implementation and enforcement of a 
                tobacco retailer licensing program in--
                            (i) the Indian tribe involved;
                            (ii) the State within which the lands of 
                        the Indian tribe are located pursuant to a 
                        voluntary cooperative agreement entered into by 
                        the State and the Indian tribe; or
                            (iii) the Secretary pursuant to 
                        subparagraph (F).
                    (D) Eligibility.--To be eligible to implement and 
                enforce a tobacco retailer licensing program under 
                section 231, the Secretary, in consultation with the 
                Secretary of Interior, must find that--
                            (i) the Indian tribe has a governing body 
                        that has powers and carries out duties that are 
                        similar to the powers and duties of State or 
                        local governments;
                            (ii) the functions to be exercised relate 
                        to activities conducted on its Indian lands; 
                        and
                            (iii) the Indian tribe is reasonably 
                        expected to be capable of carrying out the 
                        functions required by the Secretary.
                    (E) Determinations.--Not later than 90 days after 
                the date on which an Indian tribe submits an 
                application for authority under subparagraph (D), the 
                Secretary shall make a determination concerning the 
                eligibility of such tribe for such authority. Each 
                tribe found eligible under subparagraph (D) shall be 
                eligible to enter into agreements for block grants 
                under section 231, to conduct a licensing and 
                enforcement program pursuant to section 231, and for 
                bonuses under section 232.
                    (F) Implementation by the secretary.--If the 
                Secretary determines that the Indian tribe is not 
                willing or not qualified to administer a retail 
                licensing and enforcement program, the Secretary, in 
                consultation with the Secretary of Interior, shall 
                promulgate regulations for a program for such tribes in 
                the same manner as for States which have not 
                established a tobacco retailer licensing program under 
                section 231(f).
                    (G) Deficient applications; opportunity to cure.--
                            (i) If the Secretary determines under 
                        subparagraph (F) that a Indian tribe is not 
eligible to establish a tobacco retailer licensing program, the 
Secretary shall--
                                    (I) submit to such tribe, in 
                                writing, a statement of the reasons for 
                                such determination of ineligibility; 
                                and
                                    (II) shall assist such tribe in 
                                overcoming any deficiencies that 
                                resulted in the determination of 
                                ineligibility.
                            (ii) After an opportunity to review and 
                        cure such deficiencies, the tribe may re-apply 
                        to the Secretary for assistance under this 
                        subsection.
                    (H) Secretarial review.--The Secretary may 
                periodically review the tribal tobacco retailer 
                licensing program of a tribe approved pursuant to 
                subparagraph (E), including the effectiveness of the 
                program, the tribe's enforcement thereof, and the 
                compatibility of the tribe's program with the program 
                of the State in which the tribe is located. The program 
                shall be subject to all applicable requirements of 
                section 231.
    (e) Eligibility for Public Heath Funds.--
            (1) Eligibility for grants.--
                    (A) For each fiscal year the Secretary may award 
                grants to Indian tribes from the federal Account or 
                other federal funds, except a tribe that is not a 
                participating tobacco product manufacturer (as defined 
                in section 1402(a), for the same purposes as States and 
                local governments are eligible to receive grants from 
                the Federal Account as provided for in this Act. Indian 
                tribes shall have the flexibility to utilize such 
                grants to meet the unique health care needs of their 
                service populations consistent with the goals and 
                purposes of Federal Indian health care law and policy.
                    (B) In promulgating regulations for the approval 
                and funding of smoking cessation programs under section 
                221 the Secretary shall ensure that adequate funding is 
                available to address the high rate of smoking among 
                Native Americans.
            (2) Health care funding.--
                    (A) Indian health service.--Each fiscal year the 
                Secretary shall disburse to the Indian Health Service 
                from the National Tobacco Settlement Trust Fund an 
                amount determined by the Secretary in consultation with 
                the Secretary of the Interior equal to the product of--
                            (i) the ratio of the total Indian health 
                        care service population relative to the total 
                        population of the United States; and
                            (ii) the amount allocated to the States 
                        each year from the State Litigation Trust 
                        Account.
                    (B) Funding.--The trustees of the Trust Fund shall 
                for each fiscal year transfer to the Secretary from the 
                State Litigation Trust Account the amount determined 
                pursuant to paragraph (A).
                    (C) Use of health care trust funds.--Amounts made 
                available to the Indian Health Service under this 
                paragraph shall be made available to Indian tribes 
                pursuant to the provisions of the Indian Self 
                Determination and Education Assistance Act (25 U.S.C. 
                450b et seq.), shall be used to reduce tobacco 
                consumption, promote smoking cessation, and shall be 
                used to fund health care activities including--
                            (i) clinic and facility design, 
                        construction, repair, renovation, maintenance, 
                        and improvement;
                            (ii) health care provider services and 
                        equipment;
                            (iii) domestic and community sanitation 
                        associated with clinic and facility 
                        construction and improvement;
                            (iv) inpatient and outpatient services; and
                            (v) other programs and services which have 
                        as their goal raising the health status of 
                        Indians.
    (f) Preemption.--
            (1) In general.--Except as otherwise provided in this 
        section, nothing in this Act shall be construed to prohibit an 
        Indian tribe 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 by this Act.
            (2) Public exposure to smoke.--Nothing in this title shall 
        be construed to preempt or otherwise affect any Indian tribe 
        rule or practice that provides greater protections from the 
        health hazard of environmental tobacco smoke.
    (g) Disclaimer.--Nothing in this Act shall be construed to increase 
or diminish tribal or State jurisdiction on Indian lands with respect 
to tobacco-related activities.

                       TITLE VII--TOBACCO CLAIMS

SEC. 701. DEFINITIONS.

    In this title:
            (1) Affiliate.--The term ``affiliate'' means a person who 
        directly or indirectly owns or controls, is owned or controlled 
        by, or is under common ownership or control with, another 
        person. For purposes of this definition, ownership means 
        ownership of an equity interest, or the equivalent thereof, of 
        ten percent or more, and person means an individual, 
        partnership, committee, association, corporation, or any other 
        organization or group of persons.
            (2) Civil action.--The term ``civil action'' means any 
        action, lawsuit, or proceeding that is not a criminal action.
            (3) Court.--The term ``court'' means any judicial or agency 
        court, forum, or tribunal within the United States, including 
        without limitation any Federal, State, or tribal court.
            (4) Final judgment.--The term ``final judgment'' means a 
        judgment on which all rights of appeal or discretionary review 
        have been exhausted or waived or for which the time to appeal 
        or seek such discretionary review has expired.
            (5) Final settlement.--The term ``final settlement'' means 
        a settlement agreement that is executed and approved as 
        necessary to be fully binding on all relevant parties.
            (6) Individual.--The term ``individual'' means a human 
        being and does not include a corporation, partnership, 
        unincorporated association, trust, estate, or any other public 
        or private entity, State or local government, or Indian tribe.
            (7) Tobacco claim.--The term ``tobacco claim'' means a 
        claim directly or indirectly arising out of, based on, or 
        related to the health-related effects of tobacco products, 
        including without limitation a claim arising out of, based on 
        or related to allegations regarding any conduct, statement, or 
        omission respecting the health-related effects of such 
        products.
            (8) Tobacco product manufacturer.--The term ``tobacco 
        product manufacturer'' means a person who--
                    (A) manufactures tobacco products for sale in the 
                United States after the date of enactment of this Act, 
                including tobacco products for sale in the United 
                States through an importer;
                    (B) is, after the date of enactment of this Act, 
                the first purchaser for resale in the United States of 
                tobacco products manufactured for sale outside of the 
                United States;
                    (C) engaged in activities described in subparagraph 
                (A) or (B) prior to the date of enactment of this Act, 
                has not engaged in such activities after the date of 
                enactment of this Act, and was not as of June 20, 1997, 
                an affiliate of a tobacco product manufacturer in which 
                the tobacco product manufacturer or its other 
                affiliates owned a 50 percent or greater interest;
                    (D) is a successor or assign of any of the 
                foregoing;
                    (E) is an entity to which any of the foregoing 
                directly or indirectly makes, after the date of 
                enactment of this Act, a fraudulent conveyance or a 
                transfer that would otherwise be voidable under part 5 
                of title 11 of the United States Code, but only to the 
                extent of the interest or obligation transferred; or
                    (F) is an affiliate of a tobacco product 
                manufacturer.
            (9) Castano civil actions.--The term ``Castano Civil 
        Actions'' means the following civil actions: Gloria Wilkinson 
        Lyons et al. v. American Tobacco Co., et al. (USDC Alabama 96-
        0881-BH; Agnes McGinty, et al. v. American Tobacco Co., et al. 
        (USDC Arkansas LR-C-96-881); Willard R. Brown, et al. v. R.J. 
        Reynolds Co., et al. (San Diego, California-00711400); Gray 
        Davis & James Ellis, et al. R.J. Reynolds Tobacco Co., et al. 
        (San Diego, California-00706458); Chester Lyons, et al. v. 
        Brown & Williamson Tobacco Corp., et al. (Fulton County, 
        Georgia-E-59346); Rosalyn Peterson, et al. v. American Tobacco 
        Co., et al. (USDC Hawaii-97-00233-HG); Jean Clay , et al. v. 
        American Tobacco Co., et al. (USDC Illinois Benton Division-97-
        4167-JPG); William J. Norton, et al. v. RJR Nabisco Holdings 
        Corp., et al. (Madison County, Indiana 48D01-9605-CP-0271); 
        Alga Emig, et al. v. American Tobacco Co., et al. (USDC Kansas-
        97-1121-MLB); Gloria Scott, et al. v. American Tobacco Co., et 
        al. (Orleans Parish, Louisiana-97-1178); Vern Masepohl, et al. 
        v. American Tobacco Co., et al. (USDC Minnesota-3-96-CV-888); 
        Matthew Tepper, et al. v. Philip Morris Incorporated, et al 
        (Bergen County, New Jersey-BER-L-4983-97-E); Carol A. Connor, 
        et al. v. American Tobacco Co., et al. (Bernalillo County, New 
        Mexico-CV96-8464); Edwin Paul Hoskins, et al. v. R.J. Reynolds 
        Tobacco Co., et al.; Josephine Stewart-Lomantz v. Brown & 
        Williamson Tobacco, et al.; Rose Frosina, et al. v. Philip 
        Morris Incorporated, et al.; Catherine Zito, et al. v. American 
        Tobacco Co., et al.; Kevin Mroczkowski, et al. v. Lorillard 
        Tobacco Company, et al. (Supreme Court, New York County, New 
        York-110949 thru 110953); Judith E. Chamberlain, et al. v. 
        American Tobacco Co., et al. (USDC Ohio-1:96CV2005); Brian 
        walls, et al. v. American Tobacco Co., et al. (USDC Oklahoma-
        97-CV-218-H); Steven R. Arch, et al. v. American Tobacco Co., 
        et al. (USDC Pennsylvania-96-5903-CN); Barreras-Ruiz, et al. v. 
        American Tobacco Co., et al. (USDC Puerto Rico-96-2300-JAF); 
        Joanne Anderson, et al. v. American Tobacco Co., et al. (Know 
        County, Tennessee); Carlis Cole, et al. v. The Tobacco 
        institute, Inc., et al. (USDC Beaumont Texas Division-
        1:97CV0256); Carrol Jackson, et al. v. Philip Morris 
        Incorporated, et al. (Salt Lake County, Utah-CV No. 98-
        0901634PI).

SEC. 702. APPLICATION; PREEMPTION.

    (a) Application.--The provisions of this title govern any tobacco 
claim in any civil action brought in an State, Tribal, or Federal 
court, including any such claim that has not reached final judgment or 
final settlement as of the date of enactment of this Act.
    (b) Preemption.--This title supersedes State law only to the extent 
that State law applies to a matter covered by this title. Any matter 
that is not governed by this title, including any standard of liability 
applicable to a manufacturer, shall be governed by any applicable 
State, Tribal, or Federal law.
    (c) Criminal Liability Untouched.--Nothing in this title shall be 
construed to limit the criminal liability of tobacco product 
manufacturers, retailers, or distributors, or their officers, 
directors, employees, successors, or assigns.

SEC. 703. RULES GOVERNING TOBACCO CLAIMS.

    (a) General Causation Presumption.--In any civil action to which 
this title applies brought involving a tobacco claim, there shall be an 
evidentiary presumption that nicotine is addictive and that the 
diseases identified as being caused by use of tobacco products in the 
Center for Disease Control and Prevention Reducing the Health 
Consequences of Smoking: 25 Years of Progress: A Report of the Surgeon 
General (United States Public Health Service 1989), The Health 
Consequences of Smoking: Involuntary Smoking, (USPHS 1986); and The 
Health Consequences of Using Smokeless Tobacco, (USPHS 1986), are 
caused in whole or in part by the use of tobacco products, (hereinafter 
referred to as the ``general causation presumption''), and a jury 
empaneled to hear a tobacco claim shall be so instructed. In all other 
respects, the burden of proof as to the issue of whether a plaintiff's 
specific disease or injury was caused by smoking shall be governed by 
the law of the State or Tribe in which the tobacco claim was brought. 
This general causation presumption shall in no way affect the ability 
of the defendant to introduce evidence or argument which the defendant 
would otherwise be entitled to present under the law of the State or 
Tribe in which the tobacco claim was brought to rebut the general 
causation presumption, or with respect to general causation, specific 
causation, or alternative causation, or to introduce any other evidence 
or argument which the defendant would otherwise be entitled to make.
    (b) Actions Against Participating Tobacco Product Manufacturers.--
In any civil action brought involving a tobacco claim against 
participating tobacco product manufacturers, as that term is defined in 
title XIV, the provisions of title XIV apply in conjunction with the 
provisions of this title.

 TITLE VIII--TOBACCO INDUSTRY ACCOUNTABILITY REQUIREMENTS AND EMPLOYEE 
                       PROTECTION FROM REPRISALS

SEC. 801. ACCOUNTABILITY REQUIREMENTS AND OVERSIGHT OF THE TOBACCO 
              INDUSTRY.

    (a) Accountability.--The Secretary, following regular consultation 
with the Commissioner of Food and Drugs, the Surgeon General, the 
Director of the Center for Disease Control or the Director's delegate, 
and the Director of the Health and Human Services Office of Minority 
Health shall annually issue a report as provided for in subsection (c).
    (b) Tobacco Company Plan.--Within a year after the date of 
enactment of this Act, each participating tobacco product manufacturer 
shall adopt and submit to the Secretary a plan to achieve the required 
percentage reductions in underage use of tobacco products set forth in 
section 201, and thereafter shall update its plan no less frequently 
than annually. The annual report of the Secretary may recommend 
amendment of any plan to incorporate additional measures to reduce 
underage tobacco use that are consistent with the provisions of this 
Act.
    (c) Annual Report.--The Secretary shall submit a report to the 
Congress by January 31 of each year, which shall be published in the 
Federal Register. The report shall--
            (1) describe in detail each tobacco product manufacturer's 
        compliance with the provisions of this Act and its plan 
        submitted under subsection (b);
            (2) report on whether each tobacco product manufacturer's 
        efforts to reduce underage smoking are likely to result in 
        attainment of smoking reduction targets under section 201;
            (3) recommend, where necessary, additional measures 
        individual tobacco companies should undertake to meet those 
        targets; and
            (4) include, where applicable, the extent to which prior 
        panel recommendations have been adopted by each tobacco product 
        manufacturer.

SEC. 802. TOBACCO PRODUCT MANUFACTURER EMPLOYEE PROTECTION.

    (a) Prohibited Acts.--No tobacco product manufacturer may 
discharge, demote, or otherwise discriminate against any employee with 
respect to compensation, terms, conditions, benefits, or privileges of 
employment because the employee (or any person acting under a request 
of the employee)--
            (1) notified the manufacturer, the Commissioner of Food and 
        Drugs, the Attorney General, or any Federal, State, or local 
public health or law enforcement authority of an alleged violation of 
this or any other Act;
            (2) refused to engage in any practice made unlawful by such 
        Acts, if the employee has identified the alleged illegality to 
        the manufacturer;
            (3) testified before Congress or at any Federal or State 
        proceeding regarding any provision (or proposed provision) of 
        such Acts;
            (4) commenced, caused to be commenced, or is about to 
        commence or cause to be commenced a proceeding under such Acts, 
        or a proceeding for the administration or enforcement of any 
        requirement imposed under such Acts;
            (5) testified or is about to testify in any such 
        proceeding; or
            (6) assisted or participated, or is about to assist or 
        participate, in any manner in such a proceeding or in any other 
        manner in such a proceeding or in any other action to carry out 
        the purposes of such Acts.
    (b) Employee Complaint.--
            (1) Any employee of a tobacco product manufacturer who 
        believes that he or she has been discharged, demoted, or 
        otherwise discriminated against by any person in violation of 
        subsection (a) of this section may, within 180 days after such 
        violation occurs, file (or have any person file on his or her 
        behalf) a complaint with the Secretary alleging such discharge, 
        demotion, or discrimination. Upon receipt of such a complaint, 
        the Secretary shall notify the person named in the complaint of 
        its filing.
            (2)(A) Upon receipt of a complaint under paragraph (1) of 
        this subsection, the Secretary shall conduct an investigation 
        of the violation alleged in the complaint. Within 30 days after 
        the receipt of such complaint, the Secretary shall complete 
        such investigation and shall notify in writing the complainant 
        (and any such person acting in his or her behalf) and the 
        person alleged to have committed such violation of the results 
        of the investigation conducted under this paragraph. Within 90 
        days after the receipt of such complaint, the Secretary shall 
        (unless the proceeding on the complaint is terminated by the 
        Secretary on the basis of a settlement entered into by the 
        Secretary and the person alleged to have committed such 
        violation) issue an order either providing the relief 
        prescribed in subparagraph (B) of this paragraph or denying the 
        complaint. An order of the Secretary shall be made on the 
        record after notice and the opportunity for a hearing in 
        accordance with sections 554 and 556 of title 5, United States 
        Code. Upon the conclusion of such a hearing and the issuance of 
        a recommended decision that the complaint has merit, the 
        Secretary shall issue a preliminary order providing the relief 
        prescribed in subparagraph (B) of this paragraph, but may not 
        order compensatory damages pending a final order. The Secretary 
        may not enter into a settlement terminating a proceeding on a 
        complaint without the participation and consent of the 
        complainant.
            (B) If, in response to a complaint under paragraph (1) of 
        this subsection, the Secretary determines that a violation of 
        this paragraph has occurred, the Secretary shall order the 
        person who committed such violation to (i) take affirmative 
        action to abate the violation, and (ii) reinstate the 
        complainant to his or her former position together with 
        compensation (including back pay), terms, conditions, and 
        privileges of his or her employment. The Secretary may order 
        such person to provide compensatory damages to the complainant. 
        If an order is issued under this subparagraph, the Secretary, 
        at the request of the complainant, shall assess the person 
        against whom the order is issued a sum equal to the aggregate 
        amount of all costs and expenses (including attorneys' and 
        expert witness fees) reasonably incurred (as determined by the 
        Secretary), by the complainant for, or in connection with, the 
        bringing of the complaint upon which the order is issued.
            (3)(A) The Secretary shall dismiss a complaint filed under 
        paragraph (1) of this subsection, and shall not conduct the 
        investigation required under paragraph (2) of this subsection, 
        unless the complainant has made a prima facie showing that any 
        behavior described in subsection (a) of this section was a 
        contributing factor in the unfavorable personnel action alleged 
        in the complaint.
            (B) Notwithstanding a finding by the Secretary that the 
        complainant has made the showing required by subparagraph (A) 
        of this paragraph, no investigation required under paragraph 
        (2) of this subsection shall be conducted if the manufacturer 
        demonstrates by clear and convincing evidence that it would 
        have taken the same unfavorable personnel action in the absence 
        of such behavior. Relief may not be ordered under paragraph (1) 
        of this subsection if the manufacturer demonstrates by clear 
        and convincing evidence that it would have taken the same 
        unfavorable personnel action in the absence of such behavior.
            (C) The Secretary may determine that a violation of 
        subsection (a) of this section has occurred only if the 
        complainant has demonstrated that any behavior described in 
        subsection (a) of this section was a contributing factor in 
        unfavorable personnel action alleged in the complaint.
    (c) Judicial Review.--
            (1) Any person adversely affected or aggrieved by an order 
        issued under subsection (a) of this section may obtain review 
        of the order in the United States court of appeals for the 
        circuit in which the violation, with respect to which the order 
        was issued, allegedly occurred. The petition for review must be 
        filed within 60 days after the issuance of the Secretary's 
        order. Judicial review shall be available as provided in 
        chapter 7 of title 5, United States Code. The commencement of 
        proceedings under this subsection shall not, unless ordered by 
        the court, operate as a stay of the Secretary's order.
            (2) An order of the Secretary with respect to which review 
        could have been obtained under paragraph (1) of this subsection 
        shall not be subject to judicial review in any criminal or 
        civil proceeding.
    (d) Noncompliance.--Whenever a person has failed to comply with an 
order issued under subsection (b)(2) of this section, the Secretary may 
file a civil action in the United States district court for the 
district in which the violation occurred to enforce such order. In 
actions brought under this subsection, the district courts shall have 
jurisdiction to grant all appropriate relief, including injunctive 
relief and compensatory and exemplary damages.
    (e) Action To Ensure Compliance.--
            (1) Any person on whose behalf an order was issued under 
        subsection (b)(2) of this section may commence a civil action 
        to require compliance with such order against the person to 
        whom such order was issued. The appropriate United States 
        district court shall have jurisdiction to enforce such order, 
        without regard to the amount in controversy or the citizenship 
        of the parties.
            (2) The court, in issuing any final order under this 
        subsection, may award costs of litigation (including reasonable 
        attorneys' and expert witness fees) to any party whenever the 
        court determines such award is appropriate.
    (f) Enforcement.--Any non-discretionary duty imposed by this 
section shall be enforceable in a mandamus proceeding brought under 
section 1361 of title 28, United States Code.
    (g) Applicability to Certain Employees.--Subsection (a) of this 
section shall not apply with respect to any employee who, acting 
without direction from the manufacturer (or the agent of the 
manufacturer) deliberately causes a violation of any requirement of 
this Act, the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et 
seq), or any other law or regulation relating to tobacco products.
    (h) Effect on Other Laws.--This section shall not be construed to 
expand, diminish, or otherwise affect any right otherwise available to 
an employee under Federal or State law to redress the employee's 
discharge or other discriminatory action taken by a tobacco product 
manufacturer against the employee.
    (i) Posting.--The provisions of this section shall be prominently 
posted in any place of employment to which this section applies.

        TITLE IX--PUBLIC DISCLOSURE OF TOBACCO INDUSTRY DOCUMENTS

SEC. 901. FINDINGS.

    The Congress finds that--
            (1) the American tobacco industry has made claims of 
        attorney-client privilege, attorney work product, and trade 
        secrets to protect from public disclosure thousands of internal 
        documents sought by civil litigants;
            (2) a number of courts have found that these claims of 
        privilege were not made in good faith; and
            (3) a prompt and full exposition of tobacco documents 
        will--
                    (A) promote understanding by the public of the 
                tobacco industry's research and practices; and
                    (B) further the purposes of this Act.

SEC. 902. APPLICABILITY.

    This title applies to all tobacco product manufacturers.

SEC. 903. DOCUMENT DISCLOSURE.

