1.Short
title; table of contents
(a)This Act may be cited
as the Help End Addiction to Lethal
Tobacco Habits Act
or the HEALTH Act
.
(b)The table of contents of this Act is as follows:
Sec. 1. Short title; table of
contents.
TITLE I—Requirements on manufacturers
Sec. 101. Reports.
Sec. 102. Tobacco testing.
Sec. 103. Warning labels.
TITLE II—Tobacco use surveys
Sec. 201. Tobacco use survey.
TITLE III—Reduction in United States tobacco users
Sec. 301. Amendment to the Public Health Service
Act.
TITLE IV—Revenue provisions
Sec. 401. Increase in excise tax rate on tobacco products based
on relative health risk.
TITLE V—Cessation and prevention
Sec. 501. Food and Drug Administration Tobacco Risk
Classification Panel.
Sec. 502. Authority to prohibit nicotine.
Sec. 503. Counter-advertising.
Sec. 504. Medicare coverage of counseling for cessation of
tobacco use.
Sec. 505. Medicare coverage of tobacco cessation
pharmacotherapy.
Sec. 506. Tobacco cessation for Federal employee health
benefits plans.
Sec. 507. Matching grants for States that use a significant
portion of master settlement agreement funds for tobacco control and
cessation.
<enum>I</enum><header>Requirements on
manufacturers</header>
<section id="ID1bbf1589d6314d46a089ce13af4036d4"><enum>101.</enum><header>Reports</header>
<subsection id="id7DC3C110D3F0491DAE3C756BC3FB0D34"><enum>(a)</enum><header>Federal
cigarette labeling</header><text display-inline="yes-display-inline">Section
7(a) of the Federal Cigarette Labeling and Advertising Act (15 U.S.C. 1335a(a))
is amended by striking <quote>which does not identify the company which uses
the ingredients or the brand of cigarettes which contain the
ingredients</quote> and inserting <quote>and a specification of the quantity of
nicotine and tar contained in each such product</quote>.</text>
</subsection><subsection id="id411E4F98E6E648EB8865E206A055F632"><enum>(b)</enum><header>Smokeless
tobacco</header><text>Section 7(a) of the Comprehensive Smokeless Tobacco
Health Education Act of 1986 (15 U.S.C. 4403(a)(1)) is amended—</text>
<paragraph id="id47631EA27E364E1AA8A0D8C1E5F1F995"><enum>(1)</enum><text>in subparagraph
(A), by striking <quote>which does not identify the company which uses the
ingredients or the brand of smokeless tobacco which contains the
ingredients</quote>; and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDd0d2f592b77640518c5cea70ac3b28fd"><enum>(2)</enum><text>in subparagraph
(B), by inserting <quote>and tar</quote> after <quote>nicotine</quote>.</text>
</paragraph></subsection></section><section id="id08F9580112134F5285C381C21C97F9A4"><enum>102.</enum><header>Tobacco
testing</header>
<subsection id="id2A479D91155F4D6D9F20D0F142C83094"><enum>(a)</enum><header>Federal
Cigarette Labeling and Advertising Act</header><text display-inline="yes-display-inline">Section 7 of the Federal Cigarette Labeling
and Advertising Act (15 U.S.C. 1335a) is amended by adding at the end the
following:</text>
<quoted-block display-inline="no-display-inline" id="id08C5C78E38664AB39B5EE56867DF8BD4" style="OLC">
<subsection id="idB2A45A0BDF92475BBDA0221982B536A9"><enum>(c)</enum><header>Tobacco
testing</header>
<paragraph id="IDd8187f6d383f46898319c209f72a4b83"><enum>(1)</enum><header>Standards and
Practices for Measuring and Analyzing Tobacco Constituents</header>
<subparagraph id="IDb593292a43784a5fac8b68535d145226"><enum>(A)</enum><header>In
general</header><text>Not later than 18 months after the date of enactment of
the <short-title>Help End Addiction to Lethal Tobacco
Habits Act</short-title>, the Secretary of Commerce, acting through the
Director of the National Institute of Standards and Technology and in
consultation with the Secretary of Health and Human Services, shall develop and
publish in the Federal Register standards and best practices for—</text>
<clause id="ID211264efef184054bdbfd47580b7806b"><enum>(i)</enum><text>the sampling of
tobacco and tobacco products for testing; and</text>
</clause><clause id="ID8e689ca770684a84a35afe7979301377"><enum>(ii)</enum><text>accurate
measurement and analysis of tobacco constituents, including—</text>
<subclause id="ID8883463f4b3c4287a3916736f586afc2"><enum>(I)</enum><text>nicotine;</text>
</subclause><subclause id="ID148d5f7b2f154acfbbc64cb2bc2d1e70"><enum>(II)</enum><text>tar;</text>
</subclause><subclause id="IDb3814138edfe4061aab42a69a66ffd1c"><enum>(III)</enum><text>carbon
monoxide; and</text>
</subclause><subclause id="id8BE802F5127E4D0C9130B2ECBD462B07"><enum>(IV)</enum><text>any other
constituent as may be necessary.</text>
</subclause></clause></subparagraph><subparagraph id="ID59e553ce2705401f8fb0d7007c2bd3a4"><enum>(B)</enum><header>Components</header><text>The
standards and best practices developed under subparagraph (A) shall address the
need for—</text>
<clause id="ID47e3448450a7411aa757feb0b23e4bd5"><enum>(i)</enum><text>standardized
measurement and verification practices for tobacco constituent reports made by
all persons under this section, taking into account—</text>
<subclause id="ID7b3ac14702ec45e49ad10a2454064fb4"><enum>(I)</enum><text>protocols and
standards currently in use by persons making such reports;</text>
</subclause><subclause id="ID41a80e80ba2346138b73d66729919039"><enum>(II)</enum><text>existing
protocols and standards developed by members of the public health
community;</text>
</subclause><subclause id="ID1cd7a2e74ee742a3878630cd4257365f"><enum>(III)</enum><text>the report
required under subsection (b)(1)(B); and</text>
</subclause><subclause id="IDa8f6d607754c4f86a413fb7d1807062a"><enum>(IV)</enum><text>such other
factors as the Secretary of Commerce and the Secretary of Health and Human
Services determine to be appropriate;</text>
</subclause></clause><clause id="ID7cdd55ca75644718b94190cea1a83756"><enum>(ii)</enum><text>measurement and
verification of actions taken to reduce the harm or exposure from tobacco
products; and</text>
</clause><clause id="IDaadd7f38a11d4522af2f20535c5722e7"><enum>(iii)</enum><text>such other
measurement and verification standards as the Secretary of Commerce and the
Secretary of Health and Human Services determine to be appropriate.</text>
</clause></subparagraph><subparagraph id="IDab1ca176547842a293a6086840c6145b"><enum>(C)</enum><header>Options</header><text>The
standards and best practices developed under subparagraph (A) may require the
measurement of the content, rather than the yield of tobacco ingredients,
components, or additives.</text>
</subparagraph></paragraph><paragraph id="ID39c3001655e44cc88501098447e56fdc"><enum>(2)</enum><header>Applicable
law</header><text>To ensure that high quality information is produced, the
standards and best practices developed under paragraph (1) shall conform to the
guidelines established under section 515 of the Treasury and General Government
Appropriations Act, 2001 (commonly known as the Data Quality Act) (44 U.S.C.
3516 note; 114 Stat. 2763A–1543), as enacted into law by section 1(a)(3) of
Public Law 106–554.</text>
</paragraph><paragraph id="IDd7491e9ae65b4215881dd20a30fe0818"><enum>(3)</enum><header>Transitional
measurement standards</header><text>Until such time as the standards and best
practices developed under paragraph (1) are available, persons reporting to
Federal Trade Commission under this section shall use—</text>
<subparagraph id="ID7122b0cbf56c4500955084597f13a225"><enum>(A)</enum><text>the conditions
described in the International Organization for Standardization standard ISO
3308;</text>
</subparagraph><subparagraph id="ID88e91cafdd49432dae64d401c492d47d"><enum>(B)</enum><text>the International
Organization for Standardization standards 4387 to determine tar, 10315 to
determine nicotine, and 8454 to determine carbon monoxide; and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID4335db0415ad469f9845ac25a4ce4fb8"><enum>(C)</enum><text>the sampling
specified in the International Organization for Standardization standard ISO
8243.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="idC35257F1EDFE44F9B4A0248426EDF1B4"><enum>(b)</enum><header>Comprehensive
Smokeless Tobacco Health Education Act of 1986</header><text>Section 4 of the
Comprehensive Smokeless Tobacco Health Education Act of 1986 (15 U.S.C. 4403)
is amended by adding at the end the following:</text>
<quoted-block display-inline="no-display-inline" id="id4201D3526A6A43C0BD9C3D993E81290B" style="OLC">
<subsection id="idCD7DBC80AC1A4B94B420B3DEF49F30F7"><enum>(c)</enum><header>Tobacco
testing</header>
<paragraph id="id1AB76FE0A85748108BE0636FEA977779"><enum>(1)</enum><header>Standards and
Practices for Measuring and Analyzing Smokeless Tobacco Constituents</header>
<subparagraph id="id6682158D72B245739243B07806FC0744"><enum>(A)</enum><header>In
general</header><text>Not later than 18 months after the date of enactment of
the <short-title>Help End Addiction to Lethal Tobacco
Habits Act</short-title>, the Secretary of Commerce, acting through the
Director of the National Institute of Standards and Technology and in
consultation with the Secretary of Health and Human Services, shall develop and
publish in the Federal Register standards and best practices for—</text>
<clause id="idDC0243A5E1DA4010B0114C5DC667A47F"><enum>(i)</enum><text>the sampling of
smokeless tobacco and tobacco products for testing; and</text>
</clause><clause id="idFC7435B6FB9E4A23B799D05B40EBE827"><enum>(ii)</enum><text>accurate
measurement and analysis of smokeless tobacco constituents, including—</text>
<subclause id="id224AD415E7E141F98634CF7C647B63F1"><enum>(I)</enum><text>nicotine;</text>
</subclause><subclause id="idEC49B2D58D684D669750F80007361DFF"><enum>(II)</enum><text>tar;</text>
</subclause><subclause id="id69F330D43FE5413EBA4FBBBF26B2C164"><enum>(III)</enum><text>nitrosamines;
and</text>
</subclause><subclause id="id5A784010B73941298C42723F7643A1E8"><enum>(IV)</enum><text>any other
constituent as may be necessary.</text>
</subclause></clause></subparagraph><subparagraph id="idCCA51409956C4130A5C9945B585BB120"><enum>(B)</enum><header>Components</header><text>The
standards and best practices developed under subparagraph (A) shall address the
need for—</text>
<clause id="id7ECEAFF2C1FF4677A5AA2D6EDF0CD6EC"><enum>(i)</enum><text>standardized
measurement and verification practices for tobacco constituent reports made by
all persons under this section, taking into account—</text>
<subclause id="id95FB10B8555C4B2B926D56C49D71A7ED"><enum>(I)</enum><text>protocols and
standards currently in use by persons making such reports;</text>
</subclause><subclause id="id2CEB1DAD4C834F5681EE08F0468DCFCD"><enum>(II)</enum><text>existing
protocols and standards developed by members of the public health
community;</text>
</subclause><subclause id="id0DB9F4EAB17E4CC699EB48722CB85A9A"><enum>(III)</enum><text>the report
required under subsection (b)(1)(B); and</text>
</subclause><subclause id="id0E2F3C86AB6B46C491C9E3B906525F5A"><enum>(IV)</enum><text>such other
factors as the Secretary of Commerce and the Secretary of Health and Human
Services determine to be appropriate;</text>
</subclause></clause><clause id="idCAAADBCF66D3495889B07C86A938BDA7"><enum>(ii)</enum><text>measurement and
verification of actions taken to reduce the harm or exposure from smokeless
tobacco products; and</text>
</clause><clause id="id380558ACAA1642A1A2921DF5D53AEB81"><enum>(iii)</enum><text>such other
measurement and verification standards as the Secretary of Commerce and the
Secretary of Health and Human Services determine to be appropriate.</text>
</clause></subparagraph><subparagraph id="id06FA3C04B04C49039F42990889F4A989"><enum>(C)</enum><header>Options</header><text>The
standards and best practices developed under subparagraph (A) may require the
measurement of the content, rather than the yield of tobacco ingredients,
components, or additives.</text>
</subparagraph></paragraph><paragraph id="idD21F3B9DD8F3430490ABE74062688B54"><enum>(2)</enum><header>Applicable
law</header><text>To ensure that high quality information is produced, the
standards and best practices developed under paragraph (1) shall conform to the
guidelines established under section 515 of the Treasury and General Government
Appropriations Act, 2001 (commonly known as the Data Quality Act) (44 U.S.C.
