[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 3035 Introduced in Senate (IS)]







107th CONGRESS
  2d Session
                                S. 3035

To prohibit the sale of tobacco products through the Internet or other 
indirect means to underage individuals, to ensure the collection of all 
                cigarette taxes, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            October 2, 2002

Mr. Hutchinson introduced the following bill; which was read twice and 
               referred to the Committee on the Judiciary

_______________________________________________________________________

                                 A BILL


 
To prohibit the sale of tobacco products through the Internet or other 
indirect means to underage individuals, to ensure the collection of all 
                cigarette taxes, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Eliminating Profiteering through 
Illegal Cigarette Sales Act'' or ``EPICS Act''.

SEC. 2. UNLAWFUL ACTS REGARDING SALE OF TOBACCO PRODUCTS TO UNDERAGE 
              INDIVIDUALS.

    (a) In General.--It shall be unlawful for any person who is in the 
business of selling tobacco products, and who advertises such products 
through the Internet or any other means, to sell a tobacco product to 
an individual under the legal age (according to State law) to purchase 
tobacco products if pursuant to the sale the person mails the product 
or ships the product by carrier in or affecting interstate commerce.
    (b) Procedures To Protect Against Sales to Underage Individuals.--
It shall be unlawful for any person in the business of selling tobacco 
products to take an order for a tobacco product, other than from a 
person who is in the business of selling tobacco products, through the 
mail, or through any telecommunications means (including by telephone, 
facsimile, or the Internet), if in providing for the sale or delivery 
of the product pursuant to the order the person mails the product, or 
ships the product by carrier in or affecting interstate commerce, and 
the person fails to comply with each of the following procedures:
            (1) Before mailing or shipping the product, the person 
        receives from the individual who places the order the 
        following:
                    (A) A copy of a valid government-issued document 
                (whether an operator's permit or otherwise) that 
                provides the name, address, and date of birth of the 
                individual.
                    (B) A signed statement in writing from the 
                individual providing a certification of the individual 
                that--
                            (i) such document and information correctly 
                        identifies the individual and correctly states 
                        the address and date of birth of the 
                        individual;
                            (ii) the individual understands that 
                        forging another person's signature to the 
                        statement is illegal; and
                            (iii) the individual understands that 
                        tobacco sales to minors are illegal and that 
                        tobacco purchases by minors may be illegal 
                        under applicable State law.
            (2) Before mailing or shipping the product, the person--
                    (A) verifies the information received from the 
                individual under paragraph (1) against a commercially 
                available database; and
                    (B) sends a letter to the individual requesting--
                            (i) confirmation of the order; and
                            (ii) that the individual reply immediately 
                        (to a specified toll-free phone number or e-
                        mail address) if the individual did not submit 
                        the order.
            (3) In the case of an order for a product pursuant to an 
        advertisement on the Internet, the person receives payment by 
        credit card or check for the order before mailing or shipping 
        the product.
            (4) Unless the person is identified as a member of the 
        Armed Forces by the document issued by the Department of 
        Defense identifying individuals as members of the Armed Forces, 
        the person provides for the mailing or shipping of the product 
        to the name and address provided on the government-issued 
        document received under paragraph (1).
            (5)(A) The person employs a method of mailing or shipping 
        the product requiring that the individual purchasing the 
        product--
                    (i) be the addressee;
                    (ii) personally sign for delivery of the package; 
                and
                    (iii) if the individual appears to the carrier 
                making the delivery to be under 27 years of age, take 
                delivery of the package only after producing valid, 
                government-issued identification that--
                            (I) bears a photograph of the individual;
                            (II) indicates that the individual is not 
                        under the legal age to purchase cigarettes; and
                            (III) indicates that the individual is not 
                        younger than the age indicated on the 
                        government-issued document received under 
                        paragraph (1).
            (B) The bill of lading clearly states the requirements in 
        subparagraph (A) and specifies that Federal law requires 
        compliance with the requirements.
            (6) The person notifies the carrier for the mailing or 
        shipping, in writing, of the age of the addressee as indicated 
        by the government-issued document received under paragraph (1).
    (c) Advertising Through Internet; Prominent Warning Labels.--It 
shall be unlawful for any person in the business of selling tobacco 
products to advertise tobacco products for sale through an Internet 
website to a person other than a person who is in the business of 
selling tobacco products unless such website contains, on the part of 
each website page relating to sale of such products that is immediately 
visible when accessed, prominent and clearly legible warning labels as 
follows:
            (1) A warning label stating that sales of tobacco products 
        to persons under 18 years of age are illegal in all States 
        except Alabama, Alaska, and Utah, where sales of tobacco 
        products to person under 19 years of age are illegal.
            (2) A warning label described--
                    (A) in the case of cigarettes, in subsections 
                (a)(1) and (b)(2) of section 4 of the Federal Cigarette 
                Labeling and Advertising Act (15 U.S.C. 1333); and
                    (B) in the case of smokeless tobacco products, in 
                subsections (a)(1) and (b)(1) of section 3 of the 
                Federal Comprehensive Smokeless Tobacco Health 
                Education Act of 1986 (15 U.S.C. 4402).
    (d) Advertising Through Internet; Access.--It shall be unlawful for 
any person in the business of selling tobacco products to advertise 
such products for sale through an Internet website unless access to the 
website (other than a nonselling website home page) is provided only to 
individuals who provide to the person the information described in 
subparagraphs (A) and (B) of subsection (b)(1) and whose information is 
verified according to the procedures described in subsection (b)(2).
    (e) Rule of Construction Regarding Common Carriers.--This Act may 
not be construed as imposing liability upon any common carrier, or 
officers or employees thereof, when acting within the scope of business 
of the common carrier.

