[Congressional Bills 105th Congress] [From the U.S. Government Publishing Office] [S. 1530 Introduced in Senate (IS)] 105th CONGRESS 1st Session S. 1530 To resolve ongoing tobacco litigation, to reform the civil justice system responsible for adjudicating tort claims against companies that manufacturer tobacco products, and establish a national tobacco policy for the United States that will decrease youth tobacco use and reduce the marketing of tobacco products to young Americans. _______________________________________________________________________ IN THE SENATE OF THE UNITED STATES November 13, 1997 Mr. Hatch introduced the following bill; which was read the first time _______________________________________________________________________ A BILL To resolve ongoing tobacco litigation, to reform the civil justice system responsible for adjudicating tort claims against companies that manufacturer tobacco products, and establish a national tobacco policy for the United States that will decrease youth tobacco use and reduce the marketing of tobacco products to young Americans. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) Short Title.--This Act may be cited as the ``Placing Restraints on Tobacco's Endangerment of Children and Teens Act'' or the ``PROTECT Act''. (b) Table of Contents.--The table of contents of this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Findings. Sec. 3. Goals and purposes. Sec. 4. National goals for the reduction in underage tobacco use. Sec. 5. Definitions. TITLE I--NATIONAL TOBACCO SETTLEMENT TRUST FUND Sec. 101. Establishment of Trust Fund. Sec. 102. Licensing fees payment schedule. Sec. 103. Enforcement. TITLE II--NATIONAL PROTOCOL AND LIABILITY PROVISIONS Subtitle A--National Tobacco Control Protocol Chapter 1--Establishment Sec. 201. Requirement. subchapter a--protocol restrictions on advertising Sec. 211. Application of subchapter. Sec. 212. Agreement to prohibit certain advertising. Sec. 213. Consensual restrictions. Sec. 214. Agreement on format and content requirements for labeling and advertising. Sec. 215. Agreement to ban on nontobacco items and services, contests and games of chance, and sponsorship of subchapter b--provisions relating to lobbying Sec. 220. Application of subchapter. Sec. 221. Agreement to provisions relating to lobbying. Sec. 222. Agreement tsubchapter c--other provisions Sec. 225. Application of subchapter. Sec. 226. Determination of licensing fee amount. Sec. 227. Attorney's fees and expenses. Sec. 228. Limitations with respect to Indian country. Chapter 3--Enforcement Sec. 231. Federal enforcement of the protocol. Sec. 232. State enforcement of the protocol. Sec. 233. Private enforcement of protocol. Sec. 234. Removal. Subtitle B--Consent Decrees Sec. 241. Consent decrees. Sec. 242. State enforcement of consent decrees. Sec. 243. Non-participating manufacturers. Subtitle C--Liability Provisions Chapter 1--General Provisions Sec. 251. Definitions. Chapter 2--Immunity And Liability for Past Conduct Sec. 255. Application of chapter. Sec. 256. General immunity. Sec. 257. Civil liability for past conduct. Sec. 258. Civil liability for future conduct. Sec. 259. Non-participating manufacturers. Sec. 260. Payment of judgments and settlements. Sec. 261. State eligibility. Sec. 262. Removal. Sec. 263. Conforming amendments. TITLE III--REDUCTION IN UNDERAGE TOBACCO USE Subtitle A--State Laws Regarding the Sale of Tobacco Products to Minors Sec. 300. Short title. Sec. 301. State laws regarding sale of tobacco products to individuals under the age of 18. Sec. 302. Model State law. Subtitle B--Required Reduction in Underage Usage Sec. 311. Purpose. Sec. 312. Determination of underage use base percentages. Sec. 313. Annual daily incidence of underage use of tobacco products. Sec. 314. Required reduction in underage tobacco use. Sec. 315. Application of surcharges. Sec. 316. Abatement procedures. Sec. 317. Incentive for exceeding reduction goals. TITLE IV--HEALTH AND SAFETY REGULATION OF TOBACCO PRODUCTS Sec. 401. Health and safety regulation of tobacco products. ``CHAPTER IX--HEALTH PROMOTION AND DISEASE PREVENTION PROGRAM FOR TOBACCO PRODUCTS ``Sec. ``subchapter a--tobacco product regulation ``Sec. 901. Statement of general duties. ``Sec. 902. Tobacco product health risk management standards. ``Sec. 903. Good manufacturing practice standards. ``Sec. 904. Tobacco product labeling, warning, and packaging standards. ``Sec. 905. Reduced risk tobacco products. ``Sec. 906. Tobacco product marketing provisions. ``Sec. 907. Tobacco Products Scientific Advisory Committee. ``Sec. 908. Reports. ``Sec. 909. Judicial review. ``Sec. 910. Preemption. Sec. 402. Technical provisions. Sec. 403. Federal licensing of military and other entities. TITLE V--PAYMENTS TO STATES AND PUBLIC HEALTH PROGRAMS Subtitle A--Payments to States Sec. 501. Reimbursement for State expenditures. Sec. 502. Requirement for State use of certain funds. Subtitle B--Public Health Programs Sec. 521. National Institutes of Health Trust Fund for Health Research. Sec. 522. National anti-tobacco product consumption and tobacco product cessation public health program. TITLE VI--STANDARDS TO REDUCE INVOLUNTARY EXPOSURE TO TOBACCO SMOKE Sec. 601. Definitions. Sec. 602. Smoke-free environment policy. Sec. 603. Preemption. Sec. 604. Regulations. Sec. 605. Effective date. TITLE VII--PUBLIC DISCLOSURE OF HEALTH RESEARCH Sec. 701. Purpose. Sec. 702. National tobacco document depository. Sec. 703. Enforcement. TITLE VIII--AGRICULTURAL TRANSITION PROVISIONS Sec. 801. Short title. Sec. 802. Purposes. Sec. 803. Definitions. Subtitle A--Tobacco Production Transition Chapter 1--Tobacco Transition Contracts Sec. 811. Tobacco Transition Account. Sec. 812. Offer and terms of tobacco transition contracts. Sec. 813. Elements of contracts. Sec. 814. Buyout payments to owners. Sec. 815. Transition payments to producers. Sec. 816. Tobacco worker transition program. Sec. 817. Farmer opportunity grants. Chapter 2--Rural Economic Assistance Block Grants Sec. 821. Rural economic assistance block grants. Subtitle B--Tobacco Price Support and Production Adjustment Programs Chapter 1--Tobacco Price Support Program Sec. 831. Interim reform of tobacco price support program. Sec. 832. Termination of tobacco price support program. Chapter 2--Tobacco Production Adjustment Programs Sec. 835. Termination of tobacco production adjustment programs. Subtitle C--Funding Sec. 841. Trust Fund. Sec. 842. Commodity Credit Corporation. TITLE IX--MISCELLANEOUS PROVISIONS Sec. 901. Provisions relating to Native Americans. Sec. 902. Whistleblower protections. Sec. 903. Limited antitrust exemption. Sec. 904. Pass-through. Sec. 905. Effective date. SEC. 2. FINDINGS. (a) General Findings.--Congress makes the following findings: (1) Tobacco is an addictive substance the use of which constitutes the Nation's number 1 preventable cause of death. (2) The use of tobacco products by the nation's children is a serious and growing public health problem that results in new generations of tobacco-dependent children and adults. (3) There is a consensus within the scientific and medical communities that currently marketed tobacco products are inherently unsafe and cause cancer, heart disease, and other serious adverse health effects. The tobacco industry concealed relevant data concerning the effects of tobacco products on adolescents and adults. (4) Virtually all new users of tobacco products are under the age of 18. Tobacco industry advertising and marketing is directed at adolescents and as such, sweeping new restriction on the sale, promotion, and distribution of such products are needed. (5) Enhancing the existing legal mechanisms and the available prevention, research, and treatment resources with respect to tobacco will allow our Nation to address more effectively the problems associated with the use of tobacco products. (6) Public health authorities believe that the societal benefits of enacting tobacco settlement legislation in human and economic terms would be vast. The Secretary of Health and Human Services has found that reducing underage tobacco use 50 percent ``would prevent well over 60,000 early deaths''. The Secretary has estimated that the monetary value of the regulations promulgated as a result of this Act will be an estimated $43,000,000,000 per year in reduced medical costs, improved productivity, and the benefit of avoiding the premature death of loved ones. (7) The unique position occupied by tobacco in the history and economy of the United States, the magnitude of the actual and potential tobacco-related litigation, the advisability of avoiding the cost, expense, uncertainty, and inconsistency associated with such protracted litigation, the need to limit the sale, distribution, marketing, and advertising of tobacco products to persons of legal age, and the need to better educate the public (especially young people) concerning the health risks of using tobacco products make it in the public interest to enact legislation to facilitate a comprehensive resolution of such matters. (b) Findings Related to Interstate Commerce and the Judicial System.--Congress makes the following findings: (1) The sale, distribution, marketing, advertising, and use of tobacco products are activities substantially affecting interstate commerce and as such, have a substantial effect on the economy of the United States. (2) The sale, distribution, marketing, advertising, and use of tobacco products are activities that substantially affect interstate commerce by virtue of the health care-related and other costs that Federal and State governmental authorities have incurred because of the usage of tobacco products. (3) Various civil actions brought by State attorneys general, cities, counties, the Commonwealth of Puerto Rico, third-party payors, and other private classes and individuals to recover damages relating to tobacco-related diseases, conditions and products are pending throughout the United States; of these actions are slow-moving, expensive, and burdensome not only for the litigants but also for Federal and State judicial systems. SEC. 3. GOALS AND PURPOSES. (a) Goals.--It is a goal of this Act to-- (1) decrease youth smoking and reduce the marketing of tobacco products to young Americans; (2) decrease tobacco use by all Americans by encouraging public education and smoking cessation programs and to decrease the exposure of individuals to environmental (second-hand) smoke; (3) enhance biomedical research efforts into diseases associated with tobacco use; (4) advance our knowledge about the health effects of nicotine and tobacco on the human body; (5) provide transition assistance to tobacco farmers and create incentives to reduce the production and distribution of tobacco products; (6) return to the States funds that they have expended with respect to tobacco-related health care costs and other costs related to tobacco; (7) establish the authority of the Food and Drug Administration with respect to the types of tobacco products that may be lawfully sold; (8) reform tobacco litigation practices to bring finality to current litigation and provide greater predictability in future individual cases; and (9) wisely invest increased tobacco revenues in important public health priorities, such as smoking cessation, public education, counter-advertising. (b) Purposes.--It is the purpose of this Act to-- (1) provide for the funding by the tobacco industry of an aggressive Federal enforcement program relating to tobacco advertising and distribution, including a State-administered retail licensing system to prevent minors from obtaining tobacco products; (2) subject the tobacco industry to severe financial penalties in the event that underage tobacco usage does not decline radically over the next 10 years; (3) provide for the establishment of national standards to control the manufacturing of tobacco products and the ingredients used in such products; (4) provide certain regulatory powers to the Secretary of Health and Human Services to encourage the development and marketing by the tobacco industry of ``less hazardous tobacco products'', including the power to regulate the level of nicotine in such products; (5) require the manufacturers of tobacco products to disclose all present and future non-public internal laboratory research regarding tobacco products; (6) establish a minimum Federal standard to limit smoking in public places, including the halls of Congress; (7) provide for the establishment of a National Tobacco Settlement Trust Fund to be funded by the tobacco industry and used in accordance with this Act; (8) provide for the establishment of a national education- oriented counter advertising and tobacco use prevention campaign to be funded through the National Tobacco Settlement Trust Fund; (9) provide annual payments to States to fund tobacco- related health benefits programs through the National Tobacco Settlement Trust Fund; and (10)(A) settle the present tobacco-related governmental parens patriae and private class actions as to which a final judgment or final settlement has not been reached as of the effective date of this Act; (B) bar future tobacco-related claims based on dependency; (C) preclude claims for punitive damages based on conduct that took place prior to the effective date of this Act to that such claims are not reduced to final judgment or final settlement prior to the effective date of this Act; and (D) preclude further class actions or aggregations of claims in tobacco-related actions. SEC. 4. NATIONAL GOALS FOR THE REDUCTION IN UNDERAGE TOBACCO USE. (a) In General.--With respect to the average annual incidence of the daily use of tobacco products by individuals who are under 18 years of age, it shall be the national goals of the United States that such use be reduced as follows: (1) Cigarettes.--With respect to cigarettes-- (A) in the fifth and sixth calendar years after the date of enactment of this Act the percentage decrease in the use of cigarette products shall be at least 30 percent; (B) in the seventh, eighth and ninth calendar years after the date of enactment of this Act the percentage decrease in the use of cigarette products shall be at least 50 percent; and (C) in the tenth and subsequent calendar years after the date of enactment of this Act the percentage decrease in the use of cigarette products shall be at least 60 percent. (2) Smokeless tobacco products.--With respect to smokeless tobacco products-- (A) in the fifth and sixth calendar years after the date of enactment of this Act the percentage decrease in the use of smokeless tobacco products shall be at least 25 percent; (B) in the seventh, eighth and ninth calendar years after the date of enactment of this Act the percentage decrease in the use of smokeless tobacco products shall be at least 35 percent; and (C) in the tenth and subsequent calendar years after the date of enactment of this Act the percentage decrease in the use of smokeless tobacco products shall be at least 45 percent. (b) Determinations.--Determinations as to whether the national goals described in subsection (a) have been met shall be made in accordance with the provisions of subtitle B of title III. SEC. 5. DEFINITIONS. In this Act: (1) Brand.--The term ``brand'' means a variety of a tobacco product distinguished by the tobacco used, tar content, nicotine content, flavoring used, size, filtration, or packaging. (2) Cigarette.--The term ``cigarette'' means any product which contains nicotine, is intended to be burned under ordinary conditions of use, and consists of-- (A) any roll of tobacco wrapped in paper or in any substance not containing tobacco; and (B) any roll of tobacco wrapped in any substance containing tobacco which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette described in subparagraph (A). (3) Cigarette tobacco.--The term ``cigarette tobacco'' means any product that consists of loose tobacco that contains or delivers nicotine and is intended for use by persons in a cigarette. Unless otherwise stated, the requirements of this Act pertaining to cigarettes shall also apply to cigarette tobacco. (4) Commerce.--The term ``commerce'' means-- (A) commerce between any State, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands, American Samoa, the Northern Mariana Islands or any territory or possession of the United States; (B) commerce between points in any State, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands, American Samoa, the Northern Mariana Islands or any territory or possession of the United States; or (C) commerce wholly within the District of Columbia, Guam, the Virgin Islands, American Samoa, the Northern Mariana Islands or any territory or possession of the United States. (5) Commissioner.--The term ``Commissioner'' means the Commissioner of Food and Drugs. (6) Consent decree.--The term ``consent decree'' means a consent decree executed by the participating manufacturers and a State under the provision of section 241. (7) Court.--The term ``court'' means any judicial or agency court, forum or tribunal within the United States, including without limitation any Federal, State, or tribal court. (8) Distributor.--The term ``distributor'' means any person who furthers the distribution of tobacco products, whether domestic or imported, at any point from the original place of manufacture to the person who sells or distributes the product to individuals for personal consumption. Such term shall not include common carriers. (9) Indian tribe.--The term ``Indian tribe'' has the same meaning given such term in section 4(e) of the Indian Self Determination and Education Assistance Act (25 U.S.C. 450b(e)). (10) Tribal organization.--The term ``tribal organization'' has the same meaning given such term in section 4 of the Indian Self Determination and Education Assistance Act (25 U.S.C. 450b). (11) Manufacturer.--The term ``manufacturer'' means-- (A) a person who directly (not through a subsidiary company or affiliate) manufactures tobacco products for sale in the United States; (B) a successor or assign of a person described in subparagraph (A); (C) an entity established by a person described in subparagraph (A); or (D) an entity to which a person described in subparagraph (A) directly or indirectly makes a fraudulent conveyance after the effective date of this Act or a transfer that would otherwise be voidable under chapter 7 of title 11, United States Code, but only to the extent of the interest or obligation transferred. Such term shall not include a parent or affiliate of a person who manufactures tobacco products unless such parent or affiliate itself is a person described in any of subparagraphs (A) through (D). (12) Nicotine.--The term ``nicotine'' means the chemical substance named 3-(1-Methyl-2-pyrrolidinyl)pyridine or C<INF>10</INF>H<INF>14</INF>N<INF>2</INF>, including any salt or complex of nicotine. (13) Package.--The term ``package'' means a pack, box, carton, or container of any kind in which tobacco products are offered for sale, sold, or otherwise distributed to consumers. (14) Participating manufacturer.--The term ``participating manufacturer'' means a manufacturer which, within the periods specified in the applicable provisions of title II-- (A) enters into the Protocol; and (B) enters into a consent decree with each State that requests that the manufacturer enter into the Protocol. (15) Person.--The term ``person'' means an individual, partnership, corporation, or any other business or legal entity. (16) Point of sale.--The term ``point of sale'' means any location at which an individual can purchase or otherwise obtain tobacco products for personal consumption. (17) Protocol.--The term ``Protocol'' means the protocol to be executed under subtitle A of title II for the purpose of setting forth certain obligations being undertaken by the Attorney General, participating manufacturers, the chief executive officer of each State, and a representative of the members of the class certified for purposes of Dianne Castano v. American Tobacco Company, as consideration for the resolution of tobacco claims through the civil liability provisions of title II. (18) Retailer.--The term ``retailer'' means any person who sells tobacco products to individuals for personal consumption, or who operates a facility where vending machines or self- service displays are permitted under this Act. (19) Sale.--The term ``sale'' includes the selling, providing samples of, or otherwise making tobacco products available for personal consumption in any place within the scope of this Act. (20) Secretary.--The term ``Secretary'' means the Secretary of Health and Human Services. (21) Smokeless tobacco.--The term ``smokeless tobacco'' means any product that consists of cut, ground, powdered, or leaf tobacco that contains nicotine and that is intended to be placed in the oral or nasal cavity. (22) State.--The term ``State'' includes the several States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands, American Samoa, the Northern Mariana Islands, and any other territory or possession of the United States. Such term includes any political division of any State. (23) Tobacco.--The term ``tobacco'' means tobacco in its unmanufactured form. (24) Tobacco claim.--The term ``tobacco claim'' means a claim directly or indirectly arising out of, based on, or related to the health-related effects or attributes of tobacco products, including a claim arising out of, based on, or related to allegations regarding any conduct, statement or omission concerning the health-related effects or attributes of such products, that is brought against-- (A) a manufacturer or the predecessors or past, present or future parents, affiliates, officers, directors, employees or agents of a manufacturer; or (B) any importer, supplier, distributor, wholesaler, retailer or other seller of tobacco products or any grower of tobacco. (25) Tobacco product.--The term ``tobacco product'' means cigarettes, cigarette tobacco, and smokeless tobacco. (26) Trust fund.--The term ``Trust Fund'' means the National Tobacco Settlement Trust Fund established under section 101. TITLE I--NATIONAL TOBACCO SETTLEMENT TRUST FUND SEC. 101. ESTABLISHMENT OF TRUST FUND. (a) Creation and Deposits.-- (1) In general.--There is established in the Treasury of the United States a trust fund to be known as the ``National Tobacco Settlement Trust Fund''. (2) Deposits.--The Trust Fund shall be composed of the following deposits to be paid by participating manufacturers under the fee payment schedule under section 102: (A) Compensatory damage deposits.--With respect to compensatory damages, $303,337,500,000 shall be deposited in the Trust Fund and shall represent the settlement amount referred to in the Protocol and the consent decrees. (B) Punitive damage deposits.--With respect to punitive damages, $95,000,000,000 shall be deposited in the Trust Fund and shall represent the settlement of tobacco-related punitive damages claims which occurred prior to the date of enactment of this Act, and shall be used to fund the Trust Fund for Health Research under section 521. (3) Accounts in trust fund.--The National Tobacco Settlement Trust Fund shall consist of-- (A) a State Account, and (B) a Federal Account. Each such Account shall consist of such amounts as may be transferred to it under this section or credited under section 103(b)(3). (4) Trustees.-- (A) In general.--The National Tobacco Settlement Trust Fund shall be administered by the Attorney General who shall serve together with the Secretary of the Treasury and the Secretary of Health and Human Services as the Trustees of the Fund. (B) Advisory board.--The Trustees of the Trust Fund, in administering the Trust Fund, shall be advised by an advisory board established under section 103. (b) Transfers to Trust Fund.--There is transferred to the State Account and the Federal Account of the National Tobacco Settlement Trust Fund, without further appropriation, an amount equal to 50 percent in the case of the State Account and 50 percent in the case of the Federal Account of the-- (1) amounts received under section 102, less the amounts made available under subparagraphs (D), (E), and (F) of subsection (c)(3) for tobacco transition, Native Americans, and asbestos-related injuries; (2) amounts paid as fines or penalties, including interest thereon, under section 104; and (3) amounts repaid or recovered under section 315, including interest thereon. (c) Expenditures From Trust Fund.-- (1) In general.--Amounts in the National Tobacco Settlement Trust Fund shall be made available in each fiscal year, without further appropriation, as described in the table in paragraph (2). (2) Expenditure table.--For purposes of paragraph (1), amounts shall be made available in each full fiscal year following the date of enactment of this Act as follows: In billions of dollars ---------------------------------------------------------------------------------------------------------------- Native Year States Public Health Research Asbestos Agriculture Americans ---------------------------------------------------------------------------------------------------------------- 1st 3.25 1.1 2.15 0 3.0925 0.2 2nd 3.75 1.6 2.15 0.2 5.0925 0.2 3rd 4.75 2.2 2.55 0.2 6.1925 0.2 4th 7.0 3.3 3.7 0.2 .0925 0.2 5th 7.5 3.5 4.0 0.2 .0925 0.2 6th 8.0 4.0 4.0 0.2 0.1 0.2 7th 8.0 4.0 4.0 0.2 0.1 0.2 8th 8.0 4.0 4.0 0.2 0.1 0.2 9th 8.0 4.0 4.0 0.2 0.1 0.2 10th 8.0 4.0 4.0 0.2 0.1 0.2 11th 8.0 4.0 4.0 0.2 0.0575 0.2 12th 8.0 4.0 4.0 0.2 0.0575 0.2 13th 8.0 4.0 4.0 0.2 0.0575 0.2 14th 8.0 4.0 4.0 0.2 0.0575 0.2 15th 8.0 4.0 4.0 0.2 0.0575 0.2 16th 8.0 4.0 4.0 0.2 0.065 0.2 17th 8.0 4.0 4.0 0.2 0.065 0.2 18th 8.0 4.0 4.0 0.2 0.065 0.2 19th 8.0 4.0 4.0 0.2 0.065 0.2 20th 8.0 4.0 4.0 0.2 0.065 0.2 21st 8.0 4.0 4.0 0.2 0.0725 0.2 22nd 8.0 4.0 4.0 0.2 0.0725 0.2 23rd 8.0 4.0 4.0 0.2 0.0725 0.2 24th 8.0 4.0 4.0 0.2 0.0725 0.2 25th 8.0 4.0 4.0 0.2 0.0725 0.2 ---------------------------------------------------------------------------------------------------------------- (3) Definitions and use of funds.--With respect to the table in paragraph (2): (A) State.--The term ``State'' means the State account established under subsection (a)(3)(A). Amounts provided to the State Account under this section shall be available in each fiscal year, without further appropriation, to make payments to the States as provided for in subtitle A of title V. (B) Research.--The term ``research'' means activities carried out by the Secretary under section 521 to conduct and support biomedical and behavioral research into the causes of tobacco use, diseases and conditions associated with tobacco use and other substance abuse dependencies, and the development of therapies for such diseases and conditions. (C) Public health.--The term ``public health'' means public health activities carried out by the Secretary under section 522 to implement the National Anti-Tobacco Product Consumption and Tobacco Product Cessation Public Health Program to further the purposes of this Act. (D) Asbestos.--The term ``asbestos'' means programs and activities carried out by the Secretary of Labor relating to victims of asbestos-related injuries with respect to which the use of tobacco products have been determined to be a significant contributor. (E) Agriculture.--The term ``agriculture'' means the Tobacco Transition Account to be administered by the Secretary of Agriculture as provided for under section 841. (F) Native americans.--The term ``Native Americans'' means anti-tobacco consumption and cessation activities to be carried out by the Indian Health Service under section 901(h). (4) Federal account.--Amounts to which subparagraphs (B) through (D) of paragraph (3) apply shall be deposited into Federal Account and shall be available in each fiscal year, without further appropriation, as described in such subparagraphs. (5) Reservation.--Prior to making available amounts under this subsection for a fiscal year, the Trustees shall reserve the amounts to which subparagraphs (E) through (G) of paragraph (3) apply, for use in each fiscal year, without further appropriation, as described in such subparagraphs. (d) Maintenance of Effort.--The Trustees may not make an expenditure for a fiscal year-- (1) under subsection (c)(1), unless a State certifies that the aggregate expenditure of funds of the State, exclusive of Federal funds, for the purposes of the expenditure under such subsection will be maintained at a level that does not fall below the average level of such aggregate expenditure for the preceding 2 fiscal years of the State; and (2) under any subparagraph of subsection (c)(2), unless such expenditure is in addition to, and not in substitution for, any appropriation otherwise applicable with respect to the purpose described in such subparagraph. (e) Adjustments.--The amounts described in subsection (a)(1) relating to deposits and in subsection (c) relating to expenditures shall be adjusted annually by the Trustees to account for any adjustments made under section 102(c)(2) relating to fee payments. Amounts for expenditures under subsection (c) shall be adjusted proportionally by the Trustees based on the adjustments under section 102(c)(2). SEC. 102. LICENSING FEES PAYMENT SCHEDULE. (a) Requirement of Initial Payment.--To be eligible to receive the protections provided under subtitle C of title II, participating manufacturers shall, on the later of-- (1) the date of enactment of this Act; (2) the date on which the Protocol is executed under section 201; or (3) the date on which all applicable consent decrees are executed under section 241; pay licensing fees to the Trust Fund in an aggregate amount of $10,000,000,000. (b) Subsequent Base Amount Payments.--To be eligible to receive the protections provided under subtitle C of title II, participating manufacturers shall, not later than December 31 of each year involved, pay licensing fees to the Trust Fund in an aggregate amount of-- (1) with respect to the first fiscal year following the year in which the fees are paid under subsection (a), $9,792,500,000; (2) with respect to the second such fiscal year, $12,992,500,000; (3) with respect to the third such fiscal year, $16,092,500,000; (4) with respect to the fourth such fiscal year, $14,492,500,000; (5) with respect to the fifth such fiscal year, $15,492,500,000; (6) with respect to the sixth such fiscal year, and each of the next 4 succeeding fiscal years, $16,500,000,000 for each such year; (7) with respect to the 11th such fiscal year, and each of the next 4 succeeding fiscal years, $16,457,500,000 for each such year; (8) with respect to the 16th such fiscal year, and each of the next 4 succeeding fiscal years, $16,465,000,000 for each such year; and (9) with respect to the 21st such fiscal year, and each of the next 4 succeeding fiscal years, $16,472,500,000 for each such year. (c) Adjustments.-- (1) In general.--The amount of the annual base amount payments for each year under subsection (b) shall be adjusted by the Trustees in accordance with the formula described in paragraph (2). In prescribing such adjustments, the Trustees shall ensure that participating manufacturers make annual payments based on their relative domestic volume of sales of units of tobacco products during the year for which the payment is due. (2) Formula.-- (A) Inflation adjustment.--With respect to a year, the base amount payment for such year under subsection (b) shall be increased for such year by the greater of 3 percent or the percentage increase in the Consumer Price Index for the period beginning in the first full fiscal year beginning after the date of enactment of this Act and ending in the year for which the determination is being made. (B) Volume adjustment.-- (i) Determination.--With respect to a year-- (I) if the actual volume is greater than the base volume, the amount of the annual base amount payments for such year under subsection (b) shall be increased by an amount equal to the amount determined by multiplying such base amount by the ratio of the actual volume to the base volume; or (II) if the actual volume is less than the base volume, the annual base amount payments for such year under subsection (b) shall be reduced by an amount equal to the amount determined by multiplying such base amount by the greater of-- (aa) the ratio of the actual volume to the base volume; or (bb) the ratio of the portion of the actual volume attributable to sales to individuals 18 years of age or older to the portion of the base volume attributable to sales to individual 18 years of age or older. (ii) Required reduction.--If a reduction in the applicable base amount is required under clause (ii), but the participating manufacturers' aggregate net operating profits from domestic sales of tobacco products for the year for which the annual payment is being calculated, as reported to the Securities and Exchange Commission, is greater than such participating manufacturers' aggregate net operating profits from domestic sales of tobacco products in 1996 (as increased for inflation) as reported to the Securities and Exchange Commission, such reduction shall be reduced (but not below zero) by an amount equal to 25 percent of such increase in such profits. (iii) Nonreporting manufacturer.--In the case of a participating manufacturer that does not report profits to the Securities and Exchange Commission, the profit figures referred to in this subparagraph shall be those reflected in that participating manufacturer's audited financial statements for the applicable year. The determination of the participating manufacturers' aggregate net operating profits from domestic sales of tobacco products shall be derived using the same methodology as was employed in deriving such participating manufacturers' aggregate net operating profits from domestic sales of tobacco products in 1996, as reported to the Securities and Exchange Commission. (iv) Definitions.--For purposes of this subparagraph-- (I) the term ``actual volume'' means the number of units of tobacco products sold domestically by participating manufacturers in the year involved (as reported by such participating manufacturers to the Secretary); and (II) the term ``base volume'' means the number of units of tobacco products sold domestically by participating manufacturers in 1996. (d) Determination of Amount.--The amount of licensing fees that each participating manufacturer shall be required to pay to the Trust Fund under this section shall be determined under the Protocol under section 226. In making such determinations, consideration shall be provided for any payments made by manufacturers to States under any settlement of a civil action described in section 256(a). (e) Guidelines.--The Trustees shall develop guidelines and implement procedures for the collection of fees under this section. (f) Collection of Unpaid Payments.--In any case where the Trustees do not receive a payment under this section within 30 days after it is due, such payment shall be treated as a claim of the United States Government subject to subchapter II of chapter 37 of title 31, United States Code. SEC. 103. ADMINISTRATIVE PROVISIONS. (a) Duty of Trustees.--It shall be the duty of the Attorney General as a Trustees of the National Tobacco Settlement Trust Fund to hold the Trust Fund and to report to the Committees on Judiciary, Labor and Human Resources, Commerce and Agriculture of the Senate and the Committees on Judiciary, Commerce, and Agriculture of the House of Representatives each fiscal year-- (1) on the financial condition and the results of the operations of the Trust Fund during the fiscal year preceding the fiscal year in which such report is submitted, and (2) on the expected condition and operations of the Trust Fund during the fiscal year in which such report is submitted and the 5 fiscal years succeeding such fiscal year. Such report shall be printed as both a House and Senate document of the session of the Congress to which the report is made. (b) Investment of Amounts in Trust Fund.-- (1) Investment in obligations.--The Trustees shall invest such portion of the State Account and the Federal Account of the National Tobacco Settlement Trust Fund as is not, in their judgment, required to meet current withdrawals. Such investments may be made only in interest-bearing obligations of the United States. For such purpose, such obligations may be acquired-- (A) on original issue at the issue price, or (B) by purchase of outstanding obligations at the market price. (2) Sale of obligations.--Any obligation acquired by the State Account or the Federal Account of the Trust Fund may be sold by the Secretary of the Treasury at the market price. (3) Crediting of interest and sale proceeds.--The interest on, and the proceeds from the sale or redemption of, any obligations held in the State Account or the Federal Account of the Trust Fund shall be credited to and form a part of such Account. (c) Establishment of Advisory Board.-- (1) In general.--There is established an advisory board (referred to in this subsection as the ``Advisory Board'') to advise the Trustees of the National Tobacco Settlement Trust Fund in the administration of the Trust Fund. (2) Membership.-- (A) In general.--The Advisory Board shall be composed of the Trustees of the National Tobacco Settlement Trust Fund, who shall act as the co- chairpersons of the Advisory Board, and 4 members to be appointed-- (i) \1/2\ by the Speaker of the House of Representatives, in consultation with the minority leader of the House of Representatives, and (ii) \1/2\ by the majority leader of the Senate, in consultation with the minority leader of the Senate. (b) Nominees.--The members appointed under each clause of subparagraph (A) shall be chosen in the following manner: (i) 1 member from a nominee list prepared by State attorneys general. (ii) 1 member from a nominee list prepared by representatives of the tobacco industry. (iii) 1 member from a nominee list prepared by representatives of public health experts. (iv) 1 member from a nominee list prepared by representatives of the members of the class of plaintiffs in Dianne Castano v. American Tobacco Company. (3) Terms and vacancies.--Each member of the Advisory Board shall serve for a term of 4 years, to begin on the date of appointment. Any vacancy on the Advisory Board shall not affect its powers, but shall be filled in the same manner as the original appointment. Any member appointed to fill a vacancy occurring before the expiration of the term for which the member's predecessor was appointed shall be appointed for the remainder of that term. (4) Powers.-- (A) Hearings.--The Advisory Board may hold such hearings, sit and act at such times and places, take such testimony, and receive such evidence as the Advisory Board considers advisable to carry out the duties of the Advisory Board. (B) Information from federal agencies.--The Advisory Board may secure directly from any Federal department or agency such information as the Advisory Board considers necessary to carry out such duties. (5) Personnel matters.-- (A) Compensation.--Each member of the Advisory Board who is not an officer or employee of the Federal Government shall serve without compensation. All members of the Advisory Board who are officers or employees of the United States shall serve without compensation in addition to that received for their services as officers or employees of the United States. (B) Travel expenses.--The members of the Advisory Board shall be allowed travel expenses, including per diem in lieu of subsistence, at rates authorized for employees of agencies under subchapter I of chapter 57 of title 5, United States Code, while away from their homes or regular places of business in the performance of services for the Advisory Board. (6) Limitation.--Amounts used for administrative expenses under this section shall not exceed .1 percent of the amounts in the Trust Fund in each year or $15,000,000 whichever is less. (7) Nonapplication of faca.--The provisions of the Federal Advisory Committee Act (5 U.S.C. App. 2) shall not apply to the Advisory Board established under this subsection. (d) Budgetary Treatment of Trust Fund Operations.-- (1) In general.