3516 note; 114 Stat. 2763A–1543), as enacted into law by section 1(a)(3) of
Public Law 106–554.</text>
</paragraph><paragraph id="id62096E5E23CB4416AC05CD779EB16F30"><enum>(3)</enum><header>Transitional
measurement standards</header><text>Until such time as the standards and best
practices developed under paragraph (1) are available, persons reporting to
Federal Trade Commission under this section shall use—</text>
<subparagraph id="id437101B0C3B648AAADE79BCC246C128B"><enum>(A)</enum><text>the International
Organization for Standardization standards 15592–3 to determine tar and 15152
to determine nicotine; and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idBDA42001845B4820A8B947DE391C32BA"><enum>(B)</enum><text>the sampling
specified in the International Organization for Standardization standard ISO
4874.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection></section><section id="ID0b27dea09be244ccab0345601f0a609c"><enum>103.</enum><header>Warning
labels</header>
<subsection id="id8EE493AF1968402DA06BEF531B740973"><enum>(a)</enum><header>Cigarette
labeling and advertising warnings</header>
<paragraph id="idB4F672DDEB554CA99944534C689D92EE"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 4(a) of the
Federal Cigarette Labeling and Advertising Act (15 U.S.C. 1333(a)) is
amended—</text>
<subparagraph id="idB3DDD81F1F504EC1885E07686B89E8DD"><enum>(A)</enum><text display-inline="yes-display-inline">in paragraph (1) by striking
<quote>section, one of the following labels:</quote> and all that follows, and
inserting the following:</text>
<quoted-block display-inline="no-display-inline" id="id5B2E38C1EADF4C40BD12F8C0516F0AC8" style="traditional">
<paragraph id="idC3281807D2414EC09DE218D4C0284F03" indent="up1"><enum></enum><text>section—</text>
<subparagraph id="IDd651819356f243608c31502e88600051"><enum>(A)</enum><text>1 of the following labels:</text>
<list level="paragraph">
<list-item>SURGEON GENERAL’S WARNING: Smoking
kills.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking seriously harms
you and others around you.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smokers die
younger.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking clogs the
arteries and causes heart attacks and strokes.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Cigarettes cause fatal
lung cancer.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking when pregnant
harms your baby.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Protect children: don't
make them breathe your smoke.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking is highly
addictive, don't start.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Stopping smoking reduces
the risk of fatal heart and lung diseases.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking can cause a slow
and painful death.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Get help now to stop
smoking: (telephone/postal address/Internet address/consult your
doctor/pharmacist).</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking may reduce the
blood flow and causes impotence.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking causes aging of
the skin.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking can damage the
sperm and decreases fertility.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoke contains the toxic
chemicals benzene, nitrosamines, formaldehyde, and hydrogen
cyanide.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Cigarettes are addictive;
and</list-item></list>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDcf06032c5ea94ca3b9ba913029c5ff77" indent="down1"><enum>(B)</enum><text>a label on 1 side
of the package indicating the tar, nicotine, and carbon monoxide yields of the
cigarettes so that at least 10 percent of the corresponding surface is covered,
such label to be accompanied by the following statements: <quote>Nicotine is
addictive.</quote>, and <quote>Tar and Carbon Monoxide are harmful; there is no
safe
level.</quote>.</text>
</subparagraph></paragraph><after-quoted-block>;</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="id2D521FF2E9A84839B5D2E9ED2861BFCF"><enum>(B)</enum><text display-inline="yes-display-inline">in paragraph (2) by striking
<quote>section, one of the following labels:</quote> and all that follows, and
inserting the following:</text>
<quoted-block display-inline="no-display-inline" id="idB02391E980DC429F82993EAF0589A198" style="traditional">
<paragraph id="id12D8762E9E9146DD97508F9AA8E8C069" indent="up1"><enum></enum><text>section—</text>
<subparagraph id="idF62FC3139534404F8D774E9DE2287854"><enum>(A)</enum><text>1 of the following labels:</text>
<list level="paragraph">
<list-item>SURGEON GENERAL’S WARNING: Smoking
kills.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking seriously harms
you and others around you.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smokers die
younger.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking clogs the
arteries and causes heart attacks and strokes.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Cigarettes cause fatal
lung cancer.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking when pregnant
harms your baby.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Protect children: don't
make them breathe your smoke.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking is highly
addictive, don't start.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Stopping smoking reduces
the risk of fatal heart and lung diseases.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking can cause a slow
and painful death.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Get help now to stop
smoking: (telephone/postal address/Internet address/consult your
doctor/pharmacist).</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking may reduce the
blood flow and causes impotence.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking causes aging of
the skin.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking can damage the
sperm and decreases fertility.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoke contains the toxic
chemicals benzene, nitrosamines, formaldehyde, and hydrogen
cyanide.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Cigarettes are addictive;
and</list-item></list>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idAF48EF51710B4BDE8A752D92D93DA4B3" indent="down1"><enum>(B)</enum><text>a label on the
advertisement indicating the tar, nicotine, and carbon monoxide yields of the
cigarettes so that at least 10 percent of the surface is covered, such label to
be accompanied by the following statements: <quote>Nicotine is
addictive.</quote>, and <quote>Tar and Carbon Monoxide are harmful; there is no
safe level.</quote>.</text>
</subparagraph></paragraph><after-quoted-block>;
and</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="id631B39E720BC4848882681CC57C32B02"><enum>(C)</enum><text>in paragraph (3)
by striking <quote>section, one of the following labels:</quote> and all that
follows, and inserting the following:</text>
<quoted-block display-inline="no-display-inline" id="id63F1DB56CE99496889AB90A8D42A9C4B" style="traditional">
<paragraph id="id1A4C18EA05934AE181341AF51A66D1CB" indent="up1"><enum></enum><text>section—</text>
<subparagraph id="id0889158F9042458D933AEA0E1881D24B"><enum>(A)</enum><text>1 of the following labels:</text>
<list level="paragraph">
<list-item>SURGEON GENERAL’S WARNING: Smoking
kills.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking seriously harms
you and others around you.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smokers die
younger.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking clogs the
arteries and causes heart attacks and strokes.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Cigarettes cause fatal
lung cancer.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking when pregnant
harms your baby.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Protect children: don't
make them breathe your smoke.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking is highly
addictive, don't start.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Stopping smoking reduces
the risk of fatal heart and lung diseases.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking can cause a slow
and painful death.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Get help now to stop
smoking: (telephone/postal address/Internet address/consult your
doctor/pharmacist).</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking may reduce the
blood flow and causes impotence.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking causes aging of
the skin.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoking can damage the
sperm and decreases fertility.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Smoke contains the toxic
chemicals benzene, nitrosamines, formaldehyde, and hydrogen
cyanide.</list-item>
<list-item>SURGEON GENERAL’S WARNING: Cigarettes are addictive;
and</list-item></list>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idFBBF59FE454B4F35B4B9C69619993DE9" indent="down1"><enum>(B)</enum><text>a label on the
advertisement indicating the tar, nicotine, and carbon monoxide yields of the
cigarettes so that at least 10 percent of the surface is covered, such label to
be accompanied by the following statements: <quote>Nicotine is
addictive.</quote>, and <quote>Tar and Carbon Monoxide are harmful; there is no
safe
level.</quote>.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph id="ID097e0189a7ba4ef381d7d9ed5e4031bd"><enum>(2)</enum><header>Location and
graphics</header><text>Section 4(b) of the <act-name>Federal Cigarette Labeling
and Advertising Act</act-name> (15 U.S.C. 1333(b)) is amended—</text>
<subparagraph id="id3AEA41528E3C45FD9149EE7FEBDC8A2D"><enum>(A)</enum><text>in paragraph (1),
by striking <quote>shall be located in the place label statements were</quote>
and all that follows through the end and inserting “shall:</text>
<quoted-block display-inline="no-display-inline" id="idD5997449D6CE47B8BC39C9141260E0B6" style="OLC">
<paragraph id="idB42BA9D9C8AF4F93A34F0F08567D802A"><enum>(A)</enum><text>Occupy at least
50 percent of the front and rear panels of the package on which it is displayed
and printed directly on the package underneath the cellophane or other clear
wrapping. All text of the warning described in such paragraph (1) shall be in
conspicuous and legible 17-point type, unless the text of the label statement
would occupy more than 70 percent of such area, in which case the text may be
in a smaller conspicuous and legible type size. The text shall be black on a
white background, or white on a black background, in a manner that contrasts,
by typography, layout, or color, with all other printed material on the
package.</text>
</paragraph><paragraph id="ID754266065d45412daea8e0cb81867dd5"><enum>(B)</enum><text>Be accompanied by
color graphics depicting the negative health consequences of
smoking.</text>
</paragraph><after-quoted-block>;</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="idA99328D9F11448D6AEAA39F19DCA4120"><enum>(B)</enum><text>in paragraph (2),
by adding at the end the following: <quote>Each label statement shall be
accompanied by color graphics depicting the negative health consequences of
smoking.</quote>; and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idF1E1590A718D438CB736080655361FB8"><enum>(C)</enum><text>in paragraph (3),
by adding at the end the following: <quote>Each label statement shall be
accompanied by color graphics depicting the negative health consequences of
smoking.</quote>.</text>
</subparagraph></paragraph><paragraph id="id592CA6E12BAE4B6093E146FE0667B172"><enum>(3)</enum><header>Label
rotation</header><text>Section 4(c)(1) of the Federal Cigarette Labeling and
Advertising Act (15 U.S.C. 1333(c)(1)) is amended—</text>
<subparagraph id="id03F226F4C8FA4CDDB72A206D8FDE465F"><enum>(A)</enum><text>by striking
<quote>quarterly</quote>; and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idBCE64E373AD440EE9C88D270AB145DFD"><enum>(B)</enum><text>by inserting
before the period at the end <quote>in equal distribution and
display.</quote>.</text>
</subparagraph></paragraph></subsection><subsection id="IDf27d0c53e63b474ab1142b3c3c1bd311"><enum>(b)</enum><header>Smokeless
tobacco labels and advertising warnings</header><text display-inline="yes-display-inline">Section 3(a)(1) of the Comprehensive
Smokeless Tobacco Health Education Act of 1986 (15 U.S.C. 4402(a)(1)) is
amended—</text>
<paragraph id="ID76168581923343c89fde31f4b4e435d9"><enum>(1)</enum><text>in subsection
(a)(1), by striking <quote>Act, one of the following labels:</quote> and all
that follows, and inserting the following:</text>
<quoted-block display-inline="no-display-inline" id="idBF894801067C463EAE44DA0571DB37F2" style="traditional">
<paragraph id="idBC9ED51D12A9442EAE409ED96B55C0B0" indent="up1"><enum></enum><text>Act—</text>
<subparagraph id="id66AB19AB48E74E168A9498BF15FF3BA9"><enum>(A)</enum><text>1 of the following labels:</text>
<list level="paragraph">
<list-item>WARNING: Smokeless tobacco is
addictive.</list-item>
<list-item>WARNING: This product causes mouth
diseases.</list-item>
<list-item>WARNING: Use of this product can cause
cancer.</list-item>
<list-item>WARNING: This tobacco product can damage your health
and is addictive.</list-item>
<list-item>WARNING: This product contains cancer-causing
agents.</list-item>
<list-item>WARNING: Tobacco can kill.</list-item>
<list-item>WARNING: Tobacco users die
younger.</list-item>
<list-item>WARNING: Tobacco use when pregnant harms your
baby.</list-item>
<list-item>WARNING: Tobacco is highly addictive, don't
start.</list-item>
<list-item>WARNING: Get help now to stop using tobacco:
(telephone/postal address/Internet address/consult your
doctor/pharmacist).</list-item>
<list-item>WARNING: Tobacco contains the toxic chemicals
benzene, nitrosamines, formaldehyde, and hydrogen cyanide;
and</list-item></list>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idDAE1004C7C1D4DD5AAC10E21EA8611EB" indent="down1"><enum>(B)</enum><text>a label on 1 side
of the package indicating the tar, nicotine, and nitrosamines yields of the
products so that at least 10 percent of the corresponding surface is covered,
such label to be accompanied by the following statements: <quote>Nicotine is
addictive.</quote>, and <quote>Tar and Nitrosamines are harmful; there is no
safe
level.</quote>.</text>
</subparagraph></paragraph><after-quoted-block>;</after-quoted-block></quoted-block>
</paragraph><paragraph id="ID60744bba9a014e0f913d373023496828"><enum>(2)</enum><text>by striking
subsection (b) and inserting the following:</text>
<quoted-block display-inline="no-display-inline" id="idDBB2AC9CAF54431F9626E7EC2354496C" style="OLC">
<subsection id="ID3b8af0bd7638416cb0580051290f11d5"><enum>(b)</enum><header>Label
format</header><text>Each label statement required by paragraph (1)
shall:</text>
<paragraph id="ID4251db5c53b1433db1faf73ebbb7c745"><enum>(1)</enum><text>Be located on the
2 principal display panels of the package, but not the bottom, and each label
statement shall comprise at least 40 percent of such panels of the package. All
of the text of the warning described in paragraph (1) shall appear in 17 point
conspicuous and legible type in a manner that contrasts by typography, layout,
or color, with all other printed material on the package. The text of the label
statement shall be black on a white background, or white on a black background,
in an alternating fashion under the plan submitted under subsection (d), except
that if the text of a label statement would occupy more than 70 percent of the
area specified by subparagraph (A), such text may appear in a smaller type
size.</text>
</paragraph></subsection><after-quoted-block>;
and</after-quoted-block></quoted-block>
</paragraph><paragraph id="ID7d1500c2cc1f409195b2fef242cc707a"><enum>(3)</enum><text>in subsection
(c)(2)—</text>
<subparagraph id="id6149F110534E490CBE0BEB148B45BA6E"><enum>(A)</enum><text>by striking
<quote>every 4 months</quote>; and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idA2929E884526466496EF4EEEDDEE884A"><enum>(B)</enum><text>by inserting
before the period at the end <quote>in equal distribution and
display</quote>.</text>
</subparagraph></paragraph></subsection></section><enum>II</enum><header>Tobacco use
surveys</header>
<section id="id9FB56B0023EC4AD8BB540560FD8B25FA"><enum>201.</enum><header>Tobacco use
survey</header>
<subsection id="ID8e5e19c261574c4e9eda7fa19921f4f1"><enum>(a)</enum><header>Annual
survey</header><text>Not later than January 1, 2008, and annually thereafter,
the Secretary shall conduct a survey to support the calculation of allowances
under title XXX of the Public Health Service Act (as added by section 301).