SEC. 3. FEDERAL TRADE COMMISSION.

    (a) Civil Enforcement.--For purposes of the enforcement of section 
2 by the Federal Trade Commission, a violation of a provision of 
subsection (a) or (b) of such section shall be deemed to be an unfair 
or deceptive act or practice in or affecting commerce within the 
meaning of the Federal Trade Commission Act, and the procedures under 
section 5(b) of such Act shall apply with respect to such a violation.
    (b) Regulations.--Not later than 90 days after the date of the 
enactment of this Act, the Commission shall promulgate a final rule for 
carrying out this Act.
    (c) Information Regarding State Laws on Minimum Purchase-Age.--The 
Commission shall post on the Internet site of the Commission 
information that, by State, provides the minimum age at which it is 
legal under State law to purchase tobacco products in the State.

SEC. 4. CRIMINAL PENALTIES.

    (a) In General.--
            (1) First violation.--Except as provided in paragraph (2), 
        any person who violates a provision of subsection (a) or (b) of 
        section 2 shall be fined not more than $1,000.
            (2) Subsequent violations.--In the case of a second or 
        subsequent violation by a person of a provision of subsection 
        (a) or (b) of section 2, the person shall be fined not less 
        than $1,000 and not more than $5,000.
            (3) Rule of construction.--This subsection does not apply 
        to a violation of a provision of subsection (a) or (b) of 
        section 2 if any provision of subsection (b) of this section 
        applies to such violation.
    (b) Knowing Violations.--
            (1) First violation.--Except as provided in paragraph (2), 
        any person who knowingly violates a provision of subsection (a) 
        or (b) of section 2 shall be fined in accordance with title 18, 
        United States Code, imprisoned not more than two years, or 
        both.
            (2) Subsequent violations.--In the case of a second or 
        subsequent knowing violation by a person of a provision of 
        subsection (a) or (b) of section 2, the person shall be fined 
        in accordance with title 18, United States Code, imprisoned not 
        more than five years, or both.

SEC. 5. FEDERAL CIVIL ACTIONS BY STATE ATTORNEYS GENERAL AND CERTAIN 
              OTHER INDIVIDUALS.