--The receipts and disbursements of the National Tobacco Settlement Trust Fund shall not be included in the totals of the budget of the United States Government as submitted by the President or of the congressional budget and shall be exempt from any general budget limitation imposed by statute on expenditures and net lending (budget outlays) of the United States Government. (2) No transfers between trust fund and general fund.--No provision of law may provide for payments from the general fund of the Treasury to the National Tobacco Settlement Trust Fund or for payments from the Trust Fund to the general fund of the Treasury. SEC. 104. ENFORCEMENT. (a) Initial Penalty.--There is hereby imposed an initial penalty on the failure of any participating manufacturer to make any fee payment required under section 102 within 60 days after the date on which such fee is due. (b) Amount of Penalty.--The amount of the penalty imposed by subsection (a) on any failure with respect to a manufacturer shall be $100,000 for each day during the noncompliance period. (c) Noncompliance Period.--For purposes of this section, the term ``noncompliance period'' means, with respect to any failure to make the fee payment required under section 102, the period-- (1) beginning on the due date for such payment; and (2) ending on the date on which such payment is paid in full. (d) Limitations.-- (1) In general.--No penalty shall be imposed by subsection (a) on any failure to make a fee payment under section 102 during any period for which it is established to the satisfaction of the Trustees that none of the persons responsible for such failure knew or, exercising reasonable diligence, would have known, that such failure existed. (2) Corrections.--No penalty shall be imposed under subsection (a) on any failure to make a fee payment under section 102 if-- (A) such failure was due to reasonable cause and not to willful neglect; and (B) such failure is corrected during the 30-day period beginning on the 1st date that any of the persons responsible for such failure knew or, exercising reasonable diligence, would have known, that such failure existed. (3) Waiver.--In the case of any failure to make a fee payment under section 102 that is due to reasonable cause and not to willful neglect, the Trustees may waive all or part of the penalty imposed under subsection (a) to the extent that the Trustees determines that the payment of such penalty would be excessive relative to the failure involved. (e) Status as Participating Manufacturer.--If, at the end of the 1- year period beginning on the date on which a participating manufacturer fails to make a timely fee payment as required under section 102, such manufacture has not fully paid the amount owed by such manufacturer under such section, such manufacturer shall be considered a nonparticipating manufacturer and shall not be eligible for any protections or assistance provided for under this Act (including the liability protections under subtitle C of title I). TITLE II--NATIONAL PROTOCOL AND LIABILITY PROVISIONS Subtitle A--National Tobacco Control Protocol CHAPTER 1--ESTABLISHMENT SEC. 201. REQUIREMENT. (a) Requirement.--To be eligible to receive the liability protections provided for in subtitle C, each tobacco manufacturer to which this Act applies shall, not later than 90 days after the date of enactment of this Act, enter into a National Tobacco Control Protocol with the Attorney General of the United States, the chief executive officer of each State, and a representative of the members of the class certified for purposes of Dianne Castano v. American Tobacco Company. (b) Terms and Conditions.--The Protocol referred to in subsection (a) shall be-- (1) developed by the Attorney General, in consultation with the Secretary, the State attorneys' general, and other individuals determined appropriate by the Attorney General, as a binding and enforceable contract that embodies the terms of this subtitle; and (2) designed to be enforceable in Federal or State courts as provided for in this subtitle. (c) Contracts.--As part of the Protocol under this subtitle, a participating manufacturer shall agree, with respect to any contract entered into by the manufacturer with an entity that is a distributor or retailer of tobacco products, to include in such contract as a term and condition a requirement that such distributor or retailer comply with the provisions of the Protocol. CHAPTER 2--TERMS AND CONDITIONS Subchapter A--Protocol Restrictions on Advertising SEC. 211. APPLICATION OF SUBCHAPTER. The provisions of this subchapter shall be considered as part of the Protocol. SEC. 212. AGREEMENT TO PROHIBIT CERTAIN ADVERTISING. (a) Prohibition on Outdoor Advertising.-- (1) In general.--No manufacturer, distributor, or retailer may use any form of outdoor tobacco product advertising, including billboards, posters, or placards. (2) Stadia and arenas.--Except as otherwise provided in this title, a manufacturer, distributor, or retailer shall not advertise tobacco products in any arena or stadium where athletic, musical, artistic or other social or cultural events or activities occur. (b) Prohibition on Use of Human Images and Cartoons.--No manufacturer, distributor, or retailer may use a human image or a cartoon character or cartoon-type character in its advertising, labeling or promotional material with respect to a tobacco product. (c) Prohibition on Advertising on the Internet.--No manufacturer, distributor, or retailer may use the Internet to advertise tobacco products unless such an advertisement is inaccessible in or from the United States. (d) Prohibition on Point of Sale Advertising.-- (1) In general.--Except as otherwise provided in this subsection, no manufacturer, distributor, or retailer may use point of sale advertising of tobacco products. (2) Adult only stores and tobacco outlets.--Paragraph (1) shall not apply to point of sale advertising at adult only stores and tobacco outlets. (3) Permissible advertising.-- (A) In general.--Each manufacturer of tobacco products may display not more than 2 separate point of sale advertisements in or at each location at which tobacco products are offered for sale. (B) Market share manufacturers.--A manufacturer with at least 25 percent of the market share of the tobacco product involved may display an additional point of sale advertisement in or at each location at which tobacco products are offered for sale. (C) Retailers.--No manufacturer, distributor, or retailer may enter into any arrangement with a retailer to limit the ability of the retailer to display any form of permissible point of sale advertisement or promotional material originating with another manufacturer, distributor, or retailer. (4) Limitations.-- (A) In general.--A point of sale advertisement permitted under this subsection shall be comprised of a display area than is not larger than 576 square inches (either individually or in the aggregate) and shall consist only of black letters on a white background or other recognized typographical marks. Such advertisement shall not be attached to nor located within 2 feet of any fixture on which candy is displayed for sale. (B) Audio and video formats.--Audio and video advertisements permitted under section 214(c) may be distributed to individuals who are 18 years of age or older at point of sale but may not be played or viewed at such point of sale. (C) Display fixtures.--Display fixtures in the form of signs consisting of brand name and price and not larger than 2 inches in height are permitted. (5) Definition.--For purposes of this subsection, the term ``point of sale advertising'' means all printed or graphical materials bearing the brand name (alone or in conjunction with any other word), logo, motto, selling message, recognizable color or pattern of colors, or any other indicia of product identification similar or identical to those used for tobacco products, which, when used for its intended purpose, can reasonably be anticipated to be seen by customers at a location at which tobacco products are offered for sale. SEC. 213. CONSENSUAL RESTRICTIONS. (a) Restriction on Product Names.--A manufacturer shall not use a trade or brand name of a nontobacco product as the trade or brand name for a cigarette or smokeless tobacco product, except for a tobacco product whose trade or brand name was on both a tobacco product and a nontobacco product that were sold in the United States on January 1, 1995. (b) Advertising Limit Actions.-- (1) In general.--A manufacturer, distributor, or retailer may in accordance with this title, disseminate or cause to be disseminated advertising or labeling which bears a tobacco product brand name (alone or on conjunction with any other word) or any other indicia of tobacco product identification only in newspapers, in magazines, in periodicals or other publications (whether periodic or limited distribution), on billboards, posters and placards in accordance with section 212(a), in nonpoint of sale promotional material (including direct mail), in point-of-sale promotional material, and in audio or video formats delivered at a point-of-sale. (2) Limitation.--A manufacturer, distributor, or retailer that intends to disseminate, or to cause to be disseminated, advertising or labeling for a tobacco product in a medium that is not described in paragraph (1) shall notify the Commissioner not less than 30 days prior to the date on which such medium is to be used. Such notice shall describe the medium and discuss the extent to which the advertising or labeling may be seen by individuals who are under 18 years of age. (3) Action by commissioner.--Not later than 30 days after the date on which the Commissioner receives a notice under paragraph (2), the Commissioner shall make a determination with respect to the action to be taken concerning such notice. (c) Restriction on Placement in Entertainment Media.-- (1) In general.--No payment shall be made by any manufacturer, distributor, or retailer for the placement of any tobacco product or tobacco product package or advertisement-- (A) as a prop in any television program or motion picture produced for viewing by the general public; or (B) in a video or on a video game machine. (2) Video game.--The term ``video game'' means any electronic amusement device that utilizes a computer, microprocessor, or similar electronic circuitry and its own cathode ray tube, or is designed to be used with a television set or a monitor, that interacts with the user of the device. (3) Video.--The term ``video'' means an audiovisual work produced for viewing by the general public, such as a television program, a motion picture, a music video, and the audiovisual display of a video game. (d) Restrictions on Glamorization of Tobacco Products.--No direct or indirect payment shall be made by any manufacturer, distributor, or retailer to any entity for the purpose of promoting the image or use of a tobacco product through print or film media that appeals to individuals under 18 years of age or through a live performance by an entertainment artist that appeals to such individuals. SEC. 214. AGREEMENT ON FORMAT AND CONTENT REQUIREMENTS FOR LABELING AND ADVERTISING. (a) In General.--Except as provided in subsections (b) and (c), each manufacturer, distributor, or retailer advertising or causing to be advertised, disseminating or causing to be disseminated, any labeling or advertising for a tobacco product shall use only black text on a white background. (b) Certain Advertising Excepted.-- (1) In general.--Subsection (a) shall not apply to advertising-- (A) in any facility where vending machines and self-service displays are permitted under this title if the advertising involved-- (i) is not visible from outside of the facility; and (ii) is affixed to a wall or fixture in the facility; (B) that appears in any publication (whether periodic or limited distribution) that is an adult publication. (2) Adult publication.--For purposes of paragraph (1)(B), the term ``adult publication'' means a newspaper, magazine, periodical, or other publication-- (A) whose readers under 18 years of age constitute 15 percent or less of the total readership as measured by competent and reliable survey evidence; and (B) that is read by fewer than 2,000,000 individuals who are under 18 years of age as measured by competent and reliable survey evidence. (c) Audio or Video Formats.--Each manufacturer, distributor or retailer advertising or causing to be advertised any advertising for a tobacco product in an audio or video format shall comply with the following: (1) With respect to an audio format, the advertising shall be limited to words only with no music or sound effects. (2) With respect to a video format, the advertising shall be limited to static black text only on a white background. Any audio with the video advertising shall be limited to words only with no music or sound effects. SEC. 215. AGREEMENT TO BAN ON NONTOBACCO ITEMS AND SERVICES, CONTESTS AND GAMES OF CHANCE, AND SPONSORSHIP OF EVENTS. (a) Ban on All Non-Tobacco Merchandise.--No manufacturer, importer, distributor, or retailer shall market, license, distribute, sell or cause to be marketed, licensed, distributed or sold any item (other than tobacco products) or service, which bears the brand name (alone or in conjunction with any other word), logo, symbol, motto, selling message, recognizable color or pattern of colors, or any other indicia of product identification similar or identifiable to those used for any brand of tobacco products. (b) Gifts, Contests, and Lotteries.--No manufacturer, distributor, or retailer shall offer or cause to be offered to any person purchasing tobacco products any gift or item (other than a tobacco product) in consideration of the purchase of such products, or to any person in consideration of furnishing evidence, such as credits, proofs-of- purchase, or coupons, of such a purchase. (c) Sponsorship.-- (1) In general.--No manufacturer, distributor, or retailer shall sponsor or cause to be sponsored any athletic, musical, artistic or other social or cultural event, or any entry or team in any event, in which the brand name (alone or in conjunction with any other word), logo, motto, selling message, recognizable color or pattern of colors, or any other indicia of product identification similar or identical to those used for tobacco products is used. (2) Use of corporate name.--A manufacturer, distributor, or retailer may sponsor or cause to be sponsored any athletic, musical, artistic or other social or cultural event in the name of the corporation which manufactures the tobacco product if-- (A) both the corporate name and the corporation were registered and in use in the United States prior to January 1, 1995; and (B) the corporate name does not include any brand name (alone or in conjunction with any other word), logo, symbol, motto, selling message, recognizable color or pattern of colors, or any other indicia or product identification identical or similar to, or identifiable with, those used for any brand of tobacco products. Subchapter B--Provisions relating to Lobbying SEC. 220. APPLICATION OF SUBCHAPTER. The provisions of this subchapter shall be considered as part of the Protocol. SEC. 221. AGREEMENT TO PROVISIONS RELATING TO LOBBYING. (a) Definitions.--For purposes of this section, the terms ``lobbying activities'', ``lobbying firm'', and ``lobbyist'' have the meanings given such terms by section 3 of the Lobbying Disclosure Act of 1995 (2 U.S.C. 1602). (b) General Requirement.--A manufacturer of a tobacco product shall require that any lobbyist or lobbying firm employed or retained by the manufacturer, or any other individual who performs lobbying activities on behalf of the manufacturer, as part of the employment or retainer agreement refrain from supporting or opposing any Federal or State legislation, or otherwise supporting or opposing any governmental action on any matter without the express consent of the manufacturer. (c) Additional Agreements.--An individual shall not be employed or retained to perform lobbying activities on behalf of a manufacturer of a tobacco product unless such individual enters into a signed agreement with the manufacturer that acknowledges that the individual-- (1) is fully aware of, and will fully comply with, all applicable laws and regulations relating to the manufacture and distribution of tobacco products; (2) has reviewed and will fully comply with the requirements of this Act (and the amendments made by this Act); (3) has reviewed and will fully comply with any consent decree entered into under subtitle C as that decree applies to the manufacturer involved; and (4) has reviewed and will fully comply with the business conduct policies and other applicable policies and commitments (including those relating to the prevention of underage tobacco use) of the manufacturer involved. SEC. 222. AGREEMENT TO TERMINATE CERTAIN ENTITIES. (a) Requirement.--Not later than 1 year after the date of enactment of this Act, manufacturers of tobacco products shall provide for the termination of the activities of the Tobacco Institute and the Council for Tobacco Research, U.S.A. and the Institute and Council shall be dissolved. (b) Establishment of Other Entities.-- (1) Authority.--Manufacturers of tobacco products may form or participate in any trade organization or other industry association only in accordance with this subsection. (2) Board of directors.--A trade organization or other industry association formed or participated in under this subsection shall-- (A) shall be administered by an independent board of directors, of which-- (i) during the 10-year period beginning on the date on which the organization or association is formed or first participated in under this subsection, not less than 20 percent (at least 1 member) shall be individuals who are not current or former directors, officers, or employees of an entity terminated under subsection (a) or of the members of the association or organization; and (ii) during the life of the association or organization, no member shall be a director of any of the members of the association or organization; (B) be administered by officers who are appointed by the board of directors and who are not otherwise employed by any of the members of the association or organization; and (C) be provided with legal advice by a legal adviser who is appointed by the board of directors and who is not otherwise employed by any of the members of the association or organization. (3) By-laws.--A trade organization or other industry association formed or participated in under this subsection shall adopt by-laws that-- (A) prohibit meetings by members of the association or organization who are competitors in the tobacco industry except under the sponsorship of the association or organization; (B) require that every meeting of the board of directors, or a subcommittee of the board or other general committee, proceed under and strictly adhere to an agenda that is approved by the legal counsel and circulated in advance; and (C) require the taking of minutes that describe the substance of any meeting of the members of the association or organization and the maintenance of such minutes in the records of the association or organization for a period of 5 years following the meeting. (c) Department of Justice.-- (1) Oversight.--The Attorney General and, as appropriate, State antitrust authorities shall exercise oversight authority over any association or organization to which subsection (b) applies. (2) Access and inspection.--During the 10-year period beginning on the date on which an association or organization to which subsection (b) applies is formed, the Attorney General and, as appropriate State antitrust authorities shall, upon the provision of reasonable notice to the legal counsel of the association or organization, have access to-- (A) all books, records, meeting agenda and minutes, and other documents maintained by the association or organization; and (B) the directors, officers, and employees of the association or organization for interview purposes. (3) Multi-state committee.--Two or more States, acting through the attorney general of each such State, may establish a multi-State oversight committee to assist the Attorney General in exercising the oversight responsibilities under this section. (4) Confidentiality.--The Attorney General shall promulgate regulations to provide that materials provided under paragraph (2) are protected with appropriate confidentiality protections. (d) Antitrust Exemptions.--The provisions of the Sherman Act (15 U.S.C. 1 et seq.), the Clayton Act (29 U.S.C. 52 et seq.), and any other Federal or State antitrust laws shall not apply to an association or organization to which subsection (b) applies. Subchapter C--Other Provisions SEC. 225. APPLICATION OF SUBCHAPTER. The provisions of this subchapter shall be considered as part of the Protocol. SEC. 226. DETERMINATION OF LICENSING FEE AMOUNT. With respect to the total amount of licensing fees to be paid by participating manufacturers under section 102 for a fiscal year, such manufacturers shall determine the percentage of such total amount that each such manufacturer shall be required to pay and the manner in which such payments will be made. SEC. 227. ATTORNEY'S FEES AND EXPENSES. (a) Arbitration Panel.-- (1) Establishment.--For the purpose of awarding of attorneys' fees and expenses relating to litigation affected by, or legal services that resulted in whole or in part in, this Act, there is established an Arbitration Panel which shall consist of-- (A) 3 members to be appointed by the Trustees; (B) 1 member to be appointed by the participating manufacturers; (C) 1 member to be appointed by the Attorneys General of the States who were signatories to the Memorandum of Understanding dated June 20, 1997, by and between tobacco manufacturers, the Attorneys Generals, and private attorneys; and (D) 1 member to be appointed by the private attorneys, including attorneys representing plaintiffs in the case of Dianne Castano v. American Tobacco Company. (2) Operation.-- (A) Establishment.--The members of the Arbitration Panel shall be appointed not later than 30 days after the effective date of this Act. (B) Procedures.--Not later than 30 days after the date on which all members of the Arbitration Panel are appointed under paragraph (1), the Panel shall establish the procedures under which the Panel will operate which shall include-- (i) a requirement that any finding by the Arbitration Panel must be in writing and supported by written reasons; (ii) procedures for the exchanging of exhibits and witness lists by the various claimants for awards; (iii) to the maximum extent practicable, requirements that proceedings before the Panel be based on affidavits rather than live testimony; and (iv) a requirement that all claims be submitted to the Arbitration Panel not later than 3 months after the effective date of this Act and a determination made by the Panel with respect to such claims not later than 7 months after such date of enactment. (3) Right to petition.--Any individual attorney or group of attorneys involved in litigation affected by this Act shall have the right to petition the Arbitration Panel for attorneys' fees and expenses. (4) Criteria.--In making any award pursuant to this section, the Arbitration Panel shall consider the following criteria: (A) The time and labor required by the claimant. (B) The novelty and difficulty of the questions involved in the action for which the claimant is making a claim. (C) The skill requisite to perform the legal service involved properly. (D) The preclusion of other employment by the attorney due to acceptance of the action involved. (E) Whether the fee is fixed or a percentage. (F) Time limitations imposed by the client or the circumstances. (G) The amount involved and the results obtained. (H) The experience, reputation, and ability of the attorneys involved. (I) The undesirability of the action. (5) Appeal and enforcement.--The findings of the Arbitration Panel shall be final, binding, nonappealable, and payable within 30 days after the date on which the finding is made public, except that if an award is to be paid in installments, the first installment shall be payable within such 30 day period and succeeding installments shall be paid annually thereafter. (b) Source and Payment of Awards.--In no event shall any award of the Arbitration Panel be paid from, credited against, or otherwise affect in any way any fee payments that are required to be made by any participating manufacturer under to section 102 or under any other provision of this Act. Any such award shall be paid by participating manufacturers pursuant to an allocation agreement among such manufacturers. (c) Validity and Enforceability of Private Agreements.-- Notwithstanding any other provision of this Act, nothing in this section shall be construed to abrogate or restrict in any way the rights of any parties to mediate, negotiate, or settle any fee or expense disputes or issues to which this section applies, or to enter into private agreements with respect to the allocation or division of fees among the attorneys party to any such agreement. (d) Limitation.--Notwithstanding any other provision of law, in no event shall the amount of attorneys' fees awarded under this section for a fiscal year exceed an amount equal to 5 percent of the amount paid to the Trust Fund under section 102 for the fiscal year. Any amounts in excess of such amount may be collected in subsequent fiscal years subject to the 5 percent limitation with respect to each such fiscal year. The manufacturer signatories to the Protocol shall be responsible for the payment of all such attorneys' fees and such payments shall not be counted against the fee payments to be made under section 102 nor shall they be drawn from the National Tobacco Settlement Trust Fund. SEC. 228. LIMITATIONS WITH RESPECT TO INDIAN COUNTRY. (a) General Prohibition.--A participating manufacturer shall not engage in any activity within Indian country (as defined in section 901) that is otherwise prohibited under this Act (or an amendment made by this Act). (b) Limitation on Sale.--A participating manufacturer shall not sell or otherwise distribute a tobacco product for subsequent manufacture, distribution, or sale to an Indian tribe or tribal organization, or provide such products to a manufacturer, distributor, or retailer that is subject to the jurisdiction of a tribe or organization, except under the same terms and conditions as the manufacturer imposes on other manufacturers, distributors, or retailers. CHAPTER 3--ENFORCEMENT SEC. 231. FEDERAL ENFORCEMENT OF THE PROTOCOL. (a) Civil Action.--The Attorney General, acting in his or her capacity as a Trustee, may bring a civil action for the enforcement, or to restrain any breach, of the Protocol in the United States District Court for the District of Columbia or in the district court of the United States for the district in which the breach occurred. (b) Remedy.--In any action under subsection (a), the district court involved-- (1) shall restrain the conduct that is the subject of the breach of the Protocol; (2) shall order specific performance of the obligations set forth in the Protocol; and (3) may order civil penalties against any manufacturer who knowingly violates a requirement of the Protocol in an amount not to exceed $10,000,000 for all such violations adjudicated in a single proceeding. (c) Contracts With State Agencies.--The Attorney General may enter into contracts with an agency of any State to assist in the enforcement of the provisions of the Protocol. (d) Action by Attorney General.--With respect to the funding of any activities under subsection (a), the Attorney General shall use amounts available in the Trust Fund under section 101. If the Attorney General determines that amounts available in the Trust Fund are insufficient, the Attorney General may use amounts available for the activities of the Department of Justice. SEC. 232. STATE ENFORCEMENT OF THE PROTOCOL. (a) Civil Action.--The chief law enforcement officer of a State may bring in its own name and within its jurisdiction a civil action for the enforcement, or to restrain a breach, of the Protocol if the alleged violation that is the subject of the proceedings occurred in that State. (b) Limitation.--No proceeding described in subsection (a) may be commenced or maintained by a State-- (1) prior to the expiration of the 30-day period beginning on the date on which the State has given notice to the Attorney General that the State intends to bring such proceeding; or (2) if the Attorney General is diligently prosecuting, or has diligently prosecuted or settled, a proceeding pertaining to such alleged breach. In any proceeding described in paragraph (2) that is brought by the Attorney General a State may intervene as a matter of right. (c) Remedies.--In any proceeding described in subsection (b)-- (1) the remedies available shall be those described in section 231(b); and (2) no civil penalty shall be imposed if any State is diligently prosecuting, or has already diligently prosecuted or settled, a proceeding described in subsection (b) pertaining to such alleged breach seeking any civil penalty. (d) Single Breach.--For purposes of this section, conduct arising out of the same transaction or occurrence, or a related series of transactions or occurrences, that breaches any obligation under the Protocol shall be considered to be part of a single breach. SEC. 233. PRIVATE ENFORCEMENT OF PROTOCOL. (a) In General.--A participating manufacturer may seek a declaration of the rights and obligations of the manufacturer under the Protocol by filing an action pursuant to section 2201 of title 28, United States Code. (b) Civil Action.--A participating manufacturer may bring a civil action against another participating manufacturer to enforce, or restrain breaches of, the Protocol by such other participating manufacturer, except that-- (1) no such action may be commenced or maintained if the Secretary is diligently prosecuting, or has diligently prosecuted or settled, a proceeding pertaining to such alleged breach; (2) no such action may seek-- (A) monetary relief if any State is already diligently prosecuting, or has already diligently prosecuted or settled, a proceeding pertaining to such alleged breach seeking any civil penalty; or (B) injunctive relief in any State that is already diligently prosecuting, or has already diligently prosecuted or settled, a proceeding pertaining to such alleged breach seeking injunctive relief; and (3) the court, in any such action, shall restrain conduct in breach of the Protocol and order specific performance of the obligations set forth in the Protocol, and may award damages up to the amount of profits lost by reason of the breach by the participating manufacturer bringing such action. (c) Single Breach.--For purposes of this section, conduct arising out of the same transaction or occurrence, or a related series of transactions or occurrences, that breaches any obligation under the Protocol shall be considered to be part of a single breach. (d) Right of Intervention.--In any proceeding described in section 231(a) or 232(a), any participating manufacturer may intervene as a matter of right. SEC. 234. REMOVAL. Chapter 89 of title 28, United States Code, is amended by adding at the end the following: ``Sec. 1453. Removal of state actions regarding tobacco products ``Any action described in section 231, 232, or 242 of the PROTECT Act that is brought in State court may be removed by any defendant to the Federal court for the district or division embracing the location in which such action was brought, except that this section will not apply where the alleged violation arises from conduct-- ``(1) solely within the territorial boundaries of the State bringing such action; and ``(2) not associated with or part of a pattern or course of conduct involving any similar acts or omissions in any other State.''. Subtitle B--Consent Decrees SEC. 241. CONSENT DECREES. (a) Requirement.--To be eligible to receive payments under title V, a State, to be eligible to receive liability protections under subtitle C, a tobacco manufacturer, and to be eligible to receive any benefits under this Act, a representative of the members of the class certified for purposes of Dianne Castano v. American Tobacco Company, shall enter into consent decrees under this section to be effective on the date of enactment of this Act. (b) Terms and Conditions.-- (1) In general.--The terms and conditions contained in the consent decrees described in subsection (a) shall contain provisions to clarify the application and requirements of this Act (and the amendments made by this Act), and the Protocol, including, but not limited to, provisions relating to-- (A) restrictions on tobacco product advertising and marketing and youth access to such products; (B) the termination, establishment, and operation of trade associations; (C) restrictions on tobacco lobbying; (D) the disclosure of tobacco smoke constituents; (E) the disclosure of nontobacco ingredients found in tobacco products; (F) the disclosure of existing and future documents relating to health, toxicity, and addiction related to tobacco product usage; (G) the obligation of manufacturers to make payments for the benefit of States, private litigants and the general public; (H) the obligation of manufacturers to interact only with distributors and retailers that operate in compliance with the applicable provisions of Federal, State, or local law regarding the marketing and sale of tobacco products; (I) requirements for warnings, labeling, and packaging of tobacco products; (K) the dismissal of pending litigation as required under title VII and as agreed to by the parties to the decree; and (L) any other matter determined appropriate by the Secretary or the parties involved. (2) Limitations.--The terms and conditions contained in the consent decrees described in subsection (a) shall not contain provisions relating to-- (A) tobacco product design, performance, or modification; (B) manufacturing standards and good manufacturing practices; (C) testing and regulation with respect to toxicity and ingredients approval; and (D) the national goals relating to percentage reductions in the underage use of tobacco products for a year under section 5. (3) Waiver of constitutional claims.--The terms and conditions contained in the consent decrees described in subsection (a) shall include a provision waiving the Federal or State constitutional claims of the parties and providing for the severability of the provisions of the decree. (4) Construction.--The terms and conditions contained in the consent decrees described in subsection (a) shall provide that the terms of the decree will be construed in a manner that is consistent with the provision of this Act. (c) Approval.--To be valid under this section, the provisions of a consent decree must be approved by the Attorney General prior to approval or entry by a court. (d) Enforcement.-- (1) Changes in law.--The provisions of a consent decree entered under this section shall remain in effect and enforceable regardless of whether the provisions of this Act are amended, except that any amendments to this Act that-- (A) establish Federal requirements that are in conflict with obligations contained in the consent decrees shall render such obligations unenforceable; (B) require allocations of funds that are in conflict with the allocation contained in the consent decrees shall render such consent decree allocation unenforceable; and (C) require warnings, labeling, or packaging that conflicts with the warning, labeling, or packaging requirements of the consent decree, shall require that modifications be made in the consent decree to conform with such amendments. (2) By state.-- (A) In general.--A State may bring an action to enforce the provisions of any consent decree under this section in any appropriate State court. Such proceedings may seek injunctive relief only and may not seek criminal or monetary sanctions. Enforcement of any injunctive relief provided under a State action under this section shall be permitted under any applicable State law. (B) Consistency.--The Attorney General shall promulgate regulations to ensure the consistency of State court ruling with respect to conduct under a consent decree that is not exclusively local in nature. SEC. 242. STATE ENFORCEMENT OF CONSENT DECREES. (a) In General.--Subject to subsections (b) and (c), a State may bring in its own name and within its jurisdiction proceedings for the enforcement, or to restrain violations of, the terms of a consent decree described in section 241 that is entered into by that State. (b) Injunctive Relief.--A proceeding described in subsection (a) shall be limited to injunctive relief only and may not seek or impose criminal or monetary relief if criminal or monetary relief may be imposed for the subsequent violation of any injunction that is entered in an action described in subsection (a). (c) Interpretation.--In any proceeding described in subsection (a), the meaning of this Act and the Protocol shall control the interpretation of the corresponding terms of the consent decree, and such terms shall be interpreted in a manner identical to the interpretation given the corresponding terms of this Act and the Protocol. SEC. 243. NON-PARTICIPATING MANUFACTURERS. (a) In General.--With respect to a manufacturer that elects not to enter into a consent decree under section 241, such manufacturer shall not be eligible to receive the liability protections under subtitle C. (b) Imposition of Fee.-- (1) In general.--A manufacturer shall be subject to an annual fee as established under this subsection unless such manufacturer enters into consent decrees as provided for in section 241 and becomes a signatory to the Protocol under section 201. (2) Amount.-- (A) Total.--The total amount of all fees established under this subsection for a year shall be equal to the amount of fees to be paid by manufacturers under section 102 for the year involved. (B) Per manufacturer.--The Secretary shall promulgate regulations for the purpose of assessing fees under this subsection and determining the amount of the fee to be assessed to each manufacturer which shall be based on the market share of each such manufacturer. (c) Settlement Reserve Fund.-- (1) In general.--Each nonparticipating manufacturer to which subsection (b)(1) applies shall annually deposit into an escrowed reserve fund an amount equal to 150 percent of the amount that such manufacturer would have paid under section 102 for the year in which the manufacturer is making such deposit if the manufacturer had been a signatory to the Protocol under section 201. (2) Use.--Amounts contained in the reserve fund of a manufacturer under paragraph (1) shall be used solely for tobacco-related liability payments. The manufacturer may reclaim any amounts remaining in the fund (with interest) at the end of the 35-year period beginning on the date on which such fund is established. Subtitle C--Liability Provisions CHAPTER 1--GENERAL PROVISIONS SEC. 251. DEFINITIONS. In this subtitle: ``(1) Final judgment.--The term ``final judgment'' means a judgment on which all rights of appeal or discretionary review have been exhausted or waived or for which the time to appeal or seek such discretionary review has expired. ``(2) Final settlement.--The term ``final settlement'' means a settlement agreement that is executed and approved as necessary to be fully binding on all relevant parties. ``(3) Individual claim.--The term ``individual claim'' means a claim for relief that is based on the death of, injury to, or loss of consortium of a single individual and that is brought directly by such individual or by the estate or natural heirs of such individual. ``(4) Third-party payor.--The term ``third-party payor'' means any person, including an insurance company or health and welfare plan, who claims to have paid money or incurred a debt as a result of injury to another person, except that such term shall not include the heirs or survivors of a single individual with respect to an injury to such individual. CHAPTER 2--IMMUNITY AND LIABILITY FOR PAST CONDUCT SEC. 255. APPLICATION OF CHAPTER. (a) In General.