Such survey shall—</text>
<paragraph id="ID287a912a3c7f484ba8e89d395f05eef0"><enum>(1)</enum><text>determine—</text>
<subparagraph id="IDd54930067d8944cdafeb0a9e31592158"><enum>(A)</enum><text>the percentage of
all individuals who used a tobacco product within the 30-day period prior to
the conduct of the survey; and</text>
</subparagraph><subparagraph id="ID0b8e792d59f5496390044ed22b6db703"><enum>(B)</enum><text>the percentage of
individuals identified under paragraph (1) who identify each brand of each type
of tobacco product as the usual brand smoked or used within such 30-day
period;</text>
</subparagraph></paragraph><paragraph id="IDb5e2cec328994d1ea0a75951d4187734"><enum>(2)</enum><text>be conducted in
coordination with existing survey activities;</text>
</paragraph><paragraph id="IDebc2b04686c743a0ac3b2b69b3d740a8"><enum>(3)</enum><text>be based on a
nationally representative sample of at least 200,000 completed interviews of
individuals;</text>
</paragraph><paragraph id="ID7f6bfe32e7a743628b7b98e00c523edf"><enum>(4)</enum><text>be a
household-based in person survey; and</text>
</paragraph><paragraph id="ID06e67baf6087458199473892a5939075"><enum>(5)</enum><text>contain any other
elements as may be necessary.</text>
</paragraph></subsection><subsection id="ID90b2109d8f9746b2871c3d0fcdccb429"><enum>(b)</enum><header>Existing data
sources</header><text>The Secretary may combine, replace or otherwise alter the
following existing surveys to collect needed data in the most efficient and
cost-effective manner:</text>
<paragraph commented="no" display-inline="no-display-inline" id="idEED9002F4FCC4EB7BA8149CF8CEE8932"><enum>(1)</enum><text>The National
Health Interview Survey.</text>
</paragraph><paragraph id="idFA41FC68B6284929974CCEADDAE7592C"><enum>(2)</enum><text>The National
Survey on Drug Use and Health under section 505 of the Public Health Service
Act (42 U.S.C. 290aa–4).</text>
</paragraph><paragraph id="id48400790F02046C4BFD11D42BBBC9E38"><enum>(3)</enum><text>The Behavior Risk
Factor Surveillance Survey.</text>
</paragraph><paragraph id="id3CCAE21E6B2A4610929A938F73B28325"><enum>(4)</enum><text>The Monitoring
the Future study.</text>
</paragraph><paragraph id="idF848A1A78C8649F39A0D856C81E9AD3D"><enum>(5)</enum><text>The Youth Risk
Behavior Surveillance System.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id900A2EFFBE604CADB24E44744F560480"><enum>(6)</enum><text>The current
Population Survey Tobacco Use Supplement.</text>
</paragraph></subsection></section><enum>III</enum><header>Reduction in
United States tobacco users</header>
<section id="id0B90F9BC762E46B9AAA0B4FEDE19BF98"><enum>301.</enum><header>Amendment to
the Public Health Service Act</header><text display-inline="no-display-inline">The Public Health Service Act (42 U.S.C. 201
et seq.) is amended by adding at the end the following:</text>
<quoted-block display-inline="no-display-inline" id="id875299B0798644BA9FAEADD78012D297" style="OLC">
<title id="id6085B26B56CC49D88318FEF3C5338780"><enum>XXX</enum><header>Reduction in
United States tobacco users</header>
<section id="idB38C0003E2B54FE882FC6DB9FA59DEB5"><enum>3001.</enum><header>Purpose</header><text display-inline="no-display-inline">It is the purpose of this title to—</text>
<paragraph id="id74659644A05143699AA3DA7ADD86174E"><enum>(1)</enum><text display-inline="yes-display-inline">reduce the adverse health effects of
tobacco use through reductions in the annual size of the tobacco market from
2006 levels in the United States;</text>
</paragraph><paragraph id="id6A32054B46534AD3B2BF0369CD60A0F5"><enum>(2)</enum><text display-inline="yes-display-inline">effectuate such reductions by requiring
compliance by tobacco manufacturers with prescribed user limitations by
specified deadlines, which limitations may be met through alternative methods
of compliance provided by a market share allocation and transfer system;
and</text>
</paragraph><paragraph id="id4F2FDD64B5A54AE48581ADCACF7637F3"><enum>(3)</enum><text display-inline="yes-display-inline">encourage tobacco control and prevention,
and smoking cessation.</text>
</paragraph></section><section id="ID8c77850324f44fd9820fc78b32fd2319"><enum>3002.</enum><header>Definitions</header><text display-inline="no-display-inline">In this title:</text>
<paragraph id="ID5c29723d2fca473f8beae294a62a0aa7"><enum>(1)</enum><header>Actual 2006
tobacco users</header><text>The term <term>actual 2006 tobacco users</term> for
affected brands means the total number of United States tobacco users in
calendar year 2006 as determined using data reported in surveys under title II
of the <short-title>Help End Addiction to Lethal Tobacco
Habits Act</short-title>.</text>
</paragraph><paragraph id="IDf4b53613bfee411b83b61c1a69b54504"><enum>(2)</enum><header>Affected
brand</header><text>The term <term>affected brand</term> means a brand marketed
by an affected manufacturer that is subject to tobacco user reduction
requirements or limitations under this title.</text>
</paragraph><paragraph id="IDbc3631483c494dd89ecaf41add58fc87"><enum>(3)</enum><header>Affected
manufacturer</header><text>The term <term>affected manufacturer</term> means a
manufacturer of tobacco products (as defined in section 5702 of the Internal
Revenue Code of 1986) who applies for a permit under section 40.62 of title 26,
Code of Federal Regulations (or successor regulations).</text>
</paragraph><paragraph id="ID732e1f80757a46e596858ec26dc59184"><enum>(4)</enum><header>Allowable 2006
tobacco users</header><text>The term <term>allowable 2006 tobacco users</term>
means a federally enforceable limitation on the number of United States tobacco
users applicable to the brand.</text>
</paragraph><paragraph id="ID079126471a484867bacfdf98e99de916"><enum>(5)</enum><header>Allowance</header><text>The
term <term>allowance</term> means an authorization, allocated to an affected
brand by the Secretary under this title, to sell to, during or after a
specified calendar year, 1 United States tobacco user.</text>
</paragraph><paragraph id="IDd9515df193f3444bad5ed4bedae137d5"><enum>(6)</enum><header>Baseline</header><text>The
term <term>baseline</term> means the number of United States tobacco users of
an affected brand, calculated as follows:</text>
<subparagraph id="id44DA661D95BE481E92F240F57B34F11D"><enum>(A)</enum><text>For each affected
brand that was in commercial operation as of January 1, 2007, the baseline
shall be the annual average number of United States tobacco users of the brand
during calendar years 2004, 2005, and 2006, as determined using data recorded
by the Department of Health and Human Services pursuant to surveys under the
following:</text>
<clause id="idE8CA195B2F3C4C9A940A7E0F1105FA12"><enum>(i)</enum><text>The National
Health Interview Survey.</text>
</clause><clause id="idA2B5C6733B1141449CA905796F1820FD"><enum>(ii)</enum><text>The National
Survey on Drug Use and Health under section 505 of the Public Health Service
Act (42 U.S.C. 290aa–4).</text>
</clause><clause id="id9749D77CAC8148F68E2270269491D9C6"><enum>(iii)</enum><text>The Behavior
Risk Factor Surveillance Survey.</text>
</clause><clause id="id9B67424A1EEB4E8EB241F1C8E32618DC"><enum>(iv)</enum><text>The Monitoring
the Future study.</text>
</clause><clause id="id4A8A2ECC70EC4A06A727D259E98F3D00"><enum>(v)</enum><text>The Youth Risk
Behavior Surveillance System.</text>
</clause><clause id="id0767C9777A16479A97FBC0D16CFEDFDD"><enum>(vi)</enum><text>The current
Population Survey Tobacco Use Supplement.</text>
</clause></subparagraph><subparagraph id="id3A093D1BAC8D43ADBDA3C7B0F5DE9AAF"><enum>(B)</enum><text>For any affected
brand for which such survey data was not collected, the baseline shall be the
annual average number of tobacco users for those years, as calculated pursuant
to a method which the Secretary shall prescribe by regulation not later than 9
months after the date of enactment of this title.</text>
</subparagraph><subparagraph id="id19203C6992054DA7B6A45E95F478D3D2"><enum>(C)</enum><text>The Secretary
may, upon application or on his or her own motion, supplement data needed in
support of this title and correct any factual errors in data from which
baselines have been calculated. Corrected data shall be used for purposes of
issuing allowances under the title. Such corrections shall not be subject to
judicial review, nor shall the failure of the Secretary to correct an alleged
factual error in such reports be subject to judicial review.</text>
</subparagraph></paragraph><paragraph id="ID5305fe5851ae41e79434f1477d071d2c"><enum>(7)</enum><header>Brand</header><text>The
term <term>brand</term> has the meaning given such term in section 5702 of the
Internal Revenue Code of 1986.</text>
</paragraph><paragraph id="IDf633a3edca284cefbd7e9b1f8fd13920"><enum>(8)</enum><header>Compliance
plan</header><text>The term <term>compliance plan</term> means a schedule and
description of the method or methods for compliance and certification by the
owner or operator that the manufacturer is in compliance with the requirements
of this title.</text>
</paragraph><paragraph id="ID236093d6f8974652ae398b7090bf7467"><enum>(9)</enum><header>Designated
representative</header><text>The term <term>designated representative</term>
means a responsible person or official authorized by the owner or operator of
an affected brand to represent the owner or operator in matters pertaining to
the holding, transfer, or disposition of allowances allocated to an affected
brand, and the submission of and compliance with permits, permit applications,
and compliance plans for the affected brand.</text>
</paragraph><paragraph id="ID06af3e4a5bdf4c30b67cf7006aebc786"><enum>(10)</enum><header>Existing
brand</header><text>The term <term>existing brand</term> means a brand of
tobacco product that commenced commercial distribution before the date of
enactment of this title.</text>
</paragraph><paragraph id="IDaecbb34ab0e64c779ae3ac4b91307a76"><enum>(11)</enum><header>New
brand</header><text>The term <term>new brand</term> means a brand of tobacco
product that commences commercial distribution on or after the date of
enactment of this title.</text>
</paragraph><paragraph id="IDc8bc639276044b20a685c6aafd85dbff"><enum>(12)</enum><header>Permitting
authority</header><text>The term <term>permitting authority</term> means the
Alcohol and Tobacco Tax and Trade Bureau.</text>
</paragraph><paragraph id="ID4f32c88ad0fe468faa15362585c993b6"><enum>(13)</enum><header>United States
tobacco user</header><text>The term <term>United States tobacco user</term>
means a person in the United States who uses a tobacco product (as defined in
section 5702 of the Internal Revenue Code of 1986) as determined using surveys
described in title II of the <short-title>Help End
Addiction to Lethal Tobacco Habits Act</short-title>.</text>
</paragraph></section><section id="ID7e1e0db2bcc94cedac956a99645beb6b"><enum>3003.</enum><header>United States
tobacco user allowance program for existing and new brands</header>
<subsection id="ID19e2d1f6162a40fda7046480caf4f989"><enum>(a)</enum><header>Allocations of
annual allowances for existing and new brands</header>
<paragraph id="id94B55972A40B4FE0AD5C288FF9CEE824"><enum>(1)</enum><header>In
general</header><text>For the United States tobacco user limitation programs
under this title, the Secretary shall allocate annual allowances for the
affected brand, to be held or distributed by the designated representative of
the owner or operator of each affected brand of an affected manufacturer in
accordance with this title, in an amount that is equal to the annual United
States tobacco user limitation calculated under this section and sections 3004,
3005, or 3007, except as otherwise specifically provided elsewhere in this
title.</text>
</paragraph><paragraph id="idF5C788BEBA014B8BA59CBA0F4ED74B2A"><enum>(2)</enum><header>Limitation</header>
<subparagraph id="idED91A256C2D04CEA94E1E6480BBA9745"><enum>(A)</enum><header>In
general</header><text>Except as provided in section 3007, beginning on January
1, 2015, the Secretary shall not allocate annual allowances pursuant to section
3005 in such an amount as would result in total annual allowances in excess of
30,000,000. For purposes of the preceding sentence, the Secretary shall not
take into account unused allowances carried forward by owners and operators of
affected brands or by other persons holding such allowances, following the year
for which they were allocated.</text>
</subparagraph><subparagraph id="idF3FD6D7184E3444684D6EF5469D1996B"><enum>(B)</enum><header>Pro rata
reductions</header><text>If determined necessary to comply with the limitation
imposed under subparagraph (A), the Secretary shall reduce, on a pro rata
basis, the Phase II allowance allocations for each affected brand, subject to
the requirements of section 3005.</text>
</subparagraph></paragraph><paragraph id="id5703050C66074923A22A41CF9E1B4172"><enum>(3)</enum><header>Annual
allocation</header><text>The Secretary shall allocate allowances for each
affected brand of an affected manufacturer annually, as provided for in this
section, section 3004, and section 3005.</text>
</paragraph><paragraph id="idDE790382E8714AFF8809713736E27227"><enum>(4)</enum><header>Removal of
brands</header><text>Except as provided for in section 3007, the removal of an
existing affected brand or manufacturer from commercial operation at any time
after the date of the enactment of this title shall not terminate or otherwise
affect the allocation of allowances pursuant to section 3004 or 3005 to which
the brand is entitled. Allowances shall be allocated by the Secretary without
cost to the recipient.</text>
</paragraph><paragraph id="idC044943FA91E43F28631B069F6767D7B"><enum>(5)</enum><header>Election</header><text>Any
person who may make an election concerning the amount of allowances to be
allocated to a brand or brands shall make such election and so inform the
Secretary not later than March 31, 2015, in the case of an election under
section 3005. If such person fails to make such election, the Secretary shall
set forth for each brand owned or operated by such person, the amount of
allowances reflecting the election that would, in the judgment of the
Secretary, provide the greatest benefit for the owner or operator of the
brand.</text>
</paragraph></subsection><subsection id="ID4d0dcf2b623f4f33860818cc1069f3fe"><enum>(b)</enum><header>Allowance
transfer system</header>
<paragraph id="id9B956D169DC740E9BE4ABCDD5F2AB2D3"><enum>(1)</enum><header>In
general</header><text>Allowances allocated under this title may be transferred
among the designated representatives of the owners or operators of affected
manufacturers under this title and any other person who holds such allowances,
as provided for by the allowance system regulations promulgated under paragraph
(2).</text>
</paragraph><paragraph id="id5FD3A66D19234B8F9AC53F0EB6F95A4A"><enum>(2)</enum><header>Regulations</header><text>Not
later than 18 months after the date of enactment of this title, the Secretary
shall promulgate regulations for purposes of paragraph (1). Such regulations
shall—</text>
<subparagraph id="idE883C9CBE12C458F96885E4CCFBF8AF4"><enum>(A)</enum><text>provide for the
establishment of the allowance system described in this section, including
requirements for the allocation, transfer, and use of allowances under this
title;</text>
</subparagraph><subparagraph id="idBDE1C3BD04474F95B9707D744A4ECD7A"><enum>(B)</enum><text>prohibit the use
of any allowance prior to the calendar year for which the allowance was
allocated; and</text>
</subparagraph><subparagraph id="id378084A87CB743E49F8BBAE056026F00"><enum>(C)</enum><text>provide,
consistent with the purposes of this title, for the identification of unused
allowances, and for such unused allowances to be carried forward and added to
allowances allocated in subsequent years, including allowances allocated to
brands subject to Phase I requirements (as described in section 3004) which are
applied to limitation requirements in Phase II (as described in section 3005);
and</text>
</subparagraph><subparagraph id="idECE19E85369D4EB5999424226CA49FF1"><enum>(D)</enum><text>establish a
system for issuing, recording, and tracking allowances under this section, such
regulations to specify all necessary procedures and requirements for an orderly
and competitive functioning of the allowance system, and all allowance
allocations and transfers shall, upon recordation by the Secretary, be deemed a
part of each brand's permit requirements pursuant to section 3006, without any
further permit review and revision.</text>
</subparagraph></paragraph><paragraph id="id30A110A991E94817B3833F31D1380A13"><enum>(3)</enum><header>Certification</header><text>Transfers
of allowances under this subsection shall not be effective until written
certification of the transfer, signed by a responsible official of each party
to the transfer, is received and recorded by the Secretary within 30
days.</text>
</paragraph><paragraph id="id2C09F13D3CAB4FE4A5CDDE93A07B43E9"><enum>(4)</enum><header>Preallocation
transfers</header><text>Regulations under this subsection shall permit the
transfer of allowances prior to the issuance of such allowances under
subsection (a). Recorded preallocation transfers shall be deducted by the
Secretary from the number of allowances which would otherwise be allocated to
the transferor, and added to those allowances allocated to the transferee.
Preallocation transfers shall not affect the prohibition contained in this
subsection against the use of allowances prior to the year for which they are
allocated.</text>
</paragraph></subsection><subsection id="ID8f3e14b447694a52b1d1468f1c13206a"><enum>(c)</enum><header>New affected
brands</header>
<paragraph id="id684904CF1C0A4A3594018F2929E763BA"><enum>(1)</enum><header>In
general</header><text>After January 1, 2009, it shall be unlawful for a new
affected brand to sell to a number of United States tobacco users in excess of
the number of allowances held for the brand by the brand’s owner or operator.
Such new affected brands shall not be eligible for an allocation of United
States tobacco user allowances under this section. New affected brands may
obtain allowances from any person, in accordance with this section.</text>
</paragraph><paragraph id="idC5A7972A5F984862BBC3B021EF52454C"><enum>(2)</enum><header>Enforcement</header><text>The
owner or operator of any new affected brand in violation of this subsection
shall be liable for fulfilling the obligations specified in section
3008.</text>
</paragraph></subsection><subsection id="ID170b2a32601d4a11b18dba76dd168112"><enum>(d)</enum><header>Nature of
allowances</header>
<paragraph id="id91234E6A400942D58AAF22809C750B8E"><enum>(1)</enum><header>In
general</header><text>An allowance allocated under this title shall be a
limited authorization to sell to 1 United States tobacco user in accordance
with the provisions of this title. Such allowance shall not constitute a
property right. Allowances under this title, once allocated to a person by the
Secretary, may be received, held, and temporarily or permanently transferred in
accordance with this title (and the regulations promulgated hereunder) without
regard to whether or not a permit is in effect under the permitting authority
with respect to the brand for which such allowance was originally allocated and
recorded.</text>
</paragraph><paragraph id="id69440C6E0D464CE1A0D7F341C4786C29"><enum>(2)</enum><header>Rules of
construction</header><text>Nothing in this title or in any other provision of
law shall be construed to limit the authority of the United States to terminate
or limit an authorization under this title. Nothing in this section relating to
allowances shall be construed as affecting the application of, or compliance
with, any other provision of this title to an affected brand or manufacturer.