    (a) Injunctive Relief.--A State, through its State attorney 
general, on behalf of residents of the State, or any person who holds a 
permit under section 5712 of the Internal Revenue Code of 1986, may 
bring in an appropriate district court of the United States a civil 
action to restrain violations by a person of any provision of 
subsection (a) or (b) of section 2, including obtaining a preliminary 
or permanent injunction or other order against the person.
    (b) Coordination With Commission.--Before bringing a civil action 
under subsection (a), a State attorney general or any such person shall 
provide to the Federal Trade Commission written notice of the intent of 
the State attorney general or such person to bring the action.
    (c) Federal Jurisdiction.--
            (1) In general.--The district courts of the United States 
        shall have jurisdiction over any civil action under subsection 
        (a).
            (2) Venue.--A civil action under subsection (a) may be 
        brought only in accordance with section 1391 of title 28, 
        United States Code, or in the district in which the recipient 
        of the tobacco products resides or is found.
    (d) Requirements for Injunctions and Orders.--
            (1) In general.--In any civil action under subsection (a), 
        upon a proper showing by the State attorney general or person 
        bringing the action involved, the court may issue a preliminary 
        or permanent injunction or other order to restrain a violation 
        of a provision of subsection (a) or (b) of section 2.
            (2) Notice.--No preliminary injunction or permanent 
        injunction or other order may be issued under paragraph (1) 
        without notice to the adverse party and an opportunity for a 
        hearing.
            (3) Form and scope of order.--Any preliminary or permanent 
        injunction or other order entered in a civil action under 
        subsection (a) shall--
                    (A) set forth the reasons for the issuance of the 
                order;
                    (B) be specific in its terms;
                    (C) describe in reasonable detail, and not by 
                reference to the complaint or other document, the act 
                or acts sought to be restrained; and
                    (D) be binding upon--
                            (i) the parties to the action and the 
                        officers, agents, employees, and attorneys of 
                        those parties; and
                            (ii) persons in active concert or 
                        participation with the parties to the action 
                        who receive actual notice of the order by 
                        personal service or otherwise.
    (e) Additional Remedies.--
            (1) In general.--A remedy under subsection (a) is in 
        addition to any other remedies provided by law.
            (2) State court proceedings.--Nothing in this section may 
        be construed to prohibit an authorized State official from 
        proceeding in State court on the basis of an alleged violation 
        of any State law.

SEC. 6. COLLECTION OF STATE CIGARETTE TAXES.