--This chapter shall apply to the enforcement of all judgments and settlements with respect to tobacco claims maintained against participating manufacturers. (b) Limitation on Enforcement.--A judgment or settlement concerning any tobacco claim described in subsection (a) that is not a final judgment or final settlement as of the effective date of this Act shall not be enforced by any court except in accordance with this chapter. (c) General Prohibition.-- (1) In general.--No obligation to pay any amount under a judgment or settlement to which this chapter applies shall arise, nor shall a lien, attachment, garnishment or other means of collecting or securing payment under any such judgment or settlement issue, become operative, or be enforced, except as provided for in this chapter. (2) Requirement of statement.--A judgment to which this chapter applies that requires a monetary payment shall not be issued or entered unless such judgment contains a statement, on the face of the judgment, of the following: ``Satisfaction of this judgment is subject to the requirements of the PROTECT Act.''. (3) Enforcement.--A judgment to which this chapter applies that does not contain the statement required under paragraph (2) shall not be valid or enforceable. (4) Appeal.--The posting of a bond or the application of any form of penalty or enhanced interest may not be required in connection with the appeal of any judgment to which this chapter applies. SEC. 256. GENERAL IMMUNITY. (a) State Attorney General Actions.-- (1) Pending actions.--Health-related civil actions that have been commenced by a State or local governmental entity, or on behalf of such an entity, against a manufacturer that is a signatory to the National Tobacco Control Protocol under section 201 and that are pending on the date of enactment of this Act are terminated. (2) Future actions.--A manufacturer that is a signatory to the National Tobacco Control Protocol under section 201 shall be immune from any civil action commenced after the date of enactment of this Act by a Federal, State, or local governmental entity, or on behalf of such an entity, for all health- related claims arising from the use of a tobacco product. (b) Other Actions.-- (1) Class actions.-- (A) Pending actions.--Class actions for claims arising from the use of a tobacco product that are pending against a manufacturer that is a signatory to the National Tobacco Control Protocol under section 201, are terminated. (B) Future actions.--A manufacturer that is a signatory to the National Tobacco Control Protocol under section 201 shall be immune from any class action commenced after the date of enactment of this Act for all claims arising from the use of a tobacco product. (2) Addiction and dependence claims.-- (A) Pending actions.--Any civil action for claims based on addiction to or dependence on a tobacco product that are pending against a manufacturer that is a signatory to the National Tobacco Control Protocol under section 201, are terminated. (B) Future actions.--A manufacturer that is a signatory to the National Tobacco Control Protocol under section 201 shall be immune from any civil action commenced after the date of enactment of this Act for all claims based on addiction to or dependence on a tobacco product. (c) Preservation.--All personal injury claims arising from the use of a tobacco product by an individual shall be preserved. SEC. 257. CIVIL LIABILITY FOR PAST CONDUCT. (a) Application.--The provisions of this section shall apply to all civil actions permitted under section 256 for relief arising from the conduct of a manufacturer that is a signatory to the National Tobacco Control Protocol under section 201 that occurred prior to the date of enactment of this Act. (b) Punitive Damages Prohibited.--No punitive damages shall be awarded in any claim described in subsection (a). (c) Individual Trials.--No class action suits, joinder of parties, aggregation of claims, consolidation of actions, extrapolations, or other devices to resolve cases other than on the basis of individual actions shall be permitted without the consent of the defendant. Any defendant, in an action that involves a violation of this subsection, may remove such action to an appropriate Federal court. (d) Joint Sharing Agreement.--As part of the National Tobacco Control Protocol under section 201, all signatories shall agree to the joint sharing of any civil liability for actions for damages arising from the use of tobacco products. Such signatories shall not be jointly and severally liable for damages involving nonsignatories. Actions involving both signatories and nonsignatories shall be severed. (e) Permissible Parties.-- (1) Plaintiffs.--The following individuals may be plaintiffs in a civil action to which this section applies: (A) Individuals bringing claims, or claims derivative of such claims, on their own behalf for a tobacco-related injury, or the heirs of such individuals. (B) Third-party payors for claims not based on subrogation that were pending on June 9, 1997. (C) Third-party payors for claims based on subrogation of individual claims permitted under subparagraph (A). (2) Defendants.--This section shall apply only to actions brought against a signatory of the National Tobacco Control Protocol under section 201, a successor or assign of such a signatory, any future fraudulent transferees, or any entity for suit designated to survive a defunct signatory. Such signatories shall be vicariously liable for the actions of their agents. (f) Removal.--Except as provided in subsection (c), there shall be no removal of an action to which this section applies. (g) Discovery.--The development, after the date of enactment of this Act, of any tobacco product that reduces the risk of injury or illness to a user shall not be admissible or discoverable. (h) Limitation on Enforcement.-- (1) In general.--A judgment or settlement concerning any tobacco claim in a civil action permitted under section 256 that is not a final judgment or final settlement as of the effective date of this Act shall not be enforced by any court except in accordance with this section. (2) Obligations.--No obligation to pay any amount under a judgment or settlement to which this section applies shall arise, nor shall a lien, attachment, garnishment or other means of collecting or securing payment under any such judgment or settlement issue, become operative, or be enforced, except to the extent that the Secretary of the Treasury certifies that the requirements of subsection (i) have been met. (3) Requirement of statement.--A judgment to which this section applies that requires a monetary payment shall not be issued or entered unless such judgment contains a statement, on the face of the judgment, of the following: ``Satisfaction of this judgment is subject to the requirements of section 257 of the PROTECT Act.''. (4) Enforcement.--A judgment to which this section applies that does not contain the statement required under paragraph (3) shall not be valid or enforceable. (5) Appeal.--The posting of a bond or the application of any form of penalty or enhanced interest may not be required in connection with the appeal of any judgment to which this section applies. (i) Procedures for Collection of Judgment.-- (1) Certification.--A participating manufacturer shall not make, or be required to make, any monetary payment with respect to any judgment or settlement to which this section applies unless the Attorney General acting as Trustee-- (A) certifies that the requirements of paragraph (2) have been met with respect to such payment; and (B) publishes such certification in the Federal Register. (2) Filing with attorney general.-- (A) By party claiming entitlement.--Any party claiming an entitlement to monetary payment under a final judgment or final settlement of a tobacco claim to which this section applies shall register such claim with the Attorney General acting as Trustee by filing a true and correct copy of the final judgment or final settlement agreement with the Attorney General and providing a copy of such filing to all other parties to the judgment or settlement. (B) Of payment.--Any party making a payment described in this subsection shall certify such payment to the Attorney General by filing a true and correct copy of the instrument of payment and a statement of the remaining unpaid portion, if any, of the final judgment or final settlement involved with the Attorney General and providing a copy of such filing to all other parties to the judgment or settlement. (3) Determinations.--Not later than 30 days after the date of which the Attorney General receives a registration of a claim under paragraph (2)(A) the Attorney General shall determine whether payment of such claim is permitted under this section. If the Attorney General determines that such claim is payable under this section, the Secretary shall certify such claim. (4) Payment.--Subject to the limitations contained in subsection (j), a participating manufacturer to which a claim that is certified under paragraph (3) applies, shall make payment on such claim not later than 1 year after the date of such certification. (j) Limitations.-- (1) Aggregate annual cap.--With respect to a calendar year, the aggregate amount of all tobacco claims judgments or settlements to which this section applies, that the signatories of the National Tobacco Control Protocol under section 201 shall be required to pay, shall not exceed an amount equal to 33 percent of the annual fee payments required of all such signatories under section 102 for the year involved. The Attorney General, based on certifications issued under subsection (i)(3) shall make determinations with respect to the amounts of payments to be made in a calendar year. (2) Payment of excess.--If the amount of the judgments and settlements described in paragraph (1) exceed an amount equal to 33 percent of the annual fee payments required under section 102 for the year involved, such excess amount shall be paid in the following year. (3) Effect of settlement.--The signatories described in paragraph (1) shall receive a credit, to be applied against the amount owed by such signatories to the National Tobacco Settlement Trust Fund under section 102 for the year involved, in an amount equal to 80 percent of the aggregate amounts paid under judgments or settlements of tobacco-related claims to which this section applies for such year. (5) Individual cap.--With respect to an action to which this section applies, any amount awarded in excess of $1,000,000 may be paid in the year following the year in which the judgment or settlement was entered, except that this paragraph shall not apply if all other awards under judgments or settlements entered in the first year can be paid without exceeding the aggregate annual cap under paragraph (1). Such excess amount shall carry over from year to year with no payments in any single year exceeding $1,000,000 and no interest accruing on such amounts until such time as the annual aggregate cap is not exceeded. (k) Defense Costs.--The signatories of the National Tobacco Control Protocol under section 201 shall be responsible for the payment of all attorneys' fees and other costs associated with being a defendant in an action to which this section applies. SEC. 258. CIVIL LIABILITY FOR FUTURE CONDUCT. (a) Application.--The provisions of this section shall apply to all civil actions permitted under section 256 for relief arising from the conduct of a manufacturer that is a signatory to the National Tobacco Control Protocol under section 201 that occurs after the date of enactment of this Act. (b) General Provisions.--The provisions of subsections (c) and (e) through (i) of section 256 shall apply to actions under this section. (c) Third-Party Payor Claims.--Third-party payor claims that are not based on subrogation shall not be commenced under this section. SEC. 259. NON-PARTICIPATING MANUFACTURERS. The provisions of this title shall not apply to any manufacturer that-- (1) is not a signatory to the National Tobacco Control Protocol under section 201; and (2) is at least 12 months delinquent in the payment of amounts under section 102. SEC. 260. PAYMENT OF JUDGMENTS AND SETTLEMENTS. (a) In General.--Notwithstanding sections 1257, 1738 and 2283 of title 28, United States Code, or any doctrine of abstention or principle of res judicta or collateral estoppel, a participating manufacturer may commence an action in a district court of the United States to enjoin any State court proceeding to enforce or execute any judgment or settlement that is unenforceable under this chapter. Such an action shall be deemed a civil action arising under the laws of the United States for purposes of section 1331 of title 28, United States Code, and may be commenced in the district court of the United States for the district and division embracing the place where the State court proceeding is pending. (b) Injunctions.--Upon a demonstration by the participating manufacturer in an action under subsection (a) that the judgment or settlement that is the subject of such action is unenforceable under this chapter, the court shall issue an injunction against the enforcement of such judgment or settlement and may order such other relief as is appropriate. SEC. 261. STATE ELIGIBILITY. (a) Requirement for State Law.--To be eligible to receive funds under subtitle A of title V, a State shall-- (1) have in effect a State law that provides that-- (A) sections 256 through 259 shall be the law of the State and shall be binding in all proceedings in any court or tribunal in the State without limitation, notwithstanding any other provision of law, court decision, rule or practice; and (B) any defendant in a civil action to which this Act applies shall have a right of prompt interlocutory appeal to the highest court of the State to enforce the requirements of the State law; and (2) have withdrawn and dismissed with prejudice any claim required to be dismissed by the State under this chapter within 60 days of the effective date of this Act. (b) Certification.--Not later than 6 months after the effective date of this Act, and annually thereafter, the Attorney General shall certify that each State that is eligible to receive funds under subtitle A of title V has complied with the requirements of this section. A State shall not be eligible for such funds prior to being certified under this subsection. (c) Effect of Nonenactment of Law.-- (1) In general.--With respect to a State that does not comply with subsection (a)(1), no tobacco claim that is otherwise maintainable under this chapter shall be maintained in any court of that State. (2) Application of law.--Until such time as the State complies with subsection (a)(1), any tobacco claim that is otherwise maintainable under this chapter that is asserted under the law of, or in the courts of, such State shall be deemed to arise under this section and shall be subject to the provisions of this chapter, and the substantive rules of decision for such claim shall otherwise be derived from the law of the State that would have been applicable but for the operation of this subsection. SEC. 262. REMOVAL. Chapter 89 of title 28, United States Code, (as amended by section 234) is further amended by adding at the end the following: ``Sec. 1454. Removal of certain actions relating to tobacco products ``(a) Limitation.--A civil action in any State court that is maintainable under chapter 1 of subtitle C of title I of the PROTECT Act shall not be removed to a district court of the United States except as provided for in this section. ``(b) Removal Permitted.-- ``(1) Agreement of parties.--A civil action maintainable under chapter 1 of subtitle C of title I of the PROTECT Act may be removed at any time prior to judgment to the district court of the United States for the district and division embracing the place where such action is pending if all plaintiffs and all defendants consent in writing to such removal. ``(2) Participating manufacturer.--A civil action that a defendant reasonably contends is being conducted in a manner inconsistent with the terms of chapter 1 of subtitle C of title II of the PROTECT Act may he removed by such defendant to the district court of the United States for the district and division embracing the place where such action is pending, if the removing defendant is a participating manufacturer as defined in section 5 of such Act. ``(c) Jurisdiction.--In any action removed pursuant to subsection (b), the district court shall have jurisdiction over such action to the full extent permitted under the Constitution. ``(d) Notice.--The notice of removal of a civil action under subsection (b)(2) shall be filed not later than 30 days after the receipt by the removing defendant of an order or ruling that such defendant reasonably contends is inconsistent with the terms of chapter 1 of subtitle C of title II of the PROTECT Act. ``(e) Determinations by District Court.--In a civil action removed under subsection (b)(2), if the district court determines-- ``(1) that the action was being conducted in a manner inconsistent with the terms of chapter 1 of subtitle C of title II of the PROTECT Act, the district court shall-- ``(A) order that the action be dismissed without prejudice; or ``(B) enter such other orders as may be necessary to bring the action into conformity with such chapter and retain jurisdiction over any claim or claims as necessary to serve the interests of justice and the requirements of the PROTECT Act; ``(2) that the action was being conducted in a manner consistent with the terms of such chapter but that the defendant removing the action had a reasonable basis to seek removal under this section, the district court shall retain jurisdiction over any claim or claims as may be necessary to serve the interests of justice and the requirements of the PROTECT Act; or ``(3) that the defendant removing the action had no reasonable basis for contending that such action was being conducted in a manner inconsistent with the terms of such chapter, the district court shall remand the case to the State court from which it was removed. ``(f) Reviewability of Order.--An order remanding an action to a State court under subsection (e) shall be reviewable by appeal or otherwise. ``(h) Miscellaneous.--For purposes of this section-- ``(1) the parties in controversy shall be considered to be of diverse citizenship unless all plaintiffs (including all members of any plaintiff class) and all defendants are citizens of the same State; ``(2) a corporation shall be considered to be a citizen only of the State of its incorporation; and ``(3) there shall be no requirement of a minimum amount in controversy. ``(i) Application of Certain Procedures.--The procedures described in sections 1446(a), 1446(d), and 1447(a) through (c) shall be applicable to an action removed under this section.''. SEC. 263. CONFORMING AMENDMENTS. Title 11, United States Code, is amended-- (1) in section 362(b)-- (A) in paragraph (17), by striking ``or'' at the end; (B) in paragraph (18), by striking the period and inserting ``; or''; and (C) by inserting after paragraph (18), the following: ``(19) under subsection (a) of this section, of the commencement or continuation of any action or other proceeding by a participating manufacturer (as defined in section 5 of the PROTECT Act) regarding any interest or obligation arising under or directly related to a liability apportionment agreement entered into in accordance with chapter 1 of subtitle C of title II of the PROTECT Act.''; (2) in section 365-- (A) in subsection (a), by striking ``and (d)'' and inserting ``(d), and (p)''; and (B) by adding at the end the following: ``(p) The trustee may not reject, shall be deemed to have assumed as of the commencement of the case, and shall cause the debtor to perform on an executory contract of a participating manufacturer (as defined in section 5 of the PROTECT Act) to the extent such executory contract is directly related to a liability apportionment agreement entered into in accordance with chapter 1 of subtitle C of title II of the PROTECT Act.''; (3) in section 507(a), by adding at the end the following: ``(10) Tenth, any unsecured claim of a participating tobacco product manufacturer (as defined in section 5 of the PROTECT Act) that arises under or is directly related to a liability apportionment agreement entered into in accordance with chapter 1 of subtitle C of title II of the PROTECT Act.''; (4) in section section 541(b)-- (A) in paragraph (4), by striking ``or'' at the end; (B) in paragraph (5), by striking the period and inserting ``; or''; and (C) by inserting after paragraph (5), the following: ``(6) any interest of the debtor in property to the extent that the debtor has transferred or agreed to transfer such interest pursuant to a liability apportionment agreement entered into in accordance with chapter 1 of subtitle C of title II of the PROTECT Act or any written agreement directly related to such liability apportionment agreement.''; and (5) in subsection 1141-- (A) in subsection (a), by striking ``and (d)(3)'' and inserting ``, (d)(3), and (d)(5)''; (B) in subsection (a), by striking ``and (d)(3)'' and inserting ``, (d)(3), and (d)(5)''; and (C) in subsection (d), by adding at the end the following: ``(5) The confirmation of a plan does not discharge a debtor from any debt or other obligation arising under or directly related to a liability apportionment agreement entered into in accordance with chapter 1 of subtitle C of title II of the PROTECT Act.''. TITLE III--REDUCTION IN UNDERAGE TOBACCO USE Subtitle A--State Laws Regarding the Sale of Tobacco Products to Minors SEC. 300. SHORT TITLE. This subtitle may be cited as the ``Tobacco Use by Minors Prevention Act''. SEC. 301. STATE LAWS REGARDING SALE OF TOBACCO PRODUCTS TO INDIVIDUALS UNDER THE AGE OF 18. (a) Eligibility.-- (1) In general.--Subject to paragraph (2), for fiscal year 1999 and each subsequent fiscal year a State shall not be eligible for payments under subtitle A of title V if that State does not have in effect a State law with the provisions contained in the model State law described in section 302. (2) Delayed applicability for certain states.--In the case of a State whose legislature does not convene a regular session in fiscal year 1999, the requirement described in paragraph (1) shall apply only for fiscal year 2000 and subsequent fiscal years. (b) Enforcement.--For the first applicable fiscal year and for each subsequent fiscal year, a State shall-- (1) enforce the law described in subsection (a)(1) systematically and conscientiously and in a manner that can reasonably be expected to reduce the extent to which tobacco products are available to individuals under the age of 18; (2) certify that the State requires such enforcement of such law to be treated as a priority by State and local law enforcement authorities; (3) conduct random, unannounced inspections to ensure compliance with the law described in subsection (a)(1); and (4) annually submit to the Trustees a report describing-- (A) the activities carried out by the State to enforce such law during the fiscal year preceding the fiscal year for which the State is seeking the grant; (B) the steps taken by the State to ensure that enforcement of such law was treated as a priority by State and local law enforcement authorities; (C) the extent of success the State has achieved in reducing the availability of tobacco products to individuals under the age of 18, including the results of the inspections conducted under paragraph (1); and (D) the strategies to be utilized by the State for enforcing such law during the fiscal year for which the grant is sought. (c) Funding.--The law specified in subsection (a)(1) may be administered and enforced by a State using-- (1) any amounts made available to the State under subtitle A of title V; (2) any fees collected for licenses issued pursuant to the law described in subsection (a)(1); (3) any fines or penalties assessed for violations of the law specified in subsection (a)(1); or (4) any other funding source that the legislature of the State may prescribe by statute. (d) Noncompliance of State.--Before making a payment under subtitle A of title V to a State for the first applicable fiscal year or any subsequent fiscal year, the Trustees, in consultation with the Secretary, shall make a determination whether the State has maintained compliance with subsections (a) and (b). If, after notice to the State and an opportunity for a hearing, the Trustees determines that the State is not in compliance with such subsections, the Trustees shall reduce the amount of the State payment under such subtitle for the fiscal year involved by an amount equal to-- (1) in the case of the first applicable fiscal year, 10 percent of the amount determined under subtitle A of title V; (2) in the case of the first fiscal year following such applicable fiscal year, 20 percent of the amount determined under such sections for the State for the fiscal year; (3) in the case of the second such fiscal year, 30 percent of the amount determined under such sections for the State for the fiscal year; and (4) in the case of the third such fiscal year or any subsequent fiscal year, 40 percent of the amount determined under such sections for the State for the fiscal year. (e) Waiver and Modification.-- (1) In general.--A State may request that the Secretary waive, or permit the modification of, any provision or provisions of the model State law described in section 302. (2) Requirements.--The Secretary shall grant a request for a waiver or modification under paragraph (1) unless the Secretary determines that-- (A) the State has not demonstrated that the State has enacted laws that implement requirements that are comparable to the requirements of all of the elements of the model State law under section 302; or (A) the cumulative effect of granting all of such waivers or modifications with respect to the State would render the youth anti-tobacco laws and marketing systems of the State to be ineffective. (f) Definition.--For purposes of this section, the term ``first applicable fiscal year'' means-- (1) fiscal year 2000, in the case of any State described in subsection (a)(2); and (2) fiscal year 1999, in the case of any other State. SEC. 302. MODEL STATE LAW. The model State law described in this section with respect to a State is the following: ``SECTION 1. DISTRIBUTION TO MINORS. ``(a) In General.--No person shall distribute a tobacco product to an individual under 18 years of age. A person who violates this subsection is liable for-- ``(1) a civil money penalty of $100 for the first violation of this subsection; ``(2) a civil money penalty of $200 for a second violation of this subsection; and ``(3) a civil money penalty of $500 for a third and subsequent violation of this subsection. ``(b) Employers.--The employer of an employee who has violated subsection (a) more than once while in the employ of the employer is liable for a civil money penalty of $250 for each violation by such employee. An employer who pays a civil money penalty under this subsection shall not, for purposes of section 10, be considered as having violated this Act. ``(c) Defenses.--It shall be a defense to a charge brought under subsection (a) that-- ``(1) the defendant-- ``(A) relied upon proof of age that appeared on its face to be valid, or ``(B) had complied with the requirements of section 7, or ``(2) the individual to whom the tobacco product was distributed was at the time of the distribution employed in violation of section 8(b). ``(d) Enforcement.--A person who violates subsection (a) shall not be liable for a civil money penalty unless the individual who received the tobacco product is proceeded against under section 2(a), except that such a person shall be liable for such penalty if such individual was not proceeded against because such individual was testing compliance with this Act under section 8(b). ``SEC. 2. PURCHASE, RECEIPT, OR POSSESSION BY MINORS PROHIBITED. ``(a) In General.--An individual under 18 years of age shall not purchase or attempt to purchase, receive or attempt to receive, possess or attempt to possess, smoke or attempt to smoke, or otherwise use or consume or attempt to use or consume a tobacco product in a public place. An individual who violates this subsection is liable for a civil money penalty of not less than $25 and not more than $150 for each violation and shall be subject to suspension of the individual's authorization to operate a motor vehicle. Upon the second or subsequent violation of this subsection, the authorization of such individual to operate a motor vehicle shall be suspended for a period of not less than 30 days and such individual shall be required to perform community service. ``(b) Notice.--A law enforcement agency, upon determining that an individual under 18 years of age allegedly purchased, received, possessed, smoked, or otherwise used or attempted to purchase, receive, possess, smoke, or otherwise use, a tobacco product in violation of subsection (a) shall notify the individual's parent or parents, custodian, or guardian as to the nature of the violation if the name and address of a parent, guardian, or custodian is reasonably ascertainable by the law enforcement agency. The notice required by this subsection shall be made not later than 48 hours after the individual who allegedly violated subsection (a) is cited by such agency for the violation. The notice may be made by any means reasonably calculated to give prompt actual notice, including notice in person, by telephone, or by first-class mail. ``(c) Employment.--Subsection (a) does not prohibit an individual under the age of 18 from possessing a tobacco product during regular working hours and in the course of such individual's employment if the tobacco product is not possessed for such individual's consumption. ``SEC. 3. SIGNAGE. ``It shall be unlawful for any person who sells tobacco products over-the-counter to fail to post conspicuously a sign communicating that-- ``(1) the sale of tobacco products to individuals under the age of 18 is prohibited by law, ``(2) the purchase of tobacco products by individuals under the age of 18 is prohibited by law, and ``(3) proof of age may be demanded. A person who fails to post a sign in violation of this section is liable for a civil money penalty of $250 for each violation. ``SEC. 4. SAMPLING. ``It shall be unlawful for any person to distribute tobacco product samples in any face-to-face transaction without first procuring, from any prospective purchaser or recipient who appears to be under the age of 18, proof of age establishing that such prospective purchaser or recipient is 18 years of age or older. A person who violates this section is liable for a civil money penalty of $250 for each violation. This section does not apply to distributions of tobacco products in an area or establishment that individuals under the age of 18 are not permitted to enter. ``SEC. 5. OUT-OF-PACKAGE DISTRIBUTION. ``It shall be unlawful for any person to distribute cigarettes or smokeless tobacco products other than in an unopened package originating with the manufacturer that bears the health warning required by Federal law. A person who distributes a cigarette or smokeless tobacco product in violation of this section is liable for a civil money penalty of $250 for each violation. ``SEC. 6. DISPLAYS. ``(a) General Rule.--It shall be unlawful for any person who sells tobacco products to maintain packages of such products in any display or storage configuration which affords customers direct access to such packages. ``(b) Penalty.--Any person who violates subsection (a) is liable for a civil money penalty of $250 for each violation. ``SEC. 7. NOTIFICATION OF EMPLOYEES. ``(a) Notice to Employees.--Within 180 days of the effective date of this Act, every person engaged in the business of distributing tobacco products at retail shall implement a program to notify each employee employed by that person who distributes tobacco products that this Act-- ``(1) prohibits the distribution of tobacco products to any individual under 18 years of age and the purchase, receipt, possession, smoking, or other use or consumption of tobacco products by any individual under 18 years of age, ``(2) prohibits out-of-package distribution of cigarettes and smokeless tobacco products, and ``(3) permits a defense to a charge of distribution of a tobacco product to an individual under 18 years of age based on evidence that the defendant relied upon proof of age that appeared on its face to be valid. Any employer failing to provide the required notice to any employee shall be liable for a civil money penalty of $250 for each violation. ``(b) Statement.--It shall be a defense to a charge that an employer violated subsection (a) of this section that the employee acknowledged receipt, either in writing or by electronic means, of a statement in substantially the following form: ``I understand that State law prohibits the distribution of tobacco products to individuals under 18 years of age and out- of-package distribution of cigarettes and smokeless tobacco products and permits a defense based on evidence that a prospective purchaser's proof of age was reasonably relied upon and appeared on its face to be valid. I understand that if I sell, give, or voluntarily provide tobacco products to an individual under the age of 18, I may be found responsible for a civil money penalty for each violation. I promise to comply with this law.'' ``(c) Vicarious Liability.--If an employer is charged with a violation of subsection (a) and the employer uses as a defense to such charge the defense provided by subsection (b), the employer shall be deemed to be liable for such violation if such employer pays the penalty imposed on the employee involved in such violation or in any way reimburses the employee for such penalty. ``SEC. 8. RANDOM UNANNOUNCED INSPECTIONS; REPORTING; AND COMPLIANCE. ``(a) Enforcement and Inspection.--The State Police of a State, or such local law enforcement authority duly designated by the State Police, shall enforce this Act in a manner that can reasonably be expected to reduce the extent to which tobacco products are distributed to individuals under 18 years of age and shall conduct random, unannounced inspections in accordance with the procedures set forth in this Act and in regulations issued under section 301 of the PROTECT Act to ensure compliance with this Act. ``(b) Use of Individuals Under 18.--The State may engage an individual under 18 years of age to test compliance with this Act, except that such an individual may be used to test compliance with this Act only if the testing is conducted under the following conditions: ``(1) Prior to use of any individual under the age of 18 years in a random, unannounced inspection, written consent shall be obtained from such individual's parents or legal guardian. ``(2) An individual under 18 years of age shall act solely under the supervision and direction of the State during a random, unannounced inspection. ``(3) An individual under 18 years of age used in random, unannounced inspections shall not be used in any such inspection at a store in which such individual is a regular customer. ``(4) If an individual under 18 years of age participating in random, unannounced inspections is questioned about such individual's age, such person shall state such individual's actual age and shall present a true and correct proof of age if requested at any time during the inspection to present it. ``(c) Penalty.--Any person who uses any person under 18 years of age, other than as permitted by subsection (b), to test compliance with this Act, is liable for a civil money penalty of $250 for each violation. ``(d) Use of Penalty Money and Fees.--Civil money penalties collected for violations of this Act and fees collected under section 9 may only be used to defray the costs of administration and enforcement of this Act. ``SEC. 9. LICENSURE. ``(a) In General.--The State shall require that each person engaged in the distribution of tobacco products hold a license issued under this section. A separate license shall be required for each place of business where tobacco products are distributed at retail. A license issued under this section is not assignable and is valid only for the person in whose name it is issued and for the place of business designated in the license. ``(b) Fee.--The annual license fee shall be not less than $500 for each place of business where tobacco products are distributed at retail. ``(c) Application.--Every application for a license, including renewal of a license, under this section shall be made upon a form provided by the State and shall set forth the name under which the applicant transacts or intends to transact business, the location of the place of business for which the license is to be issued, the street address to which all notices relevant to the license are to be sent (in this Act referred to as `notice address'), and any other identifying information that the State may require. ``(d) Action on License.--The State shall issue or renew a license or deny an application for a license or the renewal of a license within 30 days of receiving a properly completed application and the license fee. The State shall provide notice to an applicant of action on an application denying the issuance of a license or refusing to renew a license. ``(e) Scope and Renewal.--Every license issued by the State shall be valid for 1 year from the date of issuance and shall be renewed upon application except as otherwise provided in this Act. ``(f) Change of Address.--Upon notification of a change of address for a place of business for which a license has been issued, a license shall be reissued for the new address without the filing of a new application. ``(g) Notice.--The State shall notify every person in the State who is engaged in the distribution at retail of tobacco products of the license requirement of this section and of the date by which such person should have obtained a license. ``(h) Penalty.-- ``(1) In general.--Any person who engages in the distribution at retail of tobacco products without a license required by this section is liable for a civil money penalty in an amount equal to two times the applicable license fee and $100 for each day on which such distribution continues without a license. ``(2) Suspension or revocation.--Any person who engages in the distribution at retail of tobacco products after a license issued under this section has been suspended or revoked is liable for a civil money penalty of $250 per day for each day on which such distribution continues after the date such person received notice of such suspension or revocation. ``(i) Term.--The term of a license shall be 1 year. ``(j) Effective Date.--No person shall engage in the distribution at retail of tobacco products on or after 180 days after the date of enactment of this Act unless the person is authorized to do so by a license issued pursuant to this section or is an employee or agent of a person who has been issued such a license. ``SEC. 10. SUSPENSION, REVOCATION, DENIAL, AND NONRENEWAL OF LICENSES. ``(a) Notice.--Upon a finding that a licensee has been determined by a court of competent jurisdiction to have violated this Act during the license term, the State shall notify the licensee in writing, served personally or by registered mail at the notice address, that any subsequent violation of this Act at the same place of business may result in an administrative action to suspend the license for a period determined by the State. ``(b) Suspension.--Upon finding that a further violation by the licensee has occurred involving the same place of business for which the license was issued and the licensee has been provided notice under subsection (a), the State may initiate an administrative action to suspend the license for a period to be determined by the State. If an administrative action to suspend a license is initiated, the State shall immediately notify the licensee in writing at the notice address of the initiation of the action and the reasons therefore and permit the licensee an opportunity, at least 30 days after written notice is served personally or by registered mail upon the licensee, to show why suspension of the license would be unwarranted or unjust. ``(c) Revocation.