Nothing in this section shall be construed as requiring a change of any kind in
any State law regulating excise tax rates or affecting any State law regarding
such State regulation or as limiting State regulation under such a State
law.</text>
</paragraph></subsection><subsection id="IDcebc8afbfdd64bd0bfa1028534f1abf3"><enum>(e)</enum><header>Prohibitions</header>
<paragraph id="idAB637D1B1A8543BB9A240055341FEAE8"><enum>(1)</enum><header>In
general</header><text>It shall be unlawful—</text>
<subparagraph id="idE1F41D72EA134EEEB9D3CAB4A3B9AE05"><enum>(A)</enum><text>for any person to
hold, use, or transfer any allowance allocated under this title, except in
accordance with regulations promulgated by the Secretary;</text>
</subparagraph><subparagraph id="id531FFF9E29CF43ABABA10AB281F26E36"><enum>(B)</enum><text>for any affected
brand to sell to United States tobacco users in excess of the number of
allowances held for that brand for that year by the owner or operator of the
brand.</text>
</subparagraph></paragraph><paragraph id="idFD9AF7AD5D8C45CFBE8AF787423FF7EC"><enum>(2)</enum><header>Effect of
provision</header><text>Upon the allocation of allowances under this title, the
prohibition contained in paragraph (1)(B) shall supersede any other United
States tobacco user limitation applicable under this title to the brands for
which such allowances are allocated.</text>
</paragraph><paragraph id="idDB74FEA7243D4AD5A66B8DDE3571D587"><enum>(3)</enum><header>Limitation</header><text>An
allowance under this title may not be used prior to the calendar year for which
such allowance is allocated.</text>
</paragraph><paragraph id="id2A31CA01EADE49C19D6DBCBA00043D66"><enum>(4)</enum><header>Rule of
construction</header><text>Nothing in this section, or in the allowance system
regulations promulgated under this section, shall be construed to relieve the
Secretary of the Treasury of permitting, monitoring, and enforcement
obligations under this title of under the Internal Revenue Code of 1986, nor
relieve affected manufacturers of their requirements and liabilities under this
title or such Code.</text>
</paragraph></subsection><subsection id="IDd171f7499f5e43c383813ec352417f44"><enum>(f)</enum><header>Applicability
of the antitrust laws</header>
<paragraph id="ID13e3808530c340588545834781c8b83c"><enum>(1)</enum><header>In
general</header><text>Nothing in this section shall be construed to
effect—</text>
<subparagraph id="IDa0df1281524e4d72a4286b20b4d560ec"><enum>(A)</enum><text>the applicability
of the antitrust laws to the transfer, use, or sale of allowances; or</text>
</subparagraph><subparagraph id="IDf27b595fd5154a50b34fbd9564d41da6"><enum>(B)</enum><text>the authority of
the Federal Trade Commission under any provision of law relating to unfair
methods of competition or anticompetitive acts or practices.</text>
</subparagraph></paragraph><paragraph commented="no" id="IDae400637c38748a5ac1bf6b2cf976b58"><enum>(2)</enum><header>Definition</header><text>As
used in this section, the term <term>antitrust laws</term> means those Acts set
forth in section 1 of the Clayton Act (15 U.S.C. 12).</text>
</paragraph></subsection></section><section commented="no" id="IDc84b77eb39d8408a99740630406af2cc"><enum>3004.</enum><header>Phase I
tobacco user requirements</header>
<subsection commented="no" id="IDedce6b1b657e454db7eafbdce4420919"><enum>(a)</enum><header>United States
tobacco user limitations</header>
<paragraph commented="no" id="id6697DC00A6B049E3B8E73652D5BF301C"><enum>(1)</enum><header>In
general</header><text>Not later than 9 months after the date of enactment of
this title, the Secretary shall publish in the Federal Register a list of
affected brands and their allowances for the years 2009 through 2015. Such
allowances for each such brand for 2009 shall equal the product of—</text>
<subparagraph commented="no" id="id150E50741D7D4FE096D9CB5B131F2AC9"><enum>(A)</enum><text>the average
of—</text>
<clause commented="no" id="id10C3E501BD4B4FACAF1A047E56DCCDBA"><enum>(i)</enum><text>the baseline of
the brand involved, divided by the total number of United States tobacco users
as determined using survey data under section 201 of the
<short-title>Help End Addiction to Lethal Tobacco Habits
Act</short-title>; and</text>
</clause><clause commented="no" id="idA4E28DAB9B0248D792DAAFC1D1BC5C69"><enum>(ii)</enum><text>the production
of that brand produced in that year for the domestic market (as determined by
the Secretary of Agriculture), divided by the total production for the domestic
market for that year (as determined by the Secretary of Agriculture);
and</text>
</clause></subparagraph><subparagraph commented="no" id="idBD6706501B024A2A98F2F8ACBBD81C89"><enum>(B)</enum><text>the total number
of United States tobacco users (as determined using survey data under section
201 of the <short-title>Help End Addiction to Lethal
Tobacco Habits Act</short-title>).</text>
</subparagraph></paragraph><paragraph commented="no" id="idE67EA997A364478F86351C85C28B8E7A"><enum>(2)</enum><header>Prohibition</header><text>After
January 1, 2009, it shall be unlawful for any affected brand to sell to United
States tobacco users in excess of the limitation determined under paragraph (1)
for such brand (stated as a total number of allowances in such list for phase
I), unless—</text>
<subparagraph id="id67CD498B0E7A4319B3C688C7F788A0D7"><enum>(A)</enum><text>the user
limitations applicable to such brand have been achieved pursuant to this
section and section 3005; or</text>
</subparagraph><subparagraph id="id4A7C36CC9A144F9EAA83F28005834042"><enum>(B)</enum><text>the owner or
operator of such brand holds allowances to sell to not less than the brand's
total annual users;</text>
</subparagraph><continuation-text continuation-text-level="paragraph">except
that, after January 1, 2015, the user limitations established in this section
shall be superseded by those established under section 3005. The owner or
operator of any brand in violation of this section shall be fully liable for
such violation including liability for fulfilling the obligations specified in
section 3008.</continuation-text></paragraph></subsection><subsection id="ID298ef58732094da0ba7db8ce83c14c31"><enum>(b)</enum><header>Substitutions</header><text>The
owner or operator of an affected brand under subsection (a) may include in its
section 3006 permit application and proposed compliance plan, a proposal to
reassign, in whole or in part, the affected brand's tobacco user reduction
requirements to any other brand or brands under the control of such owner or
operator. Such proposal shall specify—</text>
<paragraph id="ID8d66174712ce4301bb3006a5e2adb890"><enum>(1)</enum><text>the designation
of the substitute brand or brands to which any part of the reduction
obligations of subsection (a) shall be required, in addition to, or in lieu of,
any original affected brands designated under such subsection;</text>
</paragraph><paragraph id="ID56ad9f17646f402d8fdd4d9afcea4534"><enum>(2)</enum><text>the original
affected brand's baseline, the actual and allowable 2006 tobacco users, and the
authorized annual allowance allocation stated in the list in subsection
(a)(1);</text>
</paragraph><paragraph id="IDac0a29322ea04034b414a5e2cdeadda8"><enum>(3)</enum><text>the calculation
of the annual average United States tobacco users for calendar years 2004,
2005, and 2006, sold to by the substitute brand or brands, based on the
baseline for each brand;</text>
</paragraph><paragraph id="IDf424fda9d0814daeba4afbd930c27c08"><enum>(4)</enum><text>the user
limitations that would be applicable to the original and substitute affected
brands under the substitution proposal;</text>
</paragraph><paragraph id="ID69596f5b384742a799f6c5ce17ffe0b7"><enum>(5)</enum><text>documentation, to
the satisfaction of the Secretary, that the reassigned user limitations will,
in total, achieve the same or greater user reduction than would have been
achieved by the original affected brand and the substitute brand or brands
without such substitution; and</text>
</paragraph><paragraph id="IDd46c6f2c75984b8391ae78b7ba3dc6a8"><enum>(6)</enum><text>such other
information as the Secretary may require.</text>
</paragraph></subsection><subsection id="ID39f18cc2888e4671b9337bb8ec6ce64d"><enum>(c)</enum><header>Secretary's
action on substitution proposals</header>
<paragraph id="id85654003E70B40EBAA6CA4B37FA38EED"><enum>(1)</enum><header>Final
action</header>
<subparagraph id="id9E9B25E2030D499A82D25788B547AC14"><enum>(A)</enum><header>In
general</header><text>The Secretary shall take final action on a substitution
proposal under subsection (b) in accordance with section 3006 if the
substitution proposal complies with the requirements of this subsection.</text>
</subparagraph><subparagraph id="id8310600D7F924A8C968CEF5F31847284"><enum>(B)</enum><header>Approval</header><text>The
Secretary may approve a substitution proposal under subsection (b) in whole or
in part and with such modifications or conditions as may be consistent with the
orderly functioning of the allowance system under this title and which will
ensure the user reductions contemplated by this title.</text>
</subparagraph><subparagraph id="id8FED1AB327254B55A00E6031ECEC96DE"><enum>(C)</enum><header>Disapproval</header><text>If
a substitution proposal does not meet the requirements of subsection (b), the
Secretary shall disapprove it.</text>
</subparagraph><subparagraph id="idEF7DCADA11C3470EAC302DF1036469FE"><enum>(D)</enum><header>Limitation</header><text>The
owner or operator of a brand on the list in subsection (a) shall not substitute
another brand or brands without the prior approval of the Secretary.</text>
</subparagraph></paragraph><paragraph id="ID70cd2bf18f6d4d49be183c56ad4e3df6"><enum>(2)</enum><header>Actions upon
approval</header>
<subparagraph id="id41855DA2190B4B339C39B9C3F6EF2294"><enum>(A)</enum><header>In
general</header><text>Upon the approval of a substitution proposal under this
subsection, each substitute brand, and each manufacturer with such brand, shall
be deemed to be affected under this title, and the Secretary of the Treasury
shall revise any permits to the original and substitute affected manufacturer
and brand in accordance with the approved substitution plan and section
3006.</text>
</subparagraph><subparagraph id="id403A02ADFC30483EADBCB40D4EC09336"><enum>(B)</enum><header>Revised
allocation</header><text>The Secretary shall allocate allowances for the
original and substitute affected brands in accordance with the approved
substitution proposal pursuant to section 3003.</text>
</subparagraph><subparagraph id="idC50BBC2260C64D29AE9DAC23008FA738"><enum>(C)</enum><header>Limitation</header><text>It
shall be unlawful for any manufacturer or brand that is allocated allowances
pursuant to this section to sell to United States tobacco users in excess of
the limitation provided for in the approved substitution plan unless the owner
or operator of each brand governed by the permit and approved substitution plan
holds allowances to sell to not less than the brand’s total annual users. The
owner or operator of any original or substitute affected brand operated in
violation of this subsection shall be fully liable for such violation,
including liability for fulfilling the obligations specified in section
3008.</text>
</subparagraph></paragraph><paragraph id="id51463089BED94B0C88C9B78A41352855"><enum>(3)</enum><header>Disapproval</header><text>If
a substitution proposal is disapproved, the Secretary shall allocate allowances
to the original affected brand or brands in accordance with subsection
(a).</text>
</paragraph><paragraph id="IDe7eae7ad9e594cafad8bf6fabf4169c0"><enum>(4)</enum><header>Rule of
construction</header><text>Nothing in this subsection shall be construed as an
event of force majeur or a commercial impractibility or in any other way as a
basis for excused nonperformance by a manufacturer.</text>
</paragraph></subsection></section><section id="ID22223210e4c541c192e386ac5d81e1e9"><enum>3005.</enum><header>Phase II
tobacco user requirements</header>
<subsection id="ID261ed9fb97c646f59e693e8a8ad8f872"><enum>(a)</enum><header>Applicability</header><text>Beginning
on January 1, 2015, each existing affected brand shall be subject to the
limitations or requirements of this section.</text>
</subsection><subsection id="id63235C24F6DE4CB299A78D56F3DB1F2A"><enum>(b)</enum><header>Affected brands
and manufacturers</header>
<paragraph id="id5EB2A9554DD443BB947C34363F900329"><enum>(1)</enum><header>Affected
brands</header><text>Each brand that is subject to an annual tobacco user
limitation under this section shall be deemed to be an affected brand under
this title.</text>
</paragraph><paragraph id="id9FD9E211C0E5452CA995F64FE9870E41"><enum>(2)</enum><header>Affected
manufacturers</header><text>Each manufacturer that includes one or more
affected brands is an affected manufacturer.</text>
</paragraph><paragraph id="idCA902DAE43BF4922BF579230FFE82A3E"><enum>(3)</enum><header>Brands not in
operation in 2008</header><text>In the case of a brand that was not in
operation during calendar year 2008, the United States tobacco users for a
calendar year after 2008, as determined by the Secretary, shall be used in lieu
of the 2008 rate.</text>
</paragraph><paragraph id="id892C98356AC84243915A19B17F6108B5"><enum>(4)</enum><header>Publication of
list</header>
<subparagraph id="id3E36F03A2ABF4F329A28F50A9D08A571"><enum>(A)</enum><header>Proposed
list</header><text>Not later than December 31, 2013, the Secretary shall
publish a proposed list of the annual Phase II allowance allocations for the
years 2016 through 2027.</text>
</subparagraph><subparagraph id="id2003F1071E50485FB1ABDA582223F49F"><enum>(B)</enum><header>Final
list</header><text>After notice and opportunity for public comment, but not
later than November 30, 2014, the Secretary shall publish a final list of the
annual Phase II allocations, subject to the provisions of section 3005.</text>
</subparagraph></paragraph></subsection><subsection id="id738934BC991E42E78E595BABA6019204"><enum>(c)</enum><header>Liability</header><text>The
owner or operator of any brand operated in violation of this section shall be
liable under this Act for fulfilling the obligations specified in section
3008.</text>
</subsection><subsection id="ID5fdf7c553a304a6388b75911be54efaf"><enum>(d)</enum><header>Unlawful
acts</header><text>It shall be unlawful for a brand—</text>
<paragraph id="id5BFD8C1828374BE08B154D81235A16BE"><enum>(1)</enum><text>beginning on
January 1, 2015, to exceed an annual United States tobacco user limitation
equal to the product of the brand's baseline multiplied by
<fraction>2/3</fraction>, unless the owner or operator of such brand holds
allowances to sell to not less than the brand's total annual users; and</text>
</paragraph><paragraph id="ID0f930c0818a54fea85a35cce366557f0"><enum>(2)</enum><text>beginning on
January 1, 2027, to exceed an annual United States tobacco user limitation
equal to the product of its baseline multiplied by 0.1, unless the owner or
operator holds allowances to sell to not less than the brand’s total annual
United States tobacco users.</text>
</paragraph></subsection></section><section id="IDa41443834c364e1693e27a1b0e285623"><enum>3006.</enum><header>Permits and
compliance plans</header>
<subsection id="ID8f503321eaaf4296b02b1cb9e0898bd1"><enum>(a)</enum><header>Permit
program</header><text>The provisions of this title shall be implemented,
subject to section 3003, through the modification of, or an addition to, a
permit issued to a brand that is subject to this title and issued and enforced
in accordance with the provisions of section 5713 of the Internal Revenue Code