    (a) Disclosure to the Food and Drug Administration.--
            (1) Within 60 days after the date of enactment of this Act, 
        each tobacco product manufacturer shall submit to the Food and 
        Drug Administration the documents identified in subsection (c), 
        including documents for which trade secret protection is 
        claimed, with the exception of any document for which privilege 
        is claimed, and identified in accordance with subsection (b). 
        Each such manufacturer shall provide the Administration with 
        the privilege and trade secret logs identified under subsection 
        (b).
            (2) With respect to documents that are claimed to contain 
        trade secret material, unless and until it is finally 
        determined under this title, either through judicial review or 
        because time for judicial review has expired, that such a 
        document does not constitute or contain trade secret material, 
        the Administration shall treat the document as a trade secret 
        in accordance with section 708 of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 379) and the regulations promulgated 
        thereunder. Nothing herein shall limit the authority of the 
        Administration to obtain and use, in accordance with any 
        provision of the Federal Food, Drug, and Cosmetic Act and the 
        regulations promulgated thereunder, any document constituting 
        or containing trade secret material. Documents and materials 
        received by the Administration under this provision shall not 
        be obtainable by or releasable to the public through section 
        552 of title 5, United States Code, or any other provision of 
        law, and the only recourse to obtain these documents shall be 
        through the process established by section 905.
            (3) If a document depository is not established under title 
        XIV, the Secretary shall establish by regulation a procedure 
        for making public all documents submitted under paragraph (1) 
        except documents for which trade secret protection has been 
        claimed and for which there has not been a final judicial 
        determination that the document does not contain a trade 
        secret.
    (b) Separate Submission of Documents.--
            (1) Privileged trade secret documents.--Any document 
        required to be submitted under subsection (c) or (d) that is 
        subject to a claim by a tobacco product manufacturer of 
        attorney-client privilege, attorney work product, or trade 
        secret protection shall be so marked and shall be submitted to 
        the panel under section 904 within 30 days after its 
        appointment. Compliance with this subsection shall not be 
        deemed to be a waiver of any applicable claim of privilege or 
        trade secret protection.
            (2) Privilege and trade secret logs.--
                    (A) In general.--Within 15 days after submitting 
                documents under paragraph (1), each tobacco product 
                manufacturer shall submit a comprehensive log which 
                identifies on a document-by-document basis all 
                documents produced for which the manufacturer asserts 
                attorney-client privilege, attorney work-product, or 
                trade secrecy. With respect to documents for which the 
                manufacturer previously has asserted one or more of the 
                aforementioned privileges or trade secret protection, 
                the manufacturer shall conduct a good faith de novo 
                review of such documents to determine whether such 
                privilege or trade secret protection is appropriate.
                    (B) Organization of log.--The log shall be 
                organized in numerical order based upon the document 
                identifier assigned to each document. For each 
                document, the log shall contain--
                            (i) a description of the document, 
                        including type of document, title of document, 
                        name and position or title of each author, 
                        addressee, and other recipient who was intended 
                        to receive a copy, document date, document 
                        purpose, and general subject matter;
                            (ii) an explanation why the document or a 
                        portion of the document is privileged or 
                        subject to trade secret protection; and
                            (iii) a statement whether any previous 
                        claim of privilege or trade secret was denied 
                        and, if so, in what proceeding.
                    (C) Public inspection.--Within 5 days of receipt of 
                such a log, the Depository shall make it available for 
                public inspection and review.
            (3) Declaration of compliance.--Each tobacco product 
        manufacturer shall submit to the Depository a declaration, in 
        accordance with the requirements of section 1746 of title 28, 
        United States Code, by an individual with responsibility for 
        the de novo review of documents, preparation of the privilege 
        log, and knowledge of its contents. The declarant shall attest 
        to the manufacturer's compliance with the requirements of this 
        subsection pertaining to the review of documents and 
        preparation of a privilege log.
    (c) Document Categories.--Each tobacco product manufacturer shall 
submit--
            (1) every existing document (including any document subject 
        to a claim of attorney-client privilege, attorney work product, 
        or trade secret protection) in the manufacturer's possession, 
        custody, or control relating, referring, or pertaining to--
                    (A) any studies, research, or analysis of any 
                possible health or pharmacological effects in humans or 
                animals, including addiction, associated with the use 
                of tobacco products or components of tobacco products;
                    (B) the engineering, manipulation, or control of 
                nicotine in tobacco products;
                    (C) the sale or marketing of tobacco products;
                    (D) any research involving safer or less hazardous 
                tobacco products;
                    (E) tobacco use by minors; or
                    (F) the relationship between advertising or 
                promotion and the use of tobacco products;
            (2) all documents produced by any tobacco product 
        manufacturer, the Center of Tobacco Research or Tobacco 
        Institute to the Attorney General of any State during discovery 
        in any action brought on behalf of any State and commenced 
        after January 1, 1994;
            (3) all documents produced by any tobacco product 
        manufacturer, Center for Tobacco Research or Tobacco Institute 
        to the Federal Trade Commission in connection with its 
        investigation into the ``Joe Camel'' advertising campaign and 
        any underage marketing of tobacco products to minors;
            (4) all documents produced by any tobacco product 
        manufacturers, the Center for Tobacco Research or the Tobacco 
        Institute to litigation adversaries during discovery in any 
        private litigation matters;
            (5) all documents produced by any tobacco product 
        manufacturer, the Center for Tobacco Research, or the Tobacco 
        Institute in any of the following private litigation matters:
                    (A) Philip Morris v. American Broadcasting Co., Law 
                No. 7609CL94x00181-00 (Cir. Ct. Va. filed Mar. 26, 
                1994);
                    (B) Estate of Butler v. R.J. Reynolds Tobacco Co., 
                Civ. A. No. 94-5-53 (Cir. Ct. Miss., filed May 12, 
                1994);
                    (C) Haines v. Liggett Group, No. 84-CV-678 (D.N.J., 
                filed Feb. 22, 1984); and
                    (D) Cipollone v. Liggett Group, No. 83-CV-284 
                (D.N.J., filed Aug. 1, 1983);
            (6) any document produced as evidence or potential evidence 
        or submitted to the Depository by tobacco product manufacturers 
        in any of the actions described in paragraph (5), including 
        briefs and other pleadings, memoranda, interrogatories, 
        transcripts of depositions, and expert witnesses and 
        consultants materials, including correspondence, reports, and 
        testimony;
            (7) any additional documents that any tobacco product 
        manufacturer, the Center for Tobacco Research, or the Tobacco 
        Institute have agreed or been required by any court to produce 
        to litigation adversaries as part of discovery in any action 
        listed in paragraph (2), (3), (4), or (5) but have not yet 
        completed producing as of the date of enactment of this Act;
            (8) all indices of documents relating to tobacco products 
        and health, with any such indices that are maintained in 
        computerized form placed into the depository in both a 
        computerized and hard-copy form;
            (9) a privilege log describing each document or portion of 
        a document otherwise subject to production in the actions 
        enumerated in this subsection that any tobacco product 
        manufacturer, the Center for Tobacco Research, or the Tobacco 
        Institute maintains, based upon a good faith de novo re-review 
        conducted after the date of enactment of this Act is exempt 
        from public disclosure under this title; and
            (10) a trade secrecy log describing each document or 
        portion of a document that any tobacco product manufacturer, 
        the Center for Tobacco Research, or the Tobacco Institute 
        maintains is exempt from public disclosure under this title.
    (d) Future Documents.--With respect to documents created after the 
date of enactment of this Act, the tobacco product manufacturers and 
their trade associations shall--
            (1) place the documents in the depository; and
            (2) provide a copy of the documents to the Food and Drug 
        Administration (with the exception of documents subject to a 
        claim of attorney-client privilege or attorney work product).
            (1) Every existing document (including any document subject 
        to a claim of attorney-client privilege, attorney work product, 
        or trade secret protection) in the manufacturer's possession, 
        custody, or control relating, referring, or pertaining to--
                    (A) any studies, research, or analysis of any 
                possible health or pharmacological effects in humans or 
                animals, including addiction, associated with the use 
                of tobacco products or components of tobacco products;
                    (B) the engineering, manipulation, or control of 
                nicotine in tobacco products;
                    (C) the sale or marketing of tobacco products;
                    (D) any research involving safer or less hazardous 
                tobacco products;
                    (E) tobacco use by minors; or
                    (F) the relationship between advertising or 
                promotion and the use of tobacco products;
            (2) Every existing document (including any document subject 
        to a claim of attorney-client privilege, attorney work product, 
        or trade secret protection) in the manufacturer's possession, 
        custody, or control--
                    (A) produced, or ordered to be produced, by the 
                tobacco product manufacturer in any health-related 
                civil or criminal proceeding, judicial or 
                administrative; and
                    (B) that the panel established under section 906 
                determines is appropriate for submission.
            (3) All studies conducted or funded, directly or 
        indirectly, by any tobacco product manufacturer, relating to 
        tobacco product use by minors.
            (4) All documents discussing or referring to the 
        relationship, if any, between advertising and promotion and the 
        use of tobacco products by minors.
            (5) A privilege log describing each document or each 
        portion of a document otherwise subject to public disclosure 
        under this subsection that any tobacco product manufacturer 
        maintains is exempt from public disclosure under this title.
            (6) A trade secrecy log describing each document or each 
        portion of a document otherwise subject to public disclosure 
        under this subsection that any tobacco product manufacturer, 
        the Center for Tobacco Research, or the Tobacco Institute 
        maintains is exempt from public disclosure under this Act.
    (e) Document Identification and Index.--Documents submitted under 
this section shall be sequentially numbered and marked to identify the 
tobacco product manufacturer. Within 15 days after submission of 
documents, each tobacco product manufacturer shall supply the panel 
with a comprehensive document index which references the applicable 
document categories contained in subsection (b).

SEC. 904. DOCUMENT REVIEW.

    (a) Ajudication of Privilege Claims.--An claim of attorney-client 
privilege, trade secret protection, or other claim of privilege with 
respect to a document required to be submitted by this title shall be 
heard by a 3-judge panel of the United States District Court for the 
District of Columbia under section 2284 of title 28, United States 
Code. The panel may appoint special masters, employ such personnel, and 
establish such procedures as it deems necessary to carry out its 
functions under this title.
    (b) Privilege.--The panel shall apply the attorney-client 
privilege, the attorney work-product doctrine, and the trade secret 
doctrine in a manner consistent with Federal law.

SEC. 905. RESOLUTION OF DISPUTED PRIVILEGE AND TRADE SECRET CLAIMS.

    (a) In General.--The panel shall determine whether to uphold or 
reject disputed claims of attorney client privilege, attorney work 
product, or trade secret protection with respect to documents 
submitted. Any person may petition the panel to resolve a claim that a 
document submitted may not be disclosed to the public. Such a 
determination shall be made by a majority of the panel, in writing, and 
shall be subject to judicial review as specified in this title. All 
such determinations shall be made solely on consideration of the 
subject document and written submissions from the person claiming that 
the document is privileged or protected by trade secrecy and from any 
person seeking disclosure of the document. The panel shall cause notice 
of the petition and the panel's decision to be published in the Federal 
Register.
    (b) Final Decision.--The panel may uphold a claim of privilege or 
protection in its entirety or, in its sole discretion, it may redact 
that portion of a document that it determines is protected from public 
disclosure under subsection (a). Any decision of the panel shall be 
final unless judicial review is sought under section 906. In the event 
that judicial review is so sought, the panel's decision shall be stayed 
pending a final judicial decision.

SEC. 906. APPEAL OF PANEL DECISION.

    (a) Petition; Right of Appeal.--Any person may obtain judicial 
review of a final decision of the panel by filing a petition for review 
with the United States Court of Appeals for the Federal Circuit within 
60 days after the publication of such decision in the Federal Register. 
A copy of the petition shall be transmitted by the Clerk of the Court 
to the panel. The panel shall file in the court the record of the 
proceedings on which the panel based its decision (including any 
documents reviewed by the panel in camera) as provided in section 2112 
of title 28, United States Code. Upon the filing of such petition, the 
court shall have exclusive jurisdiction to affirm or set aside the 
panel's decision, except that until the filing of the record the panel 
may modify or set aside its decision.
    (b) Additional Evidence and Arguments.--If the any party applies to 
the court for leave to adduce additional evidence respecting the 
decision being reviewed and shows to the satisfaction of the court that 
such additional evidence or arguments are material and that there were 
reasonable grounds for the failure to adduce such evidence or arguments 
in the proceedings before the panel, the court may order the panel to 
provide additional opportunity for the presentation of evidence or 
arguments in such manner and upon such terms as the court deems proper. 
The panel may modify its findings or make new findings by reason of the 
additional evidence or arguments and shall file with the court such 
modified or new findings, and its recommendation, if any, for the 
modification or setting aside of the decision being reviewed.
    (c) Standard of Review; Finality of Judgments.--The panel's 
findings of fact, if supported by substantial evidence on the record 
taken as a whole, shall be conclusive. The court shall review the 
panel's legal conclusions de novo. The judgment of the court affirming 
or setting aside the panel's decision shall be final, subject to review 
by the Supreme Court of the United States upon certiorari or 
certification, as provided in section 1254 of title 28, United States 
Code.
    (d) Public Disclosure After Final Decision.--Within 30 days after a 
final decision that a document, as redacted by the panel or in its 
entirety, is not protected from disclosure by a claim of attorney-
client privilege, attorney work product, or trade secret protection, 
the panel shall direct that the document be made available to the 
Commissioner of Food and Drugs under section 903(a). No Federal, 
Tribal, or State court shall have jurisdiction to review a claim of 
attorney-client privilege, attorney work product, or trade secret 
protection for a document that has lawfully been made available to the 
public under this subsection.
    (e) Effect of Non-disclosure Decision on Judicial Proceedings.--The 
panel's decision that a document is protected by attorney-client 
privilege, attorney work product, or trade secret protection is binding 
only for the purpose of protecting the document from disclosure by the 
Depository. The decision by the panel shall not be construed to prevent 
a document from being disclosed in a judicial proceeding or interfere 
with the authority of a court to determine whether a document is 
admissible or whether its production may be compelled.

SEC. 907. MISCELLANEOUS.

    The disclosure process in this title is not intended to affect the 
Federal Rules of Civil or Criminal Procedure or any Federal law which 
requires the disclosure of documents or which deals with attorney-
client privilege, attorney work product, or trade secret protection.

SEC. 908. PENALTIES.

    (a) Good Faith Requirement.--Each tobacco product manufacturer 
shall act in good faith in asserting claims of privilege or trade 
secret protection based on fact and law. If the panel determines that a 
tobacco product manufacturer has not acted in good faith with full 
knowledge of the truth of the facts asserted and with a reasonable 
basis under existing law, the manufacturer shall be assessed costs, 
which shall include the full administrative costs of handling the claim 
of privilege, and all attorneys' fees incurred by the panel and any 
party contesting the privilege. The panel may also impose civil 
penalties of up to $50,000 per violation if it determines that the 
manufacturer acted in bad faith in asserting a privilege, or knowingly 
acted with the intent to delay, frustrate, defraud, or obstruct the 
panel's determination of privilege, attorney work product, or trade 
secret protection claims.
    (b) Failure To Produce Document.--A failure by a tobacco product 
manufacturer to produce indexes and documents in compliance with the 
schedule set forth in this title, or with such extension as may be 
granted by the panel, shall be punished by a civil penalty of up to 
$50,000 per violation. A separate violation occurs for each document 
the manufacturer has failed to produce in a timely manner. The maximum 
penalty under this subsection for a related series of violations is 
$5,000,000. In determining the amount of any civil penalty, the panel 
shall consider the number of documents, length of delay, any history of 
prior violations, the ability to pay, and such other matters as justice 
requires. Nothing in this title shall replace or supersede any criminal 
sanction under title 18, United States Code, or any other provision of 
law.

SEC. 909. DEFINITIONS.

    For the purposes of this title--
            (1) Document.--The term ``document'' includes originals and 
        drafts of any kind of written or graphic matter, regardless of 
        the manner of production or reproduction, of any kind or 
        description, whether sent or received or neither, and all 
        copies thereof that are different in any way from the original 
        (whether by interlineation, receipt stamp, notation, indication 
        of copies sent or received or otherwise) regardless of whether 
        confidential, privileged, or otherwise, including any paper, 
        book, account, photograph, blueprint, drawing, agreement, 
        contract, memorandum, advertising material, letter, telegram, 
object, report, record, transcript, study, note, notation, working 
paper, intra-office communication, intra-department communication, 
chart, minute, index sheet, routing sheet, computer software, computer 
data, delivery ticket, flow sheet, price list, quotation, bulletin, 
circular, manual, summary, recording of telephone or other conversation 
or of interviews, or of conferences, or any other written, recorded, 
transcribed, punched, taped, filmed, or graphic matter, regardless of 
the manner produced or reproduced. Such term also includes any tape, 
recording, videotape, computerization, or other electronic recording, 
whether digital or analog or a combination thereof.
            (2) Trade secret.--The term ``trade secret'' means any 
        commercially valuable plan, formula, process, or device that is 
        used for making, compounding, processing, or preparing trade 
        commodities and that can be said to be the end-product of 
        either innovation or substantial effort, for which there is a 
        direct relationship between the plan, formula, process, or 
        device and the productive process.
            (3) Certain actions deemed to be proceedings.--Any action 
        undertaken under this title, including the search, indexing, 
        and production of documents, is deemed to be a ``proceeding'' 
        before the executive branch of the United States.
            (4) Other terms.--Any term used in this title that is 
        defined in section 701 has the meaning given to it by that 
        section.

           TITLE X--LONG-TERM ECONOMIC ASSISTANCE FOR FARMERS

SEC. 1001. SHORT TITLE.

    This title may be cited as the ``Long-Term Economic Assistance for 
Farmers Act'' or the ``LEAF Act''.

SEC. 1002. DEFINITIONS.

    In this title:
            (1) Participating tobacco producer.--The term 
        ``participating tobacco producer'' means a quota holder, quota 
        lessee, or quota tenant.
            (2) Quota holder.--The term ``quota holder'' means an owner 
        of a farm on January 1, 1998, 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.).
            (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 1995, 1996, or 1997 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 1995, 1996, or 1997 crop 
                years.
            (4) Quota tenant.--The term ``quota tenant'' means a 
        producer that--
                    (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 1995, 1996, or 1997 crop years; 
                and
                    (B) is not a quota holder or quota lessee.
            (5) Secretary.--The term ``Secretary'' means--
                    (A) in subtitles A and B, the Secretary of 
                Agriculture; and
                    (B) in section 1031, 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) Tobacco warehouse owner.--The term ``tobacco warehouse 
        owner'' means a warehouseman that participated in an auction 
        market (as defined in the first section of the Tobacco 
        Inspection Act (7 U.S.C. 511)) during the 1998 marketing year.
            (9) Flue-cured tobacco.--The term ``flue-cured tobacco'' 
        includes type 21 and type 37 tobacco.

              Subtitle A--Tobacco Community Revitalization

SEC. 1011. AUTHORIZATION OF APPROPRIATIONS.

    There are appropriated and transferred to the Secretary for each 
fiscal year such amounts from the National Tobacco Trust Fund 
established by section 401, other than from amounts in the State 
Litigation Settlement Account, as may be necessary to carry out the 
provisions of this title.

SEC. 1012. EXPENDITURES.

    The Secretary is authorized, subject to appropriations, to make 
payments under--
            (1) section 1021 for payments for lost tobacco quota for 
        each of fiscal years 1999 through 2023, but not to exceed 
        $1,650,000,000 for any fiscal year except to the extent the 
        payments are made in accordance with subsection (d)(12) or 
        (e)(9) of section 1021;
            (2) section 1022 for industry payments for all costs of the 
        Department of Agriculture associated with the production of 
        tobacco;
            (3) section 1023 for tobacco community economic development 
        grants, but not to exceed--
                    (A) $375,000,000 for each of fiscal years 1999 
                through 2008, less any amount required to be paid under 
                section 1022 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 1022 during the fiscal year;
            (4) section 1031 for assistance provided under the tobacco 
        worker transition program, but not to exceed $25,000,000 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.

SEC. 1013. BUDGETARY TREATMENT.

    This subtitle 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.