--The State may initiate an administrative action to revoke a license that previously has been suspended under subsection (b) if, during the one year period in which the license was issued, a further violation of this Act is committed after the suspension by the licensee involving the same place of business for which the license was issued. If an administrative action to revoke a license is initiated, the State shall immediately notify the licensee in writing at the notice address of the initiation of the action and the reasons therefore and permit the licensee an opportunity, at least 30 days after written notice is served personally or by registered mail upon the licensee, to show why revocation of the license would be unwarranted or unjust. ``(d) Other Violations.--No action with respect to any license at a place of business may be taken based on a violation that occurred subsequent to the occurrence of another violation unless such other violation is fully adjudicated at the time the subsequent violation occurred. ``(e) Fee.--A person whose license has been suspended or revoked with respect to a place of business pursuant to this section shall pay the State a fee of $1,000 for the renewal or reissuance of the license at that same place of business. ``(f) Effect on Application for New License.--Revocation of a license under subsection (c) with respect to a place of business shall not be grounds to deny an application by that person for a new license with respect to that place of business for more than 12 months subsequent to the date of such revocation. Revocation or suspension of a license with respect to a particular place of business shall not be the grounds to deny an application for a new license, to refuse to renew a license, or to revoke or suspend an existing license at another place of business. ``(g) Judicial Review.--A licensee may seek judicial review of an action of the State suspending, revoking, denying, or refusing to renew a license under this section by filing a complaint in a court of competent jurisdiction. A complaint shall be filed within 30 days after the date on which notice of the action is received by the licensee. The court shall review the evidence de novo. ``(h) Report.--The State shall not report any action suspending, revoking, denying, or refusing to renew a license under this section to the Secretary of Health and Human Services, unless judicial review, if any, of the action has been completed. ``SEC. 11. PREEMPTION. ``(a) In General.--The provisions of this Act shall not preempt any provisions of State or local law that provide greater restrictions than those required in this Act so long as such State or local laws do not conflict with regulations issued under section 910 of the Federal Food, Drug and Cosmetic Act. ``(b) Food and Drug Administration.--Nothing in this Act shall be construed to prohibit the Secretary of Health and Human Services from regulating tobacco products under chapter IX of the Federal Food, Drug, and Cosmetic Act. ``SEC. 12. SEVERABILITY. ``If any provision of this Act or its application to any person or circumstance is held invalid, such holding shall not affect other provisions or applications of this Act that can be given effect without the invalid application. ``SEC. 13. NO PRIVATE RIGHT OF ACTION. ``Nothing in this Act shall be construed to create a right of action by any private person for any violation of any provision of this Act. ``SEC. 14. JURISDICTION AND VENUE. ``Any action alleging a violation of this Act may only be brought in a court of general jurisdiction in the city or county where the violation is alleged to have occurred. ``SEC. 15. REPORT. ``The State shall prepare for submission annually to the Secretary of Health and Human Services a report on the State's reporting of compliance with this title and any implementing regulations promulgated by the Secretary. ``SEC. 16. DEFINITIONS. ``For purposes of this Act: ``(1) Direct access.--The term `direct access' means the ability of a customer to obtain physically a package of tobacco products without the intervention of an employee of the establishment. ``(2) Package.--The term `package' means a pack, box, carton, pouch, or container of any kind in which cigarettes or smokeless tobacco products are offered for sale, sold, or otherwise distributed to consumers. ``(3) Proof of age.--The term `proof of age' means a driver's license or other form of identification issued by a governmental authority or other identification that includes a photograph and the date of birth of the individual. ``(4) Sample.--The term `sample' means a tobacco product distributed to members of the public at no cost for the purpose of promoting the product, but excludes tobacco products distributed-- ``(A) in conjunction with the sale of other tobacco products, ``(B) to consumer or market research panels, ``(C) to persons employed in the trade, or ``(D) to customers or consumers in response to customer or consumer complaints. ``(5) Tobacco product.--The term `tobacco product' means-- ``(A) `tobacco products' as defined in section 5 of the PROTECT Act; or ``(B) any other product containing tobacco as a principal ingredient which, because of its appearance, type, or tobacco used in the product, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a tobacco product as described in subparagraph (A).''. Subtitle B--Required Reduction in Underage Usage SEC. 311. PURPOSE. It is the purpose of this subtitle to encourage the achievement of dramatic and immediate reductions in the number of underage consumers of tobacco products through the imposition of substantial financial surcharges on participating manufacturers if certain underage tobacco- use reduction targets are not met. SEC. 312. DETERMINATION OF UNDERAGE USE BASE PERCENTAGES. (a) Cigarettes.--For purposes of this section, the underage use base percentage for cigarettes shall be a percentage determined by the Secretary, weighted by the relative population of the age groups involved as determined using data compiled in 1995 by the Bureau of the Census, based on-- (1) the average of the percentages of 12th graders (individuals who are 16 or 17 years of age) who used cigarette products on a daily basis for each of the calendar years 1986 through 1996; (2) the average of the percentages of 10th graders (individuals who are 14 or 15 years of age) who used cigarette products on a daily basis for each of the calendar years 1991 through 1996; and (3) the average of the percentages of 8th graders (individuals who are 13 years of age) who used cigarette products on a daily basis for each of the calendar years 1991 through 1996. (b) Smokeless Tobacco.--For purposes of this section, the underage use base percentage for smokeless tobacco products shall be a percentage determined by the Secretary, weighted by the relative population of the age groups involved as determined using data compiled in 1995 by the Bureau of the Census, based on-- (1) the average of the percentages of 12th graders (individuals who are 16 or 17 years of age) who used smokeless tobacco products on a daily basis in 1996; (2) the average of the percentages of 10th graders (individuals who are 14 or 15 years of age) who used smokeless tobacco products on a daily basis in 1996; and (3) the average of the percentages of 8th graders (individuals who are 13 years of age) who used smokeless tobacco products on a daily basis in 1996. (c) Use of Certain Data or Methodology.--For purposes of determining the percentages under paragraphs (1) through (3) of subsections (a) and (b), the Secretary shall use the data contained in the National High School Drug Use Survey entitled Monitoring the Future by the University of Michigan or such other comparable index, as determined appropriate by the Secretary after notice and an opportunity for a hearing, that utilizes methodology identical to that used by the University of Michigan in such survey. SEC. 313. ANNUAL DAILY INCIDENCE OF UNDERAGE USE OF TOBACCO PRODUCTS. (a) Annual Determination.--Not later than the expiration of the 5- year period beginning on the date of enactment of this Act, and annually thereafter, the Secretary shall determine the average annual incidence of the daily use of tobacco products by individuals who are under 18 years of age. (b) Cigarettes.--With respect to cigarette products, a determination under subsection (a) for a year shall be based on the percentage, as weighted by the relative population of the age groups involved as determined using data compiled in 1995 by the Bureau of the Census, of-- (1) 12th graders (individuals who are 16 or 17 years of age) who used cigarette products on a daily basis during the year involved; (2) 10th graders (individuals who are 14 or 15 years of age) who used cigarette products on a daily basis during the year involved; and (3) 8th graders (individuals who are 13 years of age) who used cigarette products on a daily basis during the year involved. (c) Smokeless Tobacco.--With respect to smokeless tobacco products, a determination under subsection (a) for a year shall be based on the percentage, as weighted by the relative population of the age groups involved as determined using data compiled in 1995 by the Bureau of the Census, of-- (1) 12th graders (individuals who are 16 or 17 years of age) who used smokeless tobacco products on a daily basis during the year involved; (2) 10th graders (individuals who are 14 or 15 years of age) who used smokeless tobacco products on a daily basis during the year involved; and (3) 8th graders (individuals who are 13 years of age) who used cigarette smokeless tobacco on a daily basis during the year involved. (d) Use of Certain Data or Methodology.-- (1) In general.--For purposes of determining the percentages under paragraphs (1) through (3) of subsections (b) and (c), the Secretary shall use the data contained in the National High School Drug Use Survey entitled Monitoring the Future by the University of Michigan (if such survey is still being undertaken) or such other comparable index, as determined appropriate by the Secretary after notice and an opportunity for a hearing, that utilizes methodology identical to that used by the University of Michigan in such survey. (2) Alteration of methodology.--If the Secretary determines that the methodology used by the University of Michigan in the survey referred to in paragraph (1) has been altered in a material manner from the methodology used during the period from 1986 to 1996 (including by altering States or regions on which the survey is based), the Secretary, after notice and an opportunity for a hearing, shall use percentages based on an index developed by the Secretary that utilizes methodology identical to that used by the University of Michigan in such survey. SEC. 314. REQUIRED REDUCTION IN UNDERAGE TOBACCO USE. (a) In General.--For purposes of assessing surcharges under section 315, the Secretary shall determine whether the required percentage reduction in the underage use of tobacco products for a year (based on the tables contained in subsection (b)) has been achieved for the year involved. Such determination shall be based on-- (1) with respect to cigarette products, the average annual incidence of the daily use of tobacco products by individuals who are under 18 years of age for the year involved (as determined under section 313(b)) as compared to the underage use base percentage for cigarette products (as determined under section 312(a)); and (2) with respect to smokeless tobacco products, the average annual incidence of the daily use of smokeless tobacco products by individuals who are under 18 years of age for the year involved (as determined under section 313(c)) as compared to the underage use base percentage for smokeless tobacco products (as determined under section 312(b)). (b) Percentage Reduction in Underage Use of Tobacco Products.--For purposes of subsection (a), the required percentage reduction in the underage use of tobacco products with respect to each tobacco product shall be determined based on the national goals for the reduction in underage tobacco use under section 4. SEC. 315. APPLICATION OF SURCHARGES. (a) In General.--If the Secretary determines that the percentage reduction in the underage use of tobacco products for a year has not been achieved as required under section 314, the Secretary shall impose a surcharge on the participating manufacturers of the tobacco products involved. (b) Amount of Surcharge.-- (1) In general.-- (A) Cigarettes.--With respect to cigarettes, the amount of any surcharge to be imposed under this section for a calendar year shall be equal to-- (i) with respect to each of the first 5 calendar years to which this section applies, the product of-- (I) $100,000,000, and the number of applicable surcharge percentage points as determined under subsection (c) up to 5 percentage points; (II) $200,000,000, and the number of applicable surcharge percentage points as determined under subsection (c), if such percentage points are greater than 5 but less than 11 percentage points; and (III) $300,000,000, and the number of applicable surcharge percentage points as determined under subsection (c), if such percentage points are 11 or more percentage points; and (ii) with respect to calendar years succeeding the period referred to in subparagraph (A), the product of-- (I) $250,000,000, and the number of applicable surcharge percentage points as determined under subsection (c) up to 5 percentage points; and (II) $500,000,000, and the number of applicable surcharge percentage points as determined under subsection (c), if such percentage points are 5 or more percentage points. (B) Smokeless tobacco.--With respect to smokeless tobacco, the amount of any surcharge to be imposed under this section for a calendar year shall be equal to-- (i) with respect to each of the first 5 calendar years to which this section applies, the product of-- (I) $15,000,000, and the number of applicable surcharge percentage points as determined under subsection (c) up to 5 percentage points; (II) $30,000,000, and the number of applicable surcharge percentage points as determined under subsection (c), if such percentage points are greater than 5 but less than 11 percentage points; and (III) $45,000,000, and the number of applicable surcharge percentage points as determined under subsection (c), if such percentage points are 11 or more percentage points; and (ii) with respect to calendar years succeeding the period referred to in subparagraph (A), the product of-- (I) $30,000,000, and the number of applicable surcharge percentage points as determined under subsection (c) up to 5 percentage points; and (II) $60,000,000, and the number of applicable surcharge percentage points as determined under subsection (c), if such percentage points are 5 or more percentage points. (2) Adjustments.--The amount applicable under paragraph (1) shall be annually adjusted by the Secretary based on-- (A) with respect to subparagraph (A) of such paragraph-- (i) the proportional percentage increase or decrease, as compared to calendar year 1995, in the population of individuals residing in the United States who are at least 13 years of age but less than 18 years of age; (ii) the proportional percentage increase or decrease, as compared to calendar year 1996, in the average profit per unit (measured in cents and weighted by annual sales) earned by participating manufacturers for the tobacco product involved (as determined by the Secretary through a contract with a nationally recognized accounting firm having no connection to such manufacturers); and (B) any methodology utilized to avoid the double counting of underage individuals whose tobacco use has previously resulted in the imposition of a surcharge, limited to the extent that there were not other underage users of tobacco in such previous years for whom a surcharge was not paid because of the limitation contained in section 316. (3) Profit per unit.--For purposes of paragraph (2)(A)(ii), the average profit per unit for calendar 1996 shall be determined using the operating profit reported by participating manufacturers to the Securities and Exchange Commission. (4) Annual limitations.--The total amount of surcharges imposed under this section for a calendar year shall not exceed-- (A) in the case of cigarettes-- (i) $5,000,000,000 for each of the years described in paragraph (1)(A)(i); and (ii) $10,000,000,000 for each of the years described in paragraph (1)(A)(ii); and (B) in the case of smokeless tobacco products-- (i) $500,000,000 for each of the years described in paragraph (1)(B)(i); and (ii) $1,000,000,000 for each of the years described in paragraph (1)(B)(ii). (c) Determination of Applicable Surcharge Percentage Points.-- (1) In general.--Except as provided in paragraph (2), with respect to a calendar year, the applicable surcharge percentage points shall be equal to the percentage point difference between-- (A) the required percentage reduction in the underage use of the tobacco product involved for the year (based on the tables in section 314(b)); and (B) the number of percentage points by which the average annual incidence of the daily use of the tobacco products involved by individuals who are under 18 years of age for the year (as determined under section 313) is less than the underage use base percentage for such products (as determined under section 312). (2) Adjustment.--If for any calendar year the Secretary determines that the average annual incidence of the daily use of the tobacco products involved by individuals who are under 18 years of age (as determined under section 313) is greater than the underage use base percentage for such products (as determined under section 312), the applicable surcharge percentage point shall be equal to-- (A) the percentage point amount determined under paragraph (1)(A); and (B) the number of percentage points by which the average annual incidence of the daily use of the tobacco products involved by individuals who are under 18 years of age (as determined under section 313) is greater than the underage use base percentage for such products (as determined under section 312). (3) Type of product.--Separate determinations shall be made under this section for cigarette products and smokeless tobacco products. (d) Joint and Several Obligation.--Any surcharge imposed under this section with respect to a tobacco product (cigarette products or smokeless tobacco products) shall be the joint and several obligation of all participating manufacturers of such product as allocated by the market share of each such manufacturer with respect to such product. The market share of each manufacturer for each such product shall be based on the market share of such product for the year preceding the year for which the determination is being made. (e) Assessment.--Not later than May 1 of each year in which a surcharge will be imposed under this section, the Secretary shall assess, pursuant to subsection (d), to each participating manufacturer the amount for which such manufacturer is obligated. Not later than July 1 of any year in which a manufacturer receives an assessment under this section, the manufacturer shall pay such assessment in full or be subject to such interest on such amount as the Secretary may by regulation prescribe. (f) Use of Amounts.--Amounts received under this section shall be used to further the purposes of this Act. (g) Prohibition.--No stay or other injunctive relief may be granted by the Secretary or any court that has the effect of enjoining the imposition and collection of the surcharges to be applied under this section. SEC. 316. ABATEMENT PROCEDURES. (a) Petitions.--Upon payment by a participating manufacturer of the amount assessed to the manufacturer under section 315(f), the manufacturer may submit a petition to the Secretary for an abatement of the assessment. A notice of such abatement petition shall be submitted to the attorney general of each State. (b) Hearing.--The Secretary shall provide for the conduct of a hearing on an abatement petition received under subsection (a) pursuant to the procedures described in sections 554, 556, and 557 of title 5, United States Code. The attorney general of any State shall be permitted to be heard at any hearing conducted under this subsection. (c) Burden.--The burden at any hearing under subsection (b) shall be on the participating manufacturer to prove, by a preponderance of the evidence, that the manufacturer should be granted the abatement. (d) Basis of Decision.--Any decision regarding a petition for an abatement under this section shall be based on a determination as to whether-- (1) the participating manufacturer has acted in good faith and in full compliance with this Act (and any amendment made by this Act) and any regulations or State or local laws promulgated in furtherance of this Act; (2) the participating manufacturer has pursued all reasonably available measures to attain the reductions; (3) there is any evidence of any direct or indirect action by the participating manufacturer to undermine the achievement of the reductions required under section 314 or to undermine any other provision of this Act (or amendment); and (4) the participating manufacturer has taken (or failed to take) any other action as determined appropriate by the Secretary. (e) Amount.--Upon a determination granting an abatement under this section, the Secretary shall order the abatement of any or all of the amount paid by the participating manufacturer (as determined by the Secretary), together with interest that may have accrued on such amount during the period between the date on which payment by the manufacturer was made and the date on which the abatement order was granted. Such interest shall be equal to that provided for the average 52-week Treasury Bill during the period involved. (f) Aggrieved Parties.--Any participating manufacturer or attorney general of any State that is aggrieved by an abatement that is granted under this section may seek judicial review of the abatement decision within 30 days of the date of such decision in the Court of Appeals for the District of Columbia Circuit. Review in such cases shall be subject to the procedures described in sections 701 through 706 of title 5, United States Code. (g) Prohibition.--A participating manufacturer may not file a petition under subsection (a) until such time as the manufacturer has fully paid the Secretary the amount assessed to the manufacturer under section 315(f). SEC. 317. INCENTIVE FOR EXCEEDING REDUCTION GOALS. (a) In General.--If the Secretary determines that the percentage reduction in the underage use of tobacco products for a year exceeds 60 percent for cigarettes and 45 percent for smokeless tobacco products for a year as required under section 314, the Secretary shall notify the Trustees who shall adjust, in accordance with subsection (b), the amount of the licensing fee that a participating manufacturer shall be required to pay for such year under section 102. (b) Amount.-- (1) Cigarettes.--With respect to cigarettes, the amount of a licensing fee adjustment applicable to a participating manufacturer under this section shall be an amount equal to \1/ 80\ of the amount that the manufacturer is required to pay for such year multiplied by the number of percentage points by which the manufacturer has reduced underage tobacco use in excess of the 60 percent reduction required under section 314. (2) Smokeless tobacco.--With respect to smokeless tobacco, the amount of a licensing fee adjustment applicable to a participating manufacturer under this section shall be an amount equal to \1/110\ of the amount that the manufacturer is required to pay for such year multiplied by the number of percentage points by which the manufacturer has reduced underage tobacco use in excess of the 45 percent reduction required under section 314. (c) Procedures.--The Trustees, in consultation with the Secretary, shall develop procedures to carry out this section. TITLE IV--HEALTH AND SAFETY REGULATION OF TOBACCO PRODUCTS SEC. 401. HEALTH AND SAFETY REGULATION OF TOBACCO PRODUCTS. (a) Prohibited Acts.--Section 301 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 331) is amended by adding at the end the following: ``(x) The introduction or delivery for introduction into interstate commerce of any tobacco product that does not comply with the provisions of chapter IX. ``(y) The failure by the manufacturer of a tobacco product to comply with a tobacco product health risk management standard, a good manufacturing practice standard, a tobacco product labeling, warning or packaging standard, or any other requirement of chapter IX.''. (b) Definition.--Section 201(g)(1) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301(g)(1)) is amended by striking ``; and (D)'' and inserting ``, including nicotine-containing tobacco products that do not comply with chapter IX; and (D)''. (c) Inspections.--Section 704(a)(1) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 374(a)(1)) is amended-- (1) in subparagraph (A), by striking ``or cosmetics'' each place that such appears and inserting ``, cosmetics, or tobacco products''; and (2) in the second sentence, by striking ``drugs or'' each place that such appears and inserting ``drugs, tobacco products or''. (d) Regulation of Tobacco Products.--The Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.) is amended-- (1) by redesignating chapter IX as chapter X; (2) by redesignating sections 901, 902, 903, 904, and 905 as sections 1001, 1002, 1003, 1004, and 1005, respectively; and (3) by adding after chapter VIII the following new chapter: ``CHAPTER IX--HEALTH AND SAFETY REGULATORY REQUIREMENTS RELATING TO TOBACCO PRODUCTS ``SEC. 900. DEFINITIONS. ``In this chapter: ``(1) Cigarette.--The term `cigarette' means any product which contains nicotine, is intended to be burned under ordinary conditions of use, and consists of-- ``(A) any roll of tobacco wrapped in paper or in any substance not containing tobacco; and ``(B) any roll of tobacco wrapped in any substance containing tobacco which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette described in subparagraph (A). ``(2) Cigarette tobacco.--The term `cigarette tobacco' means any product that consists of loose tobacco that contains or delivers nicotine and is intended for use by persons in a cigarette. Unless otherwise stated, the requirements of this title pertaining to cigarettes shall also apply to cigarette tobacco. ``(3) Nicotine.--The term `nicotine' means the chemical substance named 3-(1-Methyl-2-pyrrolidinyl)pyridine or C<INF>10</INF>H<INF>14</INF>N<INF>2</INF>, including any salt or complex of nicotine.''. ``(4) Smokeless tobacco.--The term `smokeless tobacco' means any product that consists of cut, ground, powdered, or leaf tobacco that contains nicotine and that is intended to be placed in the oral or nasal cavity. ``(5) Tar.--The term `tar' means mainstream total particulate matter minus nicotine and water. ``(6) Tobacco additive.--The term `tobacco additive' means any substance the intended use of which results or may reasonably be expected to result, directly or indirectly, in the substance becoming a component of, or otherwise affecting the characteristics of, any tobacco product, including any substance that may have been removed from the tobacco product and then readded in the substance's original or modified form. ``(7) Tobacco product.--The term `tobacco product' means cigarettes and smokeless tobacco products. ``Subchapter A--Tobacco Product Regulation ``SEC. 901. STATEMENT OF GENERAL DUTIES. ``As part of the comprehensive health promotion and disease prevention program established under this chapter and the PROTECT Act (and the amendments made by such Act) relating to diseases and conditions associated with the use of tobacco products, and that places a special emphasis on discouraging the use of such products by young Americans, the Secretary shall-- ``(1) develop and implement health risk management standards for tobacco products under section 902; ``(2) develop and implement good manufacturing practice standards for tobacco products under section 903; ``(3) develop and implement tobacco product labeling, warning, and packaging standards under section 904; ``(4) develop and implement standards that encourage the development and use of reduced risk tobacco products under section 905; ``(5) develop and implement tobacco product marketing standards under section 906; ``(6) establish and oversee a tobacco products scientific advisory committee under section 907 to provide advice on the establishment of tobacco product marketing standards under section 902, 903, 904, and 905; and ``(7) submit reports to Congress evaluating the effectiveness of this chapter and the PROTECT Act as described in section 908. ``SEC. 902. TOBACCO PRODUCT HEALTH RISK MANAGEMENT STANDARDS. ``(a) Authority.-- ``(1) In general.--The Secretary shall by regulation (promulgated under the authority of section 701(a) and consistent with the procedures described in section 553 of title 5, United States Code) establish tobacco product health risk standards. ``(2) Consultation.--In developing and promulgating regulations under this chapter, the Secretary shall consult (as the Secretary determines appropriate) with-- ``(A) the Federal public health and safety officials, including-- ``(i) the Surgeon General; ``(ii) the Director of the Centers for Disease Control and Prevention; ``(iii) the Director of the Office on Smoking and Health of the Centers for Disease Control and Prevention; ``(iv) the Commissioner of Food and Drugs; ``(v) the Director of the National Institutes of Health; ``(vi) the Director of the National Cancer Institute; ``(vii) the Administrator of the Agency for Health Care Policy and Research; ``(viii) the Administrator of the Substance Abuse and Mental Health Services Administration; ``(ix) the Administrator of the Health Resources and Services Administration; ``(x) the Director of the Office of National Drug Control Policy; ``(xi) the Administrator of the Drug Enforcement Agency; ``(xii) the Administrator of the Bureau of Alcohol, Tobacco, and Firearms; and ``(xiii) other Federal public health experts; and ``(B) other public health and safety experts, including State and local public health and safety officials, and other interested members of the public and affected parties. ``(b) Procedures for the Establishment of Standards.-- ``(1) Publication of notice.-- ``(A) In general.--The Secretary shall publish in the Federal Register a notice of proposed rulemaking for the establishment, amendment, or revocation of any health risk management standard for a tobacco product under this section. The Secretary may publish an advance notice of proposed rulemaking in order to solicit broad input at an earlier stage in the rulemaking process. ``(B) Contents of notice.--A notice of proposed rulemaking for the establishment or amendment of a health risk management standard for a tobacco product shall be accompanied by a justification of the proposed action and shall-- ``(i) invite interested persons to submit to the Secretary, within 30 days of the publication of the notice, requests for changes in the standard based on new information relevant to the standard; and ``(ii) invite interested persons to submit an existing health risk management standard for the tobacco product, including a draft or proposed health risk management standard, for consideration by the Secretary. ``(C) Notice of revocation.--A notice of proposed rulemaking for the revocation of a health risk management standard shall set forth a finding with supporting justification that the health risk management standard is no longer necessary with respect to the tobacco product. ``(D) Comments.--The Secretary shall provide for a comment period of not less than 60 days after the date on which a notice has been published under this paragraph. ``(2) Request for change.--If, after the publication of a notice in accordance with paragraph (1), the Secretary receives a request for a change in the health risk management standard for a tobacco product, the Secretary shall, within 60 days of the publication of the notice, either deny the request or give notice of an intent to initiate such a change. ``(3) Regulation for establishment.-- ``(A) In general.--After the expiration of the period for comment on a notice of proposed rulemaking published under paragraph (1) with respect to a health risk management standard, and after consideration of such comments and any report from the tobacco products advisory committee under section 907, the Secretary shall-- ``(i) promulgate a regulation establishing a health risk management standard and publish in the Federal Register findings on the matters referred to in subsection (b); or ``(ii) publish a notice terminating the proceeding for the development of the standard together with the reasons for such termination. ``(B) Contents.--A regulation establishing a health risk management standard under subparagraph (A) shall set forth the date or dates upon which the standard shall take effect, but no such regulation may take effect before the expiration of the 1-year period beginning on the date of its publication unless the Secretary determines that an earlier effective date is necessary for the protection of the public health. Such date or dates shall be established so as to minimize economic loss to, and disruption or dislocation of, domestic and international trade. ``(4) Amending or revoking of standards.-- ``(A) In general.--The Secretary, upon the initiative of the Secretary or upon petition of an interested person, may by regulation, promulgated in accordance with the requirements of paragraphs (1), (2), and (3), amend or revoke a health risk management standard for a tobacco product. ``(B) Effectiveness of amendment.--The Secretary may declare a proposed amendment of a health risk management standard under this section to be effective on and after its publication in the Federal Register and until the effective date of any final action taken on such amendment if the Secretary determines that making it so effective is in the public interest. A proposed amendment of a health risk management standard made so effective under the preceding sentence may not prohibit, during the period in which it is so effective, the introduction or delivery for introduction into interstate commerce of a tobacco product which conforms to such standard without the change or changes provided by such proposed amendment. ``(c) Regulation of the Composition of Tobacco Products.--Tobacco product health risk management standards established under this section shall-- ``(1) include provisions that are designed to reduce the overall health risks to the public based upon the best available technology, including the reduction in risk to the consumers of such products, individuals who reduce or cease the use of such products, and individuals who do not initiate the use of such products; ``(2) where necessary to provide a reduction in the overall health risks of tobacco products to the public, include requirements-- ``(A) if technologically and commercially feasible, with respect to the construction, components, constituents, ingredients (including tobacco additives), and properties of the product, including the establishment of levels of nicotine and other components, ingredients (including tobacco additives), and constituents of the product, or smoke emitted by such products; ``(B) specifying the procedures for the testing of such products, including devising procedures to be used by tobacco product manufacturers, the Secretary, or other appropriate entities, to measure relevant health- related characteristics of such products; ``(C) for the testing of such products, including devising procedures to be used by manufacturers, the Secretary, or other appropriate entities to measure the relevant health related characteristics of such products to assess the conformity of such products with the applicable health risk management standards; and ``(D) to limit the sale and distribution of tobacco products to the extent authorized by this chapter; ``(3) as required under section 904, prescribe certain conditions pertaining to the labeling and advertising of tobacco products. ``(4) comply with regulations promulgated by the Secretary that specify the health risk assessment procedures for the testing of tobacco and nontobacco constituents contained in tobacco products and determinations concerning such products under subsection (d). ``(5) not later than 3 years after the date of enactment of this chapter, limit the amount of tar in a cigarette to not more than 12 milligrams, except that nothing in this paragraph shall be construed as limiting the authority of the Secretary to promulgate regulations further limiting the amount of tar that may be contained in a cigarette. ``(d) Tobacco Products Risk Assessment Standards.-- ``(1) Tobacco constituents.--The health risk management standards promulgated under subsection (c)(4) with respect to the testing of tobacco products shall include provisions relating to the assessment of the health risks posed by the components of tobacco, including nicotine and tar, and by tobacco use including carbon-monoxide. ``(2) Nontobacco ingredients.-- ``(A) In general.--The health risk management regulations under subsection (c)(4) with respect to the testing of nontobacco ingredients used in tobacco products-- ``(i) during the 5-year period beginning on the date of enactment of this chapter, this paragraph shall only apply to new ingredients (those ingredients that were not previously used in such products on such date of enactment) used in such products; and ``(ii) after the expiration of the 5-year period described in clause (i), this section shall apply to all ingredients used in such products. ``(B) Implementation.--In carrying out this section, all requirements with respect to nontobacco ingredients, substances, and compounds shall be implemented in accordance with subparagraph (A). ``(3) Health risk assessments.-- ``(A) Requirement.--Not later than 5 years after the date of enactment of this chapter, and annually thereafter, each manufacturer shall submit to the Secretary a health risk assessment for each ingredient, substance, or compound that is listed under subsection (e)(1)(A) with respect to each brand of tobacco product manufactured by each such manufacturer. ``(B) Availability of new information.--The Secretary may include in the regulations promulgated under this section, provisions that permit manufacturers to, in subsequent years, revise information that was submitted under subparagraph (A) in previous years if new data becomes available to that manufacturer. Such regulations may require that a manufacturer submit a simple notification to the Secretary where the manufacturer determines that no new data has become available during the previous year. ``(C) Joint submission.--At the discretion of the Secretary, the health risk assessments under this paragraph may be conducted by qualified third party organizations on behalf of more than 1 manufacturer for 1 or more product or ingredient, substance or compound if a joint submission is consistent with the public health. ``(D) Basis of assessment.--The health risk assessment of an ingredient, substance, or compound described in subparagraph (A) shall-- ``(i) be based on the best scientific evidence available at the time of the submission of the assessment; and ``(ii) ascertain whether there is a reasonable certainty in the minds of competent scientists that the ingredient, substance, or compound is not harmful in the quantities used under the intended conditions of use. ``(4) Regulatory action.-- ``(A) Absence of a risk assessment.--Not later than 12 months after the date of enactment of this chapter and subject to the requirements of paragraphs (1) and (3)(A), the Secretary shall promulgate regulations to prohibit the use of any ingredient, substance, or compound in the tobacco product of a manufacturer if no health risk assessment has been submitted as required under this subsection by the manufacturer for the ingredient, substance, or compound. ``(B) Review of health risk assessments.