of 1986. Any such permit issued by the Secretary of the Treasury shall
prohibit—</text>
<paragraph id="ID19818a753a344be683d57596548c1f82"><enum>(1)</enum><text>annual sales to
United States tobacco users in excess of the number of allowances the owner or
operator, or the designated representative of the owners or operators, of the
brand hold for the brand under this title;</text>
</paragraph><paragraph id="ID13101758720c4296902e95c1a3a3559c"><enum>(2)</enum><text>the brand from
exceeding applicable United States tobacco user levels;</text>
</paragraph><paragraph id="IDca25ab22a7b646fdbae7fc6ce7a0c06b"><enum>(3)</enum><text>the use of any
allowance prior to the year for which it was allocated; and</text>
</paragraph><paragraph id="ID90a947d2bc2d45879e6b23d805e842e7"><enum>(4)</enum><text>noncompliance
with any other provision of the permit.</text>
</paragraph><continuation-text continuation-text-level="subsection">No permit
shall be issued under this section that is inconsistent with the requirements
of this title, and section 5713 of the Internal Revenue Code of 1986, as
applicable.</continuation-text></subsection><subsection id="ID0eaac02d3ade40de83c372df8f36c3be"><enum>(b)</enum><header>Compliance
plan</header>
<paragraph id="id77D0E8F2CE584002B6F48ADEC15BAF1E"><enum>(1)</enum><header>In
general</header><text>An application for a permit under this section shall
contain a compliance plan with respect to compliance by the manufacturer with
the requirements of this title. The Secretary may require that the owner or
operator of 2 or more affected manufacturers submit an integrated compliance
plan providing an overall plan for achieving compliance by the affected
manufacturers.</text>
</paragraph><paragraph id="id36C7BCC0761D44209E49FA51C19FAE1A"><enum>(2)</enum><header>Coverage of all
brands</header><text>Where an affected manufacturer consists of more than 1
affected brand, the compliance plan shall cover all such brands.</text>
</paragraph><paragraph id="idB91450DF56D646519E6FA1CF047398D5"><enum>(3)</enum><header>Statement that
brand will meet requirements</header><text>Except as provided under section
3004(c)(1)(B), the submission of a statement by the owner or operator, or the
designated representative of the owner or operator, of a brand that is subject
to the limitation requirements of sections 3004 and 3005, that the brand will
meet the applicable limitation requirements of such sections in a timely manner
and that the owners and operators will hold allowances to sell to not less than
the total annual United States tobacco users of the brand, shall be deemed to
meet the proposed and approved compliance planning requirements of this section
and section 5713 of the Internal Revenue Code of 1986.</text>
</paragraph><paragraph id="idD5142CFF9A174CC18FE111D30516B265"><enum>(4)</enum><header>Automatic
amending of permits and plans</header><text>The recording by the Secretary of a
transfer of allowances under this title shall be deemed to automatically amend
all applicable proposed or approved permit applications, compliance plans, and
permits under this section.</text>
</paragraph><paragraph id="idFCD84FE507BD41D09BDFF742646CD998"><enum>(5)</enum><header>Rule of
construction</header><text>Nothing in this section shall be construed as
affecting allowances under this title.</text>
</paragraph></subsection><subsection id="ID55c66a7bd4694700ac7cba962927709e"><enum>(c)</enum><header>Regulations;
issuance of permits</header>
<paragraph id="id19FAFEAE082D4B1B812AF06D5977460B"><enum>(1)</enum><header>Regulations</header><text>Not
later than 9 months after the date of the enactment of this title, the
Secretary of the Treasury shall promulgate regulations, in consultation with
the Secretary of Health and Human Services, in accordance with sections 5712
and 5713 of the Internal Revenue Code of 1986, to modify the permit program for
affected manufacturers under this title.</text>
</paragraph><paragraph id="id514D3A2E6C1C40F3AF2385196C444B50"><enum>(2)</enum><header>Issuance of
permits</header>
<subparagraph id="id156A2733732F45E795701DCB3F7B6EBB"><enum>(A)</enum><header>In
general</header><text>Following the promulgation of regulations under paragraph
(1), the Secretary of the Treasury shall issue modified permits to implement
the requirements of sections 3004 and 3005 and the allowances provided for
under section 3003 to the owner or operator of each affected manufacturer under
sections 3004 and 3005. The permit issued in accordance with this subsection
for an affected manufacturer shall provide that the affected brands of the
affected manufacturer may not sell to an annual number of United States tobacco
users that is in excess of the number of allowances the owner or operator or
designated representative hold for the brand.</text>
</subparagraph><subparagraph id="ID75d294effd424a59bfb0ffa29c3add7a"><enum>(B)</enum><header>First phase
permits</header>
<clause id="id78451EC0AFD74C3AB90B8FB0561DCA30"><enum>(i)</enum><header>In
general</header><text>The Secretary of the Treasury shall issue permits to
affected manufacturers under section 5713 of the Internal Revenue Code of
1986.</text>
</clause><clause id="ID119ae716f8fc4fafb66a329645c0322c"><enum>(ii)</enum><header>Permit
application and compliance plan</header>
<subclause id="id00B76B5B2BAD45B782096C1F02CBCEE2"><enum>(I)</enum><header>In
general</header><text>Not later than 12 months after the date of the enactment
of this title, the designated representative of the owner or operator, or the
owner and operator, of each affected manufacturer shall submit a permit
application and compliance plan for that manufacturer in accordance with
regulations promulgated and issued by the Secretary of the Treasury under
clause (i). The permit application and the compliance plan shall be binding on
the owner or operator or the designated representative of owners and operators
for purposes of this title, and shall be enforceable in lieu of a permit until
a permit is issued by the Secretary of the Treasury for the
manufacturer.</text>
</subclause><subclause id="ID27a3056338594ab487fb9d77a1fdc2f1"><enum>(II)</enum><header>Action on
compliance plans</header><text>The Secretary shall review each proposed
compliance plan to determine whether it satisfies the requirements of this
title, and shall communicate such review to the Secretary of the Treasury, who
shall approve or disapprove such plan within 6 months after the receipt of a
complete submission. If a plan is disapproved, it may be resubmitted for
approval with such changes as the Secretary of the Treasury shall require
consistent with the requirements of this title and within such period as the
Secretary prescribes as part of such disapproval.</text>
</subclause></clause></subparagraph><subparagraph id="ID45841df5bfe542bf968db75d852f489a"><enum>(C)</enum><header>Second phase
permits</header>
<clause id="id0860D0E4E72B47F184A20BDC03402AD0"><enum>(i)</enum><header>In
general</header><text>The Secretary of the Treasury shall issue permits to
affected manufacturers under section 5713 of the Internal Revenue Code of
1986.</text>
</clause><clause id="ID3f869ada2dba47468a9b90b1af10ce99"><enum>(ii)</enum><header>Permit
application and compliance plan</header><text>Annually beginning in January 1,
2014, the designated representative of the owner or operator, or the owner and
operator, of each affected manufacturer shall submit a permit application and
compliance plan for that manufacturer in accordance with regulations issued by
the Secretary of the Treasury under clause (i). The permit application and the
compliance plan shall be binding on the owner or operator or the designated
representative of owners and operators for purposes of this title, and shall be
enforceable in lieu of a permit until a permit is issued by the Secretary of
the Treasury for the manufacturer.</text>
</clause></subparagraph><subparagraph id="IDede7e79574414b0a96b6afbd26b690e9"><enum>(D)</enum><header>New
brands</header><text>The owner or operator of each manufacturer that includes a
new brand shall submit a permit application and compliance plan to the
Secretary of the Treasury not later than the date on which the brand commences
operation. The Secretary of the Treasury shall issue a permit to the owner or
operator of the brand, or the designated representative thereof, if the brand
satisfies the requirements of sections 5712 and 5713 of the Internal Revenue
Code of 1986 and this title.</text>
</subparagraph></paragraph></subsection><subsection id="ID68a39802bf974f7cac07164eae120885"><enum>(d)</enum><header>Amendment of
permit application and compliance plan</header><text>At any time after the
submission of a permit application and compliance plan under this section, the
applicant may submit a revised application and compliance plan, in accordance
with the requirements of this section and the Internal Revenue Code of
1986.</text>
</subsection><subsection id="ID29d43f36f1064fee858131faf8179226"><enum>(e)</enum><header>Prohibition</header><text>It
shall be unlawful—</text>
<paragraph id="idE7A016801EEB414EB1160CFBE913DFF7"><enum>(1)</enum><text>for an owner or
operator, or designated representative, required to submit a permit application
or compliance plan under this title to fail to submit such application or plan
in accordance with the regulations promulgated under this section or to
otherwise fail to comply with regulations implementing this section; and</text>
</paragraph><paragraph id="IDfbcdc79c2b384c39b4557745484b6870"><enum>(2)</enum><text>for any person to
operate any manufacturer subject to this title except in compliance with the
terms and requirements of a permit application and compliance plan (including
amendments thereto) or permit issued by the Secretary of the Treasury.</text>
</paragraph><continuation-text continuation-text-level="subsection">For
purposes of this subsection, compliance with a permit issued under section 5713
of the Internal Revenue Code of 1986 which complies with this title for
manufacturers subject to this title shall be deemed to be in compliance with
this subsection.</continuation-text></subsection><subsection id="IDe8c9d72e2e104b418ac7f0c0494542ed"><enum>(f)</enum><header>Certificate of
representation and multiple owners</header>
<paragraph id="idC4376AA99D754FD381015F0873C915E8"><enum>(1)</enum><header>Certificate</header><text>No
permit shall be issued under this section to an affected brand until the
designated representative of the owners or operators has filed a certificate of
representation with regard to matters under this title, including the holding
and distribution of allowances and the proceeds of transactions involving
allowances. Except as otherwise provided for in this subsection, where all
legal or equitable title to or interest in an affected brand is held by a
single person, the certification shall state that all allowances received by
the brand are deemed to be held for that person.</text>
</paragraph><paragraph id="id30D5426D07CA4539B8B6DC7BEAD55D17"><enum>(2)</enum><header>Multiple
owners</header><text>If there are multiple holders of a legal or equitable
title to, or a leasehold interest in, such a brand, the certificate under
paragraph (1) shall state—</text>
<subparagraph id="idFB7E562BE5874F36B0A1ECF48D9DF741"><enum>(A)</enum><text>that allowances
and the proceeds of transactions involving allowances will be deemed to be held
or distributed in proportion to each holder's legal, equitable, leasehold, or
contractual reservation or entitlement; or</text>
</subparagraph><subparagraph id="idC672A4687CA94A7D8D4D4A6BA4EA457E"><enum>(B)</enum><text>if such multiple
holders have expressly provided for a different distribution of allowances by
contract, that allowances and the proceeds of transactions involving allowances
will be deemed to be held or distributed in accordance with the
contract.</text>
</subparagraph></paragraph><paragraph id="id09DF97B3F141465EB1013BCA5EF59300"><enum>(3)</enum><header>Leaseholder
agreements</header><text>A passive lessor, or a person who has an equitable
interest through such lessor, whose rental payments are not based, either
directly or indirectly, upon the revenues or income from the affected brand
shall not be deemed to be a holder of a legal, equitable, leasehold, or
contractual interest for the purpose of holding or distributing allowances as
provided in this subsection, during either the term of such leasehold or
thereafter, unless expressly provided for in the leasehold agreement.</text>
</paragraph></subsection></section><section id="ID7f21a7660c42480886e576dd36e7da76"><enum>3007.</enum><header>Excess users
penalty</header>
<subsection id="ID3e6766fc7aab43e7806ad4bce58b107c"><enum>(a)</enum><header>Excess users
penalty</header>
<paragraph id="id35B52F86973E4A1E849B8734FDF9A7AC"><enum>(1)</enum><header>In
general</header><text>The owner or operator of any brand or manufacturer
subject to the requirements of section 3003, 3004 or 3005, that sells to United
States tobacco users for any calendar year an amount in excess of the brand's
user limitation requirement or of the allowances the owner or operator holds
for use for the brand for that calendar year shall be liable for the payment of
an excess users penalty.</text>
</paragraph><paragraph id="idC8447281F81548CCB8043A9AD2030B67"><enum>(2)</enum><header>Determination
of penalty</header><text>The penalty under paragraph (1) shall be an amount
that equals the product of—</text>
<subparagraph id="idD17D8621A7394834B64F9A323BAE3EA4"><enum>(A)</enum><text>the number of
users in excess of the brand's user limitation requirement or of the allowances
the operator holds for use for the brand for that year, as applicable;
and</text>
</subparagraph><subparagraph id="id16D25E98B0E14F56BF55EC4FF48610BB"><enum>(B)</enum><text>$3,500.</text>
</subparagraph></paragraph><paragraph id="id2F7A174C5EB044569472795A4F13BE01"><enum>(3)</enum><header>Payment</header><text>A
penalty under this subsection shall be due and payable without demand to the
Secretary of the Treasury. Any such payment shall be deposited in the United
States Treasury pursuant to the <act-name>Miscellaneous Receipts
Act</act-name>. Any penalty due and payable under this section shall not
diminish the liability of the brand's owner or operator for any fine, penalty,
or assessment against the brand for the same violation under any other section
of this title.</text>
</paragraph><paragraph id="idAC4A56F4407547DFAB62A028EDC53357"><enum>(4)</enum><header>Regulations</header><text>Not
later than 12 months after the date of enactment of this title, the Secretary
shall promulgate regulations with respect to the payment of penalties under
this subsection.</text>
</paragraph></subsection><subsection id="IDd446c30a7d9d444f89b23578a1c266b8"><enum>(b)</enum><header>Excess users
offset</header>
<paragraph id="id54B187902EBE416B93BBACEF964CBF9B"><enum>(1)</enum><header>In
general</header><text>The owner or operator of any affected manufacturer that
sells to United States tobacco users during any calendar year in excess of the
brand's limitation requirement or of the allowances held for the brand for the
calendar year, shall be liable to offset the excess users by an equal amount in
the following calendar year, or such longer period as the Secretary of the
Treasury may prescribe.</text>
</paragraph><paragraph id="idE7041E9009A84CE19F7EBB42CD6FE31B"><enum>(2)</enum><header>Plan</header><text>Not
later than 60 days after the end of the year in which the excess users
occurred, the owner or operator of the manufacturer shall submit to the
Secretary a proposed plan to achieve the offsets required under paragraph (1).