            Subtitle B--Tobacco Market Transition Assistance

SEC. 1021. 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.
    (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 1997 marketing year--
                    (A) the producer was a quota holder and realized 
                income (or would have realized income, as determined by 
                the Secretary, but for a medical hardship or crop 
                disaster during the 1997 marketing year) 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 1995 through 1997 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 1995 
        through 1997 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 the farm for the 1995 
                through 1997 marketing years--
                            (i) that was leased and transferred to a 
                        farm owned by the quota lessee; or
                            (ii) that was rented to the quota lessee 
                        for the right to produce the tobacco; less
                    (B) 25 percent of the average number of pounds of 
                tobacco quota described in subparagraph (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 1995 
                through 1997 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 1995 through 1997 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.--
                    (A) In general.--For each type 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) by multiplying--
                            (i) the average tobacco farm marketing 
                        quota or allotment for the 1995 through 1997 
                        marketing years; and
                            (ii) the average yield per acre for the 
                        farm for the type of tobacco for the marketing 
                        years.
                    (B) Yields not available.--If the average yield per 
                acre is not available for a farm, the Secretary shall 
                calculate the base quota for the quota holder, quota 
                lessee, or quota tenant (based on a poundage 
                conversion) by determining the amount equal to the 
                product obtained by multiplying--
                            (i) the average tobacco farm marketing 
                        quota or allotment for the 1995 through 1997 
                        marketing years; and
                            (ii) the average county yield per acre for 
                        the county in which the farm is located for the 
                        type of tobacco for the marketing years.
    (d) Payments for Lost Tobacco Quota for Types of Tobacco Other Than 
Flue-Cured Tobacco.--
            (1) Allocation of funds.--Of the amounts made available 
        under section 1011(d)(1) for payments for lost tobacco quota, 
        the Secretary shall make available for payments under this 
        subsection an amount that bears the same ratio to the amounts 
        made available as--
                    (A) the sum of all national marketing quotas for 
                all types of tobacco other than flue-cured tobacco 
                during the 1995 through 1997 marketing years; bears to
                    (B) the sum of all national marketing quotas for 
                all types of tobacco during the 1995 through 1997 
                marketing years.
            (2) Option to relinquish quota.--
                    (A) In general.--Each quota holder, for types of 
                tobacco other than flue-cured tobacco, shall be given 
                the option to relinquish the farm marketing quota or 
                farm acreage allotment of the quota holder in exchange 
                for a payment made under paragraph (3).
                    (B) Notification.--A quota holder shall give 
                notification of the intention of the quota holder to 
                exercise the option at such time and in such manner as 
                the Secretary may require, but not later than January 
                15, 1999.
            (3) Payments for lost tobacco quota to quota holders 
        exercising options to relinquish quota.--
                    (A) In general.--Subject to subparagraph (E), for 
                each of fiscal years 1999 through 2008, the Secretary 
                shall make annual payments for lost tobacco quota to 
                each quota holder that has relinquished the farm 
                marketing quota or farm acreage allotment of the quota 
                holder under paragraph (2).
                    (B) Amount.--The amount of a payment made to a 
                quota holder described in subparagraph (A) for a 
                marketing year shall equal \1/10\ of the lifetime 
                limitation established under subparagraph (E).
                    (C) Timing.--The Secretary shall begin making 
                annual payments under this paragraph for the marketing 
                year in which the farm marketing quota or farm acreage 
                allotment is relinquished.
                    (D) Additional payments.--The Secretary may 
                increase annual payments under this paragraph in 
                accordance with paragraph (7)(E) to the extent that 
                funding is available.
                    (E) Lifetime limitation on payments.--The total 
                amount of payments made under this paragraph to a quota 
                holder shall not exceed the product obtained by 
                multiplying the base quota level for the quota holder 
                by $8 per pound.
            (4) Reissuance of quota.--
                    (A) Reallocation to lessee or tenant.--If a quota 
                holder exercises an option to relinquish a tobacco farm 
                marketing quota or farm acreage allotment under 
                paragraph (2), a quota lessee or quota tenant that was 
                the primary producer during the 1997 marketing year of 
                tobacco pursuant to the farm marketing quota or farm 
                acreage allotment, as determined by the Secretary, 
                shall be given the option of having an allotment of the 
                farm marketing quota or farm acreage allotment 
                reallocated to a farm owned by the quota lessee or 
                quota tenant.
                    (B) Conditions for reallocation.--
                            (i) Timing.--A quota lessee or quota tenant 
                        that is given the option of having an allotment 
                        of a farm marketing quota or farm acreage 
                        allotment reallocated to a farm owned by the 
                        quota lessee or quota tenant under subparagraph 
                        (A) shall have 1 year from the date on which a 
                        farm marketing quota or farm acreage allotment 
                        is relinquished under paragraph (2) to exercise 
                        the option.
                            (ii) Limitation on acreage allotment.--In 
                        the case of a farm acreage allotment, the 
                        acreage allotment determined for any farm 
                        subsequent to any reallocation under 
                        subparagraph (A) shall not exceed 50 percent of 
                        the acreage of cropland of the farm owned by 
                        the quota lessee or quota tenant.
                            (iii) Limitation on marketing quota.--In 
                        the case of a farm marketing quota, the 
                        marketing quota determined for any farm 
                        subsequent to any reallocation under 
                        subparagraph (A) shall not exceed an amount 
                        determined by multiplying--
                                    (I) the average county farm yield, 
                                as determined by the Secretary; and
                                    (II) 50 percent of the acreage of 
                                cropland of the farm owned by the quota 
                                lessee or quota tenant.
                    (C) Eligibility of lessee or tenant for payments.--
                If a farm marketing quota or farm acreage allotment is 
                reallocated to a quota lessee or quota tenant under 
                subparagraph (A)--
                            (i) the quota lessee or quota tenant shall 
                        not be eligible for any additional payments 
                        under paragraph (5) or (6) as a result of the 
                        reallocation; and
                            (ii) the base quota level for the quota 
                        lessee or quota tenant shall not be increased 
                        as a result of the reallocation.
                    (D) Reallocation to quota holders within same 
                county or state.--
                            (i) In general.--Except as provided in 
                        clause (ii), if there was no quota lessee or 
                        quota tenant for the farm marketing quota or 
                        farm acreage allotment for a type of tobacco, 
                        or if no quota lessee or quota tenant exercises 
                        an option of having an allotment of the farm 
                        marketing quota or farm acreage allotment for a 
                        type of tobacco reallocated, the Secretary 
                        shall reapportion the farm marketing quota or 
                        farm acreage allotment among the remaining 
                        quota holders for the type of tobacco within 
                        the same county.
                            (ii) Cross-county leasing.--In a State in 
                        which cross-county leasing is authorized 
                        pursuant to section 319(l) of the Agricultural 
                        Adjustment Act of 1938 (7 U.S.C. 1314e(l)), the 
                        Secretary shall reapportion the farm marketing 
                        quota among the remaining quota holders for the 
                        type of tobacco within the same State.
                            (iii) Eligibility of quota holder for 
                        payments.--If a farm marketing quota is 
                        reapportioned to a quota holder under this 
                        subparagraph--
                                    (I) the quota holder shall not be 
                                eligible for any additional payments 
                                under paragraph (5) or (6) as a result 
                                of the reapportionment; and
                                    (II) the base quota level for the 
                                quota holder shall not be increased as 
                                a result of the reapportionment.
                    (E) Special rule for tenant of leased tobacco.--If 
                a quota holder exercises an option to relinquish a 
                tobacco farm marketing quota or farm acreage allotment 
                under paragraph (2), the farm marketing quota or farm 
                acreage allotment shall be divided evenly between, and 
                the option of reallocating the farm marketing quota or 
                farm acreage allotment shall be offered in equal 
                portions to, the quota lessee and to the quota tenant, 
                if--
                            (i) during the 1997 marketing year, the 
                        farm marketing quota or farm acreage allotment 
                        was leased and transferred to a farm owned by 
                        the quota lessee; and
                            (ii) the quota tenant was the primary 
                        producer, as determined by the Secretary, of 
                        tobacco pursuant to the farm marketing quota or 
                        farm acreage allotment.
            (5) Payments for lost tobacco quota to quota holders.--
                    (A) In general.--Except as otherwise provided in 
                this subsection, during any marketing year in which the 
                national marketing quota for a type of tobacco is less 
                than the average national marketing quota for the 1995 
                through 1997 marketing years, the Secretary shall make 
                payments for lost tobacco quota to each quota holder, 
                for types of tobacco other than flue-cured tobacco, 
                that is eligible under subsection (b), and has not 
exercised an option to relinquish a tobacco farm marketing quota or 
farm acreage allotment under paragraph (2), in an amount that is equal 
to the product obtained by multiplying--
                            (i) the number of pounds by which the basic 
                        farm marketing quota (or poundage conversion) 
                        is less than the base quota level for the quota 
                        holder; and
                            (ii) $4 per pound.
                    (B) Poundage conversion for marketing quotas other 
                than poundage quotas.--
                            (i) In general.--For each type of tobacco 
                        for which there is a marketing quota or 
                        allotment (on an acreage basis), the poundage 
                        conversion for each quota holder during a 
                        marketing year shall be determined by 
                        multiplying--
                                    (I) the basic farm acreage 
                                allotment for the farm for the 
                                marketing year; and
                                    (II) the average yield per acre for 
                                the farm for the type of tobacco.
                            (ii) Yield not available.--If the average 
                        yield per acre is not available for a farm, the 
                        Secretary shall calculate the poundage 
                        conversion for each quota holder during a 
                        marketing year by multiplying--
                                    (I) the basic farm acreage 
                                allotment for the farm for the 
                                marketing year; and
                                    (II) the average county yield per 
                                acre for the county in which the farm 
                                is located for the type of tobacco.
            (6) Payments for lost tobacco quota to quota lessees and 
        quota tenants.--Except as otherwise provided in this 
        subsection, during any marketing year in which the national 
        marketing quota for a type of tobacco is less than the average 
        national marketing quota for the type of tobacco for the 1995 
        through 1997 marketing years, the Secretary shall make payments 
        for lost tobacco quota to each quota lessee and quota tenant, 
        for types of tobacco other than flue-cured tobacco, that is 
        eligible under subsection (b) in an amount that is equal to the 
        product obtained by multiplying--
                    (A) the percentage by which the national marketing 
                quota for the type of tobacco is less than the average 
                national marketing quota for the type of tobacco for 
                the 1995 through 1997 marketing years;
                    (B) the base quota level for the quota lessee or 
                quota tenant; and
                    (C) $4 per pound.
            (7) Lifetime limitation on payments.--Except as otherwise 
        provided in this subsection, the total amount of payments made 
        under this subsection to a quota holder, quota lessee, or quota 
        tenant during the lifetime of the quota holder, quota lessee, 
        or quota tenant shall not exceed the product obtained by 
        multiplying--
                    (A) the base quota level for the quota holder, 
                quota lessee, or quota tenant; and
                    (B) $8 per pound.
            (8) Limitations on aggregate annual payments.--
                    (A) In general.--Except as otherwise provided in 
                this paragraph, the total amount payable under this 
                subsection for any marketing year shall not exceed the 
                amount made available under paragraph (1).
                    (B) Accelerated payments.--Paragraph (1) shall not 
                apply if accelerated payments for lost tobacco quota 
                are made in accordance with paragraph (12).
                    (C) Reductions.--If the sum of the amounts 
                determined under paragraphs (3), (5), and (6) for a 
                marketing year exceeds the amount made available under 
                paragraph (1), the Secretary shall make a pro rata 
                reduction in the amounts payable under paragraphs (5) 
                and (6) to quota holders, quota lessees, and quota 
                tenants under this subsection to ensure that the total 
                amount of payments for lost tobacco quota does not 
                exceed the amount made available under paragraph (1).
                    (D) Rollover of payments for lost tobacco quota.--
                Subject to subparagraph (A), if the Secretary makes a 
                reduction in accordance with subparagraph (C), the 
                amount of the reduction shall be applied to the next 
                marketing year and added to the payments for lost 
                tobacco quota for the marketing year.
                    (E) Additional payments to quota holders exercising 
                option to relinquish quota.--If the amount made 
                available under paragraph (1) exceeds the sum of the 
                amounts determined under paragraphs (3), (5), and (6) 
                for a marketing year, the Secretary shall distribute 
                the amount of the excess pro rata to quota holders that 
                have exercised an option to relinquish a tobacco farm 
                marketing quota or farm acreage allotment under 
                paragraph (2) by increasing the amount payable to each 
                such holder under paragraph (3).
            (9) Subsequent sale and transfer of quota.--Effective 
        beginning with the 1999 marketing year, on the sale and 
        transfer of a farm marketing quota or farm acreage allotment 
        under section 316(g) or 319(g) of the Agricultural Adjustment 
        Act of 1938 (7 U.S.C. 1314b(g), 1314e(g))--
                    (A) the person that sold and transferred the quota 
                or allotment shall have--
                            (i) the base quota level attributable to 
                        the person reduced by the base quota level 
                        attributable to the quota that is sold and 
                        transferred; and
                            (ii) the lifetime limitation on payments 
                        established under paragraph (7) attributable to 
                        the person reduced by the product obtained by 
                        multiplying--
                                    (I) the base quota level 
                                attributable to the quota; and
                                    (II) $8 per pound; and
                    (B) if the quota or allotment has never been 
                relinquished by a previous quota holder under paragraph 
                (2), the person that acquired the quota shall have--
                            (i) the base quota level attributable to 
                        the person increased by the base quota level 
                        attributable to the quota that is sold and 
                        transferred; and
                            (ii) the lifetime limitation on payments 
                        established under paragraph (7) attributable to 
                        the person--
                                    (I) increased by the product 
                                obtained by multiplying--
                                            (aa) the base quota level 
                                        attributable to the quota; and
                                            (bb) $8 per pound; but
                                    (II) decreased by any payments 
                                under paragraph (5) for lost tobacco 
                                quota previously made that are 
                                attributable to the quota that is sold 
                                and transferred.
            (10) 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 paragraph (5), and the lifetime limitation on payments 
established under paragraph (7) shall transfer to the new owner of the 
farm to the same extent and in the same manner as those provisions 
applied to the previous quota holder.
            (11) Death of quota lessee or quota tenant.--If a quota 
        lessee or quota tenant that is entitled to payments under this 
        subsection 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.
            (12) Acceleration of payments.--
                    (A) In general.--On the occurrence of any of the 
                events described in subparagraph (B), the Secretary 
                shall make an accelerated lump sum payment for lost 
                tobacco quota as established under paragraphs (5) and 
                (6) to each quota holder, quota lessee, and quota 
                tenant for any affected type of tobacco in accordance 
                with subparagraph (C).
                    (B) Triggering events.--The Secretary shall make 
                accelerated payments under subparagraph (A) if after 
                the date of enactment of this Act--
                            (i) subject to subparagraph (D), for 3 
                        consecutive marketing years, the national 
                        marketing quota or national acreage allotment 
                        for a type of tobacco is less than 50 percent 
                        of the national marketing quota or national 
                        acreage allotment for the type of tobacco for 
                        the 1998 marketing year; or
                            (ii) Congress repeals or makes ineffective, 
                        directly or indirectly, any provision of--
                                    (I) section 316 of the Agricultural 
                                Adjustment Act of 1938 (7 U.S.C. 
                                1314b);
                                    (II) section 319 of the 
                                Agricultural Adjustment Act of 1938 (7 
                                U.S.C. 1314e);
                                    (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).
                    (C) Amount.--The amount of the accelerated payments 
                made to each quota holder, quota lessee, and quota 
                tenant under this subsection shall be equal to--
                            (i) the amount of the lifetime limitation 
                        established for the quota holder, quota lessee, 
                        or quota tenant under paragraph (7); less
                            (ii) 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 subparagraph (B).
                    (D) Referendum vote not a triggering event.--A 
                referendum vote of producers for any type of tobacco 
                that results in the national marketing quota or 
                national acreage allotment not being in effect for the 
                type of tobacco shall not be considered a triggering 
                event under this paragraph.
            (13) Ban on subsequent sale or leasing of farm marketing 
        quota or farm acreage allotment to quota holders exercising 
        option to relinquish quota.--No quota holder that exercises the 
        option to relinquish a farm marketing quota or farm acreage 
        allotment for any type of tobacco under paragraph (2) shall be 
        eligible to acquire a farm marketing quota or farm acreage 
        allotment for the type of tobacco, or to obtain the lease or 
        transfer of a farm marketing quota or farm acreage allotment 
        for the type of tobacco, for a period of 25 crop years after 
        the date on which the quota or allotment was relinquished.
    (e) Payments for Lost Tobacco Quota for Flue-Cured Tobacco.--
            (1) Allocation of funds.--Of the amounts made available 
        under section 1011(d)(1) for payments for lost tobacco quota, 
        the Secretary shall make available for payments under this 
        subsection an amount that bears the same ratio to the amounts 
        made available as--
                    (A) the sum of all national marketing quotas for 
                flue-cured tobacco during the 1995 through 1997 
                marketing years; bears to
                    (B) the sum of all national marketing quotas for 
                all types of tobacco during the 1995 through 1997 
                marketing years.
            (2) Relinquishment of quota.--
                    (A) In general.--Each quota holder of flue-cured 
                tobacco shall relinquish the farm marketing quota or 
                farm acreage allotment in exchange for a payment made 
                under paragraph (3) due to the transition from farm 
                marketing quotas as provided under section 317 of the 
                Agricultural Adjustment Act of 1938 for flue-cured 
                tobacco to individual tobacco production permits as 
                provided under section 317A of the Agricultural 
                Adjustment Act of 1938 for flue-cured tobacco.
                    (B) Notification.--The Secretary shall notify the 
                quota holders of the relinquishment of their quota or 
                allotment at such time and in such manner as the 
                Secretary may require, but not later than November 15, 
                1998.
            (3) Payments for lost flue-cured tobacco quota to quota 
        holders that relinquish quota.--
                    (A) In general.--For each of fiscal years 1999 
                through 2008, the Secretary shall make annual payments 
                for lost flue-cured tobacco to each quota holder that 
                has relinquished the farm marketing quota or farm 
                acreage allotment of the quota holder under paragraph 
                (2).
                    (B) Amount.--The amount of a payment made to a 
                quota holder described in subparagraph (A) for a 
                marketing year shall equal \1/10\ of the lifetime 
                limitation established under paragraph (6).
                    (C) Timing.--The Secretary shall begin making 
                annual payments under this paragraph for the marketing 
                year in which the farm marketing quota or farm acreage 
                allotment is relinquished.
                    (D) Additional payments.--The Secretary may 
                increase annual payments under this paragraph in 
                accordance with paragraph (7)(E) to the extent that 
                funding is available.
            (4) Payments for lost flue-cured tobacco quota to quota 
        lessees and quota tenants that have not relinquished permits.--
                    (A) In general.--Except as otherwise provided in 
                this subsection, during any marketing year in which the 
                national marketing quota for flue-cured tobacco is less 
                than the average national marketing quota for the 1995 
                through 1997 marketing years, the Secretary shall make 
                payments for lost tobacco quota to each quota lessee or 
                quota tenant that--
                            (i) is eligible under subsection (b);
                            (ii) has been issued an individual tobacco 
                        production permit under section 317A(b) of the 
                        Agricultural Adjustment Act of 1938; and
                            (iii) has not exercised an option to 
                        relinquish the permit.
                    (B) Amount.--The amount of a payment made to a 
                quota lessee or quota tenant described in subparagraph 
                (A) for a marketing year shall be equal to the product 
                obtained by multiplying--
                            (i) the number of pounds by which the 
                        individual marketing limitation established for 
                        the permit is less than twice the base quota 
                        level for the quota lessee or quota tenant; and
                            (ii) $2 per pound.
            (5) Payments for lost flue-cured tobacco quota to quota 
        lessees and quota tenants that have relinquished permits.--
                    (A) In general.--For each of fiscal years 1999 
                through 2008, the Secretary shall make annual payments 
                for lost flue-cured tobacco quota to each quota lessee 
                and quota tenant that has relinquished an individual 
                tobacco production permit under section 317A(b)(5) of 
                the Agricultural Adjustment Act of 1938.
                    (B) Amount.--The amount of a payment made to a 
                quota lessee or quota tenant described in subparagraph 
                (A) for a marketing year shall be equal to \1/10\ of 
                the lifetime limitation established under paragraph 
                (6).
                    (C) Timing.--The Secretary shall begin making 
                annual payments under this paragraph for the marketing 
                year in which the individual tobacco production permit 
                is relinquished.
                    (D) Additional payments.--The Secretary may 
                increase annual payments under this paragraph in 
                accordance with paragraph (7)(E) to the extent that 
                funding is available.
                    (E) Prohibition against permit expansion.--A quota 
                lessee or quota tenant that receives a payment under 
                this paragraph shall be ineligible to receive any new 
                or increased tobacco production permit from the county 
                production pool established under section 317A(b)(8) of 
                the Agricultural Adjustment Act of 1938.
            (6) Lifetime limitation on payments.--Except as otherwise 
        provided in this subsection, the total amount of payments made 
        under this subsection to a quota holder, quota lessee, or quota 
        tenant during the lifetime of the quota holder, quota lessee, 
        or quota tenant shall not exceed the product obtained by 
        multiplying--
                    (A) the base quota level for the quota holder, 
                quota lessee, or quota tenant; and
                    (B) $8 per pound.
            (7) Limitations on aggregate annual payments.--
                    (A) In general.--Except as otherwise provided in 
                this paragraph, the total amount payable under this 
                subsection for any marketing year shall not exceed the 
                amount made available under paragraph (1).
                    (B) Accelerated payments.--Paragraph (1) shall not 
                apply if accelerated payments for lost flue-cured 
                tobacco quota are made in accordance with paragraph 
                (9).
                    (C) Reductions.--If the sum of the amounts 
                determined under paragraphs (3), (4), and (5) for a 
                marketing year exceeds the amount made available under 
                paragraph (1), the Secretary shall make a pro rata 
                reduction in the amounts payable under paragraph (4) to 
                quota lessees and quota tenants under this subsection 
                to ensure that the total amount of payments for lost 
                flue-cured tobacco quota does not exceed the amount 
                made available under paragraph (1).
                    (D) Rollover of payments for lost flue-cured 
                tobacco quota.--Subject to subparagraph (A), if the 
                Secretary makes a reduction in accordance with 
                subparagraph (C), the amount of the reduction shall be 
                applied to the next marketing year and added to the 
                payments for lost flue-cured tobacco quota for the 
                marketing year.
                    (E) Additional payments to quota holders exercising 
                option to relinquish quotas or permits, or to quota 
                lessees or quota tenants relinquishing permits.--If the 
                amount made available under paragraph (1) exceeds the 
                sum of the amounts determined under paragraphs (3), 
                (4), and (5) for a marketing year, the Secretary shall 
                distribute the amount of the excess pro rata to quota 
                holders by increasing the amount payable to each such 
                holder under paragraphs (3) and (5).
            (8) Death of quota holder, quota lessee, or quota tenant.--
        If a quota holder, quota lessee or quota tenant that is 
        entitled to payments under paragraph (4) or (5) dies and is 
        survived by a spouse or 1 or more descendants, the right to 
        receive the payments shall transfer to the surviving spouse or, 
        if there is no surviving spouse, to the surviving descendants 
        in equal shares.
            (9) Acceleration of payments.--
                    (A) In general.--On the occurrence of any of the 
                events described in subparagraph (B), the Secretary 
                shall make an accelerated lump sum payment for lost 
                flue-cured tobacco quota as established under 
                paragraphs (3), (4), and (5) to each quota holder, 
                quota lessee, and quota tenant for flue-cured tobacco 
                in accordance with subparagraph (C).
                    (B) Triggering events.--The Secretary shall make 
                accelerated payments under subparagraph (A) if after 
                the date of enactment of this Act--
                            (i) subject to subparagraph (D), for 3 
                        consecutive marketing years, the national 
                        marketing quota or national acreage allotment 
                        for flue-cured tobacco is less than 50 percent 
                        of the national marketing quota or national 
                        acreage allotment for flue-cured tobacco for 
                        the 1998 marketing year; or
                            (ii) Congress repeals or makes ineffective, 
                        directly or indirectly, any provision of--
                                    (I) section 316 of the Agricultural 
                                Adjustment Act of 1938 (7 U.S.C. 
                                1314b);
                                    (II) section 319 of the 
                                Agricultural Adjustment Act of 1938 (7 
                                U.S.C. 1314e);
                                    (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);
                                    (V) section 106B of the 
                                Agricultural Act of 1949 (7 U.S.C. 
                                1445-2); or
                                    (VI) section 317A of the 
                                Agricultural Adjustment Act of 1938.
                    (C) Amount.--The amount of the accelerated payments 
                made to each quota holder, quota lessee, and quota 
                tenant under this subsection shall be equal to--
                            (i) the amount of the lifetime limitation 
                        established for the quota holder, quota lessee, 
                        or quota tenant under paragraph (6); less
                            (ii) any payments for lost flue-cured 
                        tobacco quota received by the quota holder, 
                        quota lessee, or quota tenant before the 
                        occurrence of any of the events described in 
                        subparagraph (B).
                    (D) Referendum vote not a triggering event.--A 
                referendum vote of producers for flue-cured tobacco 
                that results in the national marketing quota or 
                national acreage allotment not being in effect for 
                flue-cured tobacco shall not be considered a triggering 
                event under this paragraph.

SEC. 1022. INDUSTRY PAYMENTS FOR ALL DEPARTMENT COSTS ASSOCIATED WITH 
              TOBACCO PRODUCTION.

    (a) In General.--The Secretary shall use such amounts remaining 
unspent and obligated 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 participating 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. 1023. 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 farm income of the State derived from 
        the production of tobacco during the 1995 through 1997 
        marketing years (as determined under paragraph (2)) bears to 
        the total farm income of all States derived from the production 
        of tobacco during the 1995 through 1997 marketing years.
            (2) Tobacco income.--For the 1995 through 1997 marketing 
        years, the Secretary shall determine the amount of farm 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 participating 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;
                    (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); and
                    (H) initiatives designed to partially compensate 
                tobacco warehouse owners for lost revenues and assist 
                the tobacco warehouse owners in establishing successful 
                business enterprises.
            (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 1995 through 1997 marketing 
        years. For purposes of this section, the term ``tobacco-growing 
        county'' includes a political subdivision surrounded within a 
        State by a county 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 1995 through 1997 
        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 warehouse owner initiatives.--Not less 
                than 6 percent of the amounts received by a State under 
                this section during each of fiscal years 1999 through 
                2008 shall be used to carry out initiatives described 
                in paragraph (1)(H).
                    (D) 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); and
                            (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 1998 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 
                1031; or
            (2) an individual who--
                    (A) during the 1998 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.
    (g) Maintenance of Effort.--
            (1) In general.--Subject to paragraph (2), a State shall 
        provide an assurance to the Secretary that the amount of funds 
        expended by the State and all counties in the State described 
        in subsection (e)(2) for any activities funded under this 
        section for a fiscal year is not less than 90 percent of the 
        amount of funds expended by the State and counties for the 
        activities for the preceding fiscal year.
            (2) Reduction of grant amount.--If a State does not provide 
        an assurance described in paragraph (1), the Secretary shall 
        reduce the amount of the grant determined under subsection (c) 
        by an amount equal to the amount by which the amount of funds 
        expended by the State and counties for the activities is less 
        than 90 percent of the amount of funds expended by the State 
        and counties for the activities for the preceding fiscal year, 
        as determined by the Secretary.
            (3) Federal funds.--For purposes of this subsection, the 
        amount of funds expended by a State or county shall not include 
        any amounts made available by the Federal Government.

SEC. 1024. FLUE-CURED TOBACCO PRODUCTION PERMITS.

    The Agricultural Adjustment Act of 1938 is amended by inserting 
after section 317 (7 U.S.C. 1314c) the following:

``SEC. 317A. FLUE-CURED TOBACCO PRODUCTION PERMITS.

    ``(a) Definitions.--In this section:
            ``(1) Individual acreage limitation.--The term `individual 
        acreage limitation' means the number of acres of flue-cured 
        tobacco that may be planted by the holder of a permit during a 
        marketing year, calculated--
                    ``(A) prior to--
                            ``(i) any increase or decrease in the 
                        number due to undermarketings or 
                        overmarketings; and
                            ``(ii) any reduction under subsection (i); 
                        and
                    ``(B) in a manner that ensures that--
                            ``(i) the total of all individual acreage 
                        limitations is equal to the national acreage 
                        allotment, less the reserve provided under 
                        subsection (h); and
                            ``(ii) the individual acreage limitation 
                        for a marketing year bears the same ratio to 
                        the individual acreage limitation for the 
                        previous marketing year as the ratio that the 
                        national acreage allotment for the marketing 
                        year bears to the national acreage allotment 
                        for the previous marketing year, subject to 
                        adjustments by the Secretary to account for any 
                        reserve provided under subsection (h).
            ``(2) Individual marketing limitation.--The term 
        `individual marketing limitation' means the number of pounds of 
        flue-cured tobacco that may be marketed by the holder of a 
        permit during a marketing year, calculated--
                    ``(A) prior to--
                            ``(i) any increase or decrease in the 
                        number due to undermarketings or 
                        overmarketings; and
                            ``(ii) any reduction under subsection (i); 
                        and
                    ``(B) in a manner that ensures that--
                            ``(i) the total of all individual marketing 
                        limitations is equal to the national marketing 
                        quota, less the reserve provided under 
                        subsection (h); and
                            ``(ii) the individual marketing limitation 
                        for a marketing year is obtained by multiplying 
                        the individual acreage limitation by the permit 
                        yield, prior to any adjustment for 
                        undermarketings or overmarketings.
            ``(3) Individual tobacco production permit.--The term 
        `individual tobacco production permit' means a permit issued by 
        the Secretary to a person authorizing the production of flue-
        cured tobacco for any marketing year during which this section 
        is effective.
            ``(4) National acreage allotment.--The term `national 
        acreage allotment' means the quantity determined by dividing--
                    ``(A) the national marketing quota; by
                    ``(B) the national average yield goal.
            ``(5) National average yield goal.--The term `national 
        average yield goal' means the national average yield for flue-
        cured tobacco during the 5 marketing years immediately 
preceding the marketing year for which the determination is being made.
            ``(6) National marketing quota.--For the 1999 and each 
        subsequent crop of flue-cured tobacco, the term `national 
        marketing quota' for a marketing year means the quantity of 
        flue-cured tobacco, as determined by the Secretary, that is not 
        more than 103 percent nor less than 97 percent of the total 
        of--
                    ``(A) the aggregate of the quantities of flue-cured 
                tobacco that domestic manufacturers of cigarettes 
                estimate that the manufacturers intend to purchase on 
                the United States auction markets or from producers 
                during the marketing year, as compiled and determined 
                under section 320A;
                    ``(B) the average annual quantity of flue-cured 
                tobacco exported from the United States during the 3 
                marketing years immediately preceding the marketing 
                year for which the determination is being made; and
                    ``(C) the quantity, if any, of flue-cured tobacco 
                that the Secretary, in the discretion of the Secretary, 
                determines is necessary to increase or decrease the 
                inventory of the producer-owned cooperative marketing 
                association that has entered into a loan agreement with 
                the Commodity Credit Corporation to make price support 
                available to producers of flue-cured tobacco to 
                establish or maintain the inventory at the reserve 
                stock level for flue-cured tobacco.
            ``(7) Permit yield.--The term `permit yield' means the 
        yield of tobacco per acre for an individual tobacco production 
        permit holder that is--
                    ``(A) based on a preliminary permit yield that is 
                equal to the average yield during the 5 marketing years 
                immediately preceding the marketing year for which the 
                determination is made in the county where the holder of 
                the permit is authorized to plant flue-cured tobacco, 
                as determined by the Secretary, on the basis of actual 
                yields of farms in the county; and
                    ``(B) adjusted by a weighted national yield factor 
                calculated by--
                            ``(i) multiplying each preliminary permit 
                        yield by the individual acreage limitation, 
                        prior to adjustments for overmarketings, 
                        undermarketings, or reductions required under 
                        subsection (i); and
                            ``(ii) dividing the sum of the products 
                        under clause (i) for all flue-cured individual 
                        tobacco production permit holders by the 
                        national acreage allotment.
    ``(b) Initial Issuance of Permits.--
            ``(1) Termination of flue-cured marketing quotas.--On the 
        date of enactment of the National Tobacco Policy and Youth 
        Smoking Reduction Act, farm marketing quotas as provided under 
        section 317 shall no longer be in effect for flue-cured 
        tobacco.
            ``(2) Issuance of permits to quota holders that were 
        principal producers.--
                    ``(A) In general.--By January 15, 1999, each 
                individual quota holder under section 317 that was a 
                principal producer of flue-cured tobacco during the 
                1998 marketing year, as determined by the Secretary, 
                shall be issued an individual tobacco production permit 
                under this section.
                    ``(B) Notification.--The Secretary shall notify the 
                holder of each permit of the individual acreage 
                limitation and the individual marketing limitation 
                applicable to the holder for each marketing year.
                    ``(C) Individual acreage limitation for 1999 
                marketing year.--In establishing the individual acreage 
                limitation for the 1999 marketing year under this 
                section, the farm acreage allotment that was allotted 
                to a farm owned by the quota holder for the 1997 
                marketing year shall be considered the individual 
                acreage limitation for the previous marketing year.
                    ``(D) Individual marketing limitation for 1999 
                marketing year.--In establishing the individual 
                marketing limitation for the 1999 marketing year under 
                this section, the farm marketing quota that was 
                allotted to a farm owned by the quota holder for the 
                1997 marketing year shall be considered the individual 
                marketing limitation for the previous marketing year.
            ``(3) Quota holders that were not principal producers.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), on approval through a referendum 
                under subsection (c)--
                            ``(i) each person that was a quota holder 
                        under section 317 but that was not a principal 
                        producer of flue-cured tobacco during the 1997 
                        marketing year, as determined by the Secretary, 
                        shall not be eligible to own a permit; and
                            ``(ii) the Secretary shall not issue any 
                        permit during the 25-year period beginning on 
                        the date of enactment of this Act to any person 
                        that was a quota holder and was not the 
                        principal producer of flue-cured tobacco during 
                        the 1997 marketing year.
                    ``(B) Medical hardships and crop disasters.--
                Subparagraph (A) shall not apply to a person that would 
                have been the principal producer of flue-cured tobacco 
                during the 1997 marketing year but for a medical 
                hardship or crop disaster that occurred during the 1997 
                marketing year.
                    ``(C) Administration.--The Secretary shall issue 
                regulations--
                            ``(i) defining the term `person' for the 
                        purpose of this paragraph; and
                            ``(ii) prescribing such rules as the 
                        Secretary determines are necessary to ensure a 
                        fair and reasonable application of the 
                        prohibition established under this paragraph.
            ``(4) Issuance of permits to principal producers of flue-
        cured tobacco.--
                    ``(A) In general.--By January 15, 1999, each 
                individual quota lessee or quota tenant (as defined in 
                section 1002 of the LEAF Act) that was the principal 
                producer of flue-cured tobacco during the 1997 
                marketing year, as determined by the Secretary, shall 
                be issued an individual tobacco production permit under 
                this section.
                    ``(B) Individual acreage limitations.--In 
                establishing the individual acreage limitation for the 
                1999 marketing year under this section, the farm 
                acreage allotment that was allotted to a farm owned by 
                a quota holder for whom the quota lessee or quota 
                tenant was the principal producer of flue-cured tobacco 
                during the 1997 marketing year shall be considered the 
                individual acreage limitation for the previous 
                marketing year.
                    ``(C) Individual marketing limitations.--In 
                establishing the individual marketing limitation for 
                the 1999 marketing year under this section, the 
                individual marketing limitation for the previous year 
for an individual described in this paragraph shall be calculated by 
multiplying--
                            ``(i) the farm marketing quota that was 
                        allotted to a farm owned by a quota holder for 
                        whom the quota lessee or quota holder was the 
                        principal producer of flue-cured tobacco during 
                        the 1997 marketing year, by
                            ``(ii) the ratio that--
                                    ``(I) the sum of all flue-cured 
                                tobacco farm marketing quotas for the 
                                1997 marketing year prior to adjusting 
                                for undermarketing and overmarketing; 
                                bears to
                                    ``(II) the sum of all flue-cured 
                                tobacco farm marketing quotas for the 
                                1998 marketing year, after adjusting 
                                for undermarketing and overmarketing.
                    ``(D) Special rule for tenant of leased flue-cured 
                tobacco.--If the farm marketing quota or farm acreage 
                allotment of a quota holder was produced pursuant to an 
                agreement under which a quota lessee rented land from a 
                quota holder and a quota tenant was the primary 
                producer, as determined by the Secretary, of flue-cured 
                tobacco pursuant to the farm marketing quota or farm 
                acreage allotment, the farm marketing quota or farm 
                acreage allotment shall be divided proportionately 
                between the quota lessee and quota tenant for purposes 
                of issuing individual tobacco production permits under 
                this paragraph.
            ``(5) Option of quota lessee or quota tenant to relinquish 
        permit.--
                    ``(A) In general.--Each quota lessee or quota 
                tenant that is issued an individual tobacco production 
                permit under paragraph (4) shall be given the option of 
                relinquishing the permit in exchange for payments made 
                under section 1021(e)(5) of the LEAF Act.
                    ``(B) Notification.--A quota lessee or quota tenant 
                that is issued an individual tobacco production permit 
                shall give notification of the intention to exercise 
                the option at such time and in such manner as the 
                Secretary may require, but not later than 45 days after 
                the permit is issued.
                    ``(C) Reallocation of permit.--The Secretary shall 
                add the authority to produce flue-cured tobacco under 
                the individual tobacco production permit relinquished 
                under this paragraph to the county production pool 
                established under paragraph (8) for reallocation by the 
                appropriate county committee.
            ``(6) Active producer requirement.--
                    ``(A) Requirement for sharing risk.--No individual 
                tobacco production permit shall be issued to, or 
                maintained by, a person that does not fully share in 
                the risk of producing a crop of flue-cured tobacco.
                    ``(B) Criteria for sharing risk.--For purposes of 
                this paragraph, a person shall be considered to have 
                fully shared in the risk of production of a crop if--
                            ``(i) the investment of the person in the 
                        production of the crop is not less than 100 
                        percent of the costs of production associated 
                        with the crop;
                            ``(ii) the amount of the person's return on 
                        the investment is dependent solely on the sale 
                        price of the crop; and
                            ``(iii) the person may not receive any of 
                        the return before the sale of the crop.
                    ``(C) Persons not sharing risk.--
                            ``(i) Forfeiture.--Any person that fails to 
                        fully share in the risks of production under 
                        this paragraph shall forfeit an individual 
                        tobacco production permit if, after notice and 
                        opportunity for a hearing, the appropriate 
                        county committee determines that the conditions 
                        for forfeiture exist.
                            ``(ii) Reallocation.--The Secretary shall 
                        add the authority to produce flue-cured tobacco 
                        under the individual tobacco production permit 
                        forfeited under this subparagraph to the county 
                        production pool established under paragraph (8) 
                        for reallocation by the appropriate county 
                        committee.
                    ``(D) Notice.--Notice of any determination made by 
                a county committee under subparagraph (C) shall be 
                mailed, as soon as practicable, to the person involved.
                    ``(E) Review.--If the person is dissatisfied with 
                the determination, the person may request, not later 
                than 15 days after notice of the determination is 
                received, a review of the determination by a local 
                review committee under the procedures established under 
                section 363 for farm marketing quotas.
            ``(7) County of origin requirement.--For the 1999 and each 
        subsequent crop of flue-cured tobacco, all tobacco produced 
        pursuant to an individual tobacco production permit shall be 
        produced in the same county in which was produced the tobacco 
        produced during the 1997 marketing year pursuant to the farm 
        marketing quota or farm acreage allotment on which the 
        individual tobacco production permit is based.
            ``(8) County production pool.--
                    ``(A) In general.--The authority to produce flue-
                cured tobacco under an individual tobacco production 
                permit that is forfeited, relinquished, or surrendered 
                within a county may be reallocated by the appropriate 
                county committee to tobacco producers located in the 
                same county that apply to the committee to produce 
                flue-cured tobacco under the authority.
                    ``(B) Priority.--In reallocating individual tobacco 
                production permits under this paragraph, a county 
                committee shall provide a priority to--
                            ``(i) an active tobacco producer that 
                        controls the authority to produce a quantity of 
                        flue-cured tobacco under an individual tobacco 
                        production permit that is equal to or less than 
                        the average number of pounds of flue-cured 
                        tobacco that was produced by the producer 
                        during each of the 1995 through 1997 marketing 
                        years, as determined by the Secretary; and
                            ``(ii) a new tobacco producer.
                    ``(C) Criteria.--Individual tobacco production 
                permits shall be reallocated by the appropriate county 
                committee under this paragraph in a fair and equitable 
                manner after taking into consideration--
                            ``(i) the experience of the producer;
                            ``(ii) the availability of land, labor, and 
                        equipment for the production of tobacco;
                            ``(iii) crop rotation practices; and
                            ``(iv) the soil and other physical factors 
                        affecting the production of tobacco.
                    ``(D) Medical hardships and crop disasters.--
                Notwithstanding any other provision of this Act, the 
                Secretary may issue an individual tobacco production 
                permit under this paragraph to a producer that is 
                otherwise ineligible for the permit due to a medical 
                hardship or crop disaster that occurred during the 1997 
                marketing year.
    ``(c) Referendum.--
            ``(1) Announcement of quota and allotment.--Not later than 
        December 15, 1998, the Secretary pursuant to subsection (b) 
        shall determine and announce--
                    ``(A) the quantity of the national marketing quota 
                for flue-cured tobacco for the 1999 marketing year; and
                    ``(B) the national acreage allotment and national 
                average yield goal for the 1999 crop of flue-cured 
                tobacco.
            ``(2) Special referendum.--Not later than 30 days after the 
        announcement of the quantity of the national marketing quota in 
        2001, the Secretary shall conduct a special referendum of the 
        tobacco production permit holders that were the principal 
        producers of flue-cured tobacco of the 1997 crop to determine 
        whether the producers approve or oppose the continuation of 
        individual tobacco production permits on an acreage-poundage 
        basis as provided in this section for the 2002 through 2004 
        marketing years.
            ``(3) Approval of permits.--If the Secretary determines 
        that more than 66\2/3\ percent of the producers voting in the 
        special referendum approve the establishment of individual 
        tobacco production permits on an acreage-poundage basis--
                    ``(A) individual tobacco production permits on an 
                acreage-poundage basis as provided in this section 
                shall be in effect for the 2002 through 2004 marketing 
                years; and
                    ``(B) marketing quotas on an acreage-poundage basis 
                shall cease to be in effect for the 2002 through 2004 
                marketing years.
            ``(4) Disapproval of permits.--If individual tobacco 
        production permits on an acreage-poundage basis are not 
        approved by more than 66\2/3\ percent of the producers voting 
        in the referendum, no marketing quotas on an acreage-poundage 
        basis shall continue in effect that were proclaimed under 
        section 317 prior to the referendum.
            ``(5) Applicable marketing years.--If individual tobacco 
        production permits have been made effective for flue-cured 
        tobacco on an acreage-poundage basis pursuant to this 
        subsection, the Secretary shall, not later than December 15 of 
        any future marketing year, announce a national marketing quota 
        for that type of tobacco for the next 3 succeeding marketing 
        years if the marketing year is the last year of 3 consecutive 
        years for which individual tobacco production permits 
        previously proclaimed will be in effect.
    ``(d) Annual Announcement of National Marketing Quota.--The 
Secretary shall determine and announce the national marketing quota, 
national acreage allotment, and national average yield goal for the 
second and third marketing years of any 3-year period for which 
individual tobacco production permits are in effect on or before the 
December 15 immediately preceding the beginning of the marketing year 
to which the quota, allotment, and goal apply.
    ``(e) Annual Announcement of Individual Tobacco Production 
Permits.--If a national marketing quota, national acreage allotment, 
and national average yield goal are determined and announced, the 
Secretary shall provide for the determination of individual tobacco 
production permits, individual acreage limitations, and individual 
marketing limitations under this section for the crop and marketing 
year covered by the determinations.
    ``(f) Assignment of Tobacco Production Permits.--
            ``(1) Limitation to same county.--Each individual tobacco 
        production permit holder shall assign the individual acreage 
        limitation and individual marketing limitation to 1 or more 
        farms located within the county of origin of the individual 
        tobacco production permit.
            ``(2) Filing with county committee.--The assignment of an 
        individual acreage limitation and individual marketing 
        limitation shall not be effective until evidence of the 
        assignment, in such form as required by the Secretary, is filed 
        with and determined by the county committee for the county in 
        which the farm involved is located.
            ``(3) Limitation on tillable cropland.--The total acreage 
        assigned to any farm under this subsection shall not exceed the 
        acreage of cropland on the farm.
    ``(g) Prohibition on Sale or Leasing of Individual Tobacco 
Production Permits.--
            ``(1) In general.--Except as provided in paragraphs (2) and 
        (3), the Secretary shall not permit the sale and transfer, or 
        lease and transfer, of an individual tobacco production permit 
        issued under this section.
            ``(2) Transfer to descendants.--
                    ``(A) Death.--In the case of the death of a person 
                to whom an individual tobacco production permit has 
                been issued under this section, the permit shall 
                transfer to the surviving spouse of the person or, if 
                there is no surviving spouse, to surviving direct 
                descendants of the person.
                    ``(B) Temporary inability to farm.--In the case of 
                the death of a person to whom an individual tobacco 
                production permit has been issued under this section 
                and whose descendants are temporarily unable to produce 
                a crop of tobacco, the Secretary may hold the license 
                in the name of the descendants for a period of not more 
                than 18 months.
            ``(3) Voluntary transfers.--A person that is eligible to 
        obtain an individual tobacco production permit under this 
        section may at any time transfer all or part of the permit to 
        the person's spouse or direct descendants that are actively 
        engaged in the production of tobacco.
    ``(h) Reserve.--
            ``(1) In general.--For each marketing year for which 
        individual tobacco production permits are in effect under this 
        section, the Secretary may establish a reserve from the 
        national marketing quota in a quantity equal to not more than 1 
        percent of the national marketing quota to be available for--
                    ``(A) making corrections of errors in individual 
                acreage limitations and individual marketing 
                limitations;
                    ``(B) adjusting inequities; and
                    ``(C) establishing individual tobacco production 
                permits for new tobacco producers (except that not less 
                than two-thirds of the reserve shall be for 
                establishing such permits for new tobacco producers).
            ``(2) Eligible persons.--To be eligible for a new 
        individual tobacco production permit, a producer must not have 
        been the principal producer of tobacco during the immediately 
        preceding 5 years.
            ``(3) Apportionment for new producers.--The part of the 
        reserve held for apportionment to new individual tobacco 
producers shall be allotted on the basis of--
                    ``(A) land, labor, and equipment available for the 
                production of tobacco;
                    ``(B) crop rotation practices;
                    ``(C) soil and other physical factors affecting the 
                production of tobacco; and
                    ``(D) the past tobacco-producing experience of the 
                producer.
            ``(4) Permit yield.--The permit yield for any producer for 
        which a new individual tobacco production permit is established 
        shall be determined on the basis of available productivity data 
        for the land involved and yields for similar farms in the same 
        county.
    ``(i) Penalties.--
            ``(1) Production on other farms.--If any quantity of 
        tobacco is marketed as having been produced under an individual 
        acreage limitation or individual marketing limitation assigned 
        to a farm but was produced on a different farm, the individual 
        acreage limitation or individual marketing limitation for the 
        following marketing year shall be forfeited.
            ``(2) False report.--If a person to which an individual 
        tobacco production permit is issued files, or aids or 
        acquiesces in the filing of, a false report with respect to the 
        assignment of an individual acreage limitation or individual 
        marketing limitation for a quantity of tobacco, the individual 
        acreage limitation or individual marketing limitation for the 
        following marketing year shall be forfeited.
    ``(j) Marketing Penalties.--
            ``(1) In general.--When individual tobacco production 
        permits under this section are in effect, provisions with 
        respect to penalties for the marketing of excess tobacco and 
        the other provisions contained in section 314 shall apply in 
        the same manner and to the same extent as they would apply 
        under section 317(g) if farm marketing quotas were in effect.
            ``(2) Production on other farms.--If a producer falsely 
        identifies tobacco as having been produced on or marketed from 
        a farm to which an individual acreage limitation or individual 
        marketing limitation has been assigned, future individual 
        acreage limitations and individual marketing limitations shall 
        be forfeited.''.