-- ``(i) General review.--Not later than 90 days after the receipt of a health risk assessment under this subsection, the Secretary shall review the findings contained in such assessment. ``(ii) Approval, conditional approval, or disapproval.--The Secretary shall approve or disapprove of, or condition, the use of the ingredient, substance, or compound that was the subject of the assessment under this subsection within 120 days after the completion of a review under clause (i) and provide notice to the manufacturer of such action. ``(iii) General applicability.--At the discretion of the Secretary, the approval, conditional, approval, or disapproval of a particular ingredient, substance, or compound under clause (ii) may by regulation be made generally applicable to tobacco product manufacturers or a subgroup of such manufacturers. In the case of a conditional approval, the Secretary shall develop a procedure to enable manufacturers to certify that the condition will be complied with. ``(iv) Inaction by secretary.--If the Secretary fails to act with respect to an assessment during the period referred to in clause (ii), the safety of the ingredient, substance, or compound involved shall be deemed to be approved with respect to the manufacturer submitting the assessment until such time as the succeeding annual risk assessment is submitted by the manufacturer or a review is completed. ``(e) Annual Submission.-- ``(1) In general.--Each manufacturer of a tobacco product shall annually provide the Secretary with-- ``(A) a list of all ingredients, substances, and compounds (other than tobacco, water or reconstituted tobacco sheet made wholly from tobacco) that are added in the manufacture of the tobacco product, for each brand of tobacco product so manufactured; ``(B) a description of the quantity of the ingredients, substances, and compounds that are listed under subparagraph (A) with respect to each brand of tobacco product; ``(C) a description of the nicotine content of the product, measured in milligrams of nicotine; ``(D) any other information determined appropriate by the Secretary and included as a requirement in a regulation promulgated under this section. ``(2) General disclosure and confidentiality.-- ``(A) Requirement.--Regulations under subsection (c)(4) shall require that each person who manufacturers, packages, or imports cigarettes or smokeless tobacco products shall annually provide the Secretary with the information required under this section, including information as to all ingredients, substances and compounds in a tobacco product. ``(B) Confidentiality.-- ``(i) Petition by manufacturer.--Upon the submission of the information required under subsection (d)(1), or the submission of any other information under any other provisions of this chapter, a manufacturer may petition the Secretary to exempt certain ingredients, substances, or compounds or other information submitted from public disclosure under this subsection on the basis that such information should be considered confidential as a trade secret. Such petition may be accompanied by such data as the manufacturer elects to submit. ``(ii) Determination.--Not later than 90 days after receiving a petition under clause (i), the Secretary, in consultation with the Attorney General, shall make a determination with respect to whether the information described in the petition should be exempt from disclosure under clause (i) as a trade secret. The Secretary shall provide the manufacturer involved with notice of such determination, but the decision of the Secretary shall be final. ``(iii) Procedures for confidential information.--The Secretary shall develop procedures to maintain the confidentiality of information that is treated as a trade secret under a determination under clause (ii). Such procedures shall include-- ``(I) a requirement that such information be maintained in a secure facility; and ``(ii) a requirement that only the Secretary, or the authorized agents of the Secretary, will have access to the information and shall be instructed to maintain the confidentiality of such information. ``(iv) Health disclosure.--Notwithstanding a determination under clause (ii), the Secretary may require that any ingredient, substance, or compound contained in a tobacco product that is determined to be exempt from disclosure be disclosed if the Secretary determines that it is in the interest of public health to disclose such ingredient, substance, or compound. ``(v) Other disclosure.--The Secretary (or any employee of the Department of Health and Human Services) shall not disclose any information described in subclause (I) if such disclosure is prohibited under any provision of law. Any information that is not required to be disclosed to the public under this subsection, shall be exempt from disclosure pursuant to subsection (a) of section 552 of title 5, United States Code, by reason of subsection (b)(4) of such section, and shall be considered confidential and shall not be disclosed, except that such information may be disclosed to other officers or employees as provided for in clause (iii)(II) or when relevant in any proceeding under this chapter. ``(3) General disclosure of safety.--With respect to each annual submission under paragraph (1) during the 5-year period beginning on the date of enactment of this chapter, the manufacturer shall, for each ingredient, substance, or compound contained on the list of the manufacturer for the year involved, disclose whether the manufacturer has determined that the ingredient, substance, or compound would be exempt from public disclosure under this chapter. ``(f) Actions to Modify or Prohibit Certain Tobacco Products.-- ``(1) In general.--The Secretary may adopt a health risk management standard under this section that requires-- ``(A) the modification of a tobacco product in a manner that involves-- ``(i) the gradual reduction or elimination of nicotine yields of the product; or ``(ii) the reduction or elimination of other harmful constituents, ingredients (including tobacco additives), substances, compounds and properties of the product in accordance with subsection (d)(4)(B), including the establishment of levels of nicotine and other components, ingredients (including tobacco additives), and constituents of the product, or smoke emitted by such products; or ``(B) the prohibition of a tobacco product. ``(2) Considerations.--In determining whether to require a modification or prohibition described in paragraph (1), the Secretary shall identify, make available for public comment, and consider relevant factors including whether the modification or prohibition-- ``(A) will result in a significant reduction in the health risks associated with the use of the tobacco product, constituent, or component involved; ``(B) will result in a significant increase in the number of individuals seeking tobacco product cessation or withdrawal treatments, including an assessment of the effectiveness and accessibility of such treatments; ``(C) will result in the creation of a significant demand for, and supply of, contraband products or other tobacco products that do not meet the requirements of this chapter; and ``(D) is technologically feasible for commercial manufacturing. ``(3) General prohibition of tobacco products.-- ``(A) Nondelegation.--The Secretary may not delegate the authority provided under this section to promulgate a regulation that results in a general prohibition of a class of tobacco products. ``(B) Congressional Review.--In accordance with section 801 of title 5, United States Code, Congress shall review, and may disapprove, any rule of the Secretary establishing, amending, or revoking a tobacco product health risk management standard, except that with respect to a standard that results in a general prohibition of a class of tobacco products, such standard shall only take effect upon the date of enactment of a joint resolution of approval of such standard. The provisions of section 802 of title 5, United States Code, relating to certain disapproval resolutions shall apply to the consideration of any joint resolution of approval under this subsection. ``(g) Compliance.-- ``(1) In general.--Health risk management standards under this section shall apply to all tobacco products to which such standards are relevant. ``(2) Limitation.--During the period in which a regulation promulgated under this section establishing a health risk standard is in effect, a tobacco product shall not be considered to be in violation of section 301 if such product is in compliance with such regulation. ``(h) Evaluation.--The Secretary shall periodically evaluate the effectiveness of tobacco product health risk standards to determine whether such standards should be amended to reflect new medical, scientific, or technological information. ``SEC. 903. GOOD MANUFACTURING PRACTICE STANDARDS. ``(a) Authority.-- ``(1) In general.--The Secretary shall, in accordance with subsections (a) and (b) of section 902, prescribe regulations requiring that the methods used in, and the facilities and controls used for, the manufacture, packing, and storage of a tobacco product conform to current good manufacturing practice, as prescribed in such regulations, to ensure that such products will be in compliance with this chapter. ``(2) Registration.--The regulations promulgated under paragraph (1) shall require that all tobacco product manufacturers register with the Secretary. ``(3) Special consultation procedures.--In developing and promulgating any regulation under paragraph (1) the Secretary shall afford the Tobacco Products Scientific Advisory Committee established under section 907 an opportunity (with a reasonable time period) to submit recommendations in response to the notice of proposed rulemaking. ``(b) Pesticide Residues.--The regulations promulgated under subsection (a) shall at a minimum require, after consultation with the Administrator of the Environmental Protection Agency, the development and adherence to applicable tolerances with respect to pesticide chemical residues in finished tobacco products, except that such tolerances shall only apply if the Administrator determines that such tolerances are necessary to prevent such residues from being injurious to health when used in tobacco products. ``(c) Petitions for Exemptions and Variances.-- ``(1) In general.--Any person subject to any requirement prescribed by regulations under subsection (a) may petition the Secretary for an exemption or variance from such requirement. Such a petition shall be submitted to the Secretary in such form and manner as the Secretary shall by regulation prescribe and shall-- ``(A) in the case of a petition for an exemption from a requirement, set forth the basis for the petitioner's determination that compliance with the requirement is not required to ensure that the tobacco product is in compliance with section 902; ``(B) in the case of a petition for a variance from a requirement, set forth the methods proposed to be used in, and the facilities and controls proposed to be used for, the manufacture, packing, and storage of the product in lieu of the methods, facilities, and controls prescribed by the requirement; and ``(C) contain such other information as the Secretary shall prescribe. ``(2) Tobacco product requirements waiver board.-- ``(A) Authority.--The Secretary shall establish a Tobacco Product Requirements Waiver Board (referred to in this paragraph as the `Waiver Board') to provide advice and make recommendations to the Secretary with respect to the approval or disapproval of petitions submitted under paragraph (1). ``(B) Membership.--The Waiver Board shall be composed of 9 members to be appointed by the Secretary, of which-- ``(i) 3 members shall be appointed from among individuals who are officers or employees of the Federal Government or a State or local government; ``(ii) 2 members shall be appointed from among individuals who are representatives of the interests of the cigarette and smokeless tobacco industries; ``(iii) 2 members shall be appointed from among individuals who are representatives of the interests of physicians and other health professionals; and ``(iv) 2 members shall be appointed from among individuals who are representatives of the interests of the general public. ``(C) Chairperson.--The Secretary shall designate 1 of the members of the Waiver Board to serve as the Chairperson. ``(D) Compensation and expenses.-- ``(i) Compensation.--Members of the Waiver Board who are not officers or employees of the United States, while attending conferences or meetings of the Waiver Board or otherwise serving at the request of the Secretary, shall be entitled to receive compensation at rates to be fixed by the Secretary, which rates may not exceed the daily equivalent of the rate of pay for level 4 of the Senior Executive Schedule under section 5382 of title 5, United States Code, for each day (including traveltime) they are so engaged. ``(ii) Expenses.--While conducting the business of the Waiver Board away from their homes or regular places of business, each member may be allowed travel expenses, including per diem in lieu of subsistence, as authorized by section 5703 of title 5 of the United States Code for persons in the Government service employed intermittently. ``(3) Action on petition.-- ``(A) In general.--Not later than 120 days of the date on which the Secretary receives the recommendations of the Waiver Board, the Secretary shall issue an order approving or denying a petition submitted under paragraph (1). The Secretary may approve-- ``(i) a petition for an exemption for a tobacco product from a requirement if the Secretary determines that absolute compliance with such requirement is not required to assure that the product will comply with this section and is otherwise consistent with the public health; and ``(ii) a petition for a variance for a tobacco product from a requirement if the Secretary determines that the methods to be used in, and the facilities and controls to be used for, the manufacture, packing, and storage of the product in lieu of the methods, controls, and facilities prescribed by the requirement are sufficient to ensure that the product will comply with this section and is otherwise in compliance with the public health. ``(B) Conditions.--An order of the Secretary approving a petition for a variance shall prescribe such conditions respecting the methods used in, and the facilities and controls used for, the manufacture, packing, and storage of the tobacco product to be granted the variance under the petition as may be necessary to ensure that the product will comply with this section. ``(4) Informal hearing.--After the issuance of an order under paragraph (3) respecting a petition, the petitioner shall have an opportunity for an informal hearing on such order. ``(d) Recordkeeping and Reporting.--The regulations promulgated under subsection (a) shall require that manufacturers maintain such files and records as the Secretary may reasonably require relating to tobacco product safety. Such regulations may require manufacturers to report serious adverse events that are not well-known or well- documented by the scientific community (including events related to contamination or a change in any ingredient or any major change in manufacturing processes). ``(e) Inspection Authority.--As provided in section 704, the officers and employees of the Secretary shall have the authority to conduct unannounced inspections of any factory, warehouse, or other establishment of any tobacco product manufacturer and shall have access to the records, files, papers, processes, controls, and facilities relating to tobacco product manufacturing. ``(f) Agricultural Producers.--The Secretary may not promulgate any regulation under this section that has the effect of placing regulatory burdens on tobacco producers (as such term is used for purposes of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.) and the Agricultural Act of 1949 (7 U.S.C. 1441 et seq.)) in excess of the regulatory burdens generally placed on other agricultural commodity producers. ``SEC. 904. TOBACCO PRODUCT LABELING, WARNING, AND PACKAGING STANDARDS. ``(a) Cigarettes.-- ``(1) In general.-- ``(A) Packaging.--It shall be unlawful for any person to manufacture, package, or import for sale or distribution within the United States any cigarettes the package of which fails to bear, in accordance with the requirements of this subsection, one of the following statements: ``WARNING: Cigarettes Are Addictive. ``WARNING: Tobacco Smoke Can Harm Your Children. ``WARNING: Cigarettes Cause Fatal Lung Disease. ``WARNING: Cigarettes Cause Cancer. ``WARNING: If You Think Smoking Is Cool, You Are Dead Wrong. ``WARNING: Cigarettes Cause Strokes And Heart Disease. ``WARNING: Smoking During Pregnancy Can Harm Your Baby. ``WARNING: Smoking Can Kill You. ``WARNING: Tobacco Smoke Causes Fatal Lung Disease In Nonsmokers. ``WARNING: Quitting Smoking Now Greatly Reduces Serious Risks To Your Health. ``(B) Advertising.--It shall be unlawful for any manufacturer or importer of cigarettes to advertise or cause to be advertised within the United States any cigarette unless the advertising bears, in accordance with the requirements of this subsection, one of the following statements: ``WARNING: Cigarettes Are Addictive. ``WARNING: Tobacco Smoke Can Harm Your Children. ``WARNING: Cigarettes Cause Fatal Lung Disease. ``WARNING: Cigarettes Cause Cancer. ``WARNING: If You Think Smoking Is Cool, You Are Dead Wrong. ``WARNING: Cigarettes Cause Strokes And Heart Disease. ``WARNING: Smoking During Pregnancy Can Harm Your Baby. ``WARNING: Smoking Can Kill You. ``WARNING: Tobacco Smoke Causes Fatal Lung Disease In Nonsmokers. ``WARNING: Quitting Smoking Now Greatly Reduces Serious Risks To Your Health. ``(2) Requirements for label statements.-- ``(A) Location.--Each label statement required by subparagraph (A) of paragraph (1) shall be located on the upper portion of the front panel of the cigarette package (or carton) and occupy not less than 25 percent of such front panel. ``(B) Type and color.--With respect to each label statement required by subparagraph (A) of paragraph (1), the phrase `WARNING' shall appear in capital letters and the label statement shall be printed in 17 point type with adjustments as determined appropriate by the Secretary to reflect the length of the required statement. All the letters in the label statement shall appear in conspicuous and legible type, in contrast by typography, layout, or color with all other printed material on the package, and be printed in an alternating black-on-white and white-on-black format as determined appropriate by the Secretary. ``(C) Exception.--The provisions of subparagraph (A) shall not apply in the case of a flip-top cigarette package (offered for sale on the date of enactment of this title) where the front portion of the flip-top does not comprise at least 25 percent of the front panel. In the case of such a package, the label statement required by subparagraph (A) of paragraph (1) shall occupy the entire front portion of the flip top. ``(3) Requirements for advertising.-- ``(A) Location.--Each label statement required by subparagraph (B) of paragraph (1) shall occupy not less than 20 percent of the area of the advertisement involved. ``(B) Type and color.-- ``(i) Type.--With respect to each label statement required by subparagraph (B) of paragraph (1), the phrase `WARNING' shall appear in capital letters and the label statement shall be printed in the following types: ``(I) With respect to whole page advertisements on broadsheet newspaper--45 point type. ``(II) With respect to half page advertisements on broadsheet newspaper--39 point type. ``(III) With respect to whole page advertisements on tabloid newspaper--39 point type. ``(IV) With respect to half page advertisements on tabloid newspaper--27 point type. ``(V) With respect to DPS magazine advertisements--31.5 point type. ``(VI) With respect to whole page magazine advertisements--31.5 point type. ``(VII) With respect to 28cm x 3 column advertisements--22.5 point type. ``(VIII) With respect to 20cm x 2 column advertisements--15 point type. The Secretary may revise the required type sizes as the Secretary determines appropriate within the 20 percent requirement. ``(ii) Color.--All the letters in the label statement under this subparagraph shall appear in conspicuous and legible type, in contrast by typography, layout, or color with all other printed material in the advertisement, and be printed in an alternating black-on-white and white-on-black format as determined appropriate by the Secretary. ``(4) Rotation of label statements.-- ``(A) In general.--Except as provided in subparagraph (B), the label statements specified in subparagraphs (A) and (B) of paragraph (1) shall be rotated by each manufacturer or importer of cigarettes quarterly in alternating sequence on packages of each brand of cigarettes manufactured by the manufacturer or importer and in the advertisements for each such brand of cigarettes in accordance with a plan submitted by the manufacturer or importer and approved by the Secretary. The Secretary shall approve a plan submitted by a manufacturer or importer of cigarettes which will provide the rotation required by this paragraph and which assures that all of the label statements required by subparagraphs (A) and (B) will be displayed by the manufacturer or importer at the same time. ``(B) Application of other rotation requirements.-- ``(i) In general.--A manufacturer or importer of cigarettes may apply to the Secretary to have the rotation schedule described in clause (iii) apply with respect to a brand style of cigarettes manufactured or imported by such manufacturer or importer if-- ``(I) the number of cigarettes of such brand style sold in the fiscal year of the manufacturer or importer preceding the submission of the application is less than \1/4\ of 1 percent of all the cigarettes sold in the United States in such year; and ``(II) more than \1/2\ of the cigarettes manufactured or imported by such manufacturer or importer for sale in the United States are packaged into brand styles which meet the requirements of subclause (I). If an application is approved by the Secretary, the rotation schedule described in clause (iii) shall apply with respect to the applicant during the 1-year period beginning on the date of the application approval. ``(ii) Plan.--An applicant under clause (i) shall include in its application a plan under which the label statements specified in subparagraph (A) of paragraph (1) will be rotated by the applicant manufacturer or importer in accordance with the label rotation described in clause (iii). ``(iii) Other rotation requirements.--Under the rotation schedule which the manufacturer or importer with an approved application may put into effect, each of the label statements specified in subparagraph (A) of paragraph (1) shall appear on the packages of each brand style of cigarettes with respect to which the application was approved an equal number of times within the 12-month period beginning on the date of the approval by the Secretary of the application. ``(5) Application of requirement.--Paragraph (1) does not apply to a distributor or retailer of cigarettes who does not manufacture, package, or import cigarettes for sale or distribution within the United States. ``(6) Television and radio advertising.--It shall be unlawful to advertise cigarettes and little cigars on any medium of electronic communications subject to the jurisdiction of the Federal Communications Commission. ``(b) Smokeless Tobacco Products.-- ``(1) In general.-- ``(A) Packaging.--It shall be unlawful for any person to manufacture, package, or import for sale or distribution within the United States any smokeless tobacco product the package of which fails to bear, in accordance with the requirements of this subsection, one of the following statements: WARNING: This Product May Cause Mouth Cancer. WARNING: This Product May Cause Gum Disease And Tooth Loss. WARNING: This Product Is Not A Safe Alternative To Cigarettes. WARNING: Smokeless Tobacco Is Addictive. ``(B) Advertising.--It shall be unlawful for any manufacturer or importer of smokeless tobacco products to advertise or cause to be advertised within the United States any smokeless tobacco product unless the advertising bears, in accordance with the requirements of this subsection, one of the following statements: WARNING: This Product May Cause Mouth Cancer. WARNING: This Product May Cause Gum Disease And Tooth Loss. WARNING: This Product Is Not A Safe Alternative To Cigarettes. WARNING: Smokeless Tobacco Is Addictive. ``(2) Requirements for label statements.-- ``(A) Location.--Each label statement required by subparagraph (A) of paragraph (1) shall be located on the principal display panel of the product and occupy not less than 25 percent of such panel. ``(B) Type and color.--With respect to each label statement required by subparagraph (A) of paragraph (1), the phrase `WARNING' shall appear in capital letters and the label statement shall be printed in 17 point type with adjustments as determined appropriate by the Secretary to reflect the length of the required statement. All the letters in the label statement shall appear in conspicuous and legible type in contrast by typography, layout, or color with all other printed material on the package and be printed in an alternating black on white and white on black format as determined appropriate by the Secretary. ``(3) Advertising and rotation.--The provisions of paragraphs (3) and (4)(A) of subsection (a) shall apply to advertisements for smokeless tobacco products and the rotation of the statements required under paragraph (1)(A) on such products. ``(4) Application of requirement.--Paragraph (1) does not apply to a distributor or retailer of smokeless tobacco products who does not manufacture, package, or import such products for sale or distribution within the United States. ``(5) Television and radio advertising.--It shall be unlawful to advertise smokeless tobacco on any medium of electronic communications subject to the jurisdiction of the Federal Communications Commission. (c) Statement of Intended Use.-- (1) Requirement.--Each manufacturer, distributor, and retailer advertising or causing to be advertised, disseminating or causing to be disseminated advertising concerning, tobacco products otherwise permitted under this chapter shall include, in a type size and format as the Secretary may prescribe in a regulation promulgated under subsection (d), the established name of the product and a statement of the intended use of the product as provided for in paragraph (2). (3) Intended use statements.-- (A) Cigarettes.--A statement of intended use for cigarettes or cigarette tobacco is as follows (whichever is appropriate): ``Cigarettes--A Dangerous Tobacco Product Intended For Use Only By Persons 18 or Older. ``Cigarette Tobacco--A Dangerous Tobacco Product Intended For Use Only By Persons 18 or Older. (B) Smokeless tobacco.--A statement of intended use for a smokeless tobacco product is as follows (whichever is appropriate): ``Loose Leaf Chewing Tobacco--A Dangerous Tobacco Product Intended For Use Only By Persons 18 or Older. ``Plug Chewing Tobacco--A Dangerous Tobacco Product Intended For Use Only By Persons 18 or Older. ``Twist Chewing Tobacco--A Dangerous Tobacco Product Intended For Use Only By Persons 18 or Older. ``Moist Snuff--A Dangerous Tobacco Product Intended For Use Only By Persons 18 or Older. ``Dry Snuff--A Dangerous Tobacco Product Intended For Use Only By Persons 18 or Older. ``(d) Regulations.-- ``(1) In general.--Not later than 180 days after the date of the enactment of this title, the Secretary shall promulgate such regulations as may be necessary to implement subsections (a), (b), and (c). ``(2) Authority to revise tobacco product labeling statements.-- ``(A) In general.--The Secretary may by rule change the text of any of the statements required under subsections (a) and (b). A rule promulgated under this subparagraph shall not become effective prior to the expiration of the 1-year period beginning on the date on which the final rule is published in the Federal Register. ``(B) Limitation.--The Secretary may not promulgate any rule under subparagraph (A) during the 5-year period beginning on the effective date of the PROTECT Act unless the Secretary can demonstrate extraordinary circumstances. ``(3) Common or usual names.--The Secretary, in accordance with the procedures set forth in section 902, shall promulgate regulations requiring the disclosure to the public of the common or usual name of each ingredient (other than tobacco, water, or reconstituted tobacco sheet made wholly from tobacco) contained in a tobacco product in descending order of predominance by weight, except that such regulations-- ``(A) may provide for the disclosure of spices, flavorings, and colorings without naming each spice, flavoring, or coloring; and ``(B) may exempt from disclosure incidental additives, including processing aids and chemical preservatives, that are present in a tobacco product at insignificant levels that the Secretary determines do not have any functional effect or health risk. ``(e) Preemption.--No statement relating to the use of cigarettes or smokeless tobacco products and health, other than the statements required by subsections (a), (b), or (c), shall be required on any package or in any advertisement of cigarettes or a smokeless tobacco product. ``(f) Exports.--Packages of cigarettes or smokeless tobacco products manufactured, imported, or packaged-- ``(1) for export from the United States; or ``(2) for delivery to a vessel or aircraft, as supplies, for consumption beyond the jurisdiction of the internal revenue laws of the United States; shall be exempt from the requirements of this chapter, but such exemptions shall not apply to cigarettes or smokeless tobacco products manufactured, imported, or packaged for sale or distribution to members or units of the Armed Forces of the United States located outside of the United States. ``SEC. 905. REDUCED RISK TOBACCO PRODUCTS. ``(a) General Rule.--Except as provided in subsection (b), the regulations promulgated in accordance with section 902 shall require that a tobacco product be deemed to be in violation with this chapter if the labeling of the package of the product, or the claims of the manufacturer in connection with the product, can reasonably be interpreted as stating or implying that the product presents a reduced health risk as compared to other similar products. Any tobacco product accompanied by a claim to diagnose, cure, mitigate, treat, or prevent a disease, not including statements that the Secretary may permit for reduced risk tobacco products under this section, will be subject to regulation as a new drug under section 505. ``(b) Exception.-- ``(1) In general.--Subsection (a) shall not apply to the labeling of a tobacco product, or the claims of the manufacturer in connection with the product, if-- ``(A) the manufacturer, based on scientific evidence, demonstrates to the Secretary that the product reduces the risk to the health of the user as compared to other similar tobacco products; and ``(B) the Secretary approves the specific claim that will be made a part of the labeling of the product, or the specific claims of the manufacturer in connection with the product. ``(2) Reduction in health risk.--The Secretary shall promulgate regulations to permit the inclusion of scientifically-based specific health claims on the labeling of a tobacco product package, or the making of such claims by the manufacturer in connection with the product, where the Secretary determines that the inclusion or making of such claims would reduce the health risk to consumers and otherwise promote public health. ``(c) Development of Reduced Risk Tobacco Product Technology.-- ``(1) Notification of secretary.--The manufacturer of a tobacco product shall provide written notice to the Secretary upon the development or acquisition by the manufacturer of any technology that would reduce the risk of such products to the health of the user. Such notification shall not be required until adequate intellectual property protections have been secured by the manufacturer, such as the issuance of a patent or the execution of a licensing agreement. ``(2) Confidentiality.--The Secretary shall promulgate regulations to provide a manufacturer with appropriate confidentiality protections with respect to technology that is the subject of a notification under paragraph (1) that contains evidence that the technology involved is in the early developmental stages. ``(3) Licensing.-- ``(A) In general.--With respect to any technology for which a notification has been provided under paragraph (1), the manufacturer shall permit the use of such technology by other manufacturers of tobacco products to which this chapter applies. ``(B) Fees.--The Secretary of Commerce shall promulgate regulations to provide for the payment of a commercially reasonable fee by each manufacturer that uses the technology described under subparagraph (A) to the manufacturer that submits the notice under paragraph (1) for such technology. Such regulations shall contain procedures for the resolution of fee disputes between manufacturers under this subparagraph. ``(d) Requirement of Manufacture and Marketing.-- ``(1) Purpose.--It is the purpose of this subsection to provide for a mechanism to create incentives that help ensure that tobacco products that are designed to be less hazardous to the health of users are developed, tested, and made available to consumers. ``(2) Determination.--Upon a determination by the Secretary that the manufacture of a tobacco product that is less hazardous to the health of users is technologically and commercially feasible, the Secretary may, in accordance with this subsection and through the issuance or amendment of a health risk standard under section 902-- ``(A) require the disclosure of the existence of such technology; ``(B) prohibit the use of technology that is superseded by such new technology; and ``(C) require that manufacturers cease manufacturing and marketing tobacco products that do not incorporate such technology. ``SEC. 906. TOBACCO PRODUCT MARKETING RESTRICTIONS. ``(a) In General.--The Secretary shall by regulation implement the prohibitions described in this section concerning the marketing of tobacco products to minors. ``(b) Sales to Minors Prohibited.--No retailer may distribute a tobacco product to any individual who is under 18 years of age. ``(c) Photo Identification.-- ``(1) Requirement.--Except as provided in paragraph (2), each retailer shall verify, by means of photographic identification containing the date of birth of the bearer, that no individual purchasing a tobacco product is under 18 years of age. ``(2) Exception.--No verification under paragraph (1) is required for any individual who is at least 27 years of age. ``(3) Location of products.--Except as provided in subsection (j), a retailer shall ensure that all tobacco products are located in areas where customers do not have access to the products. ``(d) Face-to-Face Transactions.--Except as provided in subsection (i)(1), a retailer may sell tobacco products only in a direct, face-to- face exchange without the assistance of any electronic or mechanical device. ``(e) Out-of-Package Distribution.--No retailer may break or otherwise open a tobacco product to sell or distribute to individuals portions of such product (including individual cigarettes or a number of cigarettes that is smaller than the quantity in the minimum package size, or any quantity of cigarette tobacco or smokeless tobacco that is smaller than the smallest package distributed by the retailer for individual consumer use). ``(f) Retailer Compliance With Respect to Self-Service.--Each retailer shall ensure that all tobacco-related self-service displays, advertising, labeling, and other items that are located in the establishment of the retailer and that do not comply with the requirements of this section are removed or are brought into compliance with the requirements of this section. ``(g) Minimum Cigarette Package Size.--Except as otherwise provided in this section, no manufacturer, distributor, or retailer may sell or cause to be sold, or distribute or cause to be distributed, any cigarette package that contains fewer than 20 cigarettes. ``(h) Prohibition on Sampling.--No manufacturer, distributor, or retailer may distribute or cause to be distributed any free samples of any tobacco product. ``(i) Prohibition on Distribution Through Self-Service Modes of Sale.-- ``(1) Vending machines.--Except as provided in subsection (j)(1)(B), no manufacturer, distributor, or retailer may distribute or cause to be distributed any tobacco product through a vending machine. ``(2) Other displays.--Except as provided in subsection (j)(1)(C), no manufacturer, distributor, or retailer may distribute or cause to be distributed any tobacco product through a self-service display. ``(j) Permitted Self-Service Modes of Sale.-- ``(1) In general.--Notwithstanding any other provision of this section, the following methods of distributing tobacco products are permitted: ``(A) Mail-order sales as provided for in paragraph (2), except that mail-order redemption of coupons and the distribution of free samples through the mail shall be prohibited. ``(B) Distribution through vending machines that are located in facilities where the retailer ensures that no individuals under 18 years of age are present or permitted to enter at any time. ``(C) Distribution through self-service displays that are located in facilities where the retailer ensures that no individuals under 18 years of age are present or permitted to enter at any time. ``(2) Mail-order sales.-- ``(A) In general.--A manufacturer, distributor, or retailer may distribute or cause to be distributed a tobacco product through mail-order sales only if such sales are subject to a procedure for verifying that no individual purchasing such products is under 18 years of age. ``(B) Review by secretary.--Not later than 2 years after the date of enactment of this section, the Secretary shall review the verification procedures implemented under subparagraph (A) to determine whether individuals under 18 years of age are obtaining tobacco products through the mail. If the Secretary determines that a significant number of underage individuals are obtaining such products through the mail, the Secretary may promulgate regulations in accordance with section 902 to prohibit the distribution of tobacco products through the mail. ``SEC. 907. TOBACCO PRODUCTS SCIENTIFIC ADVISORY COMMITTEE. ``(a) Establishment.--Not later than 1 year after the date of enactment of this chapter, the Secretary shall establish an advisory committee, to be known as the `Tobacco Products Scientific Advisory Committee', to assist the Secretary in establishing, amending, or revoking a regulation promulgated under section 902, 903, 904, or 905. ``(b) Membership.-- ``(1) In general.--The Secretary shall appoint as members of the Tobacco Products Scientific Advisory Committee-- ``(A) individuals with expertise in the medicine, science, or technology involving the manufacture and use of tobacco products, who are of appropriately diversified professional backgrounds; ``(B) individuals with expertise in law or ethics; ``(C) a representative of tobacco product manufacturers; ``(D) a representative of the general public selected from anti-tobacco organizations; and ``(E) a representative of the general public selected from pro-tobacco organizations. ``(2) Limitation.--The Secretary may not appoint to the Advisory Committee any individual who is in the regular full- time employ of the Federal Government. The Secretary may appoint Federal officials as ex-officio members. ``(3) Chairperson.--The Secretary shall designate 1 of the members of advisory committee to serve as chairperson of the Advisory Committee. ``(c) Duties.