Upon approval of the proposed plan by the Secretary, as submitted, modified, or
conditioned, the plan shall be deemed to be a condition of the operating permit
under section 3006 for the brand without further review or revision of the
permit.</text>
</paragraph><paragraph id="id24A5333745054AD596FDB2D9E25684DF"><enum>(3)</enum><header>Deduction of
allowances</header><text>The Secretary shall deduct allowances equal to the
excess from those allocated for the manufacturer for the calendar year, or
succeeding years during which offsets are required under this section,
following the year in which the excess users occurred.</text>
</paragraph></subsection><subsection id="ID780ce2d2edc243b0a1c9c7a189ec8e28"><enum>(c)</enum><header>Penalty
adjustment</header><text>The Secretary of the Treasury shall, by regulation,
adjust the penalty amount specified in subsection (a)(2)(B) to account for the
excess health costs per tobacco user and inflation, based on the change in
Medical Inflation (as reported annually by the Council of Economic Advisors),
on the date of enactment and annually thereafter.</text>
</subsection><subsection id="IDc3bacc7cfc21412bac9db61fcd5e8af1"><enum>(d)</enum><header>Prohibition</header><text>It
shall be unlawful for the owner or operator of any manufacturer liable for a
penalty and offset under this section to fail—</text>
<paragraph id="id713B5E60B36F49D0A90B10A2895C88E2"><enum>(1)</enum><text>to pay the
penalty under subsection (a);</text>
</paragraph><paragraph id="idBB77AA12478844B0A99991A867006818"><enum>(2)</enum><text>to provide, and
thereafter comply with, a compliance plan as required under subsection (b);
or</text>
</paragraph><paragraph id="id481B7B67E96040FE8E5245F49EC09E24"><enum>(3)</enum><text>to offset excess
users as required under subsection (b).</text>
</paragraph></subsection></section><section commented="no" display-inline="no-display-inline" id="IDdbbc97867dfb461ea5160c760788b4fc" section-type="subsequent-section"><enum>3008.</enum><header>Inventories;
Reports; Records</header>
<subsection commented="no" display-inline="no-display-inline" id="id3680CCD757264DBF86E96980E9FB2F65"><enum>(a)</enum><header>Inventories</header><text display-inline="yes-display-inline">Every manufacturer or importer of tobacco
products shall make a true and accurate inventory at the time of commencing
business, at the time of concluding business, and at such other times, in such
manner and form, and to include such items, as the Secretary of the Treasury
shall by regulation prescribe. Such inventories shall be subject to
verification by any internal revenue officer. The Secretary, in consultation
with the Secretary of the Treasury, shall develop and implement processes to
verify allowances issued under section 3003 against information in records of
compliance.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idC2BC18201B114B94B6EB332E4B4F5158"><enum>(b)</enum><header>Reports</header><text display-inline="yes-display-inline">Every manufacturer or importer of tobacco
products shall make a report for each month and for any portion of a month
during which such manufacturer or importer engages in such business. Such
report shall be made regardless of whether any operations or transactions
occurred during the month or portion of a month covered therein. The report for
a month or portion of a month in which business is commenced or is concluded
shall be conspicuously marked <quote>Commencing Report</quote> or
<quote>Concluding Report</quote>, respectively. The original of the report
shall be submitted to the appropriate Alcohol and Tobacco Tax and Trade Bureau
officer not later than the 20th day of the month succeeding the month covered
therein. Each report shall show, for the period covered, the total quantity of
tobacco products—</text>
<paragraph id="ID1ce6d72d66e1456ba00dbb25154715d3"><enum>(1)</enum><text>manufactured;</text>
</paragraph><paragraph id="ID071705fdc0be425f9298e06c668e1854"><enum>(2)</enum><text>received in
bond;</text>
</paragraph><paragraph id="ID62ec856fafb141adb2042175b96ae998"><enum>(3)</enum><text>received by
return to bond;</text>
</paragraph><paragraph id="ID814e96550f824da2acf6b5fae6fb08e7"><enum>(4)</enum><text>disclosed by
inventory as an overage;</text>
</paragraph><paragraph id="ID2bc274082b2142498364b2c9a2491ea1"><enum>(5)</enum><text>removed subject
to tax;</text>
</paragraph><paragraph id="ID4bdfd61999cd457587fe3130ba9c5484"><enum>(6)</enum><text>removed in
bond;</text>
</paragraph><paragraph id="ID7ccccab6b2ac4d178df8702dc5d388ec"><enum>(7)</enum><text>otherwise
disposed of without determination of tax;</text>
</paragraph><paragraph id="ID7dafaf69333d4482aab7dd80f50b1954"><enum>(8)</enum><text>disclosed by
inventory as a shortage; and</text>
</paragraph><paragraph id="ID8c33ccd1137049009d416abe87e62ea2"><enum>(9)</enum><text>on hand, in bond,
at the beginning of and end of the month.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="idE95CB5FCA47A479AA742D97387287550"><enum>(c)</enum><header>Records</header><text>Every
affected manufacturer shall keep records in accordance with section 40.183 of
title 27, Code of Federal Regulations (or successor regulations). Affected
manufacturers shall retain any issued permit, compliance plan, if applicable,
and any amendments thereto, and documentation relating to allowances under
section 3003 received, held and temporarily or permanently transferred,
including certification of such transfer together with the copy of the
application and supporting
documents.</text>
</subsection></section>.
<enum>IV</enum><header>Revenue
provisions</header>
<section id="ID8A6FF5CE94B647E1800FE97D358CF4DA"><enum>401.</enum><header>Increase in
excise tax rate on tobacco products based on relative health risk</header>
<subsection id="ID9924BE0C120C42EA8F8FBEBCD7537D57"><enum>(a)</enum><header>Cigarettes</header><text>Section
5701(b) of the Internal Revenue Code of 1986 is amended—</text>
<paragraph id="IDB64A0C065EDC4B47A3BFD3327F0E3EB7"><enum>(1)</enum><text>by striking
<quote>$19.50 per thousand ($17 per thousand on cigarettes removed during 2000
or 2001)</quote> in paragraph (1) and inserting <quote>$19.50 plus the
applicable risk amount per thousand</quote>, and</text>
</paragraph><paragraph id="ID2CDEC4D8B71946DAA440B14FF9080709"><enum>(2)</enum><text>by striking
<quote>$40.95 per thousand ($35.70 per thousand on cigarettes removed during
2000 or 2001)</quote> in paragraph (2) and inserting <quote>$40.95 plus the
applicable risk amount per thousand</quote>.</text>
</paragraph></subsection><subsection id="IDB1321248B5964F1EAACBF68B60E3ADF7"><enum>(b)</enum><header>Cigars</header><text>Section
5701(a) of the Internal Revenue Code of 1986 is amended—</text>
<paragraph id="ID47D2EF6781324682AB6348F36EC3F6BA"><enum>(1)</enum><text>by striking
<quote>$1.828 cents per thousand ($1.594 cents per thousand on cigars removed
during 2000 or 2001)</quote> in paragraph (1) and inserting <quote>$1.828 cents
plus the applicable risk amount per thousand</quote>,</text>
</paragraph><paragraph id="ID1561A78A0EDF474A92EB47E855016072"><enum>(2)</enum><text>by striking
<quote>20.719 percent (18.063 percent on cigars removed during 2000 or
2001)</quote> in paragraph (2) and inserting <quote>20.719 percent plus the
applicable risk percentage</quote>, and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id0CCCE491E2E64778808848F2EFB56846"><enum>(3)</enum><text>by striking
<quote>$48.75 per thousand ($42.50 per thousand on cigars removed during 2000
or 2001)</quote> in paragraph (2) and inserting <quote>$48.75 plus the
applicable risk amount per thousand</quote>.</text>
</paragraph></subsection><subsection id="IDBDB31D1D918D418EB6ABD1C70FB8FF38"><enum>(c)</enum><header>Smokeless
Tobacco</header><text>Section 5701(e) of the Internal Revenue Code of 1986 is
amended—</text>
<paragraph id="IDB308F3BCEE7C4CBA99FB8659F4AD92AB"><enum>(1)</enum><text>by striking
<quote>58.5 cents (51 cents on snuff removed during 2000 or 2001)</quote> in
paragraph (1) and inserting <quote>58.5 cents plus the applicable risk
amount</quote>, and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDD64C649EFA5042BA93FC96A6C9EE9F90"><enum>(2)</enum><text>by striking
<quote>19.5 cents (17 cents on chewing tobacco removed during 2000 or
2001)</quote> in paragraph (2) and inserting <quote>19.5 cents plus the
applicable risk amount</quote>.</text>
</paragraph></subsection><subsection id="idB6EBFC6AF68943FBAF2C112F3343ABB3"><enum>(d)</enum><header>Applicable risk
amount</header><text>Section 5701 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="id997BB47D40BC4ECBBD298FDB96F68B0E" style="OLC">
<subsection id="id14091E1486B74016A23EBDD0BD1813B2"><enum>(p)</enum><header>Applicable risk
amount</header><text>With respect to each tobacco product or group of products
classified by the Tobacco Risk Classification Panel under the Food and Drug
Administration, the following applicable risk amounts or percentages shall
apply:</text>
<paragraph id="id9389F3376A9C42998774B578446AFF0E"><enum>(1)</enum><text>Small cigarettes:
Class I—$10; Class II—$20; and Class III—$30.</text>
</paragraph><paragraph id="id4EEFB21E9E2A4FE8B0796B3CB500E930"><enum>(2)</enum><text>Large cigarettes:
Class I—$20; Class II—$40; and Class III—$60.</text>
</paragraph><paragraph id="id8F60B97A3CC74085A72082739F4B9399"><enum>(3)</enum><text>Small cigars:
Class I—$0.914; Class II—$1.828; and Class III—$2.742.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id81F2933DFECE4B8F8AE816A6BC6F2523"><enum>(4)</enum><text display-inline="yes-display-inline">Large cigars: Class I—5 percent; Class
II—10 percent; and Class III—15 percent, but not more than $73.12.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idBBE257291CAF442CA1ECD245F58EC8B9"><enum>(5)</enum><text display-inline="yes-display-inline">Smokeless (snuff): Class I—29.25 cents;
Class II—58.5 cents; and Class III—87.75 cents.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id93C1F7307A1449A49219335BFB870B24"><enum>(6)</enum><text display-inline="yes-display-inline">Smokeless (chewing): Class I—10 cents;
Class II—20 cents; and Class III—30
cents.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="IDC2B6EDFBA04B4FA083FF4F23759E55CA"><enum>(e)</enum><header>Floor Stocks
Taxes</header>
<paragraph id="IDE04B1ED1D104435B8A7BF36B10067E24"><enum>(1)</enum><header>Imposition of
tax</header><text>On tobacco products and cigarette papers and tubes
manufactured in or imported into the United States which are removed before
January 1, 2008, and held on such date for sale by any person, there is hereby
imposed a tax in an amount equal to the excess of—</text>
<subparagraph id="ID855D1FEDB4AA4F79BE5F4C2A96CE9C90"><enum>(A)</enum><text>the tax which
would be imposed under section 5701 of the Internal Revenue Code of 1986 on the
article if the article had been removed on such date, over</text>
</subparagraph><subparagraph id="ID348BBFC807454B0E92B31F6F6558579B"><enum>(B)</enum><text>the prior tax (if
any) imposed under section 5701 of such Code on such article.</text>
</subparagraph></paragraph><paragraph id="ID1171F4ECF6B34204954FD6FCEB916BB4"><enum>(2)</enum><header>Credit against
tax</header><text>Each person shall be allowed as a credit against the taxes
imposed by paragraph (1) an amount equal to $500. Such credit shall not exceed
the amount of taxes imposed by paragraph (1) on January 1, 2008, for which such
person is liable.</text>
</paragraph><paragraph id="IDEF1F0C3ABDD3414F96BEA63252C8D91E"><enum>(3)</enum><header>Liability for
tax and method of payment</header>
<subparagraph id="IDF7FC2F03274F44EE98B1AB41C46C5E84"><enum>(A)</enum><header>Liability for
tax</header><text>A person holding cigarettes on January 1, 2008, to which any
tax imposed by paragraph (1) applies shall be liable for such tax.</text>
</subparagraph><subparagraph id="ID711E10DFC68D4B10BB1C763C35B98A90"><enum>(B)</enum><header>Method of
payment</header><text>The tax imposed by paragraph (1) shall be paid in such
manner as the Secretary shall prescribe by regulations.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID4AFCA35FE67344EC8763A44F8101D285"><enum>(C)</enum><header>Time for
payment</header><text>The tax imposed by paragraph (1) shall be paid on or
before April 1, 2008.</text>
</subparagraph></paragraph><paragraph id="ID7ABC2420A69A47D4B801CE53423C677D"><enum>(4)</enum><header>Articles in
foreign trade zones</header><text>Notwithstanding the Act of June 18, 1934 (48
Stat. 998, 19 U.S.C. 81a) and any other provision of law, any article which is
located in a foreign trade zone on January 1, 2004, shall be subject to the tax
imposed by paragraph (1) if—</text>
<subparagraph id="ID156356594FAA4C05A768CFC4F77682FC"><enum>(A)</enum><text>internal revenue
taxes have been determined, or customs duties liquidated, with respect to such
article before such date pursuant to a request made under the 1st proviso of
section 3(a) of such Act, or</text>
</subparagraph><subparagraph id="ID1B4436B30BFE4F3FB4935057A28556C5"><enum>(B)</enum><text>such article is
held on such date under the supervision of a customs officer pursuant to the 2d
proviso of such section 3(a).</text>
</subparagraph></paragraph><paragraph id="ID86E215430D7C4993BA85F4A4FF7A1422"><enum>(5)</enum><header>Definitions</header><text>For
purposes of this subsection—</text>
<subparagraph id="IDF2E9B3CBAF174683852001CA86A5B769"><enum>(A)</enum><header>In
general</header><text>Terms used in this subsection which are also used in
section 5702 of the Internal Revenue Code of 1986 shall have the respective
meanings such terms have in such section.</text>
</subparagraph><subparagraph id="ID13CE71F9CFEB4028B12AD1D06FC524EF"><enum>(B)</enum><header>Secretary</header><text>The
term <term>Secretary</term> means the Secretary of the Treasury or the
Secretary’s delegate.</text>
</subparagraph></paragraph><paragraph id="ID4DEF8F8EF0D2484D9EF72142322EE419"><enum>(6)</enum><header>Controlled
groups</header><text>Rules similar to the rules of section 5061(e)(3) of such
Code shall apply for purposes of this subsection.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID87051293288349A8A9E1BAAD5645F6F6"><enum>(7)</enum><header>Other laws
applicable</header><text>All provisions of law, including penalties, applicable
with respect to the taxes imposed by section 5701 of such Code shall, insofar
as applicable and not inconsistent with the provisions of this subsection,
apply to the floor stocks taxes imposed by paragraph (1), to the same extent as
if such taxes were imposed by such section 5701. The Secretary may treat any
person who bore the ultimate burden of the tax imposed by paragraph (1) as the
person to whom a credit or refund under such provisions may be allowed or
made.</text>
</paragraph></subsection><subsection id="ID6B2E3075343343F494F488D57B8F9D76"><enum>(f)</enum><header>Effective
Date</header><text>The amendments made by this section shall apply to articles
removed (as defined in section 5702(k) of the Internal Revenue Code of 1986)
after December 31, 2007.</text>
</subsection><subsection id="id0CF0A0B8BA794BC19BF27ACE66F7E751"><enum>(g)</enum><header>Use of
Amounts</header><text>With respect to any increase in revenues to the Treasury
resulting from the provisions of and amendments made by this section, without
further appropriation—</text>
<paragraph id="id57717BE28CC84520A79CD14B28167B98"><enum>(1)</enum><text>50 percent of
such increase shall be transferred to the Federal Hospital Insurance Trust Fund