SEC. 1025. 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 type 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 type 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 type 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 type 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)--
                    (A) by striking ``(c) The amount'' and inserting 
                ``(c) Amount of Penalty.--For the 1998 and subsequent 
                marketing years, the amount''; and
                    (B) by striking paragraph (1) and inserting the 
                following:
            ``(1) 105 percent of the average market price for the type 
        of tobacco involved during the preceding marketing year; and''.
    (c) Elimination of Tobacco Marketing Assessment.--
            (1) In general.--Section 106 of the Agricultural Act of 
        1949 (7 U.S.C. 1445) 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)''.
    (d) Adjustment for Land Rental Costs.--Section 106 of the 
Agricultural Act of 1949 (7 U.S.C. 1445) is amended by adding at the 
end the following:
    ``(h) Adjustment for Land Rental Costs.--For each of the 1999 and 
2000 marketing years for flue-cured tobacco, after consultation with 
producers, State farm organizations and cooperative associations, the 
Secretary shall make an adjustment in the price support level for flue-
cured tobacco equal to the annual change in the average cost per pound 
to flue-cured producers, as determined by the Secretary, under 
agreements through which producers rent land to produce flue-cured 
tobacco.''.
    (e) Fire-Cured and Dark Air-Cured Tobacco Programs.--
            (1) Limitation on transfers.--Section 318(g) of the 
        Agricultural Adjustment Act of 1938 (7 U.S.C. 13l4d(g)) is 
        amended--
                    (A) by striking ``ten'' and inserting ``30''; and
                    (B) by inserting ``during any crop year'' after 
                ``transferred to any farm''.
            (2) Loss of allotment or quota through underplanting.--
        Section 318 of the Agricultural Adjustment Act of 1938 (7 
        U.S.C. 1314d) is amended by adding at the end the following:
    ``(k) Loss of Allotment or Quota Through Underplanting.--Effective 
for the 1999 and subsequent marketing years, no acreage allotment or 
acreage-poundage quota, other than a new marketing quota, shall be 
established for a farm on which no fire-cured or dark air-cured tobacco 
was planted or considered planted during at least 2 of the 3 crop years 
immediately preceding the crop year for which the acreage allotment or 
acreage-poundage quota would otherwise be established.''.
    (f) Expansion of Types of Tobacco Subject to No Net Cost 
Assessment.--
            (1) No net cost tobacco fund.--Section 106A(d)(1)(A) of the 
        Agricultural Act of 1949 (7 U.S.C. 1445-1(d)(1)(A)) is 
        amended--
                    (A) in clause (ii), by inserting after ``Burley 
                quota tobacco'' the following: ``and fire-cured and 
                dark air-cured quota tobacco''; and
                    (B) in clause (iii)--
                            (i) in the matter preceding subclause (I), 
                        by striking ``Flue-cured or Burley tobacco'' 
                        and inserting ``each kind of tobacco for which 
                        price support is made available under this Act, 
                        and each kind of like tobacco,''; and
                            (ii) by striking subclause (II) and 
                        inserting the following:
                                    ``(II) the sum of the amount of the 
                                per pound producer contribution and 
                                purchaser assessment (if any) for the 
                                kind of tobacco payable under clauses 
                                (i) and (ii); and''.
            (2) No net cost tobacco account.--Section 106B(d)(1) of the 
        Agricultural Act of 1949 (7 U.S.C. 1445-2(d)(1)) is amended--
                    (A) in subparagraph (B), by inserting after 
                ``Burley quota tobacco'' the following: ``and fire-
                cured and dark air-cured tobacco''; and
                    (B) in subparagraph (C), by striking ``Flue-cured 
                and Burley tobacco'' and inserting ``each kind of 
                tobacco for which price support is made available under 
                this Act, and each kind of like tobacco,''.

          Subtitle C--Farmer and Worker Transition Assistance

SEC. 1031. 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 the 
        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 the firm 
                or subdivision have decreased absolutely; and
                    (B) the implementation of the national tobacco 
                settlement contributed importantly to the workers' 
                separation or threat of separation and to the decline 
                in the sales or production of the 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 the workers' firm or subdivision thereof is located.
            (2) Findings and assistance.--On 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). On a determination that the petition meets 
        the 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.--On 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 the other 
        programs.
    (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 $25,000,000.
            (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 that Act, the total amount of payments for training 
                under this section for any fiscal year shall not exceed 
                $12,500,000.
                    (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 that Act (19 U.S.C. 
                        2291(a)(5)(C), 2291(c)), authorizing the 
                        payment of trade readjustment allowances on 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 that 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 that Act (19 U.S.C. 
                        2296(a)) by the later of--
                                    (I) the last day of the 16th week 
                                of the 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 the 
                                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 1021.
    (f) Funding.--Of the amounts appropriated to carry out this title, 
the Secretary may use not to exceed $25,000,000 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 of enactment of this Act.
    (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. 1032. 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 1011(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 the 
        sums shall be advanced to eligible institutions prior to the 
        start of each payment period and shall be based on 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. The 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 the 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 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 the 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 
        the 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 the grant will be used 
                solely for expenses related to attendance or continued 
                attendance at the institution; and
                    ``(B) the 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 1998 the student was--
                    ``(A) an individual who--
                            ``(i) is a participating tobacco producer 
                        (as defined in section 1002 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 
the 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 the student can benefit 
        from the education or training being offered. The 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 
        the process. In determining whether to approve or disapprove 
        the process, the Secretary shall take into account the 
        effectiveness of the process in enabling students without 
        secondary school diplomas or the recognized equivalent to 
        benefit from the instruction offered by institutions utilizing 
the 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 the 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 the institution shall 
        not be considered to be enrolled in correspondence courses 
        unless the total amount of telecommunications and 
        correspondence courses at the institution equals or exceeds 50 
        percent of the 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 the 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 
        the term does not include a course that is delivered using 
        video cassette or disc recordings at the 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 the 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 the 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 the error was a result 
                of fraud on the part of the student.''.

                          Subtitle D--Immunity

SEC. 1041. GENERAL IMMUNITY FOR TOBACCO PRODUCERS AND TOBACCO WAREHOUSE 
              OWNERS.

    Notwithstanding any other provision of this title, a participating 
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 the National Tobacco Policy and Youth Smoking Reduction 
Act.

                   TITLE XI--MISCELLANEOUS PROVISIONS

                  Subtitle A--International Provisions

SEC. 1101. POLICY.

    It shall be the policy of the United States government to pursue 
bilateral and multilateral agreements that include measures designed 
to--
            (1) restrict or eliminate tobacco advertising and promotion 
        aimed at children;
            (2) require effective warning labels on packages and 
        advertisements of tobacco products;
            (3) require disclosure of tobacco ingredient information to 
        the public;
            (4) limit access to tobacco products by young people;
            (5) reduce smuggling of tobacco and tobacco products;
            (6) ensure public protection from environmental tobacco 
        smoke; and
            (7) promote tobacco product policy and program information 
        sharing between or among the parties to those agreements.

SEC. 1102. TOBACCO CONTROL NEGOTIATIONS.

    The President, in consultation with the Secretary of State, the 
Secretary of Health and Human Services, and the United States Trade 
Representative, shall--
            (1) act as the lead negotiator for the United States in the 
        area of international tobacco control;
            (2) coordinate among U.S. foreign policy and trade 
        negotiators in the area of effective international tobacco 
        control policy;
            (3) work closely with non-governmental groups, including 
        public health groups; and
            (4) report annually to the Congress on the progress of 
        negotiations to achieve effective international tobacco control 
        policy.

SEC. 1103. REPORT TO CONGRESS.

    Not later than 150 days after the enactment of this Act and 
annually thereafter, the Secretary of Health and Human Services shall 
transmit to the Congress a report identifying the international fora 
wherein international tobacco control efforts may be negotiated.

SEC. 1104. FUNDING.

    There are authorized such sums as are necessary to carry out the 
provisions of this subtitle.

SEC. 1105. PROHIBITION OF FUNDS TO FACILITATE THE EXPORTATION OR 
              PROMOTION OF TOBACCO.

    (a) In General.--No officer, employee, department, or agency of the 
United States may promote the sale or export of tobacco or tobacco 
products, or seek the reduction or removal by any foreign country of 
restrictions on the marketing of tobacco or tobacco products, unless 
such restrictions are not applied equally to all tobacco and tobacco 
products. The United States Trade Representative shall consult with the 
Secretary regarding inquiries, negotiations, and representations with 
respect to tobacco and tobacco products, including whether proposed 
restrictions are reasonable protections of public health.
    (b) Notification.--Whenever such inquiries, negotiations, or 
representations are made, the United States Trade Representative shall 
notify the Congress within 10 days afterwards regarding the nature of 
the inquiry, negotiation, or representation.

SEC. 1106. HEALTH LABELING OF TOBACCO PRODUCTS FOR EXPORT.

    (a) In General.--
            (1) Exports must be labeled.--It shall be unlawful for any 
        United States person, directly or through approval or 
        facilitation of a transaction by a foreign person, to make use 
        of the United States mail or of any instrument of interstate 
        commerce to authorize or contribute to the export from the 
        United States any tobacco product unless the tobacco product 
        packaging contains a warning label that--
                    (A) complies with Federal requirements for labeling 
                of similar tobacco products manufactured, imported, or 
                packaged for sale or distribution in the United States; 
                or
                    (B) complies with the specific health hazard 
                warning labeling requirements of the foreign country to 
                which the product is exported.
            (2) U.S. requirements apply if the destination country does 
        not require specific health hazard warning labels.--
        Subparagraph (B) of paragraph (1) does not apply to exports to 
        a foreign country that does not have any specific health hazard 
        warning label requirements for the tobacco product being 
        exported.
    (b) United States Person Defined.--For purposes of this section, 
the term ``United States person'' means--
            (1) an individual who is a citizen, national, or resident 
        of the United States; and
            (2) a corporation, partnership, association, joint-stock 
        company, business trust, unincorporated organization, or sole 
        proprietorship which has its principal place of business in the 
        United States.
    (c) Report to Congress on Enforcement; Feasibility Regulations.--
            (1) The president.--The President shall--
                    (A) report to the Congress within 90 days after the 
                date of enactment of this Act--
                            (i) regarding methods to ensure compliance 
                        with subsection (a); and
                            (ii) listing countries whose health 
                        warnings related to tobacco products are 
                        substantially similar to those in the United 
                        States; and
                    (B) promulgate regulations within 1 year after the 
                date of enactment of this Act that will ensure 
                compliance with subsection (a).
            (2) The secretary.--The Secretary shall determine through 
        regulation the feasibility and practicability of requiring 
        health warning labeling in the language of the country of 
        destination weighing the health and other benefits and economic 
        and other costs. To the greatest extent practicable, the 
        Secretary should design a system that requires the language of 
        the country of destination while minimizing the dislocative 
        effects of such a system.

SEC. 1107. INTERNATIONAL TOBACCO CONTROL AWARENESS.

    (a) Establishment of International Tobacco Control Awareness.--The 
Secretary is authorized to establish an international tobacco control 
awareness effort. The Secretary shall--
            (1) promote efforts to share information and provide 
        education internationally about the health, economic, social, 
        and other costs of tobacco use, including scientific and 
        epidemiological data related to tobacco and tobacco use and 
        enhancing countries' capacity to collect, analyze, and 
        disseminating such data;
            (2) promote policies and support and coordinate 
        international efforts, including international agreements or 
        arrangements, that seek to enhance the awareness and 
        understanding of the costs associated with tobacco use;
            (3) support the development of appropriate governmental 
        control activities in foreign countries, such as assisting 
        countries to design, implement, and evaluate programs and 
        policies used in the United States or other countries; 
        including the training of United States diplomatic and 
        commercial representatives outside the United States;
            (4) undertake other activities as appropriate in foreign 
        countries that help achieve a reduction of tobacco use;
            (5) permit United States participation in annual meetings 
        of government and non-government representatives concerning 
        international tobacco use and efforts to reduce tobacco use;
            (6) promote mass media campaigns, including paid counter-
        tobacco advertisements to reverse the image appeal of pro-
        tobacco messages, especially those that glamorize and 
        ``Westernize'' tobacco use to young people; and
            (7) create capacity and global commitment to reduce 
        international tobacco use and prevent youth smoking, including 
        the use of models of previous public health efforts to address 
        global health problems.
    (b) Activities.--
            (1) In general.--The activities under subsection (a) shall 
        include--
                    (A) public health and education programs;
                    (B) technical assistance;
                    (C) cooperative efforts and support for related 
                activities of multilateral organization and 
                international organizations;
                    (D) training; and
                    (E) such other activities that support the 
                objectives of this section as may be appropriate.
            (2) Grants and contracts.--In carrying out this section, 
        the Secretary shall make grants to, enter into and carry out 
        agreements with, and enter into other transactions with any 
        individual, corporation, or other entity, whether within or 
        outside the United States, including governmental and 
        nongovernmental organizations, international organizations, and 
        multilateral organizations.
            (3) Transfer of funds to agencies.--The Secretary may 
        transfer to any agency of the United States any part of any 
        funds appropriated for the purpose of carrying out this 
        section. Funds authorized to be appropriated by this section 
        shall be available for obligation and expenditure in accordance 
        with the provisions of this section or in accordance with the 
        authority governing the activities of the agency to which such 
        funds are transferred.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated, from the National Tobacco Trust Fund, to carry out the 
provisions of this section, including the administrative costs incurred 
by any agency of the United States in carrying out this 
section, $350,000,000 for each of the fiscal years 1999 through 2004, 
and such sums as may be necessary for each fiscal year thereafter. A 
substantial amount of such funds shall be granted to non-governmental 
organizations. Any amount appropriated pursuant to this authorization 
shall remain available without fiscal year limitation until expended.

                 Subtitle B--Anti-smuggling Provisions

SEC. 1131. DEFINITIONS.

    (a) Incorporation of Certain Definitions.--In this subtitle, the 
terms ``cigar'', ``cigarette'', ``person'', ``pipe tobacco'', ``roll-
your-own tobacco'', ``smokeless tobacco'', ``State'', ``tobacco 
product'', and ``United States'', shall have the meanings given such 
terms in sections 5702(a), 5702(b), 7701(a)(1), 5702(o), 5702(n)(1), 
5702(p), 3306(j)(1), 5702(c), and 3306(j)(2) respectively of the 
Internal Revenue Code of 1986.
    (b) Other Definitions.--In this subtitle:
            (1) Affiliate.--The term ``affiliate'' means any one of 2 
        or more persons if 1 of such persons has actual or legal 
        control, directly or indirectly, whether by stock ownership or 
        otherwise, of other or others of such persons, and any 2 or 
        more of such persons subject to common control, actual or 
        legal, directly or indirectly, whether by stock ownership or 
        otherwise.
            (2) Interstate or foreign commerce.--The term ``interstate 
        or foreign commerce'' means any commerce between any State and 
        any place outside thereof, or commerce within any Territory or 
        the District of Columbia, or between points within the same 
        State but through any place outside thereof.
            (3) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.
            (4) Package.--The term ``package'' means the innermost 
        sealed container irrespective of the material from which such 
        container is made, in which a tobacco product is placed by the 
        manufacturer and in which such tobacco product is offered for 
        sale to a member of the general public.
            (5) Retailer.--The term ``retailer'' means any dealer who 
        sells, or offers for sale, any tobacco product at retail. The 
        term ``retailer'' includes any duty free store that sells, 
        offers for sale, or otherwise distributes at retail in any 
        single transaction 30 or less packages, or it equivalent for 
        other tobacco products.
            (6) Exporter.--The term ``exporter'' means any person 
        engaged in the business of exporting tobacco products from the 
        United States for purposes of sale or distribution; and the 
        term ``licensed exporter'' means any such person licensed under 
        the provisions of this subtitle. Any duty-free store that 
        sells, offers for sale, or otherwise distributes to any person 
        in any single transaction more than 30 packages of cigarettes, 
        or its equivalent for other tobacco products as the Secretary 
        shall by regulation prescribe, shall be deemed an ``exporter'' 
        under this subtitle.
            (7) Importer.--The term ``importer'' means any person 
        engaged in the business of importing tobacco products into the 
        United States for purposes of sale or distribution; and the 
        term ``licensed importer'' means any such person licensed under 
        the provisions of this subtitle.
            (8) Intentionally.--The term ``intentionally'' means doing 
        an act, or omitting to do an act, deliberately, and not due to 
        accident, inadvertence, or mistake. An intentional act does not 
        require that a person knew that his act constituted an offense.
            (9) Manufacturer.-- The term ``manufacturer'' means any 
        person engaged in the business of manufacturing a tobacco 
        product for purposes of sale or distribution, except that such 
        term shall not include a person who manufactures less than 
        30,000 cigarettes, or its equivalent as determined by 
        regulations, in any twelve month period;; and the term 
        ``licensed manufacturer'' means any such person licensed under 
        the provisions of this subtitle, except that such term shall 
        not include a person who produces cigars, cigarettes, smokeless 
        tobacco, or pipe tobacco solely for his own personal 
        consumption or use.
            (10) Wholesaler.--The term ``wholesaler'' means any person 
        engaged in the business of purchasing tobacco products for 
        resale at wholesale, or any person acting as an agent or broker 
        for any person engaged in the business of purchasing tobacco 
        products for resale at wholesale, and the term ``licensed 
        wholesaler'' means any such person licensed under the 
        provisions of this subtitle.

SEC. 1132. TOBACCO PRODUCT LABELING REQUIREMENTS.