--The Tobacco Products Scientific Advisory Committee shall-- ``(1) assist the Secretary in establishing, amending, or revoking regulations under section 902, 903, 904, or 905; ``(2) examine and make recommendations concerning the effects of the alteration of the nicotine yield levels in tobacco products; ``(3) examine and make recommendations concerning whether there is a threshold level below which nicotine yields do not produce dependence on the tobacco product involved, and, if so, determine what that level is; and ``(4) review other safety, dependence or health issues relating to tobacco products as requested by the Secretary. ``SEC. 908. REPORTS. ``Not later than 18 months after the date of enactment of this chapter, and biennially thereafter, the Secretary shall prepare and submit to Congress a report containing-- ``(1) a description of the current sales, advertising, and marketing practices associated with tobacco products; ``(2) a description of the use patterns of tobacco products, including a report on use by individuals under 18 years of age; ``(3) a description of the effects of health promotion and disease prevention efforts related to the use of tobacco products; ``(4) an evaluation of the health promotion and disease prevention efforts relating to tobacco products and the identification of areas appropriate for further research; and ``(5) such recommendations for legislation and administrative action relating to tobacco products as the Secretary considers appropriate. ``SEC. 909. JUDICIAL REVIEW. ``(a) Application of Section.-- ``(1) In general.--Not later than 60 days after the effective date of any regulation under this chapter establishing, amending, or revoking a health risk management standard for a tobacco product, any person adversely affected by such regulation may file a petition with the United States Court of Appeals for the District of Columbia or for the circuit wherein such person resides or has its principal place of business for judicial review of such regulation. A copy of the petition shall be transmitted by the clerk of the court to the Secretary or other officer designated by him for that purpose. ``(2) Record of proceeding.--The Secretary shall file in the court under paragraph (1) the record of the proceedings on which the Secretary based the regulation involved as provided for in section 2112 of title 28, United States Code. ``(3) Definition.--For purposes of this section, the term `record' means all notices and other matter published in the Federal Register with respect to the regulation reviewed, all information submitted to the Secretary with respect to such regulation, proceedings of any panel or advisory committee with respect to such regulation, any hearing held with respect to such regulation, and any other information identified by the Secretary, in the administrative proceeding held with respect to such regulation, as being relevant to such regulation. ``(b) Additional Data, Views, and Arguments.--If the petitioner applies to the court under this section for leave to adduce additional data, views, or arguments respecting the regulation being reviewed and shows to the satisfaction of the court that such additional data, views, or arguments are material and that there were reasonable grounds for the petitioner's failure to adduce such data, views, or arguments in the proceedings before the Secretary, the court may order the Secretary to provide additional opportunity for the oral presentation of data, views, or arguments and for written submissions. The Secretary may modify such findings, or make new findings by reason of the additional data, views, or arguments so taken and shall file with the court such modified or new findings, and the recommendations of the Secretary, if any, for the modification or setting aside of the regulation or order being reviewed, with the return of such additional data, views, or arguments. ``(c) Standard for Review.--Upon the filing of the petition under subsection (a) judicial review of a regulation, the court shall have jurisdiction to review the regulation in accordance with chapter 7 of title 5, United States Code, and to grant appropriate relief, including interim relief, as provided for in such chapter. A regulation promulgated under this chapter shall not be affirmed if it is found to be unsupported by substantial evidence on the record taken as a whole. ``(d) Finality of Judgments.--The judgment of the court affirming or setting aside, in whole or in part, any regulation under this section shall be final, subject to review by the Supreme Court of the United States upon certiorari or certification, as provided for in section 1254 of title 28, United States Code. ``(e) Other Remedies.--The remedies provided for in this section shall be in addition to and not in lieu of any other remedies provided for by law. ``(f) Statement of Reasons.--To facilitate judicial review under this section or under any other provision of law of a regulation issued under this chapter, each such regulation shall contain a statement of the reasons for its issuance and the basis, in the record of the proceedings held in connection with its issuance, for its issuance. ``SEC. 910. PREEMPTION. ``(a) Limitation.--No requirement with respect to a tobacco product shall be applied by any State or local statute or regulation if such requirement conflicts with the requirements of section 902, 903, 904, or 905. ``(b) Rule of Construction.--Nothing in this section shall be construed as prohibiting a State or political subdivision of a State from enacting statutes or regulations concerning tobacco products so long as such statutes or regulations do not conflict with the requirements of section 902, 903, 904, or 905. ``(c) Effect on Liability Law.--Except as otherwise provided in this chapter, nothing in this section shall relieve any person from liability at common law or under State statutory law to any other person.''. SEC. 402. TECHNICAL PROVISIONS. (a) Application of Federal Cigarette Labeling and Advertising Act.--The provisions of the Federal Cigarette Labeling and Advertising Act (15 U.S.C. 1331 et seq.) that apply to cigarettes shall be superseded by the provisions of this title (and the amendments made by this title). (b) Repeal.--The Comprehensive Smokeless Tobacco Health Education Act of 1986 (15 U.S.C. 4401 et seq.) is repealed. SEC. 403. FEDERAL LICENSING OF MILITARY AND OTHER ENTITIES. (a) In General.--The Secretary, in consultation with the Secretary of Defense, Secretary of State, and other appropriate Federal officials, shall establish and implement a Federal tobacco licensing program to be applied to entities that sell or distribute tobacco products-- (1) on any military installation (as defined in section 2801(c)(2) of title X, United States Code); (2) in any United States embassy; (3) in any facility owned and operated by the Federal Government either in the United States or in a foreign country; (4) in any duty-free shop located within the United States; or (5) through any other Federal entity or on any other Federal property as determined appropriate by the Secretary. (b) Requirements of Program.--The program established under subsection (a) shall apply requirements (including those for penalties, suspensions, and revocations) similar to those required to be implemented by States under this subtitle. (c) Indian Tribes and Tribal Lands.--For purposes of applying and enforcing the provisions of this subtitle to entities that sell or otherwise distribute tobacco products on Indian reservations (as defined in section 403(9) of the Indian Child Protection and Family Violence Prevention Act (25 U.S.C. 3202(9))), an Indian tribe or tribal organization shall be treated as a State. TITLE V--PAYMENTS TO STATES AND PUBLIC HEALTH PROGRAMS Subtitle A--Payments to States SEC. 501. REIMBURSEMENT FOR STATE EXPENDITURES. (a) Payments.-- (1) In general.--The Trustees shall use amounts made available under section 101(c)(1) in each fiscal year to provide funds to each State to reimburse such State for amounts expended by the State for the treatment of individuals with tobacco-related illnesses or conditions. (2) Amount.--The amount for which a State is eligible for under paragraph (1) for a fiscal year shall be based on the applicable percentage described in paragraph (3) of the amount available for such fiscal year under paragraph (1). (3) Applicable percentage.--For purposes of paragraph (2), the applicable percentage for any State is determined in accordance with the following table. State Applicable Percentage Alabama................................... 1.270390 Alaska.................................... 0.241356 Arizona................................... 1.163883 Arkansas.................................. 0.751011 California................................ 8.805641 Colorado.................................. 1.054018 Connecticut............................... 1.596937 Delaware.................................. 0.227018 District of Columbia...................... 0.534487 Florida................................... 3.590667 Georgia................................... 2.007112 Hawaii.................................... 0.642527 Idaho..................................... 0.257835 Illinois.................................. 4.272898 Indiana................................... 1.714594 Iowa...................................... 0.758686 Kansas.................................... 0.762230 Kentucky.................................. 1.875439 Louisiana................................. 1.916886 Maine..................................... 0.870740 Maryland.................................. 2.051849 Massachusetts............................. 3.700447 Michigan.................................. 4.431824 Minnesota................................. 2.474364 Mississippi............................... 0.851450 Missouri.................................. 1.659116 Montana................................... 0.335974 Nebraska.................................. 0.445356 Nevada.................................... 0.307294 New Hampshire............................. 0.552048 New Jersey................................ 3.494187 New Mexico................................ 0.465816 New York.................................. 14.529380 North Carolina............................ 2.097625 North Dakota.............................. 0.250758 Ohio...................................... 4.690156 Oklahoma.................................. 0.841972 Oregon.................................... 1.092920 Pennsylvania.............................. 5.233270 Rhode Island.............................. 0.821727 South Carolina............................ 0.883628 South Dakota.............................. 0.234849 Tennessee................................. 2.479873 Texas..................................... 4.451382 Utah...................................... 0.330016 Vermont................................... 0.370244 Virginia.................................. 1.373860 Washington................................ 1.794612 West Virginia............................. 1.003660 Wisconsin................................. 2.098696 Wyoming................................... 0.122405 American Samoa............................ 0.008681 N. Mariana Islands........................ 0.001519 Guam...................................... 0.006506 U.S. Virgin Islands....................... 0.004804 Puerto Rico............................... 0.193175. (4) Use of funds.--Except as provided in subsection (b), a State may use amounts received under this subsection as the State determines appropriate. (b) Amount Attributable to Federal Medical Assistance Percentage.-- (1) Determination.--With respect to each State, the Trustees shall determine the amount of the reimbursement under subsection (a) for each fiscal year that is equal to the percentage that has been applied to the State as the Federal medical assistance percentage (as defined in section 1905(b)) of the Social Security Act (42 U.S.C. 1396d(b)) expenditures by the State for the preceding fiscal year. (2) Required use.--With respect to the amount determined under paragraph (1) for a State for a fiscal year, the Secretary shall not treat such amount as an overpayment under any joint Federal-State health program if the State certifies to the Trustee that such amount will be used by the State for anti-smoking or tobacco-related purposes under section 502. (c) Indian Tribes.--Based on the determinations made by the Trustees under section 901(f)(2), the Trustees shall, from amounts available for payments to States under this section in a fiscal year, reserve not less than the aggregate amount determined under section 901(f)(2) for payments to Indian tribes under such section 901(f). The Trustees shall reduce the amounts payable to a State under this section in accordance with determinations with respect to such State under section 901(f) to provide amounts to Indian tribes and tribal organizations in such States. SEC. 502. REQUIREMENTS FOR STATE USE OF CERTAIN FUNDS. (a) State Plan.--To be eligible to receive a payment under section 501(b) a State shall prepare and submit to the Trustees a State plan that-- (1) describes the manner in which the State intends to use amounts provided under this subsection to conduct anti-tobacco programs consistent with this Act and consistent with the smoking cessation guidelines issued by the Agency for Health Care Policy and Research; (2) describes the specific anti-smoking programs that will be funded by the State; (3) describes the amount of funds that will be used for each program described in paragraph (2); (4) describes the activities to be conducted under such programs, including the populations to be served, the eligibility standards for such populations, if any, and the goals and purposes of such programs; (5) describes the measurable objectives that will be used to evaluate program outcomes; (6) describes the procedures to be used by the State to conduct outreach to potential program participants; (7) describes the manner in which such programs will be coordinated with other Federal and State anti-smoking initiatives; and (8) has been approved under subsection (b). (b) Submission, Approval, and Amendment of Plan.-- (1) Initial plan.-- (A) In general.--As a condition of receiving payment under section 501(b), a State shall submit to the Trustees an anti-smoking program plan that meets the applicable requirements of this subsection. (B) Approval.--Except as the Trustees may provide under paragraph (5), a State plan submitted under subparagraph (A)-- (i) shall be approved for purposes of this section; and (ii) shall be effective beginning with a calendar quarter that is specified in the plan, but in no case earlier than October 1, 1998. (2) Amendments.-- (A) In general.--A State may amend, in whole or in part, its State anti-smoking plan at any time through transmittal of a plan amendment. (B) Approval.--Except as the Trustees may provide under paragraph (5), an amendment to a State plan submitted under subparagraph (A)-- (i) shall be approved for purposes of this title, and (ii) shall be effective as provided in subparagraph (C). (C) Effective dates for amendments.--An amendment to a State plan shall take effect on one or more effective dates specified in the amendment. (3) Disapproval.-- (A) Prompt review of plan submittals.--The Trustees shall promptly review State plans and plan amendments submitted under this subsection to determine if they substantially comply with the requirements of this section. (B) 90-day approval deadlines.--A State plan or plan amendment is considered approved unless the Trustees notifies the State in writing, within 90 days after receipt of the plan or amendment, that the plan or amendment is disapproved (and the reasons for disapproval) or that specified additional information is needed. (C) Correction.--In the case of a disapproval of a plan or plan amendment, the Trustees shall provide a State with a reasonable opportunity for correction before taking financial sanctions against the State on the basis of such disapproval. (4) Program operation.-- (A) In general.--The State shall conduct the program in accordance with the plan (and any amendments) approved under paragraph (3) and with the requirements of this section. (B) Violations.--The Trustees shall establish a process for enforcing requirements under this section. Such process shall provide for the withholding of funds in the case of substantial noncompliance with such requirements. In the case of an enforcement action against a State under this subparagraph, the Trustees shall provide a State with a reasonable opportunity for correction before taking financial sanctions against the State on the basis of such an action. (5) Continued approval.--An approved State plan shall continue in effect unless and until the State amends the plan under paragraph (2) or the Trustees finds, under paragraph (4), substantial noncompliance of the plan with the requirements of this section. (c) Objectives and Goals, Plan Administration.-- (1) Records, reports, audits, and evaluation.-- (A) Data collection, records, and reports.--A State plan shall include an assurance that the State will collect the data, maintain the records, and furnish the reports to the Trustees, at the times and in the standardized format the Trustees may require in order to enable the Trustees to monitor State program administration and compliance and to evaluate and compare the effectiveness of State plans under this section. (B) State assessment and study.--A State plan shall include a description of the State's plan for the annual assessments and reports under subsection (c)(1) and the evaluation required by subsection (c)(2). (C) Audits.--A State plan shall include an assurance that the State will afford the Trustees access to any records or information relating to the plan for the purposes of review or audit. (2) Program development process.--A State plan shall include a description of the process used to involve the public in the design and implementation of the plan and the method for ensuring ongoing public involvement. (3) Program budget.--A State plan shall include a description of the budget for the plan. The description shall be updated periodically as necessary and shall include details on the planned use of funds and the sources of the non-Federal share of plan expenditures, including any requirements for cost-sharing by beneficiaries. (d) Annual Reports; Evaluations.-- (1) Annual report.--The State shall-- (A) assess the operation of the State plan under this section in each fiscal year, including the progress made in reducing the number of adults and children who use tobacco; and (B) report to the Trustees, by January 1 following the end of the fiscal year, on the result of the assessment. (2) State evaluations.-- (A) In general.--By March 31, 2000, each State that has a State plan shall submit to the Trustees an evaluation that includes each of the following: (i) An assessment of the effectiveness of the State plan in reducing the number of children and adults who use tobacco products. (ii) A description and analysis of the effectiveness of elements of the State plan. (iii) An assessment of the effectiveness of other public and private programs in the State in meeting program goals. (iv) A review and assessment of State activities to coordinate the plan under this section with other public and private anti- tobacco programs. (v) Recommendations for improving the program under this section. (B) Report of the trustees.--The Trustees shall submit to Congress and make available to the public by December 31, 2001, a report based on the evaluations submitted by States under subparagraph (A), containing any conclusions and recommendations the Trustees considers appropriate. (e) Programs.--Anti-tobacco activities may be conducted using amounts received under section 501(b) in conjunction with and under the following programs: (1) The special supplemental food program under section 17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786). (2) The Maternal and Child Health Services Block Grant program under title V of the Social Security Act (42 U.S.C. 701 et seq.). (3) The State Children's Health Insurance Program of the State under title XXI of the Social Security Act (42 U.S.C. 1397aa et seq.). (4) A Head Start program under the Head Start Act (42 U.S.C. 9801 et seq.). (5) The school lunch program under the National School Lunch Act (42 U.S.C. 1751 et seq.). (6) An Indian Health Service Program. (7) The community health center program under section 330 of the Public Health Service Act (42 U.S.C. 254b). (8) Programs under title X of the Public Health Service Act (42 U.S.C. 300 et seq.). (9) Programs under title XXVI of the Public Health Service Act (42 U.S.C. 300ff-11). (10) State-initiated smoking cessation programs that include provisions for reimbursing individuals for medications or other therapeutic techniques. (11) State-initiated public education campaigns, including multi-media counter-advertising campaigns. (12) State-initiated programs for event sponsorship transitional assistance, including sponsoring or otherwise supporting athletic, artistic, or other social and cultural events traditionally under the sponsorship of, or that received other support from, tobacco product manufacturers or distributors prior to the date of enactment of this Act. (f) Application of Requirements.--The requirements of the respective provisions of law described in subsection (e) shall apply to any funds made available under this section through State programs under any such provision of law to the same extent that such requirements would otherwise apply to such programs under such provisions of law. Subtitle B--Public Health Programs SEC. 521. NATIONAL INSTITUTES OF HEALTH TRUST FUND FOR HEALTH RESEARCH. (a) Creation of Trust Fund.--There is established a trust fund to be known as the ``National Institutes of Health Trust Fund for Health Research'' (referred to in this section as the ``Trust Fund''), consisting of such amounts as may be appropriated or transferred to the Trust Fund pursuant to section 101(c)(2) and (3)(D). (b) Transfers to Trust Fund.--There is hereby appropriated to the Trust Fund for each fiscal year an amount equivalent to the amount described in section 101(d)(2)(A) for such fiscal year. (c) Obligations From Trust Fund.-- (1) In general.--Subject to the provisions of paragraph (4), with respect to the amounts made available in the Trust Fund in a fiscal year, the Secretary shall distribute during any fiscal year-- (A) 2 percent of such amounts to the Office of the Director of the National Institutes of Health to be allocated at the Director's discretion-- (i) for carrying out the responsibilities of the Office of the Director, including the Office of Research on Women's Health and the Office of Research on Minority Health, the Office of Alternative Medicine, the Office of Rare Disease Research, the Office of Behavioral and Social Sciences Research (for use for efforts to reduce tobacco use), the Office of Dietary Supplements, and the Office for Disease Prevention; and (ii) for construction and acquisition of equipment for or facilities of or used by the National Institutes of Health; (B) 2 percent of such amounts for transfer to the National Center for Research Resources to carry out section 1502 of the National Institutes of Health Revitalization Act of 1993 concerning Biomedical and Behavioral Research Facilities; (C) 1 percent of such amounts for carrying out section 301 and part D of title IV of the Public Health Service Act with respect to health information communications; (D) 10 percent of such amounts for carrying out section 414 of the Public Health Service Act with respect to national cancer research and demonstration centers; and (E) the remainder of such amounts to member institutes and centers, including the Office of AIDS Research, of the National Institutes of Health in the same proportion to the total amount received under this section, as the amount of annual appropriations under appropriations Acts for each member institute and Centers for the fiscal year bears to the total amount of appropriations under appropriations Acts for all member institutes and Centers of the National Institutes of Health for the fiscal year. (2) Plans of allocation.--The amounts transferred under paragraph (1)(E) shall be allocated by the Director of the National Institutes of Health or the various directors of the institutes and centers, as the case may be, pursuant to allocation plans developed by the various advisory councils to such directors, after consultation with such directors. (3) Grants and contracts fully funded in first year.--With respect to any grant or contract funded by amounts distributed under paragraph (1), the full amount of the total obligation of such grant or contract shall be funded in the first year of such grant or contract, and shall remain available until expended. (4) Trigger and release of monies and phase-in.-- (A) Trigger and release.--No expenditure shall be made under paragraph (1) during any fiscal year in which the annual amount appropriated for the National Institutes of Health is less than the amount so appropriated for the prior fiscal year. (B) Phase-in.--The Secretary of Health and Human Services shall phase-in the distributions required under paragraph (1) so that-- (i) 25 percent of the amount in the Trust Fund is distributed in the first fiscal year for which funds are available; (ii) 50 percent of the amount in the Trust Fund is distributed in the second fiscal year for which funds are available; (iii) 75 percent of the amount in the Trust Fund is distributed in the third fiscal year for which funds are available; and (iv) 100 percent of the amount in the Trust Fund is distributed in the fourth and each succeeding fiscal year for which funds are available. (d) National Tobacco Research Agenda.-- (1) In general.--Not later than 1 year after the date of enactment of this Act, and annually thereafter, the Director of the National Institutes of Health, in collaboration with the Director of the Centers for Disease Control and Prevention, the Commissioner of Food and Drugs, the Administrator of the Substance Abuse and Mental Health Services Administration, and the Director of the Office of National Drug Control Policy, shall prepare and submit to the Secretary and to the appropriate committees of Congress a National Tobacco Research Agenda. (2) Contents.--The Agenda submitted under paragraph (a) shall reflect the research needs in the area of tobacco-related illnesses and diseases and conditions related to other abused substances for the year for which the Agenda is being submitted, with special emphasis on youth tobacco use. The Agenda shall include research concerning-- (A) the role of tobacco products in causing cancer, cardiovascular diseases, stroke, and other diseases; (B) genetic and behavioral factors that are related to the use of tobacco or the development of tobacco- related diseases; (C) the development of prevention and treatment modalities with respect to tobacco use and cessation; (D) the development and use of safer and less addictive tobacco products; (E) tobacco-related surveillance and education, including the effects of counter-advertising; (F) biomedical and behavioral research of the type described in subparagraphs (A) through (E) for other abused substances such as illicit narcotics; and (G) brain development in the early years of life, and the continued physical, intellectual, and social development of children, with emphasis on how tobacco and other abused substances affect such development. (e) Budget Treatment of Amounts in Trust Fund.--The amounts in the Trust Fund shall be excluded from, and shall not be taken into account, for purposes of any budget enforcement procedure under the Congressional Budget Act of 1974 or the Balanced Budget and Emergency Deficit Control Act of 1985. SEC. 522. NATIONAL ANTI-TOBACCO PRODUCT CONSUMPTION AND TOBACCO PRODUCT CESSATION PUBLIC HEALTH PROGRAM. (a) Authority and Duties.--Using amounts made available pursuant to section 101(c)(2) and (3)(D), the Secretary shall carry out the following activities: (1) National anti-tobacco program.-- (A) In general.--The Secretary shall establish and implement a national anti-tobacco product consumption and tobacco product cessation program to discourage individuals from beginning to use tobacco products and other substances of abuse and to assist individuals who consume such products to discontinue such use, with special emphasis placed on health promotion and disease prevention activities that discourage children under the age of 18 from initiating or continuing use of such products; (B) Requirements.--In carrying out the program under subparagraph (A), the Secretary shall-- (i) to the maximum extent practicable, act in cooperation with State and local public health officials, and private for-profit and non-profit entities that carry out anti-tobacco product use and tobacco product cessation programs; and (ii) to the extent determined appropriate by the Secretary, coordinate the program through the Centers for Disease Control and Prevention, Office on Smoking and Health. (2) Administrative activities.--The Secretary shall provide funds for the administration and implementation of the public health and regulatory provisions of this Act (including the amendments made by this Act), including funds for the Centers for Disease Control and Prevention and the Food and Drug Administration. (3) Block grants.--The Secretary shall use not less than 50 percent of the amounts available in each fiscal year under this section to provide block grants to States to carry out activities described in subsection (c). (b) Recommendations.--In developing programs under this section, the Secretary shall consider, as appropriate, the recommendations of the members of the class certified for purposes of Dianne Castano v. American Tobacco Company. (c) Direct Federal Activities.--Under the national anti-tobacco product consumption and tobacco cessation program implemented under subsection (a)(1), the Secretary shall carry out the following activities: (1) Public education.-- (A) Model curricula.--The Secretary, acting through the Director of the Centers for Disease Control and Prevention, shall develop model curricula and other materials designed to educate the public about the health risks associated with tobacco use. Such educational materials shall be specially designed to influence the knowledge, attitudes, and behavior of young Americans. (B) Assistance by cdc.--The Director of the Centers for Disease Control and Prevention shall provide technical assistance to State and local public health and education officials and parent-teacher and other civic organizations in developing age effective anti- tobacco educational curricula and other materials. (C) Chronic consumers of tobacco products.-- Educational efforts under this paragraph shall include the development of materials that advise members of the public who consume tobacco products of the risks of continuing to use such products and the benefits of discontinuing the use of these products. (D) Cessation education.--The Director of the Centers for Disease Control and Prevention, in consultation with State and local public health officials, shall take appropriate action to inform consumers of tobacco products about effective therapies for ceasing the consumption of tobacco products. Such actions shall be consistent with the tobacco use cessation guidelines issued by the Agency for Health Care Policy and Research. (2) Counter-advertising.--The Secretary shall carry out a mass media public education campaign designed to counter the effects of marketing practices of tobacco product manufacturers and distributors. (3) Model state program.--The Secretary shall establish a model smoking cessation program that may be used by States in the design of State-based smoking cessation programs. Such model program shall provide for the provision of grants and other assistance by such States to eligible entities and individuals in the State for the establishment or administration of tobacco product use prevention and cessation programs. (4) Other activities.--The Secretary may undertake anti- tobacco product consumption and cessation activities in addition to those specified in paragraphs (1) through (3). Such activities may include enhanced direct Federal programs whose goal is to reduce the use of other abused substances such as illicit drugs. (5) Grants and contracts.--The Secretary, acting under the authority provided under section 301 of the Public Health Service Act (42 U.S.C. 241 et seq.), may award grants and contracts under subsection (a)(1) to public and private entities (including for-profit entities if determined appropriate by the Secretary) to carry out educational, counter-advertising and other activities described in this subsection. (d) Voluntary Tobacco Use Prevention and Cessation Block Grants.-- (1) In general.--The Secretary shall award block grants to States under subsection (a)(3) to enable such States to carry out activities for the purpose of planning, implementing, and evaluating tobacco use prevention and cessation activities described in paragraph (4). (2) Eligibility.--To be eligible to receive a grant under this section, a State shall certify to the Secretary that such State has in effect and is enforcing a law that contains the provisions described in the model State law described in section 302. (3) Application.-- (A) In general.--A State that desires to receive a voluntary block grant under subsection (a)(4) shall prepare and submit to the Secretary an application, at such time, in such manner, and accompanied by such information as the Secretary may require. (B) Contents.--An application submitted under subparagraph (A) shall-- (i) describe the activities that will be carried out using assistance under this subsection; and (ii) provide such assurances as the Secretary determines to be necessary to carry out this subsection. (C) Joint application.--The Secretary shall permit a State to submit a joint application for funds under this subsection and section 502. (4) Use of funds.--A State shall use amounts received under this section to carry out tobacco abuse activities described in section 502(e). (5) Formula.--The amount of a block grant under this subsection shall be determined by the Secretary based on a formula to be developed by the Secretary that takes into consideration the number of children between the ages of 10 and 18 in each State. (6) Nonparticipating states.--If a State elects not to participate in the voluntary block grant program under this subsection, the funds allocated to such State will be distributed to participating States in the same ratio as amounts provided to such States under the formula developed under paragraph (5). TITLE VI--STANDARDS TO REDUCE INVOLUNTARY EXPOSURE TO TOBACCO SMOKE SEC. 601. DEFINITIONS. In this title-- (1) Administrator.--The term ``Administrator'' means the Administrator of the Occupational Safety and Health Administration. (2) Public facility.-- (A) In general.--The term ``public facility'' means any building regularly entered by 10 or more individuals at least 1 day per week, including any such building owned by or leased to a Federal, State, or local government entity, and including any building under the control of Congress or an instrumentality of Congress (as such term is defined for purposes of section 509 of the Americans with Disabilities Act of 1990 (42 U.S.C. 12209). Such term shall not include any building or portion thereof regularly used for residential purposes. (B) Exclusions.--The term ``public facility'' does not include a building which is used as a bar, bar area, private club, hotel guest room, casino, bingo parlor, or the facilities of any tobacco product manufacturer or distributor or the facilities of any retailer primarily engaged in the business of selling tobacco products. (C) Bar.--The term ``bar'' means any indoor area that is open to the general public and that is devoted to the sale and service of alcoholic beverages for on- premises consumption and where the service of food is only incidental to the consumption of such beverages. Service of food shall be considered incidental if the food service generated less than 50 percent of the total annual gross sales of the establishment. (D) Bar area.--The term ``bar area'' means an area within a restaurant that is devoted to the sale and service of alcoholic beverages for on-premises consumption and where the service of food is only incidental to the consumption of such beverages. Service of food shall be considered incidental if the food service generated less than 50 percent of the total annual gross sales of the area. Nothing in this title shall be construed to require that a restaurant to separate the bar area from the remainder of the establishment. (3) Responsible entity.--The term ``responsible entity'' means, with respect to any public facility, the owner of such facility except that, in the case of any such facility or portion thereof which is leased, such term means the lessee. (4) Restaurant.--The term ``restaurant'' means any indoor area that is open to the general public, or a portion of such area, in which the business is the sale of food for on-premises consumption and which has an indoor seating capacity of greater than 50 individuals. Such term includes cafeterias, coffee shops, diners, sandwich shops, and short order cafes. Such term shall not include the bar area of any such area. SEC. 602. SMOKE-FREE ENVIRONMENT POLICY. (a) Policy Required.--In order to protect children and adults from cancer, respiratory disease, heart disease, and other adverse health effects from breathing environmental tobacco smoke, the responsible entity for each public facility shall adopt and implement at such facility a smoke-free environment policy which meets the requirements of subsection (b) or, in the case of schools or facilities serving children, subsection (d). (b) Elements of Policy.-- (1) In general.--Each smoke-free environment policy for a public facility shall-- (A) prohibit the smoking of cigarettes, cigars, and pipes, and any other combustion of tobacco within the facility and on facility property within the immediate vicinity of the entrance to the facility; and (B) post a clear and prominent notice of the smoking prohibition in appropriate and visible locations at the public facility. (2) Exception.-- (A) In general.--Except as provided in subparagraph (B), the smoke-free environment policy for a public facility may provide an exception to the prohibition specified in paragraph (1) for 1 or more specially designated smoking areas within a public facility if such area or areas meet the requirements of subsection (c). (B) Limitation.--Subparagraph (A) shall not apply to a public facility that is a restaurant or prison. (c) Specially Designated Smoking Areas.--A specially designated smoking area meets the requirements of this subsection if-- (1) the area is ventilated in accordance with specifications promulgated by the Administrator that ensure that air from the area is directly exhausted to the outside and does not recirculate or drift to other areas within the public facility; (2) the area is maintained at negative pressure, as compared to adjoined nonsmoking areas, as determined under regulations promulgated by the Administrator; and (3) nonsmoking individuals do not have to enter the area for any purpose while smoking is occurring in such area. Cleaning and maintenance work shall be conducted in such area only while no smoking is occurring in the area. (d) Special Rules for Schools and Other Facilities Serving Children.-- (1) In general.--With respect to a facility described in paragraph (1), the responsible entity for the facility shall adopt and implement at such facility a smoke-free environment policy that-- (A) prohibits the smoking of cigarettes, cigars, and pipes, and any other combustion of tobacco within the facility and on facility property; (B) prohibits the use of smokeless tobacco products within the facility and on facility property; and (C) post a clear and prominent notice of the smoking and smokeless tobacco prohibition in appropriate and visible locations at the public facility. (2) Facility.