    (a) Definitions.--Section 1 of the Act of October 19, 1949 (15 
U.S.C. 375), is amended--
            (1) in paragraph (1), by inserting ``and other legal 
        entities'' after ``individuals'';
            (2) by striking paragraph (3);
            (3) by redesignating paragraphs (4) through (7) as 
        paragraphs (3) through (6), respectively; and
            (4) by adding at the end the following new paragraphs:
            ``(7) The term `delivery sale' means any sale of cigarettes 
        to a consumer (other than a sale to a consumer for purposes of 
        resale) if--
                    ``(A) the consumer submits the order for such sale 
                by means of a telephone or other method of voice 
                transmission, the mails, or the Internet or other 
                online service; or
                    ``(B) the cigarettes are delivered by use of the 
                mails or other delivery service.
            ``(8) The term `sale to a consumer for purposes of resale' 
        does not include a sale of cigarettes to a natural person who 
        does not conduct business as a distributor or retailer of 
        cigarettes in the jurisdiction in which such person resides.''.
    (b) Reports to State Tobacco Tax Administrators.--Section 2 of that 
Act (15 U.S.C. 376) is amended--
            (1) in subsection (a)--
                    (A) by striking ``or transfers'' and inserting ``, 
                transfers, or ships''; and
                    (B) by striking ``to other than a distributor 
                licensed by or located in such State,''; and
            (2) in subsection (b)--
                    (A) by striking ``(1)''; and
                    (B) by striking ``, and (2)'' and all that follows 
                and inserting a period.
    (c) Requirements for Delivery Sales.--That Act is further amended 
by inserting after section 2 the following new section:
    ``Sec. 2A. (a) Each person making a delivery sale into a State 
shall comply with--
            ``(1) the shipping requirements set forth in subsection 
        (b); and
            ``(2) all laws of the State generally applicable to sales 
        of cigarettes that occur entirely within the State, including 
        laws imposing--
                    ``(A) excise taxes;
                    ``(B) sales taxes;
                    ``(C) licensing and tax-stamping requirements; and
                    ``(D) escrow or other payment obligations.
    ``(b)(1) Each person who takes a delivery sale order shall include 
on the bill of lading included with the shipping package containing 
cigarettes sold pursuant to such order a clear and conspicuous 
statement providing as follows: `CIGARETTES: FEDERAL LAW REQUIRES THE 
PAYMENT OF ALL APPLICABLE EXCISE AND SALES TAXES, AND COMPLIANCE WITH 
APPLICABLE LICENSING, TAX-STAMPING, AND ESCROW PAYMENT OBLIGATIONS'.
    ``(2) Any shipping package described in paragraph (1) that is not 
labeled in accordance with that paragraph shall be treated as 
nonmailable matter under section 3001 of title 39, United States Code.
    ``(c) Each State shall have the authority to require any person 
making a delivery sale of cigarettes into such State to collect or pay 
the taxes referred to in subsection (a)(2) and to comply with any other 
requirements described in that subsection.''.
    (d) Penalties.--Section 3 of that Act (15 U.S.C. 377) is amended to 
read as follows:
    ``Sec. 3. (a) Except as provided in subsection (b), whoever 
violates a provision of section 2 or 2A shall be fined not more than 
$1,000, imprisoned not more than 6 months, or both, in the case of the 
first violation, and fined not more than $5,000, imprisoned not more 
than 6 months, or both, in the case of any subsequent violation.
    ``(b) Whoever knowingly violates a provision of section 2 or 2A 
shall be fined in accordance with title 18, United States Code, 
imprisoned not more than 2 years, or both.''.
    (e) Injunctions.--Section 4 of that Act (15 U.S.C. 378) is 
amended--
            (1) by inserting ``(a)'' before ``The United States 
        district courts''; and
            (2) by adding at the end the following new subsections:
    ``(b)(1) A State, through its attorney general, or any person who 
holds a permit under section 5712 of the Internal Revenue Code of 1986, 
may bring an action in the United States district courts to prevent and 
restrain violations of this Act by any person (or by any person 
controlling such person).
    ``(2) Nothing in this section shall be construed to prohibit an 
authorized State official from proceeding in State court on the basis 
of an alleged violation of State law.
    ``(c) The Secretary of the Treasury shall administer the provisions 
of this Act, and shall have concurrent authority with the Attorney 
General to enforce the provisions of this Act.''.

SEC. 7. TREATMENT OF CIGARETTES AS NONMAILABLE MATTER.

    Section 1716 of title 18, United States Code, is amended--
            (1) by redesignating subsection (j) as subsection (k); and
            (2) by inserting after subsection (i) the following new 
        subsection (j):
    ``(j) All cigarettes (as that term is defined in section 2341(1) of 
this title) are nonmailable and shall not be deposited in or carried 
through the mails.''.

SEC. 8. PENAL PROVISIONS REGARDING TRAFFICKING IN CONTRABAND 
              CIGARETTES.

