[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.
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