    (a) In General.--It is unlawful for any person to sell, or ship or 
deliver for sale or shipment, or otherwise introduce in interstate or 
foreign commerce, or to receive therein, or to remove from Customs 
custody for use, any tobacco product unless such product is packaged 
and labeled in conformity with this section.
    (b) Labeling.--
            (1) Identification.--Not later than 1 year after the date 
        of enactment of this Act, the Secretary shall promulgate 
        regulations that require each manufacturer or importer of 
        tobacco products to legibly print a unique serial number on all 
        packages of tobacco products manufactured or imported for sale 
        or distribution. The serial number shall be designed to enable 
        the Secretary to identify the manufacturer or importer of the 
        product, and the location and date of manufacture or 
        importation. The Secretary shall determine the size and 
        location of the serial number.
            (2) Marking requirements for exports.--Each package of a 
        tobacco product that is exported shall be marked for export 
        from the United States. The Secretary shall promulgate 
        regulations to determine the size and location of the mark and 
        under what circumstances a waiver of this paragraph shall be 
        granted.
    (c) Prohibition on Alteration.--It is unlawful for any person to 
alter, mutilate, destroy, obliterate, or remove any mark or label 
required under this subtitle upon a tobacco product in or affecting 
commerce, except pursuant to regulations of the Secretary authorizing 
relabeling for purposes of compliance with the requirements of this 
section or of State law.

SEC. 1133. TOBACCO PRODUCT LICENSES.

    (a) In General.--Not later than 1 year after the date of enactment 
of this Act, the Secretary shall establish a program under which 
tobacco product licenses are issued to manufacturers, importers, 
exporters, and wholesalers of tobacco products.
    (b)(1) Eligibility.--A person is entitled to a license unless the 
Secretary finds--
            (A) that such person has been previously convicted of a 
        Federal crime relating to tobacco, including the taxation 
        thereof;
            (B) that such person has, within 5 years prior to the date 
        of application, been previously convicted of any felony under 
        Federal or State law; or
            (C) that such person is, by virtue of his business 
        experience, financial standing, or trade connections, not 
        likely to maintain such operations in conformity with Federal 
        law.
    (2) Conditions.--The issuance of a license under this section shall 
be conditioned upon the compliance with the requirements of this 
subtitle, all Federal laws relating to the taxation of tobacco 
products, chapter 114 of title 18, United States Code, and any 
regulations issued pursuant to such statutes.
    (c) Revocation, Suspension, and Annulment.--The program established 
under subsection (a) shall permit the Secretary to revoke, suspend, or 
annul a license issued under this section if the Secretary determines 
that the terms or conditions of the license have not been complied 
with. Prior to any action under this subsection, the Secretary shall 
provide the licensee with due notice and the opportunity for a hearing.
    (d) Records and Audits.--The Secretary shall, under the program 
established under subsection (a), require all license holders to keep 
records concerning the chain of custody of the tobacco products that 
are the subject of the license and make such records available to the 
Secretary for inspection and audit.
    (e) Retailers.--This section does not apply to retailers of tobacco 
products, except that retailers shall maintain records of receipt, and 
such records shall be available to the Secretary for inspection and 
audit. An ordinary commercial record or invoice will satisfy this 
requirement provided such record shows the date of receipt, from whom 
such products were received and the quantity of tobacco products 
received.

SEC. 1134. PROHIBITIONS.

    (a) Importation and Sale.--It is unlawful, except pursuant to a 
license issued by the Secretary under this subtitle--
            (1) to engage in the business of importing tobacco products 
        into the United States; or
            (2) for any person so engaged to sell, offer, or deliver 
        for sale, contract to sell, or ship, in or affecting commerce, 
        directly or indirectly or through an affiliate, tobacco 
        products so imported.
    (b) Manufacture and Sale.--It is unlawful, except pursuant to a 
license issued by the Secretary under this subtitle--
            (1) to engage in the business of manufacturing, packaging 
        or warehousing tobacco products; or
            (2) for any person so engaged to sell, offer, or deliver 
        for sale, contract to sell, or ship, in or affecting commerce, 
        directly or indirectly or through an affiliate, tobacco 
        products so manufactured, packaged, or warehoused.
    (c) Wholesale.--It is unlawful, except pursuant to a license issued 
by the Secretary under this subtitle--
            (1) to engage in the business of purchasing for resale at 
        wholesale tobacco products, or, as a principal or agent, to 
        sell, offer for sale, negotiate for, or hold out by 
        solicitation, advertisement, or otherwise as selling, 
        providing, or arranging for, the purchase for resale at 
        wholesale of tobacco products; or
            (2) for any person so engaged to receive or sell, offer or 
        deliver for sale, contract to sell, or ship, in or affecting 
        commerce, directly or indirectly or through an affiliate, 
        tobacco products so purchased.
    (d) Exportation.--
            (1) In general.--It is unlawful, except pursuant to a 
        license issued by the Secretary under this subtitle--
                    (A) to engage in the business of exporting tobacco 
                products from the United States; or
                    (B) for any person so engaged to sell, offer, or 
                deliver for sale, contract to sell, or ship, in or 
                affecting commerce, directly or indirectly or through 
                an affiliate, tobacco products received for export.
            (2) Report.--Prior to exportation of tobacco products from 
        the United States, the exporter shall submit a report in such 
        manner and form as the Secretary may by regulation prescribe to 
        enable the Secretary to identify the shipment and assure that 
        it reaches its intended destination.
            (3) Agreements with foreign governments.--The Secretary is 
        authorized to enter into agreements with foreign governments to 
        exchange or share information contained in reports received 
        from exporters of tobacco products if the Secretary believes 
        that such an agreement will assist in--
                    (A) insuring compliance with any law or regulation 
                enforced or administered by an agency of the United 
                States; or
                    (B) preventing or detecting violation of the laws 
                or regulations of a foreign government with which the 
                Secretary has entered into an agreement.
        Such information may be exchanged or shared with a foreign 
        government only if the Secretary obtains assurances from such 
        government that the information will be held in confidence and 
        used only for the purpose of preventing or detecting violations 
        of the laws or regulations of such government or the United 
        States and, provided further that no information may be 
        exchanged or shared with any government that has violated such 
        assurances.
    (e) Unlawful Acts.--
            (1) Unlicensed receipt or delivery.--It is unlawful for any 
        licensed importer, licensed manufacturer, or licensed 
        wholesaler intentionally to ship, transport, deliver or receive 
        any tobacco products from or to any person other than a person 
        licensed under this chapter or a retailer licensed under the 
        provisions of this Act, except a licensed importer may receive 
        foreign tobacco products from a foreign manufacturer or a 
        foreign distributor that have not previously entered the United 
        States.
            (2) Receipt of re-imported goods.--It is unlawful for any 
        person, except a licensed manufacturer or a licensed exporter 
        to receive any tobacco products that have previously been 
        exported and returned to the United States.
            (3) Delivery by exporter.--It is unlawful for any licensed 
        exporter intentionally to ship, transport, sell or deliver for 
        sale any tobacco products to any person other than a licensed 
        manufacturer or foreign purchaser.
            (4) Shipment of export-only goods.--It is unlawful for any 
        person other than a licensed exporter intentionally to ship, 
        transport, receive or possess, for purposes of resale, any 
        tobacco product in packages marked ``FOR EXPORT FROM THE UNITED 
        STATES,'' other than for direct return to the manufacturer or 
        exporter for re-packing or for re-exportation.
            (5) False statements.--It is unlawful for any licensed 
        manufacturer, licensed exporter, licensed importer, or licensed 
        wholesaler to make intentionally any false entry in, to fail 
        willfully to make appropriate entry in, or to fail willfully to 
        maintain properly any record or report that he is required to 
        keep as required by this chapter or the regulations promulgated 
        thereunder.
    (f) Effective Date.--The provisions of this section shall become 
effective on the date that is 365 days after the date of enactment of 
this Act.

SEC. 1135. LABELING OF PRODUCTS SOLD BY NATIVE AMERICANS.

    The Secretary, in consultation with the Secretary of the Interior, 
shall promulgate regulations that require that each package of a 
tobacco product that is sold on an Indian reservation (as defined in 
section 403(9) of the Indian Child Protection and Family Violence 
Prevention Act (25 U.S.C. 3202(9)) be labeled as such. Such regulations 
shall include requirements for the size and location of the label.

SEC. 1136. LIMITATION ON ACTIVITIES INVOLVING TOBACCO PRODUCTS IN 
              FOREIGN TRADE ZONES.

    (a) Manufacture of Tobacco Products in Foreign Trade Zones.--No 
person shall manufacture a tobacco product in any foreign trade zone, 
as defined for purposes of the Act of June 18, 1934 (19 U.S.C. 81a et 
seq.).
    (b) Exporting or Importing From or Into a Foreign Trade Zone.--Any 
person exporting or importing tobacco products from or into a foreign 
trade zone, as defined for purposes of the Act of June 18, 1934 (19 
U.S.C. 81a et seq.), shall comply with the requirements provided in 
this subtitle. In any case where the person operating in a foreign 
trade zone is acting on behalf of a person licensed under this 
subtitle, qualification as an importer or exporter will not be 
required, if such person complies with the requirements set forth in 
section 1134(d)(2) and (3) of this subtitle.

SEC. 1137. JURISDICTION; PENALTIES; COMPROMISE OF LIABILITY.

    (a) Jurisdiction.--The District Courts of the United States, and 
the United States Court for any Territory, of the District where the 
offense is committed or of which the offender is an inhabitant or has 
its principal place of business, are vested with jurisdiction of any 
suit brought by the Attorney General in the name of the United States, 
to prevent and restrain violations of any of the provisions of this 
subtitle.
    (b) Penalties.--Any person violating any of the provisions of this 
subtitle shall, upon conviction, be fined as provided in section 3571 
of title 18, United States Code, imprisoned for not more than 5 years, 
or both.
    (c) Civil Penalties.--The Secretary may, in lieu of referring 
violations of this subtitle for criminal prosecution, impose a civil 
penalty of not more than $10,000 for each offense.
    (d) Compromise of Liability.--The Secretary is authorized, with 
respect to any violation of this subtitle, to compromise the liability 
arising with respect to a violation of this subtitle--
            (1) upon payment of a sum not in excess of $10,000 for each 
        offense, to be collected by the Secretary and to be paid into 
        the Treasury as miscellaneous receipts; and
            (2) in the case of repetitious violations and in order to 
        avoid multiplicity of criminal proceedings, upon agreement to a 
        stipulation, that the United States may, on its own motion upon 
        5 days notice to the violator, cause a consent decree to be 
        entered by any court of competent jurisdiction enjoining the 
        repetition of such violation.
    (e) Forfeiture.--
            (1) The Secretary may seize and forfeit any conveyance, 
        tobacco products, or monetary instrument (as defined in section 
        5312 of title 31, United States Code) involved in a violation 
        of this subtitle, or any property, real or personal, which 
        constitutes or is derived from proceeds traceable to a 
        violation of this chapter. For purposes of this paragraph, the 
        provisions of subsections (a)(2), (b)(2), and (c) through (j) 
        of section 981 of title 18, United States Code, apply to 
        seizures and forfeitures under this paragraph insofar as they 
        are applicable and not inconsistent with the provisions of this 
        subtitle.
            (2) The court, in imposing sentence upon a person convicted 
        of an offense under this subtitle, shall order that the person 
        forfeit to the United States any property described in 
        paragraph (1). The seizure and forfeiture of such property 
        shall be governed by subsections (b), (c), and (e) through (p) 
        of section 853 of title 21, United States Code, insofar as they 
        are applicable and not inconsistent with the provisions of this 
        subtitle.

SEC. 1138. AMENDMENTS TO THE CONTRABAND CIGARETTE TRAFFICKING ACT.

    (a) Definitions.--Section 2341 of title 18, United States Code, is 
amended--
            (1) by striking ``60,000'' and inserting ``30,000'' in 
        paragraph (2);
            (2) by inserting after ``payment of cigarette taxes,'' in 
        paragraph (2) the following: ``or in the case of a State that 
        does not require any such indication of tax payment, if the 
        person in possession of the cigarettes is unable to provide any 
        evidence that the cigarettes are moving legally in interstate 
        commerce,'';
            (3) by striking ``and'' at the end of paragraph (4);
            (4) by striking ``Treasury.'' in paragraph (5) and 
        inserting ``Treasury;''; and
            (5) by adding at the end thereof the following:
            ``(6) the term `tobacco product' means cigars, cigarettes, 
        smokeless tobacco, roll your own and pipe tobacco (as such 
        terms are defined in section 5701 of the Internal Revenue Code 
        of 1986); and
            ``(7) the term `contraband tobacco product' means--
                    ``(A) a quantity in excess of 30,000 of any tobacco 
                product that is manufactured, sold, shipped, delivered, 
                transferred, or possessed in violation of Federal laws 
                relating to the distribution of tobacco products; and
                    ``(B) a quantity of tobacco product that is 
                equivalent to an excess of 30,000 cigarettes, as 
                determined by regulation, which bears no evidence of 
                the payment of applicable State tobacco taxes in the 
                State where such tobacco products are found, if such 
                State requires a stamp, impression, or other indication 
                to be placed on packages or other containers of product 
                to evidence payment of tobacco taxes, or in the case of 
                a State that does not require any such indication of 
                tax payment, if the person in possession of the tobacco 
                product is unable to provide any evidence that the 
                tobacco products are moving legally in interstate 
                commerce and which are in the possession of any person 
                other than a person defined in paragraph (2) of this 
                section.''.
    (b) Unlawful Acts.--Section 2342 of title 18, United States Code, 
is amended--
            (1) by inserting ``or contraband tobacco products'' before 
        the period in subsection (a); and
            (2) by adding at the end thereof the following:
    ``(c) It is unlawful for any person--
            ``(1) knowingly to make any false statement or 
        representation with respect to the information required by this 
        chapter to be kept in the records or reports of any person who 
        ships, sells, or distributes any quantity of cigarettes in 
        excess of 30,000 in a single transaction, or tobacco products 
        in such equivalent quantities as shall be determined by 
        regulation; or
            ``(2) knowingly to fail or knowingly to fail to maintain 
        distribution records or reports, alter or obliterate required 
        markings, or interfere with any inspection as required with 
        respect to such quantity of cigarettes or other tobacco 
        products.
    ``(d) It shall be unlawful for any person knowingly to transport 
cigarettes or other tobacco products under a false bill of lading or 
without any bill of lading.''.
    (c) Recordkeeping.--Section 2343 of title 18, United States Code, 
is amended--
            (1) by striking ``60,000'' in subsection (a) and inserting 
        ``30,000'';
            (2) by inserting after ``transaction'' in subsection (a) 
        the following: ``or, in the case of other tobacco products an 
        equivalent quantity as determined by regulation,'';
            (3) by striking the last sentence of subsection (a) and 
        inserting the following:
``Except as provided in subsection (c) of this section, nothing 
contained herein shall authorize the Secretary to require reporting 
under this section.'';
            (4) by striking ``60,000'' in subsection (b) and inserting 
        ``30,000'';
            (5) by inserting after ``transaction'' in subsection (b) 
        the following: ``or, in the case of other tobacco products an 
        equivalent quantity as determined by regulation,''; and
            (6) by adding at the end thereof the following:
    ``(c)(1) Any person who ships, sells, or distributes for resale 
tobacco products in interstate commerce, whereby such tobacco products 
are shipped into a State taxing the sale or use of such tobacco 
products or who advertises or offers tobacco products for such sale or 
transfer and shipment shall--
            ``(A) first file with the tobacco tax administrator of the 
        State into which such shipment is made or in which such 
        advertisement or offer is disseminated, a statement setting for 
        the persons name, and trade name (if any), and the address of 
        the persons principal place of business and of any other place 
        of business; and
            ``(B) not later than the 10th day of each month, file with 
        the tobacco tax administrator of the State into which such 
        shipment is made a memorandum or a copy of the invoice covering 
        each and every shipment of tobacco products made during the 
        previous month into such State; the memorandum or invoice in 
        each case to include the name and address of the person to whom 
        the shipment was made, the brand, and the quantity thereof.
    ``(2) The fact that any person ships or delivers for shipment any 
tobacco products shall, if such shipment is into a State in which such 
person has filed a statement with the tobacco tax administrator under 
paragraph (1)(A) of this subsection, be presumptive evidence that such 
tobacco products were sold, shipped, or distributed for resale by such 
person.
    ``(3) For purposes of this subsection--
            ``(A) the term `use' includes consumption, storage, 
        handling, or disposal of tobacco products; and
            ``(B) the term `tobacco tax administrator' means the State 
        official authorized to administer tobacco tax laws of the 
        State.''.
    (e) Penalties.--Section 2344 of title 18, United States Code, is 
amended--
            (1) by inserting ``or (c)'' in subsection (b) after 
        ``section 2344(b)'';
            (2) by inserting ``or contraband tobacco products'' after 
        ``cigarettes'' in subsection (c); and
            (3) by adding at the end thereof the following:
    ``(d) Any proceeds from the unlawful distribution of tobacco shall 
be subject to seizure and forfeiture under section 981(a)(1)(C).''.
    (f) Repeal of Federal Law Relating to Collection of State Cigarette 
Taxes.--The Act of October 19, 1949, (63 Stat. 884; 15 U.S.C. 375-378) 
is hereby repealed.

SEC. 1139. FUNDING.

    (a) License Fees.--The Secretary may, in the Secretary's sole 
discretion, set the fees for licenses required by this chapter, in such 
amounts as are necessary to recover the costs of administering the 
provisions of this chapter, including preventing trafficking in 
contraband tobacco products.
    (b) Disposition of Fees.--Fees collected by the Secretary under 
this chapter shall be deposited in an account with the Treasury of the 
United States that is specially designated for paying the costs 
associated with the administration or enforcement of this chapter or 
any other Federal law relating to the unlawful trafficking of tobacco 
products. The Secretary is authorized and directed to pay out of any 
funds available in such account any expenses incurred by the Federal 
Government in administering and enforcing this chapter or any other 
Federal law relating to the unlawful trafficking in tobacco products 
(including expenses incurred for the salaries and expenses of 
individuals employed to provide such services). None of the funds 
deposited into such account shall be available for any purpose other 
than making payments authorized under the preceding sentence.

SEC. 1140. RULES AND REGULATIONS.

    The Secretary shall prescribe all needful rules and regulations for 
the enforcement of this chapter, including all rules and regulations 
that are necessary to ensure the lawful distribution of tobacco 
products in interstate or foreign commerce.

                      Subtitle C--Other Provisions

SEC. 1161. IMPROVING CHILD CARE AND EARLY CHILDHOOD DEVELOPMENT.

    (a) In General.--There are authorized to be appropriated to the 
Secretary from the National Tobacco Trust Fund such sums as may be 
necessary for each fiscal year to be used by the Secretary for the 
following purposes:
            (1) Improving the affordability of child care through 
        increased appropriations for child care under the Child Care 
        and Development Block Grant Act of 1990 (42 U.S.C. 9859 et 
        seq.).
            (2) Enhancing the quality of child care and early childhood 
        development through the provision of grants to States under the 
        Child Care and Development Block Grant Act of 1990 (42 U.S.C. 
        9859 et seq.).
            (3) Expanding the availability and quality of school-age 
        care through the provision of grants to States under the Child 
        Care and Development Block Grant Act of 1990 (42 U.S.C. 9859 et 
        seq.).
            (4) Assisting young children by providing grants to local 
        collaboratives under the Child Care and Development Block Grant 
        Act of 1990 (42 U.S.C. 9859 et seq.) for the purpose of 
        improving parent education and supportive services, 
        strengthening the quality of child care, improving health 
        services, and improving services for children with 
        disabilities.
    (b) Supplement not Supplant.--Amounts made available to a State 
under this section shall be used to supplement and not supplant other 
Federal, State, and local funds provided for programs that serve the 
health and developmental needs of children. Amounts provided to the 
State under any of the provisions of law referred to in this section 
shall not be reduced solely as a result of the availability of funds 
under this section.

SEC. 1162. BAN OF SALE OF TOBACCO PRODUCTS THROUGH THE USE OF VENDING 
              MACHINES.

    (a) Ban of Sale of Tobacco Products Through the Use of Vending 
Machines.--Effective 12 months after the date of enactment of this Act, 
it shall be unlawful to sell tobacco products through the use of a 
vending machine.
    (b) Compensation for Banned Vending Machines.--
            (1) In general.--The owners and operators of tobacco 
        vending machines shall be reimbursed, subject to the 
        availability of appropriations under subsection (d), for the 
        fair market value of their tobacco vending machines.
            (2) Tobacco vending reimburment corporation.--
                    (A) Corporation.--Reimbursment shall be directed 
                through a private, nonprofit corporation established in 
                the District of Columbia, known as the Tobacco Vending 
                Reimburment Corporation (in this section referred to as 
                the ``Corporation''). Except as otherwise provided in 
                this section, the Corporation is subject to, and has 
                all the powers conferred upon a nonprofit corporation 
                by the District of Columbia Nonprofit Corporation Act 
                (D.C. Code section 29-501 et seq.).
                    (B) Duties.--The Corporation shall--
                            (i) disburse compensation funds to vending 
                        companies under this section;
                            (ii) verify operational machines; and
                            (iii) maintain complete records of machine 
                        verification and accountings of disbursements 
                        and administration of the compensation fund 
                        established under paragraph (4).
            (3) Management of corporation.--
                    (A) Board of directors.--The Corporation shall be 
                managed by a Board of Directors that--
                            (i) consists of distinguished Americans 
                        with experience in finance, public policy, or 
                        fund management;
                            (ii) includes at least 1 member of the 
                        United States tobacco vending machine industry;
                            (iii) shall be paid an annual salary in an 
                        amount determined by the President of the 
                        Corporation not to exceed $40,000 individually, 
                        out of amounts transferred to the Corporation 
                        under paragraph (4)(A);
                            (iv) shall appoint a President to manage 
                        the day-to-day activities of the Corporation;
                            (v) shall develop guidelines by which the 
                        President shall direct the Corporation;
                            (vi) shall retain a national accounting 
                        firm to verify the distribution of funds and 
                        audit the compensation fund established under 
                        paragraph (4);
                            (vii) shall retain such legal, management, 
                        or consulting assistance as is necessary and 
                        reasonable; and
                            (viii) shall periodically report to 
                        Congress regarding the activities of the 
                        Corporation.
                    (B) Duties of the president of the corporation.--
                The President of the Corporation shall--
                            (i) hire appropriate staff;
                            (ii) prepare the report of the Board of 
                        Directors of the Corporation required under 
                        subparagraph (A)(viii); and
                            (iii) oversee Corporation functions, 
                        including verification of machines, 
                        administration and disbursement of funds, 
                        maintenance of complete records, operation of 
                        appeals procedures, and other directed 
                        functions.
            (4) Compensation Fund.--
                    (A) Rules for disbursement of funds.--
                            (i) Payments to owners and operators.--The 
                        Corporation shall disburse funds to compensate 
                        the owners and operators of tobacco vending 
                        machines in accordance with the following:
                                    (I) The fair market value of each 
                                tobacco vending machine verified by the 
                                Corporation President in accordance 
                                with subparagraph (C), and proven to 
                                have been in operation before August 
                                10, 1995, shall be disbursed to the 
                                owner of the machine seeking 
                                compensation.
                                    (II) No compensation shall be made 
                                for a spiral glass front vending 
                                machine.
                            (ii) Other payments.--Funds appropriated to 
                        the Corporation under subsection (d) may be 
                        used to pay the administrative costs of the 
                        Corporation that are necessary and proper or 
                        required by law. The total amount paid by the 
                        Corporation for administrative and overhead 
                        costs, including accounting fees, legal fees, 
                        consultant fees, and associated administrative 
                        costs shall not exceed 1 percent of the total 
                        amount appropriated to the Corporation under 
                        subsection (d).
                    (B) Verification of vending machines.--Verification 
                of vending machines shall be based on copies of 
                official State vending licenses, company computerized 
                or handwritten sales records, or physical inspection by 
                the Corporation President or by an inspection agent 
                designated by the President. The Corporation President 
                and the Board of Directors of the Corporation shall 
                work vigorously to prevent and prosecute any fraudulent 
                claims submitted for compensation.
                    (C) Return of account funds not distributed to 
                vendors.--The Corporation shall be dissolved on the 
                date that is 4 years after the date of enactment of 
                this Act. Any funds not dispersed or allocated to 
                claims pending as of that date shall be transferred to 
                a public anti-smoking trust, or used for such other 
                purposes as Congress may designate.
    (c) Settlement of Legal Claims Pending Against the United States.--
Acceptance of a compensation payment from the Corporation by a vending 
machine owner or operator shall settle all pending and future claims of 
the owner or operator against the United States that are based on, or 
related to, the ban of the use of tobacco vending machines imposed 
under this section and any other laws or regulations that limit the use 
of tobacco vending machines.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated to the Corporation from funds not otherwise obligated in 
the Treasury or out of the National Tobacco Trust Fund, such sums as 
may be necessary to carry out this section.

SEC. 1163. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
              1974.

    (a) In General.--Subpart B of part 7 of subtitle B of title I of 
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1185 et 
seq.) is amended by adding at the end the following new section:

``SEC. 713. REQUIRED COVERAGE FOR MINIMUM HOSPITAL STAY FOR 
              MASTECTOMIES AND LYMPH NODE DISSECTIONS FOR THE TREATMENT 
              OF BREAST CANCER AND COVERAGE FOR RECONSTRUCTIVE SURGERY 
              FOLLOWING MASTECTOMIES.