established under section 1817 of the <act-name>Social Security Act</act-name>
(42 U.S.C. 1395i),</text>
</paragraph><paragraph id="idB6B3D53FF8C443F88C2B91A05708C8DC"><enum>(2)</enum><text>25 percent of
such increase shall be transferred to the States through the medicaid program
under title XIX of the <act-name>Social Security Act</act-name> (42 U.S.C. 1396
et seq.), and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idD7FC696C5DCE45CFBD33B598C324619A"><enum>(3)</enum><text>25 percent of
such increase shall be provided to the States through matching grants for the
development and administration of programs to restrict youth access to tobacco
products as provided for in regulations promulgated by the Secretary of Health
and Human Services, including grants under section 3009 of the <act-name>Public
Health Service Act</act-name>, and for counter-advertising under section 506C
of the <act-name>Public Health Service Act</act-name>.</text>
</paragraph></subsection></section><enum>V</enum><header>Cessation and
prevention</header>
<section id="IDa49b92f11dec42a18b79d840755a63a0"><enum>501.</enum><header>Food and Drug
Administration Tobacco Risk Classification Panel</header><text display-inline="no-display-inline">Chapter VII of the <act-name>Federal Food,
Drug, and Cosmetic Act</act-name> (21 U.S.C. 371 et seq.) is amended by adding
at the end the following:</text>
<quoted-block display-inline="no-display-inline" id="idAE6B51FC8AD5418187947BE573B8B7FA" style="OLC">
<subchapter id="idB22B8ED40E1141C5B603918ACE54D89D"><enum>I</enum><header>Provisions
relating to tobacco</header>
<section id="idFBE8F83061894813A4573EE8869244E6"><enum>765.</enum><header>Tobacco Risk
Classification Panel</header>
<subsection id="IDfc6a65576be1423faedd01a4b657d3f9"><enum>(a)</enum><header>Tobacco product
classes</header>
<paragraph id="idE6F31986B2624A94A30F33FE2E47DC6C"><enum>(1)</enum><header>In
general</header><text>There are established the following classes of tobacco
products:</text>
<subparagraph id="IDd49cadf030f248ddb7dc60d9f95d36ba"><enum>(A)</enum><header>Class I—general
risk</header><text>A tobacco product or group of products with typical health
risks shall be referred to as a <term>Class I product</term>.</text>
</subparagraph><subparagraph id="IDcd776ea5aebe497f97415d9bdd728f95"><enum>(B)</enum><header>Class
II—special risk</header><text>A tobacco product or group of products that
cannot be classified as a Class I tobacco product because it is—</text>
<clause id="idE7C102F52DC949D88B2C6D10C11F92E7"><enum>(i)</enum><text>of greater risk
than a Class I product; or</text>
</clause><clause id="idF781A325631D4B19A0F20B12C91FF314"><enum>(ii)</enum><text>there is
insufficient evidence to classify such product or group of products as Class I
products;</text>
</clause><continuation-text continuation-text-level="subparagraph">shall
be referred to as a <term>Class II product</term>.</continuation-text></subparagraph><subparagraph id="ID7f963f8e189d4bb5af87aedfd4131d63"><enum>(C)</enum><header>Class
III—enhanced risk</header><text>A tobacco product or group of products
that—</text>
<clause id="idCF9795E2800B4E64A2E40750232EF6A9"><enum>(i)</enum><text>is of greater
risk than a Class II product;</text>
</clause><clause id="id3BD0E24CCC4C4529B4E0247E763E0446"><enum>(ii)</enum><text>there is
insufficient evidence to classify such product or group of products as Class II
products; or</text>
</clause><clause id="idA7FB9F18A55C4B13942AD4ACD2330CCC"><enum>(iii)</enum><text>presents a
potentially unreasonable risk of illness or injury;</text>
</clause><continuation-text continuation-text-level="subparagraph">shall
be referred to as a <term>Class III product</term>.</continuation-text></subparagraph></paragraph><paragraph id="ID533a120ba0dc40d1be78f51760e136ae"><enum>(2)</enum><header>Determinations</header><text>For
purposes of this section, the classification of a tobacco product or group of
products is to be determined considering—</text>
<subparagraph id="ID8be2a47b3b884a07bdbca4d1b3e8f050"><enum>(A)</enum><text>the impact on
youth tobacco use and health;</text>
</subparagraph><subparagraph id="IDec6ead1f72ac47b18bc307834e7e7c31"><enum>(B)</enum><text>data supporting
actual levels of risk, exposure or harm due to the product; and</text>
</subparagraph><subparagraph id="ID4f0fa5f830cb4e85bbfa20e1e0b5190d"><enum>(C)</enum><text>any implied
reduction in levels of risk, exposure or harm due to the product or its
labeling.</text>
</subparagraph></paragraph></subsection><subsection id="ID069f5c7705a74ff7a5273f0e0cb9cf78"><enum>(b)</enum><header>Establishment
of panel</header>
<paragraph id="id9746019E3FD64B8DBA40F7F29E964F87"><enum>(1)</enum><header>In
general</header><text>For the purpose of securing recommendations with respect
to the classification of tobacco products or groups of products, the Secretary
shall establish a panel of experts to be known as the Tobacco Risk
Classification Panel (referred to in this section as the
<term>panel</term>).</text>
</paragraph><paragraph id="ID6a37dad228594057844a5d58489549e8"><enum>(2)</enum><header>Members</header><text>The
Secretary shall appoint to the panel individuals who are qualified by training
and experience to evaluate the risk and relative risk of tobacco products and
who, to the extent feasible, possess skill in the study of the health effects
of tobacco products, or experience in tobacco cessation, control and
prevention. The Secretary shall designate one of the members of such panel to
serve as the chairperson.</text>
</paragraph><paragraph id="IDfc3d2d3cf4fb451d867bedb3cff229a2"><enum>(3)</enum><header>Administrative
provisions</header>
<subparagraph id="id163A24D8F9C740B6BCD8611252EDEFFF"><enum>(A)</enum><header>Compensation
and expenses</header><text>Members of the panel (other than officers or
employees of the United States), while attending meetings or conferences of the
panel or otherwise engaged in its business, shall be entitled to receive
compensation at rates to be fixed by the Secretary, but not at rates exceeding
the daily equivalent of the rate in effect for grade GS–18 of the General
Schedule, for each day so engaged, including travel time, and while so serving
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, United States Code, for persons in the Government
service employed intermittently.</text>
</subparagraph><subparagraph id="ID205e2f9e36274d1ba115689cf4443e6c"><enum>(B)</enum><header>Staff and
assistance</header><text>The Secretary shall furnish the panel with adequate
clerical and other necessary assistance.</text>
</subparagraph><subparagraph id="IDc9b97d5acc2c426b881256e3a6b36625"><enum>(C)</enum><header>Meetings</header><text>The
panel shall meet at such times as may be appropriate to enable the Secretary to
meet applicable statutory deadlines.</text>
</subparagraph><subparagraph id="IDa834feeef31547e59c2a55e694b3a597"><enum>(D)</enum><header>Limitations</header><text>The
panel shall not be subject to the annual chartering and annual report
requirements of the Federal Advisory Committee Act. Section 14 of such Act
shall not apply to the duration of the panel.</text>
</subparagraph></paragraph><paragraph id="id6A31A96EB8784BEBBE1FCDB713337105"><enum>(4)</enum><header>Duties</header><text>The
panel shall make recommendations to the Secretary concerning the classification
of tobacco products.</text>
</paragraph></subsection><subsection id="ID1d41ae3fa7934a6f8bac03d516a07d5b"><enum>(c)</enum><header>Classification</header>
<paragraph id="id070CE501FEAE4B04B06F88FE9F91C53F"><enum>(1)</enum><header>In
general</header><text>Not later than 15 months after the date of enactment of
this section, and as necessary thereafter for new products, the Secretary,
based on the recommendations of the panel, shall classify all tobacco products
into the classes established under subsection (a). Such classification may be
made for a group of similar or related products.</text>
</paragraph><paragraph id="ID6d2be02a212345e4bebbb92e6f1a59d8"><enum>(2)</enum><header>Actions of
panel</header>
<subparagraph id="id94651CA5F4C340A2B2DC72F53013B888"><enum>(A)</enum><header>In
general</header><text>Upon the completion of the panel’s review of a tobacco
product or group of products referred to it under paragraph (1), the panel
shall submit to the Secretary its recommendation for the classification of the
tobacco product or group of products. Any such recommendation shall
contain—</text>
<clause id="id927CD740704143F38D6ED90119BB549E"><enum>(i)</enum><text>a
summary of the reasons for the recommendation;</text>
</clause><clause id="idB10A857EA6CD46D797A3816BD9CC9C24"><enum>(ii)</enum><text>a summary of the
data upon which the recommendation is based; and</text>
</clause><clause id="id80040581A7FE4AF39E7B5D89C7A2A14C"><enum>(iii)</enum><text>an
identification of the risks to health presented by the tobacco product or group
of products with respect to which the recommendation is made.</text>
</clause></subparagraph><subparagraph id="ID2747851902a74392b08853393fb42a09"><enum>(B)</enum><header>Review and
final determination by Secretary</header><text>After receiving the conclusions
and recommendations of the panel on a matter that the panel has reviewed under
this section, the Secretary shall review the conclusions and recommendations,
shall make a final decision on the matter, and shall notify the affected
persons of the decision in writing and, if the decision differs from the
conclusions and recommendations of the panel, shall include the reasons for the
difference.</text>
</subparagraph><subparagraph id="ID1a295f48a773461dafde4951911f76cf"><enum>(C)</enum><header>Submission of
recommendations</header><text>Not later than 1 year after the date of enactment
of this section, the panel shall submit to the Secretary recommendations
concerning all tobacco products or groups of products introduced or delivered
for introduction into interstate commerce for commercial distribution before
the date of the enactment of this section.</text>
</subparagraph></paragraph><paragraph id="ID81eab87eb6e6430aa69922b366d17bf5"><enum>(3)</enum><header>Publication</header><text>Upon
receipt of a recommendation from a panel under paragraph (2)(C), the Secretary
shall publish in the Federal Register the panel’s recommendation and a proposed
regulation classifying such tobacco product or group of products under
subsection (a).</text>
</paragraph><paragraph id="ID1928a84a5c484f4f93e5951cb89eb4ac"><enum>(4)</enum><header>Existing
products</header><text>In the case of a tobacco product or group of products
which has been introduced or delivered for introduction into interstate
commerce for commercial distribution before the date of enactment of this
section, the panel shall recommend to the Secretary that the tobacco product or
group of products be classified as a Class III product unless the panel
determines that classification of the tobacco product or group of products in
such class is not necessary. If a panel does not recommend that such a tobacco
product or group of products be classified as a Class III product, it shall in
its recommendation to the Secretary for the classification of the tobacco
product or group of products set forth the reasons for not recommending
classification of the tobacco product in such class.</text>
</paragraph><paragraph id="IDb038c9809760438b995d64571ce9010c"><enum>(5)</enum><header>New
products</header>
<subparagraph id="id970696BA92A34149B58A737301D0B542"><enum>(A)</enum><header>In
general</header><text>Any tobacco product or group of products which was not
introduced or delivered for introduction into interstate commerce for
commercial distribution before the date of the enactment of this section shall
be classified as a Class III product unless the Secretary in response to a
recommendation of the panel has classified such tobacco product or group of
products as a Class I or Class II product.</text>
</subparagraph><subparagraph id="IDfaf3f5ec2eb5467db8899110340b6cfe"><enum>(B)</enum><header>Limitation</header><text>A
tobacco product or group of products classified as a Class III product under
this subsection shall be classified in that class until the effective date of
an order of the Secretary classifying the tobacco product or group of products
as a Class I or Class II product.</text>
</subparagraph></paragraph><paragraph id="ID6e5e7c6d9073429aae54c732b5e94f8c"><enum>(6)</enum><header>Access to
data</header><text>Any person whose tobacco product is specifically the subject
of review by the panel shall have—</text>
<subparagraph id="ID6cef16e90ab24569b727d24386b75b7d"><enum>(A)</enum><text>the same access
to data and information submitted to the panel (except for data and information
that are not available for public disclosure under section 552 of title 5,
United States Code) as the Secretary; and</text>
</subparagraph><subparagraph id="ID8ebc01bc7012470db736d5ad17620628"><enum>(B)</enum><text>the opportunity
to submit, for review by the panel, additional information, which shall be
submitted to the Secretary for prompt transmittal to the panel.</text>
</subparagraph></paragraph><paragraph id="ID62b960feb8474ef7822237ae3a6ea55d"><enum>(7)</enum><header>Meetings</header><text>Any
meetings of the panel shall provide adequate time for initial presentations and
for response to any differing views by persons whose tobacco products are
specifically the subject of panel review, and shall encourage free and open
participation by all interested persons.</text>
</paragraph></subsection><subsection id="IDc9ff96c27a46405f9b51f000e7366b2d"><enum>(d)</enum><header>Classification
changes</header>
<paragraph id="idD341CBB8E9CD4966A1539EAEC89F7316"><enum>(1)</enum><header>In
general</header><text>Based on new information concerning a tobacco product or
group of products, the Secretary may by regulation change the classification of
such tobacco product or group of products. In promulgating a regulation
regarding a change in the classification of a tobacco product or group of
products, the Secretary may secure from the panel a recommendation concerning
the proposed change in the classification of the tobacco product or group of
products and shall publish in the Federal Register any recommendation submitted
to the Secretary by the panel with respect to such change.</text>
</paragraph><paragraph id="ID0871afed3d624417a549f1125f4d5a61"><enum>(2)</enum><header>Class
changes</header><text>By regulation promulgated under paragraph (1), the
Secretary may change the classification of a tobacco product from Class III to
Class II or Class I only if the appropriate relative risk determination has
been
made.</text>
</paragraph></subsection></section></subchapter><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="id5790B6BAFF3B49A285A26D4BFB8DDFC3"><enum>502.</enum><header>Authority to
prohibit nicotine</header><text display-inline="no-display-inline">Subchapter I
of chapter VII of the <act-name>Federal Food, Drug, and Cosmetic Act</act-name>
(as amended by section 501) is further amended by adding at the end the
following:</text>
<quoted-block display-inline="no-display-inline" id="idA5E25752A58E4A0B937DE95E298C9C9D" style="OLC">
<section id="idFE06F98FB2A9482F887D854007DF2390"><enum>766.</enum><header>Authority to
prohibit nicotine</header><text display-inline="no-display-inline">The
Secretary may prohibit the introduction or delivery for introduction into
interstate commerce of any product that contains nicotine if such product has
no health
benefit.</text>