--A facility described in this subparagraph is-- (A) an elementary or secondary school (as such term is defined in section 14101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 8801); (B) any facility at which a Head Start program or project is being carried out under the Head Start Act (42 U.S.C. 9831 et. seq.); and (C) any facility, other than a home-based facility, at which a licensed or certified child care provider provides child care services. (3) Designated areas.--The smoke-free environment policy for a facility described in paragraph (2) may provide an exception to the prohibition specified in paragraph (1) for 1 or more specially designated smoking areas within such facility if such area or areas meet the requirements of subsection (c). SEC. 603. PREEMPTION. Nothing in this title shall preempt or otherwise affect any other Federal, State or local law which provides protections from health hazards from environmental tobacco smoke that are equal to or greater than the protections provided for under this title. SEC. 604. REGULATIONS. Not later than 6 months after the date of enactment of this Act, the Administrator shall promulgate such regulations as necessary to carry out this title. Such regulations shall delegate to the States a right to enforce the provisions of this title. SEC. 605. EFFECTIVE DATE. The provisions of this title shall take effect on the date that is 6 months after the date on which regulations are promulgated under section 604 or 1 year after the date of enactment of this Act, whichever is later. TITLE VII--PUBLIC DISCLOSURE OF HEALTH RESEARCH SEC. 701. PURPOSE. It is the purpose of this title to provide for the disclosure of previously nonpublic or confidential documents by manufacturers of tobacco products, including the results of internal health research, and to provide for a procedure to settle claims of attorney-client privilege, work product, or trade secrets with respect to such documents. SEC. 702. NATIONAL TOBACCO DOCUMENT DEPOSITORY. (a) Establishment.-- (1) In general.--To be eligible to receive the liability protections provided for under subtitle C of title I, manufacturers of tobacco products, acting in conjunction with the Tobacco Institute and the Council for Tobacco Research, U.S.A. (prior to the termination of such entities under section 155), and in accordance with the guidelines and procedures established under paragraph (2), shall, not later than 90 days after the date of enactment of this Act, establish and maintain a National Tobacco Document Depository (in this title referred to as the ``Depository''). Such Depository shall be located in the Washington, D.C. area and be open to the public. (2) Guidelines.--The Attorney General, in consultation with the General Services Administration, shall establish guidelines and procedures for the establishment and operation of the Depository, including guidelines for the immediate disclosure of documents relating to health and safety. (b) Use of Depository.--The Depository shall be maintained in a manner that permits the Depository to be used as a resource for litigants, public health groups, and any other individuals who have an interest in the corporate records and research of the manufacturers concerning smoking and health, addiction or nicotine dependency, safer or less hazardous cigarettes, and underage tobacco use and marketing. (c) Contents.--The Depository shall include (and manufacturers and the Tobacco Institute and the Council for Tobacco Research, U.S.A. shall provide)-- (1) within 30 days of the date on which the Depository is established, all documents provided by such entities to plaintiffs in-- (A) civil or criminal actions brought by State attorneys general (including all documents selected by plaintiffs from the Guilford Repository of the United Kingdom); (B) Philip Morris Companies Inc.'s defamation action against Capital Cities/American Broadcasting Company News; (C) the Federal Trade Commission's investigation concerning Joe Camel and underage marketing; (D) Haines v. Liggett Group, Inc. (814 F. Supp. 414 (D.N.J., Jan. 26, 1993)) and Cippollone v. Liggett Group, Inc. (822 F. 2d 335, 56 USLW 2028, 7 Fed. R. Serv. 3d 1438 (3rd Cir. (N.J.), Jun. 8, 1987)); and (E) Estate of Burl Butler v. Philip Morris, Inc. (case No. 94-4-53); (2) within 90 days after the date of enactment of this Act, any exiting documents discussing or referring to health research, addiction or dependency, safer or less hazardous cigarettes, studies of the smoking habits of minors, and the relationship between advertising or promotion and youth smoking, that the entities described in subsection (a) have not completed producing as required in the actions described in paragraph (1); (3) within 30 days of the date on which the Depository is established, all documents relating to indices (as defined by the court in State of Minnesota and Blue Cross and Blue Shield of Minnesota v. Philip Morris, Inc., et al.) of documents relating to smoking and health, including all indices identified by the manufacturers in the State of Texas v. American Tobacco Company, et al.; (4) upon the settlement of any action referred to in this subsection, and after a good-faith, de novo, document-by- document review of all documents previously withheld from production in any actions on the grounds of attorney-client privilege, all documents determined to be outside of the scope of the privilege; (5) all existing or future documents relating to original laboratory research concerning the health or safety of tobacco products, including all laboratory research results relating to methods used to make tobacco products less hazardous to consumers; (6) a comprehensive new attorney-client privilege log of all documents, itemized in sufficient detail so as to enable any interested individual to determine whether the individual will challenge the claim of privilege, that the entities described in subsection (a) (based on the de novo review of such documents by such entities) claim are protected from disclosure under the attorney-client privilege; (7) all existing or future documents relating to studies of the smoking habits of minors or documents referring to any relationship between advertising and promotion and underage smoking; (8) all original laboratory research conducted or funded, directly or indirectly, by any participating tobacco product manufacturer relating to the health effects or safety of tobacco products, including all original laboratory research relating to any methods or means of making tobacco products less hazardous to consumers; (9) all studies conducted or funded, directly or indirectly, by any participating tobacco product manufacturer, relating to tobacco product use by minors; (10) all documents discussing or referring to the relationship, if any, between advertising and promotion and the use of tobacco products by minors; (11) a privilege log describing each document or each portion of a document otherwise subject to public disclosure under this subsection that any participating tobacco product manufacturer maintains is exempt from the public disclosure provisions of this Act pursuant to subsection (d); (12) a trade secrecy log describing each document or each document otherwise subject to public disclosure; and (13) all other documents determined appropriate under regulations promulgated by the Secretary. (d) Dispute Resolution Panel.-- (1) Establishment.--The Judicial Conference of the United States shall establish a Tobacco Documents Dispute Resolution Panel, to be composed of three Federal judges to be appointed by the Conference, to resolve all disputes involving claims of attorney-client, work product, or trade secrets privilege with respect to documents required to be deposited into the Depository under subsection (c) that may be brought by Federal, State, or local governmental officials or the public or asserted in any action by a manufacturer. (2) Basis for determinations.--The determinations of the Panel established under paragraph (1) shall be based on-- (A) the American Bar Association/American Law Institute Model Rules or the principals of Federal law with respect to attorney-client or work product privilege; and (B) the Uniform Trade Secrets Act with respect to trade secrecy. (3) Decision.--Any decision of the Panel established under paragraph (1) shall be final and binding upon all Federal and State courts. (4) Assessing of fees.--As part of a determination under this subsection, the Panel established under paragraph (1) shall determined whether a claimant of the privilege acted in good faith and had a factual and legal basis for asserting the claim. If the Panel determines that the claimant did not act in good faith, the Panel may assess costs against the claimant, including a reasonable attorneys' fee, and may apply such other sanctions as the Panel determines appropriate. (5) Accelerated review.--The Panel established under paragraph (1) shall establish procedures for the accelerated review of challenges to a claim of privilege. Such procedures shall include assurances that an individual filing a challenge to such a claim need not make a prima facie showing of any kind as a prerequisite to an in camera review of the documents at issue. (6) Special masters.--The Panel established under paragraph (1) may appoint Special Masters in accordance with Rule 53 of the Federal Rules of Civil Procedure. The cost relating to any Special Master shall be assessed to the manufacturers as part of a fee process to be established under regulations promulgated by the Secretary. (e) Other Provisions.-- (1) No waiver of privilege.--Compliance with this section by the entities described in subsection (a) shall not be deemed to be a waiver on behalf of such entities of any applicable privilege or protection. (2) Avoidance of destruction.--In establishing the Depository, procedures shall be implemented to protect against the destruction of documents. (3) Deemed produced.--Any documents contained in the Depository shall be deemed to have been produced for purposes of any tobacco-related litigation in the United States. (f) Documents.--For purposes of this section, the term ``documents'' shall include any paper documents that may be printed using data that is contained in computer files. SEC. 703. ENFORCEMENT. (a) In General.--The Attorney General, acting through the National Tobacco Settlement Trust Fund, or the chief law enforcement officer of a State may bring a proceeding before the dispute resolution panel under section 802(e) to enforce violations of such section. The panel shall have exclusive jurisdiction over actions to enforce violations of this title. (b) Notice.--The person against whom a violation is alleged under subsection (a) shall be given notice of a proceeding before the panel and an opportunity to be heard. Participating tobacco product manufacturers shall have the right to intervene in such proceedings. (c) Penalties.--Violations of this subtitle shall give rise to civil penalty of not to exceed $15,000 per violation and $1,000,000 for all violations adjudicated in a single proceeding, except that no penalty may be assessed where the person committing the violation had a good faith factual and legal basis that the document, portion of a document, or portion of an index of document that is the subject of the alleged violation was exempt from public disclosure under subsections (c) or (d) of section 702. (d) Single Violation.--For purposes of this section, a failure to disclose 1 or more portions of a single document in violation of this title shall be considered to be part of a single violation. TITLE VIII--AGRICULTURAL TRANSITION PROVISIONS SEC. 801. SHORT TITLE. This title may be cited as the ``Tobacco Transition Act''. SEC. 802. PURPOSES. The purposes of this title are-- (1) to authorize the use of binding contracts between the United States and tobacco quota owners and tobacco producers to compensate them for the termination of Federal programs that support the production of tobacco in the United States; (2) to make available to States funds for economic assistance initiatives in counties of States that are dependent on the production of tobacco; and (3) to terminate Federal programs that support the production of tobacco in the United States. SEC. 803. DEFINITIONS. In this title: (1) Association.--The term ``association'' means a producer-owned cooperative marketing association that has entered into a loan agreement with the Commodity Credit Corporation to make price support available to producers. (2) Buyout payment.--The term ``buyout payment'' means a payment made to a quota owner under section 814 in 1 or more installments in accordance with section 812(c)(1). (3) Contract.--The term ``contract'' or ``tobacco transition contract'' means a contract entered into under section 812. (4) Governor.--The term ``Governor'' means the chief executive officer of a State. (5) Lease.--The term ``lease'' means a rental of quota on either a cash rent or crop share basis. (6) Marketing year.--The term ``marketing year'' means-- (A) in the case of Flue-cured tobacco, the period beginning July 1 and ending the following June 30; and (B) in the case of each other kind of tobacco, the period beginning October 1 and ending the following September 30. (7) Owner.--The term ``owner'' means a person who, at the time of entering into a tobacco transition contract, owns quota provided by the Secretary. (8) Phaseout period.--The term ``phaseout period'' means the 3-year period consisting of the 1999 through 2001 marketing years. (9) Price support.--The term ``price support'' means a nonrecourse loan provided by the Commodity Credit Corporation through an association for the kind of tobacco involved. (10) Producer.--The term ``producer'' means a person who during at least 3 of the 1993 through 1997 crops of tobacco (as determined by the Secretary) that were subject to quota-- (A) leased quota; (B) shared in the risk of producing a crop of tobacco; and (C) marketed the tobacco subject to quota. (11) Quota.--The term ``quota'' means the quantity of tobacco produced in the United States, and marketed during a marketing year, that will be used in, or exported from, the United States during the marketing year (including an adjustment for stocks), as estimated by the Secretary. (12) Secretary.--The term ``Secretary'' means the Secretary of Agriculture. (13) State.--The term ``State'' means each of the several States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, and any other territory or possession of the United States. (14) Tobacco.--The term ``tobacco'' means any kind of tobacco for which a marketing quota is in effect or for which a marketing quota is not disapproved by producers. (15) Tobacco transition account.--The term ``Tobacco Transition Account'' means the Tobacco Transition Account established by section 811(a). (16) Transition payment.--The term ``transition payment'' means a payment made to a producer under section 815 for each of the 1999 through 2001 marketing years. (17) Trust fund.--The term ``Trust Fund'' means the National Tobacco Settlement Trust Fund established in the Treasury of the United States consisting of amounts that are appropriated or credited to the Trust Fund from the tobacco settlement approved by Congress. (18) United states.--The term ``United States'', when used in a geographical sense, means all of the States. Subtitle A--Tobacco Production Transition CHAPTER 1--TOBACCO TRANSITION CONTRACTS SEC. 811. TOBACCO TRANSITION ACCOUNT. (a) Establishment.--There is established a Tobacco Transition Account into to which amounts shall be transferred as provided for in section 841. (b) Use.--Funds appropriated or credited to the Tobacco Transition Account shall be available for providing buyout payments and transition payments authorized under this chapter. (c) Termination.--The Tobacco Transition Account terminates effective September 30, 2001. SEC. 812. OFFER AND TERMS OF TOBACCO TRANSITION CONTRACTS. (a) Offer.--The Secretary shall offer to enter into a tobacco transition contract with each owner and producer of tobacco. (b) Terms.--Under the terms of a contract, the owner or producer shall agree, in exchange for a payment made pursuant to section 814 or 815, as applicable, to relinquish the value of quota that is owned or leased. (c) Rights of Owners and Producers.-- (1) Owners.--An owner shall receive a buyout payment in 3 equal installments, 1 installment for each of the 1999 through 2001 crops of tobacco, in which case the owner shall have the right to continue production of each of those crops. (2) Producers.--In the case of each of the 1999 through 2001 crops for the kind of tobacco involved, a producer who is not an owner during the 1998 marketing year for the kind of tobacco involved shall not be subject to any restrictions on the quantity of tobacco produced or marketed. SEC. 813. ELEMENTS OF CONTRACTS. (a) Deadlines for Contracting.-- (1) Commencement.--To the maximum extent practicable, the Secretary shall commence entering into contracts under this chapter not later than 90 days after the date of enactment of this Act. (2) Deadline.--The Secretary may not enter into a contract under this chapter after June 30, 1999. (b) Duration of Contract.-- (1) Beginning date.--The term of a contract shall begin on the date that is the beginning of the 1999 marketing year for the kind of tobacco involved. (2) Termination date.--The term of a contract shall terminate on the date that is the end of the 2001 marketing year for the kind of tobacco involved. (c) Time for Payment.-- (1) In general.--A buyout payment or transition payment shall be made not later than the date that is the beginning of the marketing year for the kind of tobacco involved for each year of the term of a tobacco transition contract of an owner or producer of tobacco. (2) Applicability.--This subsection shall be applicable to all payments covered by section 812(c). SEC. 814. BUYOUT PAYMENTS TO OWNERS. (a) In General.--During the phaseout period, the Secretary shall make buyout payments to owners in accordance with section 812(c)(1). (b) Compensation for Lost Value.--The payment shall constitute compensation for the lost value to the owner of the quota. (c) Payment Calculation.--Under this section, the total amount of the buyout payment made to an owner shall be determined by multiplying-- (1) $8.00; by (2) the average annual quantity of quota owned by the owner during the 1995 through 1997 crop years. SEC. 815. TRANSITION PAYMENTS TO PRODUCERS. (a) In General.--The Secretary shall make transition payments during each of the 1999 through 2001 marketing years for a kind of tobacco that was subject to a quota to a producer who-- (1) produced the kind of tobacco during at least 3 of the 1993 through 1997 crop years; and (2) entered into a tobacco transition contract. (b) Transition Payments Limited to Leased Quota.--A producer shall be eligible for transition payments only for the portion of the production of the producer that is subject to quota that is leased during the 3 crop years described in subsection (a)(1). (c) Compensation for Lost Revenue.--The payments shall constitute compensation for the lost revenue incurred by a tobacco producer during each of the 1999 through 2001 marketing years for the kind of tobacco involved. (d) Election by Producer; Production.-- (1) Election.--The producer may elect which 3 of the 1993 through 1997 crop years shall be used for the calculation under subsection (e). (2) Production.--The producer shall have the burden of demonstrating to the Secretary the production of tobacco for each year of the election. (e) Payment Calculation.--Under this section, each of the 3 transition payments made to a producer for the kind of tobacco involved shall be determined by multiplying-- (1) 40 cents; by (2) the average quantity of the kind of tobacco produced by the producer during the 3 crop years elected by the producer under subsection (d). SEC. 816. TOBACCO WORKER TRANSITION PROGRAM. (a) Group Eligibility Requirements.-- (1) Criteria.--A group of workers (including workers in any firm or subdivision of a firm involved in the manufacture, processing, or warehousing of tobacco or tobacco products) shall be certified as eligible to apply for adjustment assistance under this section pursuant to a petition filed under subsection (b) if the Secretary of Labor determines that a significant number or proportion of the workers in such workers' firm or an appropriate subdivision of the firm have become totally or partially separated, or are threatened to become totally or partially separated, and-- (A) the sales or production, or both, of such firm or subdivision have decreased absolutely; and (B) the implementation of the national tobacco settlement contributed importantly to such workers' separation or threat of separation and to the decline in the sales or production of such firm or subdivision. (2) Definition of contributed importantly.--In paragraph (1)(B), the term ``contributed importantly'' means a cause that is important but not necessarily more important than any other cause. (3) Regulations.--The Secretary shall issue regulations relating to the application of the criteria described in paragraph (1) in making preliminary findings under subsection (b) and determinations under subsection (c). (b) Preliminary Findings and Basic Assistance.-- (1) Filing of petitions.--A petition for certification of eligibility to apply for adjustment assistance under this section may be filed by a group of workers (including workers in any firm or subdivision of a firm involved in the manufacture, processing, or warehousing of tobacco or tobacco products) or by their certified or recognized union or other duly authorized representative with the Governor of the State in which such workers' firm or subdivision thereof is located. (2) Findings and assistance.--Upon receipt of a petition under paragraph (1), the Governor shall-- (A) notify the Secretary that the Governor has received the petition; (B) within 10 days after receiving the petition-- (i) make a preliminary finding as to whether the petition meets the criteria described in subsection (a)(1); and (ii) transmit the petition, together with a statement of the finding under clause (i) and reasons for the finding, to the Secretary for action under subsection (c); and (C) if the preliminary finding under subparagraph (B)(i) is affirmative, ensure that rapid response and basic readjustment services authorized under other Federal laws are made available to the workers. (c) Review of Petitions by Secretary; Certifications.-- (1) In general.--The Secretary, within 30 days after receiving a petition under subsection (b)(2)(B)(ii), shall determine whether the petition meets the criteria described in subsection (a)(1). Upon a determination that the petition meets such criteria, the Secretary shall issue to workers covered by the petition a certification of eligibility to apply for the assistance described in subsection (d). (2) Denial of certification.--Upon the denial of a certification with respect to a petition under paragraph (1), the Secretary shall review the petition in accordance with the requirements of other applicable assistance programs to determine if the workers may be certified under such other provisions. (d) Comprehensive Assistance.-- (1) In general.--Workers covered by a certification issued by the Secretary under subsection (c)(1) shall be provided with benefits and services described in paragraph (2) in the same manner and to the same extent as workers covered under a certification under subchapter A of title II of the Trade Act of 1974 (19 U.S.C. 2271 et seq.), except that the total amount of payments under this section for any fiscal year shall not exceed $50,000,000. (2) Benefits and services.--The benefits and services described in this paragraph are the following: (A) Employment services of the type described in section 235 of the Trade Act of 1974 (19 U.S.C. 2295). (B) Training described in section 236 of the Trade Act of 1974 (19 U.S.C. 2296), except that notwithstanding the provisions of section 236(a)(2)(A) of such Act, the total amount of payments for training under this section for any fiscal year shall not exceed $25,000,000. (C) Tobacco worker readjustment allowances, which shall be provided in the same manner as trade readjustment allowances are provided under part I of subchapter B of chapter 2 of title II of the Trade Act of 1974 (19 U.S.C. 2291 et seq.), except that-- (i) the provisions of sections 231(a)(5)(C) and 231(c) of such Act (19 U.S.C. 2291(a)(5)(C), 2291(c)), authorizing the payment of trade readjustment allowances upon a finding that it is not feasible or appropriate to approve a training program for a worker, shall not be applicable to payment of allowances under this section; and (ii) notwithstanding the provisions of section 233(b) of such Act (19 U.S.C. 2293(b)), in order for a worker to qualify for tobacco readjustment allowances under this section, the worker shall be enrolled in a training program approved by the Secretary of the type described in section 236(a) of such Act (19 U.S.C. 2296(a)) by the later of-- (I) the last day of the 16th week of such worker's initial unemployment compensation benefit period; or (II) the last day of the 6th week after the week in which the Secretary issues a certification covering such worker. In cases of extenuating circumstances relating to enrollment of a worker in a training program under this section, the Secretary may extend the time for enrollment for a period of not to exceed 30 days. (D) Job search allowances of the type described in section 237 of the Trade Act of 1974 (19 U.S.C. 2297). (E) Relocation allowances of the type described in section 238 of the Trade Act of 1974 (19 U.S.C. 2298). (e) Ineligibility of Individuals Receiving Payments for Lost Tobacco Quota.--No benefits or services may be provided under this section to any individual who has received buyout payments for tobacco quotas under section 812. (f) Funding.--Of the amounts in the Account, the Secretary may use not to exceed $50,000,000 for each of fiscal years 1999 through 2008 to provide assistance under this section. (g) Effective Date.--This section shall take effect on the date that is the later of-- (1) October 1, 1998; or (2) the date on which legislation implementing the national tobacco settlement is enacted. (h) Termination Date.--No assistance, vouchers, allowances, or other payments may be provided under this section after the date that is the earlier of-- (1) the date that is 10 years after the effective date of this section under subsection (g); or (2) the date on which legislation establishing a program providing dislocated workers with comprehensive assistance substantially similar to the assistance provided by this section becomes effective. SEC. 817. FARMER OPPORTUNITY GRANTS. Part A of title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.) is amended by adding at the end the following: ``Subpart 9--Farmer Opportunity Grants ``SEC. 420D. STATEMENT OF PURPOSE. ``It is the purpose of this subpart to assist in making available the benefits of postsecondary education to eligible students (determined in accordance with section 420F) in institutions of higher education by providing farmer opportunity grants to all eligible students. ``SEC. 420E. PROGRAM AUTHORITY; AMOUNT AND DETERMINATIONS; APPLICATIONS. ``(a) Program Authority and Method of Distribution.-- ``(1) Program authority.--From the Tobacco Transition Account under section 811 of the PROTECT Act, the Secretary, during the period beginning July 1, 1999, and ending September 30, 2024, shall pay to each eligible institution such sums as may be necessary to pay to each eligible student (determined in accordance with section 420F) for each academic year during which that student is in attendance at an institution of higher education, as an undergraduate, a farmer opportunity grant in the amount for which that student is eligible, as determined pursuant to subsection (b). Not less than 85 percent of such sums shall be advanced to eligible institutions prior to the start of each payment period and shall be based upon an amount requested by the institution as needed to pay eligible students, except that this sentence shall not be construed to limit the authority of the Secretary to place an institution on a reimbursement system of payment. ``(2) Construction.--Nothing in this section shall be construed to prohibit the Secretary from paying directly to students, in advance of the beginning of the academic term, an amount for which the students are eligible, in cases where the eligible institution elects not to participate in the disbursement system required by paragraph (1). ``(3) Designation.--Grants made under this subpart shall be known as `farmer opportunity grants'. ``(4) Amounts.--To carry out this subpart there shall be transferred the following amounts from the Tobacco Transition Account: ``(A) $42,500,000 for each of the academic years 1999-2000 through 2003-2004. ``(B) $50,000,000 for each of the academic years 2004-2005 through 2008-2009. ``(C) $57,500,000 for each of the academic years 2009-2010 through 2013-2014. ``(D) $65,000,000 for each of the academic years 2014-2015 through 2018-2019. ``(E) $72,500,000 for each of the academic years 2019-2020 through 2023-2024. ``(b) Amount of Grants.-- ``(1) Amounts.-- ``(A) In general.--The amount of the grant for a student eligible under this subpart shall be-- ``(i) $1,700, or such sum as may be available, for each of the academic years 1999- 2000 through 2003-2004; ``(ii) $2,000, or such sum as may be available, for each of the academic years 2004- 2005 through 2008-2009; ``(iii) $2,300, or such sum as may be available, for each of the academic years 2009- 2010 through 2013-2014; ``(iv) $2,600, or such sum as may be available, for each of the academic years 2014- 2015 through 2018-2019; and ``(v) $2,900, or such sum as may be available, for each of the academic years 2019- 2020 through 2023-2024. ``(B) Part-time rule.--In any case where a student attends an institution of higher education on less than a full-time basis (including a student who attends an institution of higher education on less than a half- time basis) during any academic year, the amount of the grant for which that student is eligible shall be reduced in proportion to the degree to which that student is not so attending on a full-time basis, in accordance with a schedule of reductions established by the Secretary for the purposes of this subparagraph, computed in accordance with this subpart. Such schedule of reductions shall be established by regulation and published in the Federal Register. ``(2) Maximum.--No grant or combination of grants under this subpart shall exceed the cost of tuition and fees at the institution at which that student is in attendance. If, with respect to any student, it is determined that the amount of a grant exceeds the cost of tuition and fees for that year, the amount of the farmer opportunity grant shall be reduced to an amount equal to the cost of tuition and fees at such institution. ``(3) Prohibition.--No grant shall be awarded under this subpart to any individual who is incarcerated in any Federal, State, or local penal institution. ``(c) Period of Eligibility for Grants.-- ``(1) In general.--The period during which a student may receive grants shall be the period required for the completion of the first undergraduate baccalaureate course of study being pursued by that student at the institution at which the student is in attendance, except that any period during which the student is enrolled in a noncredit or remedial course of study as described in paragraph (2) shall not be counted for the purpose of this paragraph. ``(2) Construction.--Nothing in this section shall be construed to-- ``(A) exclude from eligibility courses of study that are noncredit or remedial in nature and that are determined by the institution to be necessary to help the student be prepared for the pursuit of a first undergraduate baccalaureate degree or certificate or, in the case of courses in English language instruction, to be necessary to enable the student to utilize already existing knowledge, training, or skills; and ``(B) exclude from eligibility programs of study abroad that are approved for credit by the home institution at which the student is enrolled. ``(3) Prohibition.--No student is entitled to receive farmer opportunity grant payments concurrently from more than 1 institution or from the Secretary and an institution. ``(d) Applications for Grants.-- ``(1) In general.--The Secretary shall from time to time set dates by which students shall file applications for grants under this subpart. The filing of applications under this subpart shall be coordinated with the filing of applications under section 411(d). ``(2) Information and assurances.--Each student desiring a grant for any year shall file with the Secretary an application for the grant containing such information and assurances as the Secretary may deem necessary to enable the Secretary to carry out the Secretary's functions and responsibilities under this subpart. ``(e) Distribution of Grants to Students.--Payments under this section shall be made in accordance with regulations promulgated by the Secretary for such purpose, in such manner as will best accomplish the purpose of this section. Any disbursement allowed to be made by crediting the student's account shall be limited to tuition and fees and, in the case of institutionally owned housing, room and board. The student may elect to have the institution provide other such goods and services by crediting the student's account. ``(f) Insufficient Funding.--If, for any fiscal year, the funds made available to carry out this subpart from the Tobacco Community Revitalization Trust Fund are insufficient to satisfy fully all grants for students determined to be eligible under section 420F, the amount of the grant provided under subsection (b) shall be reduced on a pro rata basis among all eligible students. ``(g) Treatment of Institutions and Students Under Other Laws.--Any institution of higher education that enters into an agreement with the Secretary to disburse to students attending that institution the amounts those students are eligible to receive under this subpart shall not be deemed, by virtue of such agreement, to be a contractor maintaining a system of records to accomplish a function of the Secretary. Recipients of farmer opportunity grants shall not be considered to be individual grantees for purposes of the Drug-Free Workplace Act of 1988 (41 U.S.C. 701 et seq.). ``SEC. 420F. STUDENT ELIGIBILITY. ``(a) In General.--In order to receive any grant under this subpart, a student shall-- ``(1) be a member of a tobacco farm family in accordance with subsection (b); ``(2) be enrolled or accepted for enrollment in a degree, certificate, or other program (including a program of study abroad approved for credit by the eligible institution at which such student is enrolled) leading to a recognized educational credential at an institution of higher education that is an eligible institution in accordance with section 487, and not be enrolled in an elementary or secondary school; ``(3) if the student is presently enrolled at an institution of higher education, be maintaining satisfactory progress in the course of study the student is pursuing in accordance with subsection (c); ``(4) not owe a refund on grants previously received at any institution of higher education under this title, or be in default on any loan from a student loan fund at any institution provided for in part D, or a loan made, insured, or guaranteed by the Secretary under this title for attendance at any institution; ``(5) file with the institution of higher education that the student intends to attend, or is attending, a document, that need not be notarized, but that shall include-- ``(A) a statement of educational purpose stating that the money attributable to such grant will be used solely for expenses related to attendance or continued attendance at such institution; and ``(B) such student's social security number; and ``(6) be a citizen of the United States. ``(b) Tobacco Farm Families.-- ``(1) In general.--For the purpose of subsection (a)(1), a student is a member of a tobacco farm family if during calendar year 1996 the student was-- ``(A) an individual who-- ``(i) is an active tobacco producer; or ``(ii) is otherwise actively engaged in the production of tobacco; ``(B) a spouse, son, daughter, stepson, or stepdaughter of an individual described in subparagraph (A); ``(C) an individual-- ``(i) who was a brother, sister, stepbrother, stepsister, son-in-law, or daughter-in-law of an individual described in subparagraph (A); and ``(ii) whose principal place of residence was the home of the individual described in subparagraph (A); or ``(D) an individual who was a dependent (within the meaning of section 152 of the Internal Revenue Code of 1986) of an individual described in subparagraph (A). ``(2) Administration.--On request, the Secretary of Agriculture shall provide to the Secretary such information as is necessary to carry out this subsection. ``(c) Satisfactory Progress.-- ``(1) In general.--For the purpose of subsection (a)(3), a student is maintaining satisfactory progress if-- ``(A) the institution at which the student is in attendance reviews the progress of the student at the end of each academic year, or its equivalent, as determined by the institution; and ``(B) the student has at least a cumulative C average or its equivalent, or academic standing consistent with the requirements for graduation, as determined by the institution, at the end of the second such academic year. ``(2) Special rule.--Whenever a student fails to meet the eligibility requirements of subsection (a)(3) as a result of the application of this subsection and subsequent to that failure the student has academic standing consistent with the requirements for graduation, as determined by the institution, for any grading period, the student may, subject to this subsection, again be eligible under subsection (a)(3) for a grant under this subpart. ``(3) Waiver.--Any institution of higher education at which the student is in attendance may waive paragraph (1) or (2) for undue hardship based on-- ``(A) the death of a relative of the student; ``(B) the personal injury or illness of the student; or ``(C) special circumstances as determined by the institution. ``(d) Students Who Are Not Secondary School Graduates.--In order for a student who does not have a certificate of graduation from a school providing secondary education, or the recognized equivalent of such certificate, to be eligible for any assistance under this subpart, the student shall meet either 1 of the following standards: ``(1) Examination.--The student shall take an independently administered examination and shall achieve a score, specified by the Secretary, demonstrating that such student can benefit from the education or training being offered. Such examination shall be approved by the Secretary on the basis of compliance with such standards for development, administration, and scoring as the Secretary may prescribe in regulations. ``(2) Determination.--The student shall be determined as having the ability to benefit from the education or training in accordance with such process as the State shall prescribe. Any such process described or approved by a State for the purposes of this section shall be effective 6 months after the date of submission to the Secretary unless the Secretary disapproves such process. In determining whether to approve or disapprove such process, the Secretary shall take into account the effectiveness of such process in enabling students without secondary school diplomas or the recognized equivalent to benefit from the instruction offered by institutions utilizing such process, and shall also take into account the cultural diversity, economic circumstances, and educational preparation of the populations served by the institutions. ``(e) Special Rule for Correspondence Courses.