    ``(a) Inpatient Care.--
            ``(1) In general.--A group health plan, and a health 
        insurance issuer providing health insurance coverage in 
        connection with a group health plan, that provides medical and 
        surgical benefits shall ensure that inpatient coverage with 
        respect to the surgical treatment of breast cancer (including a 
        mastectomy, lumpectomy, or lymph node dissection for the 
        treatment of breast cancer) is provided for a period of time as 
        is determined by the attending physician, in his or her 
        professional judgment consistent with generally accepted 
        medical standards, in consultation with the patient, and 
        subject to subsection (d), to be medically appropriate.
            ``(2) Exception.--Nothing in this section shall be 
        construed as requiring the provision of inpatient coverage if 
        the attending physician in consultation with the patient 
        determine that a shorter period of hospital stay is medically 
        appropriate.
    ``(b) Reconstructive Surgery.--A group health plan, and a health 
insurance issuer providing health insurance coverage in connection with 
a group health plan, that provides medical and surgical benefits with 
respect to a mastectomy shall ensure that, in a case in which a 
mastectomy patient elects breast reconstruction, coverage is provided 
for--
            ``(1) all stages of reconstruction of the breast on which 
        the mastectomy has been performed;
            ``(2) surgery and reconstruction of the other breast to 
        produce a symmetrical appearance; and
            ``(3) the costs of prostheses and complications of 
        mastectomy including lymphedemas;
in the manner determined by the attending physician and the patient to 
be appropriate. Such coverage may be subject to annual deductibles and 
coinsurance provisions as may be deemed appropriate and as are 
consistent with those established for other benefits under the plan or 
coverage. Written notice of the availability of such coverage shall be 
delivered to the participant upon enrollment and annually thereafter.
    ``(c) Notice.--A group health plan, and a health insurance issuer 
providing health insurance coverage in connection with a group health 
plan shall provide notice to each participant and beneficiary under 
such plan regarding the coverage required by this section in accordance 
with regulations promulgated by the Secretary. Such notice shall be in 
writing and prominently positioned in any literature or correspondence 
made available or distributed by the plan or issuer and shall be 
transmitted--
            ``(1) in the next mailing made by the plan or issuer to the 
        participant or beneficiary;
            ``(2) as part of any yearly informational packet sent to 
        the participant or beneficiary; or
            ``(3) not later than January 1, 1998;
whichever is earlier.
    ``(d) No Authorization Required.--
            ``(1) In general.--An attending physician shall not be 
        required to obtain authorization from the plan or issuer for 
        prescribing any length of stay in connection with a mastectomy, 
        a lumpectomy, or a lymph node dissection for the treatment of 
        breast cancer.
            ``(2) Prenotification.--Nothing in this section shall be 
        construed as preventing a group health plan from requiring 
        prenotification of an inpatient stay referred to in this 
        section if such requirement is consistent with terms and 
        conditions applicable to other inpatient benefits under the 
        plan, except that the provision of such inpatient stay benefits 
        shall not be contingent upon such notification.
    ``(e) Prohibitions.--A group health plan, and a health insurance 
issuer offering group health insurance coverage in connection with a 
group health plan, may not--
            ``(1) deny to a patient eligibility, or continued 
        eligibility, to enroll or to renew coverage under the terms of 
        the plan, solely for the purpose of avoiding the requirements 
        of this section;
            ``(2) provide monetary payments or rebates to individuals 
        to encourage such individuals to accept less than the minimum 
        protections available under this section;
            ``(3) penalize or otherwise reduce or limit the 
        reimbursement of an attending provider because such provider 
        provided care to an individual participant or beneficiary in 
        accordance with this section;
            ``(4) provide incentives (monetary or otherwise) to an 
        attending provider to induce such provider to provide care to 
        an individual participant or beneficiary in a manner 
        inconsistent with this section; and
            ``(5) subject to subsection (f)(3), restrict benefits for 
        any portion of a period within a hospital length of stay 
required under subsection (a) in a manner which is less favorable than 
the benefits provided for any preceding portion of such stay.
    ``(f) Rules of Construction.--
            ``(1) In general.--Nothing in this section shall be 
        construed to require a patient who is a participant or 
        beneficiary--
                    ``(A) to undergo a mastectomy or lymph node 
                dissection in a hospital; or
                    ``(B) to stay in the hospital for a fixed period of 
                time following a mastectomy or lymph node dissection.
            ``(2) Limitation.--This section shall not apply with 
        respect to any group health plan, or any group health insurance 
        coverage offered by a health insurance issuer, which does not 
        provide benefits for hospital lengths of stay in connection 
        with a mastectomy or lymph node dissection for the treatment of 
        breast cancer.
            ``(3) Cost sharing.--Nothing in this section shall be 
        construed as preventing a group health plan or issuer from 
        imposing deductibles, coinsurance, or other cost-sharing in 
        relation to benefits for hospital lengths of stay in connection 
        with a mastectomy or lymph node dissection for the treatment of 
        breast cancer under the plan (or under health insurance 
        coverage offered in connection with a group health plan), 
        except that such coinsurance or other cost-sharing for any 
        portion of a period within a hospital length of stay required 
        under subsection (a) may not be greater than such coinsurance 
        or cost-sharing for any preceding portion of such stay.
            ``(4) Level and type of reimbursements.--Nothing in this 
        section shall be construed to prevent a group health plan or a 
        health insurance issuer offering group health insurance 
        coverage from negotiating the level and type of reimbursement 
        with a provider for care provided in accordance with this 
        section.
    ``(g) Preemption, Relation to State Laws.--
            ``(1) In general.--Nothing in this section shall be 
        construed to preempt any State law in effect on the date of 
        enactment of this section with respect to health insurance 
        coverage that--
                    ``(A) such State law requires such coverage to 
                provide for at least a 48-hour hospital length of stay 
                following a mastectomy performed for treatment of 
                breast cancer and at least a 24-hour hospital length of 
                stay following a lymph node dissection of breast 
                cancer;
                    ``(B) requires coverage of at least the coverage of 
                reconstructive breast surgery otherwise required under 
                this section; or
                    ``(C) requires coverage for breast cancer 
                treatments (including breast reconstruction) in 
                accordance with scientific evidence-based practices or 
                guidelines recommended by established medical 
                associations.
            ``(2) Application of section.--With respect to a State 
        law--
                    ``(A) described in paragraph (1)(A), the provisions 
                of this section relating to breast reconstruction shall 
                apply in such State; and
                    ``(B) described in paragraph (1)(B), the provisions 
                of this section relating to length of stays for 
                surgical breast treatment shall apply in such State.
            ``(3) Erisa.--Nothing in this section shall be construed to 
        affect or modify the provisions of section 514 with respect to 
        group health plans.''.
    (b) Clerical Amendment.--The table of contents in section 1 of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1001 note) 
is amended by inserting after the item relating to section 712 the 
following new item:

``Sec. 713. Required coverage for minimum hospital stay for 
                            mastectomies and lymph node dissections for 
                            the treatment of breast cancer and coverage 
                            for reconstructive surgery following 
                            mastectomies.''.
    (c) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply with respect to plan years beginning on or after the date 
        of enactment of this Act.
            (2) Special rule for collective bargaining agreements.--In 
        the case of a group health plan maintained pursuant to 1 or 
        more collective bargaining agreements between employee 
        representatives and 1 or more employers, any plan amendment 
        made pursuant to a collective bargaining agreement relating to 
        the plan which amends the plan solely to conform to any 
        requirement added by this section shall not be treated as a 
        termination of such collective bargaining agreement.

               TITLE XII--ASBESTOS-RELATED TOBACCO CLAIMS

SEC. 1201. NATIONAL TOBACCO TRUST FUNDS AVAILABLE UNDER FUTURE 
              LEGISLATION.

    If the Congress enacts qualifying legislation after the date of 
enactment of this Act to provide for the payment of asbestos claims, 
then amounts in the National Tobacco Trust Fund established by title IV 
of this Act set aside for public health expenditures shall be 
available, as provided by appropriation Acts, to make those payments. 
For purposes of this section, the term ``qualifying legislation'' means 
a public law that amends this Act and changes the suballocations of 
funds set aside for public health expenditures under title IV of this 
Act to provide for the payment of those claims.

                     TITLE XIII--VETERANS' BENEFITS

SEC. 1301. RECOVERY BY SECRETARY OF VETERANS AFFAIRS.

    Title 38, United States Code, is amended by adding after part VI 
the following:

 ``PART VII--RECOVERY OF COSTS FOR TOBACCO-RELATED DISABILITY OR DEATH

``Chapter 91--Tort liability for disability, injury, disease, or death 
                           due to tobacco use

``Sec.
``9101. Recovery by Secretary of Veterans Affairs
``9102. Regulations
``9103. Limitation or repeal of other provisions for recovery of 
                            compensation
``9104. Exemption from annual limitation on damages
``Sec.  9101. Recovery by Secretary of Veterans Affairs
    ``(a) Conditions; Exceptions; Persons Liable; Amount of Recovery; 
Subrogation.--In any case in which the Secretary is authorized or 
required by law to provide compensation and medical care services under 
this title for disability or death from injury or disease attributable 
in whole or in part to the use of tobacco products by a veteran during 
the veterans active military, naval, or air service under circumstances 
creating a tort liability upon a tobacco product manufacturer (other 
than or in addition to the United States) to pay damages therefor, the 
Secretary shall have a right to recover (independent of the rights of 
the injured or diseased veteran) from said tobacco product manufacturer 
the cost of the compensation paid or to be paid and the costs of 
medical care services provided, and shall, as to this right, be 
subrogated to any right or claim that the injured or diseased veteran, 
his or her guardian, personal representative, estate, dependents, or 
survivors has against such third person to the extent of the cost of 
the compensation paid or to be paid and the costs of medical services 
provided.
    ``(b) Enforcement procedure; intervention; joinder of parties; 
State or Federal court proceedings.--The Secretary may, to enforce such 
right under subsection (a) of this section--
            ``(1) intervene or join in any action or proceeding brought 
        by the injured or diseased veteran, his or her guardian, 
        personal representative, estate, dependents, or survivors, 
        against the tobacco product manufacturer who is liable for the 
        injury or disease; or
            ``(2) if such action or proceeding is not commenced within 
        6 months after the first day on which compensation is paid, or 
        the medical care services are provided, by the Secretary in 
        connection with the injury or disease involved, institute and 
        prosecute legal proceedings against the tobacco product 
        manufacturer who is liable for the injury or disease, in a 
        State or Federal court, either alone (in its own name or in the 
        name of the injured veteran, his or her guardian, personal 
        representative, estate, dependents, or survivors) or in 
        conjunction with the injured or diseased veteran, his or her 
        guardian, personal representative, estate, dependents, or 
        survivors.
    ``(c) Credits to appropriations.--Any amount recovered or collected 
under this section for compensation paid, and medical care services 
provided, by the Secretary shall be credited to a revolving fund 
established in the Treasury of the United States known as the 
Department of Veterans Affairs Tobacco Recovery Fund (hereafter called 
the Fund). The Fund shall be available to the Secretary without fiscal 
year limitation for purposes of veterans programs, including 
administrative costs. The Secretary may transfer such funds as deemed 
necessary to the various Department of Veterans Affairs appropriations, 
which shall remain available until expended.
``Sec.  9102. Regulations
    ``(a) Determination and Establishment of Present Value of 
Compensation and Medical Care Services To Be Paid.--The Secretary may 
prescribe regulations to carry out this chapter, including regulations 
with respect to the determination and establishment of the present 
value of compensation to be paid to an injured or diseased veteran or 
his or her surviving spouse, child, or parent, and medical care 
services provided to a veteran.
    ``(b) Settlement, Release and Waiver of Claims.--To the extent 
prescribed by regulations under subsection (a) of this section, the 
Secretary may--
            ``(1) compromise, or settle and execute a release of, any 
        claim which the Secretary has by virtue of the right 
        established by section 9101 of this title; or
            ``(2) waive any such claim, in whole or in part, for the 
        convenience of the Government, or if he or she determines that 
        collection would result in undue hardship upon the veteran who 
        suffered the injury or disease or his or her surviving spouse, 
        child or parent resulting in payment of compensation, or 
        receipt of medical care services.
    ``(c) Damages Recoverable for Personal Injury Unaffected.--No 
action taken by the Secretary in connection with the rights afforded 
under this chapter shall operate to deny to the injured veteran or his 
or her surviving spouse, child or parent the recovery for that portion 
of his or her damage not covered hereunder.
``Sec.  9103. Limitation or repeal of other provisions for recovery of 
              compensation and medical care services
    ``This chapter does not limit or repeal any other provision of law 
providing for recovery by the Secretary of the cost of compensation and 
medical care services described in section 9101 of this title.
``Sec.  9104. Exemption from annual limitation on damages
    ``Any amount recovered under section 9101 of this title for 
compensation paid or to be paid, and the cost of medical care services 
provided, by the Secretary for disability or death from injury or 
disease attributable in whole or in part to the use of tobacco products 
by a veteran during the veterans active military, naval, or air service 
shall not be subject to the limitation on the annual amount of damages 
for which the tobacco product manufacturers may be found liable as 
provided in the National Tobacco Policy and Youth Smoking Reduction Act 
and shall not be counted in computing the annual amount of damages for 
purposes of that section.''.

   TITLE XIV--EXCHANGE OF BENEFITS FOR AGREEMENT TO TAKE ADDITIONAL 
                    MEASURES TO REDUCE YOUTH SMOKING

SEC. 1401. CONFERRAL OF BENEFITS ON PARTICIPATING TOBACCO PRODUCT 
              MANUFACTURERS IN RETURN FOR THEIR ASSUMPTION OF SPECIFIC 
              OBLIGATIONS.

    Participating tobacco product manufacturers shall receive the 
benefits, and assume the obligations, set forth in this title.

SEC. 1402. PARTICIPATING TOBACCO PRODUCT MANUFACTURER.

    (a) In General.--Except as provided in subsection (b), a tobacco 
product manufacturer that--
            (1) executes a protocol with the Secretary of Health and 
        Human Services that meets the requirements of sections 1403, 
        1404, and 1405; and
            (2) makes the payment required under section 402(a)(1),
 is, for purposes of this title, a participating tobacco products 
manufacturer.
    (b) Disqualification.--
            (1) Ineligibility.--Notwithstanding subsection (a), a 
        tobacco product manufacturer may not become a participating 
        tobacco products manufacturer if--
                    (A) the tobacco product manufacturer or any of its 
                principal officers (acting in that official's corporate 
                capacity), is convicted of--
                            (i) manufacturing or distributing 
                        misbranded tobacco products in violation of the 
                        criminal prohibitions on such misbranding 
                        established under section 301 or 303 of the 
                        Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
                        331 or 333);
                            (ii) violating reporting requirements 
                        established under section 5762(a)(4) of the 
                        Internal Revenue Code of 1986 (26 U.S.C. 
                        5762(a)(4));
                            (iii) violating, or aiding and abetting the 
                        violation of chapter 114 of title 18, United 
                        States Code; or
                            (iv) violating Federal prohibitions on mail 
                        fraud, wire fraud, or the making of false 
                        statements to Federal officials in the course 
                        of making reports or disclosures required by 
                        this Act; or
                    (B) the tobacco product manufacturer, at the end of 
                the 1-year period beginning on the date on which such 
                manufacturer fails to make a required assessment 
                payment under title IV of this Act, has not fully made 
                such payment.
            (2) Disqualification.--A tobacco product manufacturer that 
        has become a participating tobacco product manufacturer shall 
        cease to be treated as a participating tobacco product 
        manufacturer if--
                    (A) it, or any of its principal officers (acting in 
                that official's corporate capacity) is convicted of an 
                offense described in paragraph (1)(A); or
                    (B) it fails to make such a payment within the time 
                period described in paragraph (1)(B).
    (c) Non-participating Tobacco Manufacturers.--Any tobacco product 
manufacturer that--
            (1) does not execute a protocol in accordance with 
        subsection (a);
            (2) fails to make the payment required by section 402(a)(1) 
        (if applicable to that manufacturer);
            (3) is not eligible, under subsection (b)(1), to become a 
        participating tobacco product manufacturer; or
            (4) ceases to be treated as a participating tobacco product 
        manufacturer under subsection (b)(2),
is, for purposes of this title, a non-participating tobacco product 
manufacturer.

SEC. 1403. GENERAL PROVISIONS OF PROTOCOL.

    (a) In General.--For purposes of section 1402, a protocol meets the 
requirements of this section if it--
            (1) contains the provisions described in subsection (b); 
        and
            (2) is enforceable at law.
    (b) Required Provisions.--The protocol shall include the following 
provisions:
            (1) The tobacco product manufacturer executing the protocol 
        will not engage in any conduct that was, either on the date of 
        enactment of this Act, or at any time after the date of 
        enactment of this Act--
                    (A) prohibited by this Act;
                    (B) prohibited by any regulation promulgated by the 
                Food and Drug Administration that applies to tobacco 
                products; or
                    (C) prohibited by any other statute.
            (2) The tobacco product manufacturer executing the protocol 
        will contract with only such distributors and retailers who 
        have operated in compliance with the applicable provisions of 
        Federal, State, or local law regarding the marketing and sale 
        of tobacco products and who agree to comply with advertising 
        and marketing provisions in paragraph (3).
            (3) The tobacco product manufacturer executing the protocol 
        will be bound in marketing tobacco products by the following 
        provisions, whether or not these provisions have legal force 
        and effect against manufacturers who are not signatories to the 
        protocol--
                    (A) the advertising and marketing provisions of 
                part 897 of title 21, Code of Federal Regulations, that 
                were published in the Federal Register on August 28, 
                1996, and which shall be adopted and incorporated as 
                independent terms of the protocol;
                    (B) the requirements of section 1404; and
                    (C) the requirements of section 1405.
            (4) The tobacco product manufacturer executing the protocol 
        will make any payments to the National Tobacco Trust Fund in 
        title IV that are required to be made under that title or in 
        any other title of this Act.
            (5) The tobacco product manufacturer executing the protocol 
        will be bound by the provisions of title IV, and any other 
        title of this Act with respect to payments required under title 
        IV, without regard to whether those provisions have legal force 
        and effect against manufacturers who have not become 
        signatories.
            (6) The tobacco product manufacturer executing the protocol 
        will make the industry-wide and manufacturer-specific look-back 
        assessment payments that may be required under title II.
            (7) The tobacco product manufacturer executing the protocol 
        will be bound by the provisions of title II that require a 
        manufacturer to make look-back assessments, and any other title 
        of this Act with respect to such assessments, without regard to 
        whether such terms have legal force and effect against 
        manufacturers who have not become signatories.
            (8) The tobacco product manufacturer executing the protocol 
        will, within 180 days after the date of enactment of this Act 
        and in conjunction with other participating tobacco product 
        manufacturers, establish a National Tobacco Document Depository 
        in the Washington, D.C. area--
                    (A) that is not affiliated with, or controlled by, 
                any tobacco product manufacturer;
                    (B) the establishment and operational costs of 
                which are allocated among participating tobacco product 
                manufacturers; and
                    (C) that will make any document submitted to it 
                under title IX of this Act and finally determined not 
                to be subject to attorney-client privilege, attorney 
                work product, or trade secret exclusions, available to 
                the public using the Internet or other means within 30 
                days after receiving the document.
    (c) Provisions Applicable to Documents.--The provisions of section 
2116(a) and (b) of title 44, United States Code, apply to records and 
documents submitted to the Depository (or, to the alternative 
depository, if any, established by the Secretary by regulation under 
title IX of this Act) in the same manner and to the same extent as if 
they were records submitted to the National Archives of the United 
States required by statute to be retained indefinitely.

SEC. 1404. TOBACCO PRODUCT LABELING AND ADVERTISING REQUIREMENTS OF 
              PROTOCOL.

    (a) In General.--For purposes of section 1402, a protocol meets the 
requirements of this section if it requires that--
            (1) no tobacco product will be sold or distributed in the 
        United States unless its advertising and labeling (including 
        the package)--
                    (A) contain no human image, animal image, or 
                cartoon character;
                    (B) are not outdoor advertising, including 
                advertising in enclosed stadia and on mass transit 
                vehicles, and advertising from within a retail 
                establishment that is directed toward or visible from 
                the outside of the establishment;
                    (C) at the time the advertising or labeling is 
                first used are submitted to the Secretary so that the 
                Secretary may conduct regular review of the advertising 
                and labeling;
                    (D) comply with any applicable requirement of the 
                Federal Food, Drug, and Cosmetic Act, the Federal 
                Cigarette Labeling and Advertising Act, and any 
                regulation promulgated under either of those Acts;
                    (E) do not appear on the international computer 
                network of both Federal and non-Federal interoperable 
                packet switches data networks (the ``Internet''), 
                unless such advertising is designed to be inaccessible 
                in or from the United States to all individuals under 
                the age of 18 years;
                    (F) use only black text on white background, other 
                than--
                            (i) those locations other than retail 
                        stores where no person under the age of 18 is 
                        permitted or present at any time, if the 
                        advertising is not visible from outside the 
                        establishment and is affixed to a wall or 
                        fixture in the establishment; and
                            (ii) advertisements appearing in any 
                        publication which the tobacco product 
                        manufacturer, distributor, or retailer 
                        demonstrates to the Secretary is a newspaper, 
                        magazine, periodical, or other publication 
                        whose readers under the age of 18 years 
                        constitute 15 percent or less of the total 
                        readership as measured by competent and 
                        reliable survey evidence, and that is read by 
                        less than 2 million persons under the age of 18 
                        years as measured by competent and reliable 
                        survey evidence;
                    (G) for video formats, use only static black text 
                on a white background, and any accompanying audio uses 
                only words without music or sound effects;
                    (8) for audio formats, use only words without music 
                or sound effects;
            (2) if a logo, symbol, motto, selling message, recognizable 
        color or pattern of colors, or any other indicia of brand-name 
        product identification of the tobacco product is contained in a 
        movie, program, or video game for which a direct or indirect 
        payment has been made to ensure its placement;
            (3) if a direct or indirect payment has been made by any 
        tobacco product manufacturer, distributor, or retailer to any 
        entity for the purpose of promoting use of the tobacco product 
        through print or film media that appeals to individuals under 
        the age of 18 years or through a live performance by an 
        entertainment artist that appeals to such individuals;
            (4) if a logo, symbol, motto, selling message, recognizable 
        color or pattern of colors, or any other indicia or product 
        identification identical to, similar to, or identifiable with 
        the tobacco product is used for any item (other than a tobacco 
        product) or service marketed, licensed, distributed or sold or 
        caused to be marketed, licensed, distributed, or sold by the 
        tobacco product manufacturer or distributor of the tobacco 
        product; and
            (5)(A) except as provided in subparagraph (B), if 
        advertising or labeling for such product that is otherwise in 
        accordance with the requirements of this section bears a 
        tobacco product brand name (alone or in conjunction with any 
        other word) or any other indicia of tobacco product 
        identification and is disseminated in a medium other than 
        newspapers, magazines, periodicals or other publications 
        (whether periodic or limited distribution), nonpoint-of-sale 
        promotional material (including direct mail), point-of-sale 
        promotional material, or audio or video formats delivered at a 
        point-of-sale; but
            (B) notwithstanding subparagraph (A), advertising or 
        labeling for cigarettes or smokeless tobacco may be 
        disseminated in a medium that is not specified in paragraph (1) 
        if the tobacco product manufacturer, distributor, or retailer 
        notifies the Secretary not later than 30 days prior to the use 
        of such medium, and the notice describes the medium and the 
        extent to which the advertising or labeling may be seen by 
        persons under the age of 18 years.
    (b) Color Print Ads on Magazines.--The protocol shall also provide 
that no tobacco product may be sold or distributed in the United States 
if any advertising for that product on the outside back cover of a 
magazine appears in any color or combination of colors.

SEC. 1405. POINT-OF-SALE REQUIREMENTS.

    (a) In General.--For purposes of section 1402, a protocol meets the 
requirements of this section if it provides that, except as provided in 
subsection (b), point-of-sale advertising of any tobacco product in any 
retail establishment is prohibited.
    (b) Permitted POS Locations.--
            (1) Placement.--One point-of-sale advertisement may be 
        placed in or at each retail establishment for its brand or the 
        contracted house retailer or private label brand of its 
        wholesaler.
            (2) Size.--The display area of any such point-of-sale 
        advertisement (either individually or in the aggregate) shall 
        not be larger than 576 square inches and shall consist of black 
        letters on white background or another recognized typography.
            (3) Proximity to candy.--Any such point-of-sale 
        advertisement shall not be attached to or located within 2 feet 
        of any display fixture on which candy is displayed for sale.
    (c) Audio or Video.--Any audio or video format permitted under 
regulations promulgated by the Secretary may be played or shown in, but 
not distributed, at any location where tobacco products are offered for 
sale.
    (d) No Restrictive Covenants.--No tobacco product manufacturer or 
distributor of tobacco products may enter into any arrangement with a 
retailer that limits the retailer's ability to display any form of 
advertising or promotional material originating with another supplier 
and permitted by law to be displayed in a retail establishment.
    (e) Definitions.--As used in this section, the terms ``point-of-
sale advertisement'' and ``point-of-sale advertising'' mean all printed 
or graphical materials (other than a pack, box, carton, or container of 
any kind in which cigarettes or smokeless tobacco is offered for sale, 
sold, or otherwise distributed to consumers) bearing the brand name 
(alone or in conjunction with any other word), logo, symbol, motto, 
selling message, or any other indicia of product identification 
identical or similar to, or identifiable with, those used for any brand 
of cigarettes or smokeless tobacco, which, when used for its intended 
purpose, can reasonably be anticipated to be seen by customers at a 
location where tobacco products are offered for sale.

SEC. 1406. APPLICATION OF TITLE.

    (a) In General.--The provisions of this title apply to any civil 
action involving a tobacco claim brought pursuant to title VII of this 
Act, including any such claim that has not reached final judgment or 
final settlement as of the date of enactment of this Act, only if such 
claim is brought or maintained against--
            (1) a participating tobacco product manufacturer or its 
        predecessors;
            (2) an importer, distributor, wholesaler, or retailer of 
        tobacco products--
                    (A) that, after the date of enactment of this Act, 
                does not import, distribute, or sell tobacco products 
                made or sold by a non-participating tobacco 
                manufacturer;
                    (B) whose business practices with respect to sales 
                or operations occurring within the United States, 
                conform to the applicable requirements of the protocol; 
                and
                    (C) that is not itself a non-participating tobacco 
                product manufacturer;
            (3) a supplier of component or constituent parts of tobacco 
        products--
                    (A) whose business practices with respect to sales 
                or operations occurring within the United States, 
                conform to the applicable requirements of the protocol; 
                and
                    (B) that is not itself a non-participating tobacco 
                product manufacturer;
            (4) a grower of tobacco products, unless such person is 
        itself a non-participating tobacco product manufacturer; or
            (5) an insurer of any person described in paragraph (1), 
        (2), (3), or (4) based on, arising out of, or related to 
        tobacco products manufactured, imported, distributed, or sold 
        (or tobacco grown) by such person (other than an action brought 
        by the insured person), unless such insurer is itself a non-
        participating tobacco product manufacturer.
    (b) Exceptions.--The provisions of this title shall not apply to 
any tobacco claim--
            (1) brought against any person other than those described 
        in subsection (a) or to any tobacco claim that reached final 
        judgment or final settlement prior to the date of enactment of 
        this Act;
            (2) against an employer under valid workers' compensation 
        laws;
            (3) arising under the securities laws of a State or the 
        United State;
            (4) brought by the United States;
            (5) brought under this title by a State or a participating 
        tobacco product manufacturer to enforce this Act;
            (6) asserting damage to the environment from exposures 
        other than environmental smoke or second-hand smoke; or
            (7) brought against a supplier of a component or 
        constituent part of a tobacco product, if the component or 
        constituent part was sold after the date of enactment of this 
        Act, and the supplier knew that the tobacco product giving rise 
        to the claim would be manufactured in the United States by a 
        nonparticipating tobacco product manufacturer.

SEC. 1407. GOVERNMENTAL CLAIMS.

    (a) In General.--Except as provided in subsection (b) and (c), no 
State, political subdivision of a State, municipal corporation, 
governmental entity or corporation, Indian tribe, or agency or 
subdivision thereof, or other entity acting in parens patriae, may file 
or maintain any civil action involving a tobacco claim against a 
participating tobacco product manufacturer.
    (b) Effect on Existing State Suits of Settlement Agreement or 
Consent Decree.--Within 30 days after the date of enactment of this 
Act, any State that has filed a civil action involving a tobacco claim 
against a participating tobacco product manufacturer may elect to 
settle such action against said tobacco product manufacturer. If a 
State makes such an election to enter into a settlement or a consent 
decree, it may maintain a civil action involving a tobacco claim only 
to the extent necessary to permit continuing court jurisdiction over 
the settlement or consent decree. Nothing herein shall preclude any 
State from bringing suit or seeking a court order to enforce the terms 
of such settlement or decree.
    (c) State Option for One-Time Opt Out.--Any State that does not 
make the election described in subsection (b) may continue its lawsuit, 
notwithstanding subsection (a) of this section. A State that does not 
make such an election shall not be eligible to receive payments from 
the trust fund in title IV.
    (d) 30-Day Delay.--No settlement or consent decree entered into 
under subsection (b) may take effect until 30 days after the date of 
enactment of this Act.
    (f) Preservation of Insurance Claims.--
            (1) In general.--If all participating tobacco product 
        manufacturers fail to make the payments required by title IV 
        for any calendar year, then--
                    (A) beginning on the first day of the next calendar 
                year, subsection (a) does not apply to any insurance 
                claim (including a direct action claim) that is a 
                tobacco claim, regardless of when that claim arose;
                    (B) any statute of limitations or doctrine of 
                laches under applicable law shall be tolled for the 
                period--
                            (i) beginning on the date of enactment of 
                        this Act; and
                            (ii) ending on the last day of that 
                        calendar year; and
                    (C) an insurance claim (including a direct action 
                claim) that is a tobacco claim and that is pending on 
                the date of enactment of this Act shall be preserved.
            (2) Application of title 11, united states code.--For 
        purposes of this subsection, nothing in this Act shall be 
        construed to modify, suspend, or otherwise affect the 
        application of title 11, United States Code, to participating 
        tobacco manufacturers that fail to make such payments.
            (3) State law not affected.--Nothing in this subsection 
        shall be construed to expand or abridge State law.