</section><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="ID463a23d7038b4c54b058fd52b15fbe50"><enum>503.</enum><header>Counter-advertising</header><text display-inline="no-display-inline">Part A of title V of the <act-name>Public
Health Service Act</act-name> (42 U.S.C. 290aa et seq.) is amended by adding at
the end the following:</text>
<quoted-block display-inline="no-display-inline" id="idA771435C1EC34550A97F77886ED65A8B" style="OLC">
<section id="id65AEB2FD9B9D4E48B9D7A29C08B74C16"><enum>506C.</enum><header>Tobacco use
counter-advertising</header><text display-inline="no-display-inline">The
Secretary, acting through the Administrator of the Substance Abuse and Mental
Health Services Administration, shall carry out a campaign of
counter-advertising with respect to tobacco use. The campaign shall consist of
the placement of pro-health advertisements regarding tobacco use on television,
on radio, in print, on billboards, on movie trailers, on the Internet, and in
other
media.</text>
</section><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="ID937F31605FE248BE8CD077C0B477D083"><enum>504.</enum><header>Medicare
coverage of counseling for cessation of tobacco use</header>
<subsection id="IDD2C9A1D646AE4CD3BCCC5B6606C32C0C"><enum>(a)</enum><header>Coverage</header><text>Section
1861(s)(2) of the <act-name parsable-cite="SSA">Social Security Act</act-name>
(42 U.S.C. 1395x(s)(2)) is amended—</text>
<paragraph id="ID88B7841ECD4447B8991E2A7D3DB5C45C"><enum>(1)</enum><text>in subparagraph
(Z), by striking <quote>and</quote> at the end;</text>
</paragraph><paragraph id="ID38F8447B26E444DEB3CC0A9E2ADE4D23"><enum>(2)</enum><text>in subparagraph
(AA), by inserting <quote>and</quote> at the end; and</text>
</paragraph><paragraph id="IDBEA648C5209C4788A87A2FCF3C25387A"><enum>(3)</enum><text>by adding at the
end the following new subparagraph:</text>
<quoted-block id="ID089346FC32744CC092A952C808D692A1" style="OLC">
<subitem id="ID852F1794E91C4496B881FAA39D7E6423" indent="up5"><enum>(BB)</enum><text>counseling for cessation of tobacco
use (as defined in subsection
(ccc));</text>
</subitem><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="ID9B7E80AED9064A8BAE656B36A4FCF893"><enum>(b)</enum><header>Services
Described</header><text>Section 1861 of the <act-name parsable-cite="SSA">Social Security Act</act-name> (42 U.S.C. 1395x) is amended
by adding at the end the following new subsection:</text>
<quoted-block act-name="Social Security Act" display-inline="no-display-inline" id="ID8C2FBAE81069499292DA4542B0D907CA" style="traditional">
<subsection id="IDEF56BCBFA108464A8C30B11E4C5981E0"><enum>(ccc)</enum><header>Counseling
for Cessation of Tobacco Use</header><paragraph commented="no" display-inline="yes-display-inline" id="ID0C307CF8F4894133833E3D70789DD497"><enum>(1)</enum><subparagraph commented="no" display-inline="yes-display-inline" id="ID002D48FC92D04FE0AF4769C4D472C82E"><enum>(A)</enum><text>Subject to subparagraph
(B), the term <term>counseling for cessation of tobacco use</term> means
diagnostic, therapy, and counseling services for cessation of tobacco use for
individuals who use tobacco products or who are being treated for tobacco use
which are furnished—</text>
<clause id="IDD6820BA12E2444B6A3459CA868592B86" indent="up2"><enum>(i)</enum><text>by or under the supervision of a
physician;</text>
</clause><clause id="ID86B566457172415BB1745F76F1E152D7" indent="up2"><enum>(ii)</enum><text>by a practitioner described in clause
(i), (iii), (iv), (v) or (vi) of section 1842(b)(18)(C); or</text>
</clause><clause id="ID9AD7090CB27B40348E1F8E20A3B10B26" indent="up2"><enum>(iii)</enum><text>by a licensed tobacco cessation
counselor (as defined in paragraph (2)).</text>
</clause></subparagraph><subparagraph id="ID6DC6E7BD168B4825891D8581CA4DCD1E" indent="up2"><enum>(B)</enum><text>Such term is limited to—</text>
<clause id="ID01D3D828EA1543268903B995943DA6E2"><enum>(i)</enum><text>services recommended in
<quote>Treating Tobacco Use and Dependence: A Clinical Practice
Guideline</quote>, published by the Public Health Service in June 2000, or any
subsequent modification of such Guideline; and</text>
</clause><clause id="ID7156A73111DF424EA62920C5916F21AA"><enum>(ii)</enum><text>such other services that the
Secretary recognizes to be effective.</text>
</clause></subparagraph></paragraph><paragraph id="ID4559D9FA462948F7BAA69814923541B6" indent="up1"><enum>(2)</enum><text>In this subsection, the term
<term>licensed tobacco cessation counselor</term> means a tobacco cessation
counselor who—</text>
<subparagraph id="IDEFBA17E9FD47473B9F21ECE2599B2E5C"><enum>(A)</enum><text>is licensed as such by the State (or
in a State which does not license tobacco cessation counselors as such, is
legally authorized to perform the services of a tobacco cessation counselor in
the jurisdiction in which the counselor performs such services); and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDF9C5C6A9B07F4D2E8C96D3AAEA170A5B"><enum>(B)</enum><text>meets uniform minimum standards
relating to basic knowledge, qualification training, continuing education, and
documentation that are established by the Secretary for purposes of this
subsection.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="IDF42817E95AAD4C1CB9491017B4D125D1"><enum>(c)</enum><header>Payment and
Elimination of Cost-Sharing for Counseling for Cessation of Tobacco
Use</header>
<paragraph id="IDBED7FCF408B6429E8822FD5EC779B975"><enum>(1)</enum><header>Payment and
elimination of coinsurance</header><text>Section 1833(a)(1) of the
<act-name parsable-cite="SSA">Social Security Act</act-name> (42 U.S.C.
1395l(a)(1)) is amended—</text>
<subparagraph id="IDFCF2FCEC42364CED8FD12F3DD72815D5"><enum>(A)</enum><text>by striking
<quote>and</quote> before <quote>(V)</quote>; and</text>
</subparagraph><subparagraph id="ID087DC3ECAC0F40B498D8DCEC916CD41F"><enum>(B)</enum><text>by inserting
before the semicolon at the end the following: <quote>, and (W) with respect to
counseling for cessation of tobacco use (as defined in section 1861(ccc)), the
amount paid shall be 100 percent of the lesser of the actual charge for the
service or the amount determined by a fee schedule established by the Secretary
for purposes of this subparagraph</quote>.</text>
</subparagraph></paragraph><paragraph id="ID66BB1B95F00A448F8060F981BBF46601"><enum>(2)</enum><header>Elimination of
coinsurance in outpatient hospital settings</header>
<subparagraph id="IDEC7012C11E74493088CA06AEEC3104EB"><enum>(A)</enum><header>Exclusion from
OPD fee schedule</header><text>Section 1833(t)(1)(B)(iv) of the
<act-name parsable-cite="SSA">Social Security Act</act-name> (42 U.S.C.
1395l(t)(1)(B)(iv)) is amended by striking <quote>and diagnostic
mammography</quote> and inserting <quote>, diagnostic mammography, or
counseling for cessation of tobacco use (as defined in section
1861(ccc))</quote>.</text>
</subparagraph><subparagraph id="IDF335611D0D4E475AAA9CD63580BE9DE5"><enum>(B)</enum><header>Conforming
amendments</header><text>Section 1833(a)(2) of the
<act-name parsable-cite="SSA">Social Security Act</act-name> (42 U.S.C.
1395l(a)(2)) is amended—</text>
<clause id="ID8970ACC09B494767A1654C1F1183FDE3"><enum>(i)</enum><text>in
subparagraph (F), by striking <quote>and</quote> after the semicolon at the
end;</text>
</clause><clause id="IDE2E4DB4A9509467D949515AD69ADE677"><enum>(ii)</enum><text>in
subparagraph (G)(ii), by striking the comma at the end and inserting <quote>;
and</quote>; and</text>
</clause><clause id="ID17E815BFB8984948B90889DEFA50A9D7"><enum>(iii)</enum><text>by inserting
after subparagraph (G)(ii) the following new subparagraph:</text>
<quoted-block id="ID6C411196D8B34ED9A992BD9E6802014E" style="OLC">
<subparagraph id="IDE4EDDA891DD94AF7A19959E4ABF29B69"><enum>(H)</enum><text>with respect to
counseling for cessation of tobacco use (as defined in section 1861(ccc))
furnished by an outpatient department of a hospital, the amount determined
under paragraph
(1)(W),</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</clause></subparagraph></paragraph><paragraph id="IDE58CA3E8A67F473D9541D97CC7F5DDC2"><enum>(3)</enum><header>Elimination of
deductible</header><text>The first sentence of section 1833(b) of the
<act-name parsable-cite="SSA">Social Security Act</act-name> (42 U.S.C.
1395l(b)) is amended—</text>
<subparagraph id="IDD8246C71EE614B83B35E3669D27715C6"><enum>(A)</enum><text>by striking
<quote>and</quote> before <quote>(8)</quote>; and</text>
</subparagraph><subparagraph id="ID13CEA5208CAB4D629A2B3ADCE260B952"><enum>(B)</enum><text>by inserting
before the period the following: <quote>, and (9) such deductible shall not
apply with respect to counseling for cessation of tobacco use (as defined in
section 1861(ccc))</quote>.</text>
</subparagraph></paragraph></subsection><subsection id="IDCE12768A115B464396672300FC951F6F"><enum>(d)</enum><header>Application of
Limits on Billing</header><text>Section 1842(b)(18)(C) of the
<act-name parsable-cite="SSA">Social Security Act</act-name> (42 U.S.C.
1395u(b)(18)(C)) is amended by adding at the end the following new
clause:</text>
<quoted-block act-name="Social Security Act" id="ID5F1EF8A6E98443BAB874D04709D924E2" style="OLC">
<clause id="ID23CDE0316F4C472A945E528BD7146F02" indent="up2"><enum>(vii)</enum><text>A licensed tobacco cessation
counselor (as defined in section
1861(ccc)(2)).</text>
</clause><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="ID47F5BA2F227C43E78C6F03F393739DDF"><enum>(e)</enum><header>Inclusion as
Part of Initial Preventive Physical Examination</header><text>Section
1861(ww)(2) of the <act-name parsable-cite="SSA">Social Security Act</act-name>
(42 U.S.C. 1395x(ww)(2)) is amended by adding at the end the following new
subparagraph:</text>
<quoted-block act-name="Social Security Act" id="IDD7E6095EDA924AC5BEF7D0DD7D6AC2D9" style="OLC">
<subparagraph id="IDD59AF51C171440A39901E8447398C77C" indent="up1"><enum>(M)</enum><text>Counseling for cessation of tobacco
use (as defined in subsection
(ccc)).</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="ID86CC96672E2D44B384BC5F96810CE6CB"><enum>(f)</enum><header>Effective
Date</header><text>The amendments made by this section shall apply to services
furnished on or after the date that is 1 year after the date of enactment of
this Act.</text>
</subsection></section><section id="ID48B5563936AD4B659C4D56DEE0D74C64"><enum>505.</enum><header>Medicare
coverage of tobacco cessation pharmacotherapy</header><text display-inline="no-display-inline">Section 1860D–2(e)(1) of the
<act-name parsable-cite="SSA">Social Security Act</act-name> (42 U.S.C.
1395w–102(e)(1)) is amended—</text>
<paragraph id="IDBC32893F1B9E4D73ADD8B5DE02892509"><enum>(1)</enum><text>in subparagraph
(A), by striking <quote>or</quote> after the semicolon at the end;</text>
</paragraph><paragraph id="IDB4EB22FCEC27454B9ECB0AA8E367793B"><enum>(2)</enum><text>in subparagraph
(B), by striking the comma at the end and inserting <quote>; or</quote>;
and</text>
</paragraph><paragraph id="IDEBA9E3B02680465D88E6ECE25D79B55F"><enum>(3)</enum><text>by inserting
after subparagraph (B) the following new subparagraph:</text>
<quoted-block id="IDA5335B839F46452387FE64523E634E6F" style="OLC">
<subparagraph id="ID9B6B005EE7014241A2DE29D6C05D4D73"><enum>(C)</enum><text>any agent
approved by the Food and Drug Administration for purposes of promoting, and
when used to promote, tobacco cessation that may be dispensed without a
prescription (commonly referred to as an <term>over-the-counter</term> drug),
but only if such an agent is prescribed by a physician (or other person
authorized to prescribe under State
law),</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></section><section id="id0B97507B7E9844F495E7335E0956D760"><enum>506.</enum><header>Tobacco
cessation for Federal employee health benefits plans</header>
<subsection id="id88E53442960D422E8AD8FD713944AD53"><enum>(a)</enum><header>Contract
requirement</header><text>Section 8902 of title 5, United States Code, is
amended by adding at the end the following:</text>
<quoted-block display-inline="no-display-inline" id="id079EDAE5556A4CEBB29BD02D7E43AC97" style="OLC">
<subsection id="id60146BE120C04A54A4DDA8540A9D4AA7"><enum>(p)</enum><text>Each contract
under this chapter shall require the carrier to provide for the establishment
and maintenance of a tobacco cessation
program.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idD7FF696C75EB499EB8ED05C2F5B93A07"><enum>(b)</enum><header>Effective date
and application</header><text>The amendment made by this section shall take
effect on the date of enactment of this Act and apply with respect to contracts
for health benefits plans under chapter 89 of title 5, United States Code,
which take effect on and after January of the first calendar year following 1
year after the date of enactment of this Act.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id8AD025D26CCE4235BC2F14DE2CF42408"><enum>507.</enum><header>Matching
grants for States that use a significant portion of master settlement agreement
funds for tobacco control and cessation</header><text display-inline="no-display-inline">Title XXX of the <act-name>Public Health
Service Act</act-name>, as added by section 301, is amended by adding at the
end the following:</text>
<quoted-block display-inline="no-display-inline" id="idEB73313706A34CEDB2EDA0CB03E0584B" style="OLC">
<section commented="no" display-inline="no-display-inline" id="id020C29DFF190437796EE3B2A8F4868A9"><enum>3009.</enum><header>Matching
grants for States that use a significant portion of master settlement agreement
funds for tobacco control and cessation</header>
<subsection id="ID750811139e9f47349a0c7f21fff7b91d"><enum>(a)</enum><header>In
general</header><text>The Secretary may award matching grants to eligible
States to enable such States to carry out additional tobacco control and
cessation activities.</text>
</subsection><subsection id="id8D9AAA3CC2A04744911F6AB3B3169C12"><enum>(b)</enum><header>Eligibility</header><text>To
be eligible to receive a grant under subsection (a), a State shall—</text>
<paragraph id="id0C6ACD2118ED48B7A81FA5B34911AD76"><enum>(1)</enum><text>demonstrate to
the satisfaction of the Secretary that, with respect to the calendar year
preceding the year in which the State is applying for such a grant, the State
expended in excess of 25 percent of the funds paid to the State for such year
as part of the comprehensive settlement of November 1998 referred to in section
1903(d)(3)(B)(i) of the <act-name>Social Security Act</act-name> on tobacco
control and cessation activities; and</text>
</paragraph><paragraph id="id17C18824399241A5A4263DF2BFCE3EA4"><enum>(2)</enum><text>submit to the
Secretary an application at such time, in such manner, and containing such
information as the Secretary may require.</text>
</paragraph></subsection><subsection id="id420B8562D4A94FE0A2C3389544DE90C7"><enum>(c)</enum><header>Amount of
grant</header><text>With respect to a grant under this section, an eligible
State may receive not to exceed an amount equal to 50 percent of the amount
expended by the State in excess of the 25 percent of funds described in
subsection (b)(1) for the year involved.</text>
</subsection><subsection id="id8307F41FF2554B91B0EF7E2F471AB208"><enum>(d)</enum><header>Funding</header><text>The
Secretary shall use amounts made available in each fiscal year under section
401(g)(3) of the <short-title>Help End Addiction to Lethal
Tobacco Habits Act</short-title> to carry out this
section.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</section>