--A student shall not be eligible to receive a grant under this subpart for a correspondence course unless such course is part of a program leading to an associate, bachelor, or graduate degree. ``(f) Courses Offered Through Telecommunications.-- ``(1) Relation to correspondence courses.--A student enrolled in a course of instruction at an eligible institution of higher education (other than an institute or school that meets the definition in section 521(4)(C) of the Carl D. Perkins Vocational and Applied Technology Education Act (20 U.S.C. 2471(4)(C))) that is offered in whole or in part through telecommunications and leads to a recognized associate, bachelor, or graduate degree conferred by such institution shall not be considered to be enrolled in correspondence courses unless the total amount of telecommunications and correspondence courses at such institution equals or exceeds 50 percent of such courses. ``(2) Restriction or reductions of financial aid.--A student's eligibility to receive a grant under this subpart may be reduced if a financial aid officer determines under the discretionary authority provided in section 479A that telecommunications instruction results in a substantially reduced cost of attendance to such student. ``(3) Definition.--For the purposes of this subsection, the term `telecommunications' means the use of television, audio, or computer transmission, including open broadcast, closed circuit, cable, microwave, or satellite, audio conferencing, computer conferencing, or video cassettes or discs, except that such term does not include a course that is delivered using video cassette or disc recordings at such institution and that is not delivered in person to other students of that institution. ``(g) Study Abroad.--Nothing in this subpart shall be construed to limit or otherwise prohibit access to study abroad programs approved by the home institution at which a student is enrolled. An otherwise eligible student who is engaged in a program of study abroad approved for academic credit by the home institution at which the student is enrolled shall be eligible to receive a grant under this subpart, without regard to whether such study abroad program is required as part of the student's degree program. ``(h) Verification of Social Security Number.--The Secretary, in cooperation with the Commissioner of Social Security, shall verify any social security number provided by a student to an eligible institution under subsection (a)(5)(B) and shall enforce the following conditions: ``(1) Pending verification.--Except as provided in paragraphs (2) and (3), an institution shall not deny, reduce, delay, or terminate a student's eligibility for assistance under this subpart because social security number verification is pending. ``(2) Denial or termination.--If there is a determination by the Secretary that the social security number provided to an eligible institution by a student is incorrect, the institution shall deny or terminate the student's eligibility for any grant under this subpart until such time as the student provides documented evidence of a social security number that is determined by the institution to be correct. ``(3) Construction.--Nothing in this subsection shall be construed to permit the Secretary to take any compliance, disallowance, penalty, or other regulatory action against-- ``(A) any institution of higher education with respect to any error in a social security number, unless such error was a result of fraud on the part of the institution; or ``(B) any student with respect to any error in a social security number, unless such error was a result of fraud on the part of the student.''. CHAPTER 2--RURAL ECONOMIC ASSISTANCE BLOCK GRANTS SEC. 821. RURAL ECONOMIC ASSISTANCE BLOCK GRANTS. (a) In General.--For each of fiscal years 1999 through 2001, the Secretary shall use funds in the Tobacco Transition Account to provide block grants to tobacco-growing States to assist areas of such a State that are economically dependent on the production of tobacco. (b) Funding.--To carry out this section, there shall be credited to the Tobacco Transition Account, from the Trust Fund, $100,000,000 for each of fiscal years 1999 through 2001. (c) Payments by Secretary to Tobacco-Growing States.-- (1) In general.--The Secretary shall use the amount available for a fiscal year under subsection (b) to make block grant payments to the Governors of tobacco-growing States. (2) Amount.--The amount of a block grant paid to a tobacco- growing State shall be based on-- (A) the number of counties in the State in which tobacco production is a significant part of the county's economy; and (B) the level of economic dependence of the county on tobacco production. (d) Grants by States To Assist Tobacco-Growing Areas.-- (1) In general.--A Governor of a tobacco-growing State shall use the amount of the block grant to the State under subsection (c) to make grants to counties or other public or private entities in the State to assist areas that are dependent on the production of tobacco, as determined by the Governor. (2) Amount.--The amount of a grant paid to a county or other entity to assist an area shall be based on (as determined by the Secretary)-- (A) the ratio of gross tobacco sales receipts in the area to the total farm income in the area; and (B) the ratio of all tobacco related receipts in the area to the total income in the area. (3) Use of grants.--A county or other entity that receives a grant under this subsection shall use the grant in a manner determined appropriate by the county or entity (with the approval of the State) to assist producers and other persons who are economically dependent on the production of tobacco, including use for-- (A) on-farm diversification and alternatives to the production of tobacco and risk management; and (B) off-farm activities such as development of non- tobacco related jobs. (e) Termination of Authority.--The authority provided by this section terminates October 1, 2001. Subtitle B--Tobacco Price Support and Production Adjustment Programs CHAPTER 1--TOBACCO PRICE SUPPORT PROGRAM SEC. 831. INTERIM REFORM OF TOBACCO PRICE SUPPORT PROGRAM. (a) Price Support Rates.--Section 106 of the Agricultural Act of 1949 (7 U.S.C. 1445) is amended-- (1) by striking subsection (a) and inserting the following: ``(a) In General.--The price support rate for each kind of tobacco for which quotas have been approved shall be reduced by-- ``(1) for the 1999 crop, 25 percent from the 1998 support rate for the kind of tobacco involved; ``(2) for the 2000 crop, 10 percent from the 1999 support rate for the kind of tobacco involved; and ``(3) for the 2001 crop, 10 percent from the 2000 support rate for the kind of tobacco involved.''; (2) by striking subsections (b) and (f); and (3) by redesignating subsections (c), (d), and (g) as subsections (b), (c), and (d), respectively. (b) Budget Deficit Assessment.--Section 106 of the Agricultural Act of 1949 (7 U.S.C. 1445) (as amended by subsection (a)(3)) is amended by striking subsection (d) and inserting the following: ``(d) Tobacco Transition Payment.--Effective only for the 1998 crop of tobacco, the Secretary of the Treasury shall transfer from the Tobacco Transition Account of the National Tobacco Settlement Trust Fund an amount equal to the product obtained by multiplying-- ``(1) the amount per pound equal to 2 percent of the national price support level for each kind of tobacco for which price support is made available under this Act; and ``(2) the total quantity of the kind of tobacco that is produced or purchased in, or imported into, the United States.''. (c) No Net Cost Tobacco Fund and Account.-- (1) No net cost tobacco fund.--Section 106A of the Agricultural Act of 1949 (7 U.S.C. 1445-1) is amended to read as follows: ``SEC. 106A. NO NET COST TOBACCO FUND. ``(a) Definitions.--In this section: ``(1) Association.--The term `association' means a producer-owned cooperative marketing association that has entered into a loan agreement with the Corporation to make price support available to producers of a kind of tobacco. ``(2) Corporation.--The term `Corporation' means the Commodity Credit Corporation, an agency and instrumentality of the United States within the Department of Agriculture through which the Secretary makes price support available to producers. ``(3) Net gains.--The term `net gains' means the amount by which the total proceeds obtained from the sale by an association of a crop of quota tobacco pledged to the Corporation for a price support loan exceeds the principal amount of the price support loan made by the Corporation to the association on the crop, plus interest, charges, and costs of administering the price support program. ``(4) No net cost tobacco fund.--The term `No Net Cost Tobacco Fund' means the capital account established within each association under this section. ``(5) Purchaser.--The term `purchaser' means any person who purchases in the United States, either directly or indirectly for the account of the person or another person, Flue-cured or burley quota tobacco. ``(6) Quota tobacco.--The term `quota tobacco' means any kind of tobacco for which marketing quotas are in effect or for which marketing quotas are not disapproved by producers. ``(7) Trust fund.--The term `Trust Fund' means the National Tobacco Settlement Trust Fund established in the Treasury of the United States consisting of amounts that are appropriated or credited to the Trust Fund from the tobacco settlement approved by Congress. ``(b) Price Support Program; Loans.--The Secretary-- ``(1) may carry out the tobacco price support program through the Corporation; and ``(2) shall, except as otherwise provided by this section, continue to make price support available to producers through loans to associations that, under agreements with the Corporation, agree to make loan advances to producers. ``(c) Establishment of Fund.-- ``(1) In general.--Each association shall establish within the association a No Net Cost Tobacco Fund. ``(2) Amount.--There shall be transferred from the Trust Fund to each No Net Cost Tobacco Fund such amount as the Secretary determines will be adequate to reimburse the Corporation for any net losses that the Corporation may sustain under its loan agreements with the association, based on-- ``(A) reasonable estimates of the amounts that the Corporation has lent or will lend to the association for price support for the 1982 and subsequent crops of quota tobacco, except that for the 1986 and subsequent crops of burley quota tobacco, the Secretary shall determine the amount of assessments without regard to any net losses that the Corporation may sustain under the loan agreements of the Corporation with the association for the 1983 crop of burley quota tobacco; ``(B) the cost of administering the tobacco price support program (as determined by the Secretary); and ``(C) the proceeds that will be realized from the sales of tobacco that are pledged to the Corporation by the association as security for loans. ``(d) Administration.--The Secretary shall-- ``(1) require that the No Net Cost Tobacco Fund established by each association be kept and maintained separately from all other accounts of the association and be used exclusively, as prescribed by the Secretary, for the purpose of ensuring, insofar as practicable, that the Corporation, under its loan agreements with the association with respect to 1982 and subsequent crops of quota tobacco, will suffer no net losses (including recovery of the amount of loans extended to cover the overhead costs of the association), after any net gains are applied to net losses of the Corporation under paragraph (3), except that, notwithstanding any other provision of law, the association may, with the approval of the Secretary, use funds in the No Net Cost Tobacco Fund, including interest and other earnings, for-- ``(A) the purposes of reducing the association's outstanding indebtedness to the Corporation associated with 1982 and subsequent crops of quota tobacco and making loan advances to producers as authorized; and ``(B) any other purposes that will be mutually beneficial to producers and purchasers and to the Corporation; ``(2) permit an association to invest the funds in the No Net Cost Tobacco Fund in such manner as the Secretary may approve, and require that the interest or other earnings on the investment shall become a part of the No Net Cost Tobacco Fund; ``(3) require that loan agreements between the Corporation and the association provide that the Corporation shall retain the net gains from each of the 1982 and subsequent crops of tobacco pledged by the association as security for price support loans, and that the net gains will be used for the purpose of-- ``(A) offsetting any losses sustained by the Corporation under its loan agreements with the association for any of the 1982 and subsequent crops of tobacco; or ``(B) reducing the outstanding balance of any price support loan made by the Corporation to the association under the loan agreements for 1982 and subsequent crops of tobacco; and ``(4) effective for the 1986 and subsequent crops of quota tobacco, if the Secretary determines that the amount in the No Net Cost Tobacco Fund or the net gains referred to in paragraph (3) exceeds the total amount necessary for the purposes specified in this section, suspend the transfer of amounts from the Trust Fund to the No Net Cost Tobacco Fund under this section. ``(e) Noncompliance.-- ``(1) In general.--If any association that has entered into a loan agreement with the Corporation with respect to any of the 1982 or subsequent crops of quota tobacco fails or refuses to comply with this section (including regulations promulgated under this section) or the terms of the agreement, the Secretary may terminate the agreement or provide that no additional loan funds may be made available under the agreement to the association. ``(2) Price support.--If the Secretary takes action under paragraph (1), the Secretary shall make price support available to producers of the kind or kinds of tobacco, the price of which had been supported through loans to the association, through such other means as are authorized by this Act or the Commodity Credit Corporation Charter Act (15 U.S.C. 714 et seq.). ``(f) Termination of Agreement or Association.--If, under subsection (e), a loan agreement with an association is terminated, or if an association having a loan agreement with the Corporation is dissolved, merges with another association, or otherwise ceases to operate, the No Net Cost Tobacco Fund or the net gains referred to in subsection (d)(3) shall be applied or disposed of in such manner as the Secretary may approve or prescribe, except that the net gains shall, to the extent necessary, first be applied or used for the purposes specified in this section. ``(g) Regulations.--The Secretary shall issue such regulations as are necessary to carry out this section.''. (2) No net cost tobacco account.--Section 106B of the Agricultural Act of 1949 (7 U.S.C. 1445-2) is amended to read as follows: ``SEC. 106B. NO NET COST TOBACCO ACCOUNT. ``(a) Definitions.--In this section: ``(1) Area.--The term `area', when used in connection with an association, means the general geographical area in which farms of the producer-members of the association are located, as determined by the Secretary. ``(2) Association.--The term `association' has the meaning given the term in section 106A(a)(1). ``(3) Corporation.--The term `Corporation' has the meaning given the term in section 106A(a)(2). ``(4) Net gains.--The term `net gains' has the meaning given the term in section 106A(a)(3). ``(5) No net cost tobacco account.--The term `No Net Cost Tobacco Account' means an account established by and in the Corporation for an association under this section. ``(6) Purchaser.--The term `purchaser' has the meaning given the term in section 106A(a)(5). ``(7) Tobacco.--The term `tobacco' means any kind of tobacco (as defined in section 301(b) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1301(b))) for which marketing quotas are in effect or for which marketing quotas are not disapproved by producers. ``(8) Trust fund.--The term `Trust Fund' has the meaning given the term in section 106A(a)(7). ``(b) Price Support Program; Loans.--Notwithstanding section 106A, the Secretary shall, on the request of any association, and may, if the Secretary determines, after consultation with the association, that the accumulation of the No Net Cost Tobacco Fund for the association under section 106A is, and is likely to remain, inadequate to reimburse the Corporation for net losses that the Corporation sustains under its loan agreements with the association-- ``(1) continue to make price support available to producers through the association in accordance with loan agreements entered into between the Corporation and the association; and ``(2) establish and maintain in accordance with this section a No Net Cost Tobacco Account for the association in lieu of the No Net Cost Tobacco Fund established within the association under section 106A. ``(c) Establishment of Account.-- ``(1) In general.--A No Net Cost Tobacco Account established for an association under subsection (b)(2) shall be established within the Corporation. ``(2) Amount.--There shall be transferred from the Trust Fund to each No Net Cost Tobacco Account such amount as the Secretary determines will be adequate to reimburse the Corporation for any net losses that the Corporation may sustain under its loan agreements with the association, based on-- ``(A) reasonable estimates of the amounts that the Corporation has lent or will lend to the association for price support for the 1982 and subsequent crops of quota tobacco, except that for the 1986 and subsequent crops of burley quota tobacco, the Secretary shall determine the amount of assessments without regard to any net losses that the Corporation may sustain under the loan agreements of the Corporation with the association for the 1983 crop of burley quota tobacco; ``(B) the cost of administering the tobacco price support program (as determined by the Secretary); and ``(C) the proceeds that will be realized from the sales of the kind of tobacco involved that are pledged to the Corporation by the association as security for loans. ``(3) Administration.--On the establishment of a No Net Cost Tobacco Account for an association, any amount in the No Net Cost Tobacco Fund established within the association under section 106A shall be applied or disposed of in such manner as the Secretary may approve or prescribe, except that the amount shall, to the extent necessary, first be applied or used for the purposes specified in that section. ``(d) Use.--Amounts deposited in a No Net Cost Tobacco Account established for an association shall be used by the Secretary for the purpose of ensuring, insofar as practicable, that the Corporation under its loan agreements with the association will suffer, with respect to the crop involved, no net losses (including recovery of the amount of loans extended to cover the overhead costs of the association), after any net gains are applied to net losses of the Corporation under subsection (g). ``(e) Excess Amounts.--If the Secretary determines that the amount in the No Net Cost Tobacco Account or the net gains referred to in subsection (g) exceed the total amount necessary to carry out this section, the Secretary shall suspend the transfer of amounts from the Trust Fund to the No Net Cost Tobacco Account under this section. ``(f) Termination of Agreement or Association.--In the case of an association for which a No Net Cost Tobacco Account is established under subsection (b)(2), if a loan agreement between the Corporation and the association is terminated, if the association is dissolved or merges with another association that has entered into a loan agreement with the Corporation to make price support available to producers of the kind of tobacco involved, or if the No Net Cost Tobacco Account terminates by operation of law, amounts in the No Net Cost Tobacco Account and the net gains referred to in subsection (g) shall be applied to or disposed of in such manner as the Secretary may prescribe, except that the net gains shall, to the extent necessary, first be applied to or used for the purposes specified in this section. ``(g) Net Gains.--The provisions of section 106A(d)(3) relating to net gains shall apply to any loan agreement between an association and the Corporation entered into on or after the establishment of a No Net Cost Tobacco Account for the association under subsection (b)(2). ``(h) Regulations.--The Secretary shall issue such regulations as are necessary to carry out this section.''. (3) Conforming amendments.-- (A) Section 314(a) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314(a)) is amended in the first sentence-- (i) by striking ``(1)''; and (ii) by striking ``, or (2)'' and all that follows through ``106B(d)(1) of that Act''. (B) Section 320B(c)(1) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314h(c)(1)) is amended by inserting after ``1445-2)'' the following: ``(as in effect before the effective date of the amendments made by section 831(c) of the Tobacco Transition Act)''. (d) Administrative Costs.--Section 1109 of the Agriculture and Food Act of 1981 (Public Law 97-98; 7 U.S.C. 1445 note) is repealed. (e) Crops.--This section and the amendments made by this section shall apply with respect to the 1999 and subsequent crops of the kind of tobacco involved. SEC. 832. TERMINATION OF TOBACCO PRICE SUPPORT PROGRAM. (a) Parity Price Support.--Section 101 of the Agricultural Act of 1949 (7 U.S.C. 1441) is amended-- (1) in the first sentence of subsection (a), by striking ``tobacco (except as otherwise provided herein), corn,'' and inserting ``corn''; (2) by striking subsections (c), (g), (h), and (i); (3) in subsection (d)(3)-- (A) by striking ``, except tobacco,''; and (B) by striking ``and no price support shall be made available for any crop of tobacco for which marketing quotas have been disapproved by producers;''; and (4) by redesignating subsections (d) and (e) as subsections (c) and (d), respectively. (b) Termination of Tobacco Price Support and No Net Cost Provisions.--Sections 106, 106A, and 106B of the Agricultural Act of 1949 (7 U.S.C. 1445, 1445-1, 1445-2) are repealed. (c) Definition of Basic Agricultural Commodity.--Section 408(c) of the Agricultural Act of 1949 (7 U.S.C. 1428(c)) is amended by striking ``tobacco,''. (d) Review of Burley Tobacco Imports.--Section 3 of Public Law 98- 59 (7 U.S.C. 625) is repealed. (e) Powers of Commodity Credit Corporation.--Section 5 of the Commodity Credit Corporation Charter Act (15 U.S.C. 714c) is amended by inserting ``(other than tobacco)'' after ``agricultural commodities'' each place it appears. (f) Transition Provisions.-- (1) Liability.--The amendments made by this section shall not affect the liability of any person under any provision of law as in effect before the effective date of this section. (2) Tobacco stocks and loans.--The Secretary shall issue regulations that require-- (A) the orderly disposition of tobacco stocks; and (B) the repayment of all tobacco price support loans by not later than 1 year after the effective date of this section. (g) Crops.--This section and the amendments made by this section shall apply with respect to the 2002 and subsequent crops of the kind of tobacco involved. CHAPTER 2--TOBACCO PRODUCTION ADJUSTMENT PROGRAMS SEC. 835. TERMINATION OF TOBACCO PRODUCTION ADJUSTMENT PROGRAMS. (a) Declaration of Policy.--Section 2 of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1282) is amended by striking ``tobacco,''. (b) Definitions.--Section 301(b) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1301(b)) is amended-- (1) in paragraph (3)-- (A) by striking subparagraph (C); and (B) by redesignating subparagraph (D) as subparagraph (C); (2) in paragraph (6)(A), by striking ``tobacco,''; (3) in paragraph (7), by striking the following: ``tobacco (flue-cured), July 1-June 30; ``tobacco (other than flue-cured), October 1- September 30;''; (4) in paragraph (10)-- (A) by striking subparagraph (B); and (B) by redesignating subparagraph (C) as subparagraph (B); (5) in paragraph (11)(B), by striking ``and tobacco''; (6) in paragraph (12), by striking ``tobacco,''; (7) in paragraph (14)-- (A) in subparagraph (A), by striking ``(A)''; and (B) by striking subparagraphs (B), (C), and (D); (8) by striking paragraph (15); (9) in paragraph (16)-- (A) by striking subparagraph (B); and (B) by redesignating subparagraph (C) as subparagraph (B); and (10) by redesignating paragraphs (16) and (17) as paragraphs (15) and (16), respectively. (c) Parity Payments.--Section 303 of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1303) is amended in the first sentence by striking ``rice, or tobacco,'' and inserting ``or rice,''. (d) Marketing Quotas.--Part I of subtitle B of title III of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1311 et seq.) is repealed. (e) Administrative Provisions.--Section 361 of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1361) is amended by striking ``tobacco,''. (f) Adjustment of Quotas.--Section 371 of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1371) is amended-- (1) in the first sentence of subsection (a), by striking ``peanuts, or tobacco'' and inserting ``or peanuts''; and (2) in the first sentence of subsection (b), by striking ``peanuts or tobacco'' and inserting ``or peanuts''. (g) Reports and Records.--Section 373 of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1373) is amended-- (1) by striking ``peanuts, or tobacco'' each place it appears in subsections (a) and (b) and inserting ``or peanuts''; and (2) in subsection (a)-- (A) in the first sentence, by striking ``all persons engaged in the business of redrying, prizing, or stemming tobacco for producers,''; and (B) in the last sentence, by striking ``$500;'' and all that follows through the period at the end of the sentence and inserting ``$500.''. (h) Regulations.--Section 375(a) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1375(a)) is amended by striking ``peanuts, or tobacco'' and inserting ``or peanuts''. (i) Eminent Domain.--Section 378 of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1378) is amended-- (1) in the first sentence of subsection (c), by striking ``cotton, tobacco, and peanuts'' and inserting ``cotton and peanuts''; and (2) by striking subsections (d), (e), and (f). (j) Burley Tobacco Farm Reconstitution.--Section 379 of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1379) is amended-- (1) in subsection (a)-- (A) by striking ``(a)''; and (B) in paragraph (6), by striking ``, but this clause (6) shall not be applicable in the case of burley tobacco''; and (2) by striking subsections (b) and (c). (k) Acreage-Poundage Quotas.--Section 4 of the Act entitled ``An Act to amend the Agricultural Adjustment Act of 1938, as amended, to provide for acreage-poundage marketing quotas for tobacco, to amend the tobacco price support provisions of the Agricultural Act of 1949, as amended, and for other purposes'', approved April 16, 1965 (Public Law 89-12; 7 U.S.C. 1314c note), is repealed. (l) Burley Tobacco Acreage Allotments.--The Act entitled ``An Act relating to burley tobacco farm acreage allotments under the Agricultural Adjustment Act of 1938, as amended'', approved July 12, 1952 (7 U.S.C. 1315), is repealed. (m) Transfer of Allotments.--Section 703 of the Food and Agriculture Act of 1965 (7 U.S.C. 1316) is repealed. (n) Advance Recourse Loans.--Section 13(a)(2)(B) of the Food Security Improvements Act of 1986 (7 U.S.C. 1433c-1(a)(2)(B)) is amended by striking ``tobacco and''. (o) Tobacco Field Measurement.--Section 1112 of the Omnibus Budget Reconciliation Act of 1987 (Public Law 100-203) is amended by striking subsection (c). (p) Liability.--The amendments made by this section shall not affect the liability of any person under any provision of law as in effect before the effective date under subsection (q). (q) Crops.--This section and the amendments made by this section shall apply with respect to the 1999 and subsequent crops of the kind of tobacco involved. Subtitle C--Funding SEC. 841. TRUST FUND. (a) Request.--The Secretary of Agriculture shall request the Trustees to transfer to the Tobacco Transition Account, amounts authorized or necessary under sections 814, 815, 816, 817, and 821, and the amendments made by section 831, to the account of the Commodity Credit Corporation. (b) Transfer.--On receipt of such a request, the Trustees shall transfer amounts requested under subsection (a). (c) Use.--The Secretary of Agriculture shall use the amounts transferred under subsection (b) to carry out the activities described in subsection (a). (d) Termination of Authority.--The authority provided under this section shall expire on September 30, 2001. SEC. 842. COMMODITY CREDIT CORPORATION. The Secretary may use the funds, facilities, and authorities of the Commodity Credit Corporation to carry out this title and the amendments made by this title. TITLE IX--MISCELLANEOUS PROVISIONS SEC. 901. PROVISIONS RELATING TO NATIVE AMERICANS. (a) Indian Country.-- (1) In general.--The provisions of this Act (or an amendment made by this Act) shall apply to the manufacture, distribution, and sale of tobacco products within Indian country. (2) Definition.--As used in this section, the term ``Indian country'' has the meaning given such term in section 1151 of title 18, United States Code. (b) Indian Tribes.-- (1) In general.--To the extent that an Indian tribe or tribal organization engages in the manufacture, distribution, or sale of tobacco products, the provisions of this Act (or an amendment made by this Act) shall apply to such tribe or organization. (2) Religious practice exception.--In recognition of the religious and ceremonial uses of tobacco and tobacco products by many Indian tribes and the members of such tribes, nothing in this Act (or and amendment made by this Act) shall be construed to infringe upon the rights of such tribes or members to transfer, acquire, possess, or use any tobacco or tobacco products for such purposes. The preceding sentence shall only be construed to apply to those quantities of tobacco products necessary to fulfill recognized religious or ceremonial purposes and not to permit the general marketing of tobacco products not in compliance with chapter IX of the Federal Food, Drug and Cosmetic Act. (c) Payments to Trust Fund.--Any Indian tribe or tribal organization that engages in the manufacturer of tobacco products shall be subject to liability for fee payments under section 102, or shall be considered a non-participating manufacturer and shall be subject to surcharges under subtitle B of title III. (d) Application of Federal Food, Drug and Cosmetic Act Requirements.-- (1) In general.--The Secretary, in consultation with the Secretary of the Interior, shall promulgate regulations to provide for the waiver of any requirements of the Food, Drug and Cosmetic Act with respect to tobacco products manufactured, distributed, or sold within Indian country as appropriate to comply with subsection (b)(1). (2) Eligibility for assistance.--Under the regulations promulgated under paragraph (1), the Secretary, after consultation with the Secretary of the Interior, may provide assistance to an Indian tribe or tribal organization in meeting and enforcing the requirements under such regulations if-- (A) the tribe or organization has a governing body that has powers and carries out duties that are similar to the powers and duties of State or local governments; (B) the functions to be exercised through the use of such assistance relate to activities within the exterior boundaries of the reservation or other areas within the jurisdiction of the tribe involved; and (C) the tribe or organization is reasonably expected to be capable of carrying out the functions required by the Secretary. (3) Determinations.--The Secretary shall make determinations concerning the eligibility of an Indian tribe or tribal organization for assistance under regulations under paragraph (1) not later than 90 days after the date on which such tribe or organization submits an application for such assistance. (e) Retail Licensing Requirements.-- (1) In general.--The requirements of subtitle C of title I shall apply to retailers that sell tobacco products within Indian country. (2) Self-regulation.--Not later than 6 months after the date of enactment of this Act, the Secretary shall promulgate regulations to permit the Indian tribe or tribal organization to implement a tribal licensing program within the exterior boundaries of the reservation or other areas within the jurisdiction of the tribe. (3) Implementation by secretary.--If the Secretary determines that the Indian tribe or tribal organization is not qualified to administer the requirements of subtitle C of title I, the Secretary, in consultation with the Secretary of the Interior, shall implement such requirements on behalf of the tribe or organization. (f) Eligibility for Public Health Payments.-- (1) In general.--For each fiscal year the Secretary shall pay to each Indian tribe that has an approved tribal anti- smoking plan a tribal grant for the fiscal year in an amount equal to the amount determined under paragraph (2), and shall reduce the amounts payable under section 501 to any State in which the service area or areas of the Indian tribe are located by the amount so determined. (2) Amount determined.--The amount of any funds for which an Indian tribe is eligible under paragraph (1) shall be determined by the Secretary based on the proportion of the total number of Indians residing on such tribe's reservation in the State as compared to the total population of the State and the amount allocated to Indian tribes under section 501. (3) Use.--Amounts provided to a tribe or organization under this paragraph shall be used to further the purposes of this Act and in accordance with a plan submitted by the tribe or organization and approved by the Secretary as being in compliance with this Act. Tribes and tribal organizations shall have the flexibility to utilize such amounts to meet the unique health needs of such tribes within the context of tribal health programs if such programs meet the fundamental Federal requirements under this Act as determined by the Secretary. (4) Reallotment.--Any amounts set-aside and not expended under this paragraph shall be reallotted among other eligible tribes and organizations. (g) Obligation of Manufacturers.--A participating manufacturer shall not engage in any activity within Indian country that is prohibited under the Protocol. (h) Indian Health Service.--Amounts made available under section 101(c)(3)(F) shall be provided to the Indian Health Service to be used for anti-tobacco-related consumption and cessation activities including-- (1) clinic and facility design, construction, repair, renovation, maintenance and improvement; (2) provider services and equipment; (3) domestic and community sanitation associated with clinic and facility construction and improvement; (4) inpatient and outpatient services; and (5) other programs and services provided through the Indian Health Service or through tribal contracts, compacts, grants or cooperative agreements with the Indian Health Service and which are deemed appropriate to raising the health status of Indians. (i) Preemption.-- (1) General preemption.--Except as otherwise provided for in this section, nothing in this Act shall be construed as prohibiting an Indian tribe or tribal organization from imposing requirements, prohibitions, penalties or other measures to further the purposes of this Act that are in addition to the requirements, prohibitions, or penalties required under this Act. (2) Public exposure to smoke.--Nothing in title VI shall be construed to preempt or otherwise affect any Indian tribe or tribal organization rule or practice that provides greater protection from the health hazards of environmental tobacco smoke. (3) Native americans.--Except as provided in this section, a State may not impose obligations or requirements relating to the application of this Act to Indian tribes and tribal organizations. SEC. 902. WHISTLEBLOWER PROTECTIONS. (a) Prohibition of Reprisals.--An employee of any manufacturer, distributor, or retailer of a tobacco product may not be discharged, demoted, or otherwise discriminated against (with respect to compensation, terms, conditions, or privileges of employment) as a reprisal for disclosing to an employee of the Food and Drug Administration, the Department of Justice, or any State or local regulatory or enforcement authority, information relating to a substantial violation of law related to this Act (or an amendment made by this Act) or a State or local law enacted to further the purposes of this Act. (b) Enforcement.--Any employee or former employee who believes that such employee has been discharged, demoted, or otherwise discriminated against in violation of subsection (a) may file a civil action in the appropriate United States district court before the end of the 2-year period beginning on the date of such discharge, demotion, or discrimination. (c) Remedies.--If the district court determines that a violation has occurred, the court may order the manufacturer, distributor, or retailer involved to-- (1) reinstate the employee to the employee's former position; (2) pay compensatory damages; or (3) take other appropriate actions to remedy any past discrimination. (d) Limitation.--The protections of this section shall not apply to any employee who-- (1) deliberately causes or participates in the alleged violation of law or regulation; or (2) knowingly or recklessly provides substantially false information to the Food and Drug Administration, the Department of Justice, or any other Federal, State or local regulatory or enforcement authority. SEC. 903. LIMITED ANTITRUST EXEMPTION. (a) In General.--The Federal antitrust laws, and any similar laws of any State, shall not apply to any joint discussion, consideration, review, action or agreement by or among any participating manufacturers, or any individuals acting on behalf of any participating manufacturers, for the purposes of, and limited to-- (1) entering into the Protocol under section 201 or a consent decree under section 241; (2) refusing to deal with a distributor, retailer, or other seller of tobacco products who distributes such products for sale to, or offers for sale or sells such products to, underage individuals, or who otherwise fails to comply with applicable requirements of this Act, the Protocol or a consent decree; or (3) submitting an application relating to, entering into, or complying with or otherwise carrying out the terms of any plan or program that has been approved under subsection (b). (b) Programs for Reductions in Underage Use.-- (1) In general.--The Attorney General may approve, upon the application of 1 or more participating manufacturers, a plan or program to reduce the use of tobacco products by underage individuals. (2) Determination.--Not later than 90 days after the date on which a plan or program is received under paragraph (1), the Attorney General shall approve or disapprove such plan or program. In determining whether to approve a plan or program under paragraph (1), the Secretary shall consider whether the plan or program is appropriate as part of the effort to reduce the use of tobacco products by underage individuals and will not have the effect of unduly restraining competition. (3) Withdrawing of approval.--Subsection (a)(3) shall not apply with respect to any plan or program that has not been approved by the Attorney General or that has had such an approval subsequently withdrawn. SEC. 904. PASS-THROUGH. Nothing in this Act shall be construed as prohibiting a manufacturer from passing the costs of the amount of any payments, including surcharges, assessed under this Act on to consumers of tobacco products as a further economic deterrent to the use of such products. SEC. 905. EFFECTIVE DATE. This Act shall become effective on the date of enactment of this Act. <all>