SEC. 1408. ADDICTION AND DEPENDENCY CLAIMS; CASTANO CIVIL ACTIONS.

    (a) Addiction and Dependence Claims Barred.--In any civil action to 
which this title applies, no addiction claim or dependence claim may be 
filed or maintained against a participating tobacco product 
manufacturer.
    (b) Castano Civil Actions.--
            (1) The rights and benefits afforded in this Act, and the 
        various research activities envisioned by this Act, are 
        provided in settlement of, and shall constitute the exclusive 
        remedy for the purpose of determining civil liability as to 
        those claims asserted in the Castano Civil Actions, and all 
        bases for any such claim under the laws of any State are 
        preempted (including State substantive, procedural, remedial, 
        and evidentiary provisions) and settled. The Castano Civil 
        Actions shall be dismissed with full reservation of the rights 
        of individual class members to pursue claims not based on 
        addiction or dependency in civil actions, as defined in section 
        1417(2), in accordance with this Act. For purposes of 
        determining application of statutes of limitation or repose, 
        individual actions filed within one year after the effective 
        date of this Act by those who were included within a Castano 
        Civil Action shall be considered to have been filed as of the 
        date of the Castano Civil Action applicable to said individual.
            (2) For purposes of awarding attorneys fees and expenses 
        for those actions subject to this subsection, the matter at 
        issue shall be submitted to arbitration before one panel of 
        arbitrators. In any such arbitration, the arbitration panel 
        shall consist of 3 persons, one of whom shall be chosen by the 
        attorneys of the Castano Plaintiffs' Litigation Committee who 
        were signatories to the Memorandum of Understanding dated June 
        20, 1997, by and between tobacco product manufacturers, the 
        Attorneys General, and private attorneys, one of whom shall be 
        chosen by the participating tobacco product manufacturers, and 
        one of whom shall be chosen jointly by those 2 arbitrators.
            (3) The participating tobacco product manufacturers shall 
        pay the arbitration award.

SEC. 1409. SUBSTANTIAL NON-ATTAINMENT OF REQUIRED REDUCTIONS.

    (a) Action by Secretary.--If the Secretary determines under title 
II that the non-attainment percentage for any year is greater than 20 
percentage points for cigarettes or smokeless tobacco, then the 
Secretary shall determine, on a brand-by-brand basis, using data that 
reflects a 1999 baseline, which tobacco product manufacturers are 
responsible within the 2 categories of tobacco products for the excess. 
The Secretary may commence an action under this section against the 
tobacco product manufacturer or manufacturers of the brand or brands of 
cigarettes or smokeless tobacco products for which the non-attainment 
percentage exceeded 20 percentage points.
    (b) Procedures.--Any action under this section shall be commenced 
by the Secretary in the United States District Court for the District 
of Columbia within 90 days after publication in the Federal Register of 
the determination that the non-attainment percentage for the tobacco 
product in question is greater than 20 percentage points. Any such 
action shall be heard and determined by a 3-judge court under section 
2284 of title 28, United States Code.
    (c) Determination by Court.--In any action under this section, the 
court shall determine whether a tobacco product manufacturer has shown, 
by a preponderance of the evidence that it--
            (1) has complied substantially with the provisions of this 
        Act regarding underage tobacco use, of any rules or regulations 
        promulgated thereunder, or of any Federal or State laws 
        regarding underage tobacco use;
            (2) has not taken any material action to undermine the 
        achievement of the required percentage reduction for the 
        tobacco product in question; and
            (3) has used its best efforts to reduce underage tobacco 
        use to a degree at least equal to the required percentage 
        reductions.
    (d) Removal of Annual Aggregate Payment Limitation.--Except as 
provided in subsections (e) and (g), if the court determines that a 
tobacco product manufacturer has failed to make the showing described 
in subsection (c) then sections 1411 and 1412 of this Act do not apply 
to the enforcement against, or the payment by, such tobacco product 
manufacturer of any judgment or settlement that becomes final after 
that determination is made.
    (e) Defense.--An action under this section shall be dismissed, and 
subsection (d) shall not apply, if the court finds that the Secretary's 
determination under subsection (a) was unlawful under subparagraph (A), 
(B), (C), or (D) of section 706(2) of title 5, United States Code. Any 
judgments paid under section 1412 of this Act prior to a final judgment 
determining that the Secretary's determination was erroneous shall be 
fully credited, with interest, under section 1412 of this Act.
    (f) Review.--Decisions of the court under this section are 
reviewable only by the Supreme Court by writ of certiorari granted upon 
the petition of any party. The applicability of subsection (d) shall be 
stayed during the pendency of any such petition or review.
    (g) Continuing Effect.--Subsection (d) shall cease to apply to a 
tobacco product manufacturer found to have engaged in conduct described 
in subsection (c) upon the later of--
            (1) a determination by the Secretary under section 201 
        after the commencement of action under subsection (a) that the 
        non-attainment percentage for the tobacco product in question 
        is 20 or fewer percentage points; or
            (2) a finding by the court in an action filed against the 
        Secretary by the manufacturer, not earlier than 2 years after 
        the determination described in subsection (c) becomes final, 
        that the manufacturer has shown by a preponderance of the 
        evidence that, in the period since that determination, the 
        manufacturer--
                    (A) has complied with the provisions of this Act 
                regarding underage tobacco use, of any rules or 
                regulations promulgated thereunder, and of any other 
                applicable Federal, State, or local laws, rules, or 
                regulations;
                    (B) has not taken any action to undermine the 
                achievement of the required percentage reduction for 
                the tobacco product in question; and
                    (C) has used its best efforts to attain the 
                required percentage reduction for the tobacco product 
                in question.
A judgment or settlement against the tobacco product manufacturer that 
becomes final after a determination or finding described in paragraph 
(1) or (2) of this subsection is not subject to subsection (d). An 
action under paragraph (2) of this subsection shall be commenced in the 
United States District Court for the District of Columbia, and shall be 
heard and determined by a 3-judge court under section 2284 of title 28, 
United States Code. A decision by the court under paragraph (2) of this 
subsection is reviewable only by the Supreme Court by writ of 
certiorari granted upon the petition of any party, and the decision 
shall be stayed during the pendency of the petition or review. A 
determination or finding described in paragraph (1) or (2) of this 
subsection does not limit the Secretary's authority to bring a 
subsequent action under this section against any tobacco product 
manufacturer or the applicability of subsection (d) with respect to any 
such subsequent action.

SEC. 1410. PUBLIC HEALTH EMERGENCY.

    If the Secretary, in consultation with the Commissioner of Food and 
Drugs, the Surgeon General, the Director of the Center for Disease 
Control or the Director's delegate, and the Director of the Health and 
Human Services Office of Minority Health determines at any time that a 
tobacco product manufacturer's actions or inactions with respect to its 
compliance with the Act are of such a nature as to create a clear and 
present danger that the manufacturer will not attain the targets for 
underage smoking reduction, the Secretary may bring an action under 
section 1409 seeking the immediate suspension of the tobacco product 
manufacturer's annual limitation cap on civil judgments. If the court 
determines that the Secretary has proved by clear and convincing 
evidence that the subject manufacturer's actions or inactions are of 
such a nature that they present a clear and present danger that the 
manufacturer will not attain the targets for underage smoking 
reduction, the court may suspend the subject manufacturer's annual 
limitation cap on civil judgments.

SEC. 1411. TOBACCO CLAIMS BROUGHT AGAINST PARTICIPATING TOBACCO PRODUCT 
              MANUFACTURERS.

    (a) Permissible Defendants.--In any civil action to which this 
title applies, tobacco claims may be filed or maintained only against--
            (1) a participating tobacco product manufacturer; or
            (2) a surviving entity established by a participating 
        tobacco product manufacturer.
    (b) Actions Involving Participating and Non-Participating 
Manufacturers.--In any civil action involving both a tobacco claim 
against a participating tobacco product manufacturer based in whole or 
in part upon conduct occurring prior to the date of enactment of this 
Act and a claim against 1 or more non-participating tobacco product 
manufacturers, the court, upon application of a participating tobacco 
product manufacturer, shall require the jury to or shall itself 
apportion liability as between the participating tobacco product 
manufacturer and non-participating tobacco product manufacturers.

SEC. 1412. PAYMENT OF TOBACCO CLAIM SETTLEMENTS AND JUDGMENTS.

    (a) In General.--Except as provided in this section, any judgment 
or settlement in any civil action to which this subtitle applies shall 
be subject to the process for payment of judgments and settlements set 
forth in this section. No participating tobacco product manufacturer 
shall be obligated to pay a judgment or settlement on a tobacco claim 
in any civil action to which this title applies except in accordance 
with this section. This section shall not apply to the portion, if any, 
of a judgment that imposes punitive damages based on any conduct that--
            (1) occurs after the date of enactment of this Act; and
            (2) is other than the manufacture, development, 
        advertising, marketing, or sale of tobacco products in 
        compliance with this Act and any agreement incident thereto.
    (b) Registration With the Secretary of the Treasury.--
            (1) The Secretary shall maintain a record of settlements, 
        judgments, and payments in civil actions to which this title 
        applies.
            (2) Any party claiming entitlement to a monetary payment 
        under a final judgment or final settlement on a tobacco claim 
        shall register such claim with the Secretary by filing a true 
        and correct copy of the final judgment or final settlement 
        agreement with the Secretary and providing a copy of such 
        filing to all other parties to the judgment or settlement.
            (3) Any participating tobacco product manufacturer making a 
        payment on any final judgment or final settlement to which this 
        section applies shall certify such payment to the Secretary by 
        filing a true and correct copy of the proof of payment and a 
        statement of the remaining unpaid portion, if any, of such 
        final judgment or final settlement with the Secretary and shall 
        provide a copy of such filing to all other parties to the 
        judgment or settlement.
    (c) Liability Cap.--
            (1) In general.--The aggregate payments made by all 
        participating tobacco product manufacturers in any calendar 
        year may not exceed $8,000,000,000.
            (2) Implementation.--The Secretary shall initiate a 
        rulemaking within 30 days after the date of enactment of this 
        Act to establish a mechanism for implementing this subsection 
        in such a way to ensure the fair and equitable payment of final 
        judgments or final settlements on tobacco claims under this 
        title. Amounts not payable because of the application of this 
        subsection, shall be carried forward and paid in the next year, 
        subject to the provisions of this subsection.
            (3) Inflation adjustment.--
                    (A) In general.--The amount in paragraph (1) shall 
                be increased annually, beginning with the second 
                calendar year beginning after the date of enactment of 
                this Act, by the greater of 3 percent or the annual 
                increase in the CPI.
                    (B) CPI.--For purposes of subparagraph (A), the CPI 
                for any calendar year is the average of the Consumer 
                Price Index for all-urban consumers published by the 
                Department of Labor.
                    (C) Rounding.--If any increase determined under 
                subparagraph (A) is not a multiple of $1,000, the 
                increase shall be rounded to the nearest multiple of 
                $1,000.
    (d) Injunctive Relief.--A participating tobacco product 
manufacturer may commence an action to enjoin any State court 
proceeding to enforce or execute any judgment or settlement where 
payment has not been authorized under this section. Such an action 
shall arise under the laws of the United States and may be commenced in 
the district court of the United States for the district in which the 
State court proceeding is pending.
    (e) Joint and Several Liability.--All participating tobacco product 
manufacturers shall be jointly and severally liable for, and shall 
enter into an agreement to apportion among them, any amounts payable 
under judgments and settlements governed by this section arising in 
whole or in part from conduct occurring prior to the date of enactment 
of this Act.
    (f) Bankruptcy of Participating Manufacturer.--No participating 
tobacco product manufacturer shall cease operations without 
establishing a surviving entity against which a tobacco claim may be 
brought. Any obligation , interest, or debt of a participating, tobacco 
product manufacturer arising under such liability apportionment 
agreement shall be given priority and shall not be rejected, avoided, 
discharged, or otherwise modified or diminished in a proceeding, under 
title 11, United States Code, or in any liquidation, reorganization, 
receivership, or other insolvency proceeding under State law. A trustee 
or receiver in any proceeding under title 11, United States Code, or in 
liquidation, reorganization, receivership, or other insolvency 
proceeding under State law, may avoid any transfer of an interest of 
the participating tobacco product manufacturer, or any obligation 
incurred by such manufacturer, that was made or incurred on or within 2 
years before the date of the filing of a bankruptcy petition, if such 
manufacturer made such transfer or incurred such obligation to hinder 
or defeat in any fashion the payment of any obligation, interest, or 
debt of the manufacturer arising under the liability apportionment 
agreement. Any property vesting in the participating tobacco product 
manufacturer following such a proceeding shall be subject to all claims 
and interest of creditors arising under the liability apportionment 
agreement.
    (f) Limitation on State Courts.--No court of any State, Tribe, or 
political subdivision of a State may take any action to inhibit the 
effective operation of subsection (c).

SEC. 1413. ATTORNEYS' FEES AND EXPENSES.

    (a) Arbitration Panel.--
            (1) Right to establish.--For the purpose of awarding of 
        attorneys' fees and expenses relating to litigation affected 
        by, or legal services that, in whole or in part, resulted in or 
        created a model for programs in, this Act, and with respect to 
        which litigation or services the attorney involved is unable to 
        agree with the plaintiff who employed that attorney with 
        respect to any dispute that may arise between them regarding 
        the fee agreement, the matter at issue shall be submitted to 
        arbitration. In any such arbitration, the arbitration panel 
        shall consist of 3 persons, one of whom shall be chosen by the 
        plaintiff, one of whom shall be chosen by the attorney, and one 
        of whom shall be chosen jointly by those 2 arbitrators.
            (2) Operation.--Not later than 30 days after the date on 
        which all members of an arbitration panel are appointed under 
        paragraph (1), the panel shall establish the procedures under 
        which the panel will operate which shall include--
                    (A) a requirement that any finding by the 
                arbitration panel must be in writing and supported by 
                written reasons;
                    (B) procedures for the exchanging of exhibits and 
                witness lists by the various claimants for awards;
                    (C) to the maximum extent practicable, requirements 
                that proceedings before the panel be based on 
                affidavits rather than live testimony; and
                    (D) a requirement that all claims be submitted to 
                an arbitration panel not later than 3 months after the 
                date of this Act and a determination made by the panel 
                with respect to such claims not later than 7 months 
                after such date of enactment.
            (3) Right to petition.--Any individual attorney or group of 
        attorneys involved in litigation affected by this Act shall 
        have the right to petition an arbitration panel for attorneys' 
        fees and expenses.
            (4) Criteria.--In making any award under this section, an 
        arbitration panel shall consider the following criteria:
                    (A) The time and labor required by the claimant.
                    (B) The novelty and difficulty of the questions 
                involved in the action for which the claimant is making 
                a claim.
                    (C) The skill requisite to perform the legal 
                service involved properly.
                    (D) The preclusion of other employment by the 
                attorney due to acceptance of the action involved.
                    (E) Whether the fee is fixed or a percentage.
                    (F) Time limitations imposed by the client or the 
                circumstances.
                    (G) The amount involved and the results obtained.
                    (H) The experience, reputation, and ability of the 
                attorneys involved.
                    (I) The undesirability of the action.
                    (J) Such other factors as justice may require.
            (5) Appeal and enforcement.--The findings of an arbitration 
        panel shall be final, binding, nonappealable, and payable 
        within 30 days after the date on which the finding is made 
        public, except that if an award is to be paid in installments, 
        the first installment shall be payable within such 30 day 
        period and succeeding installments shall be paid annually 
        thereafter.
    (b) Validity and Enforceability of Private Agreements.--
Notwithstanding any other provision of this Act, nothing in this 
section shall be construed to abrogate or restrict in any way the 
rights of any parties to mediate, negotiate, or settle any fee or 
expense disputes or issues to which this section applies, or to enter 
into private agreements with respect to the allocation or division of 
fees among the attorneys party to any such agreement.
    (c) Offset for Amounts Already Paid.--In making a determination 
under this section with regard to a dispute between a State that 
pursued independent civil action against tobacco product manufacturers 
and its attorney, the arbitration panel shall take into account any 
amounts already paid by the State under the agreement in dispute.

SEC. 1414. EFFECT OF COURT DECISIONS.

    (a) Severability.--If any provision of titles I through XIII, or 
the application thereof to any person, manufacturer or circumstance, is 
held invalid, the remainder of the provisions of those titles, and the 
application of such provision to other persons or circumstances, shall 
not be affected thereby.
    (b) Nonseverability.--If a court of competent jurisdiction enters a 
final decision substantially limiting or impairing the essential 
elements of title XIV, specifically the requirements of sections 1404 
and 1405, then the provisions of section 1412 are null and void and of 
no effect.

SEC. 1415. CRIMINAL LAWS NOT AFFECTED.

    Nothing in this title shall be construed to limit the criminal 
liability of tobacco product manufacturers, retailers, or distributors 
or their directors, officers, employees, successors, or assigns.

SEC. 1416. CONGRESS RESERVES THE RIGHT TO ENACT LAWS IN THE FUTURE.

    The right to alter, amend, or repeal any provision of this Act is 
hereby reserved to the Congress in accordance with the provisions of 
Article I of the Constitution of the United States and more than 200 
years of history.

SEC. 1417. DEFINITIONS.

    In this title:
            (1) Terms defined in title vii.--Any term used in this 
        title that is defined in title VII has the meaning given to it 
        in title VII.
            (2) Additional definitions.--
                    (A) Addiction claim; dependence claim.--The term 
                ``addiction claim'' or ``dependence claim'' refers only 
                to any cause of action to the extent that the prayer 
                for relief seeks a cessation program, or other public 
                health program that is to be available to members of 
                the general public and is designed to reduce or 
                eliminate the users' addiction to, or dependence on, 
                tobacco products, and as used herein is brought by 
                those who claim the need for nicotine reduction 
                assistance. Neither addiction or dependence claims 
                include claims related to or involving manifestation of 
                illness or tobacco-related diseases.
                    (B) Compensatory damages.--The term ``compensatory 
                damages'' refers to those damages necessary to 
                reimburse an injured party, and includes actual, 
                general, and special damages.
                    (C) Protocol.--The term ``protocol'' means the 
                agreement to be entered into by the Secretary of Health 
                and Human Services with a participating tobacco product 
                manufacturers under this title.
                    (D) Punitive damages.--The term ``punitive 
                damages'' means damages in addition to compensatory 
                damages having the character of punishment or penalty.
                    (E) Secretary.--The term ``Secretary'' means the 
                Secretary of the Treasury, except where the context 
                otherwise requires.

                      TITLE XV--TOBACCO TRANSITION

SEC. 1501. SHORT TITLE.

    This title may be cited as the ``Tobacco Transition Act''.

SEC. 1502. PURPOSES.

    The purposes of this title are--
            (1) to authorize the use of binding contracts between the 
        United States and tobacco quota owners and tobacco producers to 
        compensate them for the termination of Federal programs that 
        support the production of tobacco in the United States;
            (2) to make available to States funds for economic 
        assistance initiatives in counties of States that are dependent 
        on the production of tobacco; and
            (3) to terminate Federal programs that support the 
        production of tobacco in the United States.

SEC. 1503. DEFINITIONS.

    In this title:
            (1) Association.--The term ``association'' means a 
        producer-owned cooperative marketing association that has 
        entered into a loan agreement with the Commodity Credit 
        Corporation to make price support available to producers.
            (2) Buyout payment.--The term ``buyout payment'' means a 
        payment made to a quota owner under section 1514 for each of 
        the 1999 through 2001 marketing years.
            (3) Contract.--The term ``contract'' or ``tobacco 
        transition contract'' means a contract entered into under 
        section 1512.
            (4) Governor.--The term ``Governor'' means the chief 
        executive officer of a State.
            (5) Lease.--The term ``lease'' means--
                    (A) the rental of quota on either a cash rent or 
                crop share basis;
                    (B) the rental of farmland to produce tobacco under 
                a farm marketing quota; or
                    (C) the lease and transfer of quota for the 
                marketing of tobacco produced on the farm of a lessor.
            (6) Marketing year.--The term ``marketing year'' means--
                    (A) in the case of Flue-cured tobacco, the period 
                beginning July 1 and ending the following June 30; and
                    (B) in the case of each other kind of tobacco, the 
                period beginning October 1 and ending the following 
                September 30.
            (7) Owner.--The term ``owner'' means a person that, at the 
        time of entering into a tobacco transition contract, owns quota 
        provided by the Secretary.
            (8) Price support.--The term ``price support'' means a 
        nonrecourse loan provided by the Commodity Credit Corporation 
        through an association for a kind of tobacco.
            (9) Producer.--The term ``producer'' means a person that 
        for each of the 1995 through 1997 crops of tobacco (as 
        determined by the Secretary) that were subject to quota--
                    (A) leased quota or farmland;
                    (B) shared in the risk of producing a crop of 
                tobacco; and
                    (C) marketed the tobacco subject to quota.
            (10) Quota.--The term ``quota'' means the right to market 
        tobacco under a basic marketing quota or acreage allotment 
        allotted to a person under the Agricultural Adjustment Act of 
        1938 (7 U.S.C. 1281 et seq.).
            (11) Secretary.--The term ``Secretary'' means the Secretary 
        of Agriculture.
            (12) State.--The term ``State'' means each of the several 
        States of the United States, the District of Columbia, the 
        Commonwealth of Puerto Rico, and any other territory or 
        possession of the United States.
            (13) Tobacco.--The term ``tobacco'' means any kind of 
        tobacco for which--
                    (A) a marketing quota is in effect;
                    (B) a marketing quota is not disapproved by 
                producers; or
                    (C) price support is available.
            (14) Tobacco product manufacturer.--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.
            (15) Transition payment.--The term ``transition payment'' 
        means a payment made to a producer under section 1515 for each 
        of the 1999 through 2001 marketing years.
            (16) Trust fund.--The term ``Trust Fund'' means the Tobacco 
        Community Revitalization Trust Fund established by section 
        1511.
            (17) United states.--The term ``United States'', when used 
        in a geographical sense, means all of the States.

               Subtitle A--Tobacco Production Transition

                CHAPTER 1--TOBACCO TRANSITION CONTRACTS

SEC. 1511. TOBACCO COMMUNITY REVITALIZATION TRUST FUND.

    (a) Establishment.--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 amounts paid into the Trust 
Fund under subsection (d).
    (b) Administration.--The Trust Fund shall be administered by the 
Secretary of the Treasury.
    (c) Use.--Funds in the Trust Fund shall be available for making--
            (1) buyout payments;
            (2) transition payments; and
            (3) rural economic assistance block grants under section 
        1521.
    (d) Transfer from National Tobacco Settlement Trust Fund.--The 
Secretary of the Treasury shall transfer from the National Tobacco 
Settlement Trust Fund to the Trust Fund such amounts as the Secretary 
of Agriculture determines are necessary to carry out this title.
    (e) Termination.--The Trust Fund shall terminate effective 
September 30, 2003.

SEC. 1512. OFFER AND TERMS OF TOBACCO TRANSITION CONTRACTS.

    (a) Offer.--The Secretary shall offer to enter into a tobacco 
transition contract with each owner and producer.
    (b) Terms.--
            (1) Owners.--In exchange for a payment made under section 
        1514, an owner shall agree to relinquish the quota owned by the 
        owner.
            (2) Producers.--In exchange for a payment made under 
        section 1515, a producer shall agree to relinquish the value of 
        the quota leased by the producer.
    (c) Right To Grow Tobacco.--Each owner or producer that enters into 
a contract shall have the right to continue the production of tobacco 
for each of the 1999 and subsequent crops of tobacco.

SEC. 1513. ELEMENTS OF CONTRACTS.

    (a) Deadlines for Contracting.--
            (1) Commencement.--To the maximum extent practicable, the 
        Secretary shall commence entering into contracts under this 
        chapter not later than 90 days after the date of enactment of 
        this Act.
            (2) Deadline.--The Secretary may not enter into a contract 
        under this chapter after June 30, 1999.
    (b) Duration of Contract.--The term of a contract shall--
            (1) begin on the date that is the beginning of the 1999 
        marketing year for a kind of tobacco; and
            (2) terminate on the date that is the end of the 2001 
        marketing year for the kind of tobacco.
    (c) Time for Payment.--A buyout payment or transition payment shall 
be made not later than the date that is the beginning of the marketing 
year for a kind of tobacco for each year of the term of a tobacco 
transition contract of an owner or producer.

SEC. 1514. BUYOUT PAYMENTS TO OWNERS.

    (a) In General.--The Secretary shall make buyout payments in 3 
equal installments, 1 installment for each of the 1999 through 2001 
marketing years for each kind of tobacco involved, to an owner that 
owns quota at the time of entering into a tobacco transition contract.
    (b) Compensation for Lost Value.--The payment shall constitute 
compensation for the lost value to the owner of the quota.
    (c) Payment Calculation.--Under this section, the total amount of 
the buyout payment made to an owner shall be determined by 
multiplying--
            (1) $8.00; by
            (2) the average annual quantity of quota owned by the owner 
        during the 1995 through 1997 crop years.

SEC. 1515. TRANSITION PAYMENTS TO PRODUCERS.

    (a) In General.--The Secretary shall make transition payments in 3 
equal installments, 1 installment for each of the 1999 through 2001 
marketing years for each kind of tobacco produced, to a producer that--
            (1) produced the kind of tobacco for each of the 1995 
        through 1997 crops; and
            (2) entered into a tobacco transition contract.
    (b) Transition Payments Limited to Leased Quota.--A producer shall 
be eligible for transition payments only for the portion of the 
production of the producer that is subject to quota that is leased (as 
defined in section 1503(5) of this Act) during the 3 crop years 
described in subsection (a)(1).
    (c) Compensation for Lost Revenue.--The payments shall constitute 
compensation for the lost revenue incurred by a tobacco producer for a 
kind of tobacco.
    (d) Production History; Production.--
            (1) Production history.--The Secretary shall base a 
        transition payment made to a producer on the average quantity 
        of tobacco subject to a marketing quota that is produced by the 
        producer for each of the 1995 through 1997 crops.
            (2) Production.--The producer shall have the burden of 
        demonstrating to the Secretary the production of tobacco for 
        each of the 1995 through 1997 crops.
    (e) Payment Calculation.--Under this section, the total amount of 
the transition payment made to a producer shall be determined by 
multiplying--
            (1) $4.00; by
            (2) the average quantity of the kind of tobacco produced by 
        the producer for each of the 1995 through 1997 crops.

           CHAPTER 2--RURAL ECONOMIC ASSISTANCE BLOCK GRANTS

SEC. 1521. RURAL ECONOMIC ASSISTANCE BLOCK GRANTS.