    (a) Threshold Quantity for Treatment as Contraband.--(1) Section 
2341(2) of title 18, United States Code, is amended by striking 
``60,000 cigarettes'' and inserting ``2,000 cigarettes''.
    (2) Section 2342(b) of that title is amended by striking ``60,000'' 
and inserting ``2,000''.
    (3) Section 2343 of that title is amended--
            (A) in subsection (a), by striking ``60,000'' and inserting 
        ``2,000''; and
            (B) in subsection (b), by striking ``60,000'' and inserting 
        ``2,000''.
    (b) Recordkeeping, Reporting, and Inspection.--Section 2343 of that 
title, as amended by subsection (a)(3) of this section, is further 
amended--
            (1) in subsection (a)--
                    (A) in the matter preceding paragraph (1), by 
                striking ``only--'' and inserting ``such information as 
                the Secretary considers appropriate for purposes of 
                enforcement of this chapter, including--''; and
                    (B) in the flush matter following paragraph (3), by 
                striking the second sentence;
            (2) by redesignating subsection (b) as subsection (c);
            (3) by inserting after subsection (a) the following new 
        subsection (b):
    ``(b) Any person who engages in a delivery sale, and who ships, 
sells, distributes, or receives any quantity in excess of 10,000 
cigarettes within a single month, shall submit to the Secretary, 
pursuant to rules or regulations prescribed by the Secretary, a report 
that sets forth the following:
            ``(1) The person's beginning and ending inventory of 
        cigarettes (in total) for such month.
            ``(2) The total quantity of cigarettes that the person 
        received within such month from each other person (itemized by 
        name and address).
            ``(3) The total quantity of cigarettes that the person 
        distributed within such month to each person (itemized by name 
        and address) other than a retail purchaser.''; and
            (4) by adding at the end the following new subsection:
    ``(d) In this section, the term `delivery sale' means any sale of 
cigarettes to a consumer (other than a sale to a consumer for purposes 
of resale) if--
            ``(1) the consumer submits the order for such sale by means 
        of a telephone or other method of voice transmission, the 
        mails, or the Internet or other online service; or
            ``(2) the cigarettes are delivered by use of the mails or 
        other delivery service.''.
    (c) Disposal of Forfeited Cigarettes.--Section 2344(c) of that 
title is amended by striking ``seizure and forfeiture,'' and all that 
follows and inserting ``seizure and forfeiture, and any cigarettes so 
seized and forfeited shall be destroyed and not resold.''.
    (d) Enforcement.--Section 2346 of that title is amended--
            (1) by inserting ``(a)'' before ``The Secretary''; and
            (2) by adding at the end the following new subsection:
    ``(b) A State, through its attorney general, or any person who 
holds a permit under section 5712 of the Internal Revenue Code of 1986, 
may bring an action in the United States district courts to prevent and 
restrain violations of this chapter by any person (or by any person 
controlling such person).''.
    (e) Conforming and Clerical Amendments.--(1) The section heading 
for section 2343 of that title is amended to read as follows:
``Sec. 2343. Recordkeeping, reporting, and inspection''.
    (2) The table of sections at the beginning of chapter 114 of that 
title is amended by striking the item relating to section 2343 and 
inserting the following new item:

``2343. Recordkeeping, reporting, and inspection.''.

SEC. 9. DEFINITIONS.

    In this Act:
            (1) State.--The term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, American Samoa, Guam, the Commonwealth of the Northern 
        Mariana Islands, and the Virgin Islands.
            (2) State attorney general.--The term ``State attorney 
        general'' means the attorney general or other chief law 
        enforcement officer of a State, or the designee thereof.
            (3) Tobacco product.--The term ``tobacco product'' means 
        any product made or derived from tobacco that is intended for 
        human consumption, including cigarettes, smokeless tobacco, 
        pipe tobacco, and the product known as bidi.

SEC. 10. EFFECTIVE DATE.

    (a) In General.--Except as provided in subsection (b), this Act 
shall take effect 90 days after the date of the enactment of this Act.
    (b) Rulemaking.--The authority of the Federal Trade Commission to 
commence rulemaking under section 3(b) shall be effective on the date 
of the enactment of this Act.
    (c) Unlawful Acts.--Section 2 shall apply to sales of tobacco 
products occurring on or after the effective date of this Act without 
regard to whether a final rule has been promulgated under section 3(b) 
as of that date.
                                 <all>