    (a) In General.--From funds transferred from the Trust Fund, the 
Secretary shall use $200,000,000 for each of fiscal years 1999 through 
2003 to provide block grants to tobacco-growing States to assist areas 
of such a State that are economically dependent on the production of 
tobacco.
    (b) Payments by Secretary to Tobacco-Growing States.--
            (1) In general.--The Secretary shall use the amount 
        available for a fiscal year under subsection (a) to make block 
        grant payments to the Governors of tobacco-growing States.
            (2) Amount.--The amount of a block grant paid to a tobacco-
        growing State shall be based on, as determined by the 
        Secretary--
                    (A) the number of counties in the State in which 
                tobacco production is a significant part of the 
                county's economy; and
                    (B) the level of economic dependence of the 
                counties on tobacco production.
    (c) Grants by States To Assist Tobacco-Growing Areas.--
            (1) In general.--A Governor of a tobacco-growing State 
        shall use the amount of the block grant to the State under 
        subsection (b) to make grants to counties or other public or 
        private entities in the State to assist areas that are 
        dependent on the production of tobacco, as determined by the 
        Governor.
            (2) Amount.--The amount of a grant paid to a county or 
        other entity to assist an area shall be based on--
                    (A) the ratio of gross tobacco sales receipts in 
                the area to the total farm income in the area; and
                    (B) the ratio of all tobacco related receipts in 
                the area to the total income in the area.
            (3) Use of grants.--A county or other entity that receives 
        a grant under this subsection may use the grant in a manner 
        determined appropriate by the county or entity (with the 
        approval of the State) to assist producers and other persons 
        that are economically dependent on the production of tobacco, 
        including use for--
                    (A) on-farm diversification, alternatives to the 
                production of tobacco, and risk management;
                    (B) off-farm activities such as education, 
                retraining, and development of non-tobacco related 
                jobs; and
                    (C) assistance to tobacco warehouse owners or 
                operators.
    (d) Termination of Authority.--The authority provided by this 
section terminates September 30, 2003.

  Subtitle B--Tobacco Price Support and Production Adjustment Programs

                CHAPTER 1--TOBACCO PRICE SUPPORT PROGRAM

SEC. 1531. INTERIM REFORM OF TOBACCO PRICE SUPPORT PROGRAM.

    (a) Price Support Rates.--Section 106(f) of the Agricultural Act of 
1949 (7 U.S.C. 1445(f)) is amended by adding at the end the following:
            ``(9) Tobacco price support rates.--Notwithstanding any 
        other provision of this subsection, the price support rate for 
        each kind of tobacco for which quotas were approved for the 
        1998 crop shall be reduced by--
                    ``(A) for the 1999 crop, 25 percent from the 1998 
                support rate for a kind of tobacco;
                    ``(B) for the 2000 crop, 10 percent from the 1999 
                support rate for a kind of tobacco; and
                    ``(C) for the 2001 crop, 10 percent from the 2000 
                support rate for a kind of tobacco.''.
    (b) No Net Cost Tobacco Fund.--Section 106A of the Agricultural Act 
of 1949 (7 U.S.C. 1445-1) is amended--
            (1) by striking ``quota tobacco'' each place it appears and 
        inserting ``tobacco'';
            (2) in subsection (a), by striking paragraph (7) and 
        inserting the following:
            ``(7) the term `tobacco' means any kind of tobacco for 
        which--
                    ``(A) a marketing quota is in effect;
                    ``(B) a marketing quota is not disapproved by 
                producers; or
                    ``(C) price support is available.'';
            (3) in the second sentence of subsection (c), by striking 
        ``contributed by producer-members or'';
            (4) in subsection (d)--
                    (A) in paragraph (1)--
                            (i) in subparagraph (A)--
                                    (I) by striking clause (i);
                                    (II) by redesignating clauses (ii) 
                                and (iii) as clauses (i) and (ii), 
                                respectively; and
                                    (III) in clause (ii) (as so 
                                redesignated), by striking subclause 
                                (II) and inserting the following:
                                    ``(II) the amount of per pound 
                                purchaser assessments that are payable 
                                by domestic purchasers of Flue-cured 
                                and Burley tobacco under clause (i); 
                                and''; and
                            (ii) in subparagraph (B)--
                                    (I) by striking ``that, upon'' and 
                                all that follows through ``In making'' 
                                and inserting ``in making''; and
                                    (II) in the last sentence, by 
                                striking ``contributions and'';
                    (B) in paragraph (2)--
                            (i) by striking ``producer contribution 
                        or''; and
                            (ii) by striking subparagraphs (A) and (B) 
                        and inserting the following:
                    ``(A) from the person that acquired the tobacco 
                involved from the producer;
                    ``(B) if the tobacco involved is marketed by a 
                producer through a warehouseman or agent, from the 
                warehouseman or agent, who may add an amount equal to 
                the purchaser assessment to the price paid by the 
                purchaser;'';
                    (C) in paragraph (3), by striking ``, and use of'' 
                and all that follows through ``of the Fund''; and
                    (D) in paragraph (7), by striking ``contributions 
                and''; and
            (5) in subsection (h), by striking ``contribution or'' each 
        place it appears.
    (c) No Net Cost Tobacco Account.--Section 106B of the Agricultural 
Act of 1949 (7 U.S.C. 1445-2) is amended--
            (1) by striking ``quota tobacco'' each place it appears and 
        inserting ``tobacco'';
            (2) in subsection (a), by striking paragraph (5) and 
        inserting the following:
            ``(5) the term `tobacco' means any kind of tobacco for 
        which--
                    ``(A) a marketing quota is in effect;
                    ``(B) a marketing quota is not disapproved by 
                producers; or
                    ``(C) price support is available;'';
            (3) in subsection (c)(1), by striking ``producers, 
        purchasers,'' and inserting ``purchasers''; and
            (4) in subsection (d)--
                    (A) in paragraph (1)--
                            (i) by striking subparagraph (A);
                            (ii) by redesignating subparagraphs (B) and 
                        (C) as subparagraphs (A) and (B), respectively; 
                        and
                            (iii) in subparagraph (A) (as 
                        redesignated), by striking ``also'';
                    (B) in paragraph (2)--
                            (i) in subparagraph (A)--
                                    (I) in the first sentence, by 
                                striking ``the amount of the marketing 
                                assessment'' through ``association's 
                                area and''; and
                                    (II) by striking the second 
                                sentence;
                            (ii) in subparagraph (C)(ii)--
                                    (I) by striking ``sum of the'';
                                    (II) by striking ``producer and''; 
                                and
                                    (III) by striking ``producers 
                                and''; and
                    (C) in paragraph (3)--
                            (i) by striking ``(3)(A)'' and all that 
                        follows through the end of subparagraph (B) and 
                        inserting the following:
            ``(3) Collection of assessments.--
                    ``(A) Purchasers.--Except as provided in 
                subparagraphs (B) and (C), an assessment to be paid by 
                a purchaser under paragraph (1) shall be collected from 
                the person who acquired the tobacco involved from the 
                producer.
                    ``(B) Warehouseman or agent.--If tobacco of the 
                kind for which an account is established is marketed by 
                a producer through a warehouseman or agent, the 
                purchaser assessment shall be collected from the 
                warehouseman or agent, who may add an amount equal to 
                the purchaser assessment to the price paid by the 
                purchaser.''; and
                            (ii) in subparagraph (C), by striking 
                        ``both the producer and''.
    (d) Administrative Costs.--Section 1109 of the Agriculture and Food 
Act of 1981 (Public Law 97-98; 7 U.S.C. 1445 note) is repealed.
    (e) Crops.--This section and the amendments made by this section 
shall apply with respect to the 1999 through 2001 marketing years.

SEC. 1532. TERMINATION OF TOBACCO PRICE SUPPORT PROGRAM.

    (a) Parity Price Support.--Section 101 of the Agricultural Act of 
1949 (7 U.S.C. 1441) is amended--
            (1) in the first sentence of subsection (a), by striking 
        ``tobacco (except as otherwise provided herein), corn,'' and 
        inserting ``corn'';
            (2) by striking subsections (c), (g), (h), and (i);
            (3) in subsection (d)(3)--
                    (A) by striking ``, except tobacco,''; and
                    (B) by striking ``and no price support shall be 
                made available for any crop of tobacco for which 
                marketing quotas have been disapproved by producers;''; 
                and
            (4) by redesignating subsections (d) and (e) as subsections 
        (c) and (d), respectively.
    (b) Termination of Tobacco Price Support.--Sections 106 of the 
Agricultural Act of 1949 (7 U.S.C. 1445) is amended by striking 
subsections (a) through (f).
    (c) Definition of Basic Agricultural Commodity.--Section 408(c) of 
the Agricultural Act of 1949 (7 U.S.C. 1428(c)) is amended by striking 
``tobacco,''.
    (d) Review of Burley Tobacco Imports.--Section 3 of Public Law 98-
59 (7 U.S.C. 625) is repealed.
    (e) Powers of Commodity Credit Corporation.--Section 5 of the 
Commodity Credit Corporation Charter Act (15 U.S.C. 714c) is amended by 
inserting ``(other than tobacco)'' after ``agricultural commodities'' 
each place it appears.
    (f) Transition Provisions.--
            (1) Liability.--The amendments made by this section shall 
        not affect the liability of any person under any provision of 
        law as in effect before the effective date of this section.
            (2) Tobacco inventories.--The Secretary shall issue 
        regulations that require the orderly sale of tobacco 
        inventories held by associations.
            (3) No net cost tobacco fund.--
                    (A) In general.--Section 106A of the Agricultural 
                Act of 1949 (7 U.S.C. 1445-1) is amended by adding at 
                the end the following:
    ``(i) Assessments To Cover Net Losses After 2001 Marketing Year.--
            ``(1) In general.--Effective the day after the last day of 
        the 2001 marketing year for the kind of tobacco involved, 
        purchasers and importers of tobacco shall pay no net cost 
        assessments as determined by an association, with the approval 
        of Secretary, and as provided in this subsection.
            ``(2) Basis.--The amount of the assessment shall be based 
        on any unpaid past losses, and anticipated future losses, from 
        sales of tobacco inventory.
            ``(3) Collection.--Assessments shall be collected as 
        provided in subsection (d)(2).
            ``(4) Penalty for failure to pay assessment.--Penalties for 
        failure to pay assessments shall be calculated as provided in 
        subsection (h).
            ``(5) Duration of assessments.--Assessments required under 
        this subsection shall be required until--
                    ``(A) all tobacco price support loans, including 
                interest, are repaid to the Commodity Credit 
                Corporation; and
                    ``(B) the Commodity Credit Corporation has been 
                reimbursed for all net losses sustained as a result of 
                price support loans provided through the 2001 crop of 
                the kind of tobacco involved.''.
                    (B) Conforming amendments.--Section 106A of the 
                Agricultural Act of 1949 (7 U.S.C. 1445-1) (as amended 
                by section 1531(b)) is amended--
                            (i) in subsection (a)--
                                    (I) in paragraph (5), by inserting 
                                ``and'' after the semicolon;
                                    (II) in paragraph (6), by striking 
                                ``; and'' and inserting a period; and
                                    (III) by striking paragraph (7);
                            (ii) by striking subsection (b);
                            (iii) in subsection (d)--
                                    (I) in the last sentence of 
                                paragraph (1), by striking ``the 
                                amounts which the Corporation will lend 
                                to the association under such 
                                agreements and'';
                                    (II) by striking paragraph (2) and 
                                inserting the following:
            ``(2) collect the assessment due under paragraph (1) by 
        directly notifying the purchaser or importer of the amount of 
        the assessment and how payment should be made;''; and
                                    (III) in paragraph (3), by striking 
                                ``: Provided, That,'' and all that 
                                follows and inserting ``, except that, 
                                notwithstanding any other provision of 
                                law, the association may use amounts in 
                                the Fund (including interest and other 
                                earnings) for the purposes of reducing 
                                the association's outstanding 
                                indebtedness to the Corporation 
                                associated with 1982 and subsequent 
                                crops of tobacco;'';
                            (iv) in subsection (e)--
                                    (I) in the first sentence, by 
                                striking ``or provide'' and all that 
                                follows through ``the association''; 
                                and
                                    (II) by striking the second 
                                sentence; and
                            (v) in subsection (h), by striking 
                        ``(h)(1)(A)'' and all that follows through the 
                        end of subparagraph (B) and inserting the 
                        following:
    ``(h) Failure To Pay Contributions or Assessments.--
            ``(1) In general.--
                    ``(A) Purchasers.--Each purchaser that fails to pay 
                an assessment as required by subsection (d)(2) at such 
                time and in such manner as may be prescribed by the 
                Secretary, shall be liable, in addition to any amount 
                due, to a marketing penalty at a rate equal to 75 
                percent of the average market price (calculated to the 
                nearest whole cent) for the kind of tobacco involved 
                for the 2001 marketing year on the quantity of tobacco 
                as to which the failure occurs.
                    ``(B) Importers.--Each importer that fails to pay 
                an assessment as required by subsection (d)(2) at such 
                time and in such manner as may be prescribed by the 
                Secretary, shall be liable, in addition to any amount 
                due, for a marketing penalty at a rate equal to 75 
                percent of the average market price (calculated to the 
                nearest whole cent) for the respective kind of tobacco 
                for the 2001 marketing year on the quantity of tobacco 
                as to which the failure occurs.''.
            (4) No net cost tobacco account.--
                    (A) In general.--Section 106B of the Agricultural 
                Act of 1949 (7 U.S.C. 1445-2) is amended by adding at 
                the end the following:
    ``(k) Assessments To Cover Net Losses After 2001 Marketing Year.--
            ``(1) In general.--Subject to subsection (b), effective the 
        day after the last day of the 2001 marketing year for the kind 
        of tobacco involved, purchasers and importers of tobacco shall 
        pay no net cost assessments as determined by an association, 
        with the approval of Secretary, and as provided in this 
        subsection.
            ``(2) Basis.--The amount of the assessment shall be based 
        on any unpaid past losses, and anticipated future losses, from 
        sales of tobacco inventory.
            ``(3) Collection.--Assessments shall be collected as 
        provided in subsection (d)(3).
            ``(4) Penalty for failure to pay assessment.--Penalties for 
        failure to pay assessments shall be calculated as provided in 
        subsection (j).
            ``(5) Duration of assessments.--Assessments required under 
        this subsection shall be required until--
                    ``(A) all tobacco price support loans, including 
                interest, are repaid to the Commodity Credit 
                Corporation; and
                    ``(B) the Commodity Credit Corporation has been 
                reimbursed for all net losses sustained as a result of 
                price support loans provided through the 2001 crop of 
                the kind of tobacco involved.''.
                    (B) Conforming amendments.--Section 106B of the 
                Agricultural Act of 1949 (7 U.S.C. 1445-2) (as amended 
                by section 1531(c)) is amended--
                            (i) in subsection (a)--
                                    (I) by striking paragraph (5); and
                                    (II) by redesignating paragraphs 
                                (6) through (8) as paragraphs (5) 
                                through (7), respectively;
                            (ii) by striking subsection (b) and 
                        inserting the following:
    ``(b) Establishment.--Notwithstanding section 106A, the Secretary 
shall, on the request of any association, and may, if the Secretary 
determines, after consultation with the association, that the 
accumulation of the No Net Cost Tobacco Fund for the association under 
section 106A is, and is likely to remain, inadequate to reimburse the 
Corporation for net losses that the Corporation sustains under its loan 
agreement with the association, establish and maintain in accordance 
with this section a No Net Cost Tobacco Account for the association in 
lieu of the No Net Cost Tobacco Fund established within the association 
under section 106A.'';
                            (iii) in subsection (d)--
                                    (I) in the third sentence of 
                                paragraph (2)(A), by striking ``the 
                                amounts which the Corporation will lend 
                                to such association under such 
                                agreements and''; and
                                    (II) by striking paragraph (3) and 
                                inserting the following:
            ``(3) Collection.--Any assessment to be paid by a purchaser 
        or importer under paragraph (1) shall be collected from the 
        purchaser or importer by the Secretary.''; and
                            (iv) in subsection (j), by striking 
                        ``(j)(1)(A)'' and all that follows through the 
                        end of subparagraph (B) and inserting the 
                        following:
    ``(j) Failure To Pay Contributions or Assessments.--
            ``(1) In general.--
                    ``(A) Purchasers.--Each purchaser that fails to pay 
                to the Secretary an assessment as required by 
                subsection (d)(3) at such time and in such manner as 
                may be prescribed by the Secretary, shall be liable, in 
                addition to any amount due, to a marketing penalty at a 
                rate equal to 75 percent of the average market price 
                (calculated to the nearest whole cent) for the kind of 
                tobacco involved for the 2001 marketing year on the 
                quantity of tobacco as to which the failure occurs.
                    ``(B) Importers.--Each importer that fails to pay 
                to the Secretary an assessment as required by 
                subsection (d)(3) at such time and in such manner as 
                may be prescribed by the Secretary, shall be liable, in 
                addition to any amount due, for a marketing penalty at 
                a rate equal to 75 percent of the average market price 
                (calculated to the nearest whole cent) for the 
                respective kind of tobacco for the 2001 marketing year 
                on the quantity of tobacco as to which the failure 
                occurs.''.
    (g) Net Gains Held by Commodity Credit Corporation.--The Secretary 
shall ensure that the net gains in the No Net Cost Tobacco Account of 
the Commodity Credit Corporation as of September 30, 2002, equal or 
exceed the balance in the Account that existed on September 30, 1998.
    (h) Crops.--
            (1) In general.--Except as provided in paragraph (2), this 
        section and the amendments made by this section shall apply the 
        day after the last day of the 2001 marketing year for the kind 
        of tobacco involved.
            (2) Net losses to the commodity credit corporation.--
        Sections 106A and 106B of the Agricultural Act of 1949 (7 
        U.S.C. 1445-1, 1445-2) are repealed effective on the date on 
        which the Secretary--
                    (A) determines that--
                            (i) all tobacco price support loans, plus 
                        interest, have been repaid by associations; and
                            (ii) the Commodity Credit Corporation has 
                        been reimbursed for all net losses sustained as 
                        a result of price support loans provided 
                        through the 2001 crop of the kind of tobacco 
                        involved; and
                    (B) publishes a notice of the determination in the 
                Federal Register.

           CHAPTER 2--TOBACCO PRODUCTION ADJUSTMENT PROGRAMS

SEC. 1541. TERMINATION OF TOBACCO PRODUCTION ADJUSTMENT PROGRAMS.

    (a) Declaration of Policy.--Section 2 of the Agricultural 
Adjustment Act of 1938 (7 U.S.C. 1282) is amended by striking 
``tobacco,''.
    (b) Definitions.--Section 301(b) of the Agricultural Adjustment Act 
of 1938 (7 U.S.C. 1301(b)) is amended--
            (1) in paragraph (3)--
                    (A) by striking subparagraph (C); and
                    (B) by redesignating subparagraph (D) as 
                subparagraph (C);
            (2) in paragraph (6)(A), by striking ``tobacco,'';
            (3) in paragraph (7), by striking the following:
                    ``tobacco (flue-cured), July 1--June 30;
                    ``tobacco (other than flue-cured), October 1-
                September 30;'';
            (4) in paragraph (10)--
                    (A) by striking subparagraph (B); and
                    (B) by redesignating subparagraph (C) as 
                subparagraph (B);
            (5) in paragraph (11)(B), by striking ``and tobacco'';
            (6) in paragraph (12), by striking ``tobacco,'';
            (7) in paragraph (14)--
                    (A) in subparagraph (A), by striking ``(A)''; and
                    (B) by striking subparagraphs (B), (C), and (D);
            (8) by striking paragraph (15);
            (9) in paragraph (16)--
                    (A) by striking subparagraph (B); and
                    (B) by redesignating subparagraph (C) as 
                subparagraph (B); and
            (10) by redesignating paragraphs (16) and (17) as 
        paragraphs (15) and (16), respectively.
    (c) Parity Payments.--Section 303 of the Agricultural Adjustment 
Act of 1938 (7 U.S.C. 1303) is amended in the first sentence by 
striking ``rice, or tobacco,'' and inserting ``or rice,''.
    (d) Marketing Quotas.--Part I of subtitle B of title III of the 
Agricultural Adjustment Act of 1938 (7 U.S.C. 1311 et seq.) is 
repealed.
    (e) Administrative Provisions.--Section 361 of the Agricultural 
Adjustment Act of 1938 (7 U.S.C. 1361) is amended by striking 
``tobacco,''.
    (f) Adjustment of Quotas.--Section 371 of the Agricultural 
Adjustment Act of 1938 (7 U.S.C. 1371) is amended--
            (1) in the first sentence of subsection (a), by striking 
        ``peanuts, or tobacco'' and inserting ``or peanuts''; and
            (2) in the first sentence of subsection (b), by striking 
        ``peanuts or tobacco'' and inserting ``or peanuts''.
    (g) Reports and Records.--Section 373 of the Agricultural 
Adjustment Act of 1938 (7 U.S.C. 1373) is amended--
            (1) by striking ``peanuts, or tobacco'' each place it 
        appears in subsections (a) and (b) and inserting ``or 
        peanuts''; and
            (2) in subsection (a)--
                    (A) in the first sentence, by striking ``all 
                persons engaged in the business of redrying, prizing, 
                or stemming tobacco for producers,''; and
                    (B) in the last sentence, by striking ``$500;'' and 
                all that follows through the period at the end of the 
                sentence and inserting ``$500.''.
    (h) Regulations.--Section 375(a) of the Agricultural Adjustment Act 
of 1938 (7 U.S.C. 1375(a)) is amended by striking ``peanuts, or 
tobacco'' and inserting ``or peanuts''.
    (i) Eminent Domain.--Section 378 of the Agricultural Adjustment Act 
of 1938 (7 U.S.C. 1378) is amended--
            (1) in the first sentence of subsection (c), by striking 
        ``cotton, tobacco, and peanuts'' and inserting ``cotton and 
        peanuts''; and
            (2) by striking subsections (d), (e), and (f).
    (j) Burley Tobacco Farm Reconstitution.--Section 379 of the 
Agricultural Adjustment Act of 1938 (7 U.S.C. 1379) is amended--
            (1) in subsection (a)--
                    (A) by striking ``(a)''; and
                    (B) in paragraph (6), by striking ``, but this 
                clause (6) shall not be applicable in the case of 
                burley tobacco''; and
            (2) by striking subsections (b) and (c).
    (k) Acreage-Poundage Quotas.--Section 4 of the Act entitled ``An 
Act to amend the Agricultural Adjustment Act of 1938, as amended, to 
provide for acreage-poundage marketing quotas for tobacco, to amend the 
tobacco price support provisions of the Agricultural Act of 1949, as 
amended, and for other purposes'', approved April 16, 1965 (Public Law 
89-12; 7 U.S.C. 1314c note), is repealed.
    (l) Burley Tobacco Acreage Allotments.--The Act entitled ``An Act 
relating to burley tobacco farm acreage allotments under the 
Agricultural Adjustment Act of 1938, as amended'', approved July 12, 
1952 (7 U.S.C. 1315), is repealed.
    (m) Transfer of Allotments.--Section 703 of the Food and 
Agriculture Act of 1965 (7 U.S.C. 1316) is repealed.
    (n) Advance Recourse Loans.--Section 13(a)(2)(B) of the Food 
Security Improvements Act of 1986 (7 U.S.C. 1433c-1(a)(2)(B)) is 
amended by striking ``tobacco and''.
    (o) Tobacco Field Measurement.--Section 1112 of the Omnibus Budget 
Reconciliation Act of 1987 (Public Law 100-203) is amended by striking 
subsection (c).
    (p) Liability.--The amendments made by this section shall not 
affect the liability of any person under any provision of law as in 
effect before the effective date under subsection (q).
    (q) Crops.--This section and the amendments made by this section 
shall apply with respect to the 1999 and subsequent crops of the kind 
of tobacco involved.

                          Subtitle C--Funding

SEC. 1551. TRUST FUND.

    (a) Request.--The Secretary of Agriculture shall request the 
Secretary of the Treasury to transfer from the Trust Fund amounts 
authorized under sections 1514, 1515, and 1521 to the account of the 
Commodity Credit Corporation.
    (b) Transfer.--On receipt of such a request, the Secretary of the 
Treasury shall transfer amounts requested under subsection (a).
    (c) Use.--The Secretary of Agriculture shall use the amounts 
transferred under subsection (b) to carry out the activities described 
in subsection (a).
    (d) Termination of Authority.--The authority provided under this 
section shall expire on September 30, 2003.

SEC. 1552. TOBACCO RELATED ADMINISTRATIVE COSTS AND SUBSIDIES.

    (a) In General.--The Secretary shall provide, by regulation, for a 
nonrefundable marketing assessment paid by purchasers of tobacco during 
each of the 1999 through 2024 fiscal years.
    (b) Basis.--The assessment shall be--
            (1) on a per pound basis, as determined by the Secretary; 
        and
            (2) based on estimated annual costs to the Federal 
        Government of tobacco related administrative costs and 
        subsidies in accordance with this section.
    (c) Aggregate Assessment Amount.--For each fiscal year, the 
Secretary shall estimate the costs to the Federal Government relating 
to tobacco that involve--
            (1) agricultural extension;
            (2) handling, sampling, grading, inspecting, and weighing;
            (3) administering and providing subsidies for crop 
        insurance; and
            (4) administering the tobacco price support program for 
        each of the 1999 through 2001 fiscal years.
    (d) Assessment Amount For Each Kind of Tobacco.--For each fiscal 
year, the Secretary shall determine the amount of the total costs 
determined under subsection (c) that benefit each kind of tobacco.
    (e) Estimated Marketings.--For each fiscal year, the Secretary 
shall estimate the pounds marketed during the fiscal year for each kind 
of tobacco.
    (f) Assessment Rate.--For each kind of tobacco for each fiscal 
year, the Secretary shall calculate an assessment rate per pound by 
dividing--
            (1) the amount determined under subsection (d); by
            (2) the estimated pounds marketed as estimated under (e).
    (g) Remittance by Purchaser.--For each fiscal year, each purchaser 
of tobacco shall remit to the Commodity Credit Corporation a 
nonrefundable marketing assessment equal to the amount obtained by 
multiplying--
            (1) the assessment rate for the kind of tobacco purchased; 
        by
            (2) the number of pounds of the kind of tobacco purchased.
    (h) Penalties.--If any purchaser fails to remit the assessment 
required by this section or fails to comply with such requirements for 
recordkeeping as are established by the Secretary to carry out this 
section, the purchaser shall be liable to the Secretary for a civil 
penalty in an amount determined by the Secretary that does not exceed 
the amount obtained by multiplying--
            (1) the quantity of the kind of tobacco involved in the 
        violation; by
            (2) the assessment rate for the kind of tobacco.
    (i) Enforcement.--The Secretary may enforce this section in the 
courts of the United States.

SEC. 1553. COMMODITY CREDIT CORPORATION.

    The Secretary may use the funds, facilities, and authorities of the 
Commodity Credit Corporation to carry out this title and the amendments 
made by this title.

                       Subtitle D--Miscellaneous

SEC. 1561. LIABILITY FOR OBLIGATIONS OF TOBACCO PRODUCT MANUFACTURERS.

    A person that owns or produces tobacco, or owns or operates a 
tobacco warehouse, shall not be liable for--
            (1) any action or legal penalty or obligation of a 
        manufacturer of a tobacco product under this Act; or
            (2) any financial penalty or payment owed by a manufacturer 
        of a tobacco product under this Act.

SEC. 1562. FDA REGULATION OF TOBACCO PRODUCTION AND FARMS.

    Notwithstanding any other provision of law, an officer, employee, 
or agent of the Food and Drug Administration shall not--
            (1) regulate the production of a crop of tobacco by a 
        person; or
            (2) enter the farm of a person that owns or produces 
        tobacco without the consent of the person.