[Congressional Record Volume 144, Number 63 (Monday, May 18, 1998)]
[Senate]
[Pages S5001-S5012]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        NATIONAL TOBACCO POLICY AND YOUTH SMOKING REDUCTION ACT

  The PRESIDING OFFICER. Under the previous order, the Senate will 
proceed to S. 1415, which the clerk will report.
  The assistant legislative clerk read as follows:

       A bill (S. 1415) to reform and restructure the processes by 
     which tobacco products are manufactured, marketed, and 
     distributed, to prevent the use of tobacco products by 
     minors, to redress the adverse health effects of tobacco use, 
     and for other purposes.

  The Senate proceeded to consider the bill which had been reported 
from the Committee on Finance.


             MODIFICATIONS TO COMMERCE COMMITTEE SUBSTITUTE

  Mr. LOTT. Mr. President, on behalf of the chairman, the ranking 
member and a majority of the members of the Commerce Committee, I wish 
to modify the Commerce Committee substitute.
  Before the Chair declares the amendment is modified, I announce to 
the Members that this is the text of the so-called managers' amendment 
that the chairman and ranking member have been working on for the last 
few days. The modification also incorporates the Finance Committee 
reported amendments as part of the new Commerce Committee substitute.
  Mr. HOLLINGS. May I make an inquiry of the majority leader?
  Mr. LOTT. We have a series of things we need to do in a row, if I 
could get through those.
  The Chair needs to rule, I believe.
  The PRESIDING OFFICER. The amendment is so modified.
  Mr. LOTT. On behalf of the chairman and a majority of the members of 
the Commerce Committee, I wish to further modify the Commerce Committee 
substitute. Again, before the Chair declares that the amendment is 
further modified, I announce to the membership this modification would 
delete some of the Finance Committee amendments from the text of the 
Commerce Committee modification.
  The PRESIDING OFFICER. The amendment is so modified.
  Mr. LOTT. Finally, again on behalf of the chairman and a majority of 
the members of the Commerce Committee, I further modify the committee 
substitute. Again, before the Chair announces the modification, this 
last change would incorporate the Lugar Farmer's protection amendment 
as part of the Commerce Committee substitute.
  The PRESIDING OFFICER. The amendment is so modified.
  Mr. LOTT. For the information of all Senators, as a result of this 
action, the pending Commerce Committee Substitute contains the 
following: The so-called managers' amendment; all of the Finance 
Committee reported amendments, except the $1.50 increase; Title 14, 
with respect to declaring the price increase a tax increase; the three 
deletions with respect to the LEAF Act; the lookback and the compliance 
fund and tobacco tax trust fund; and the Lugar-Farmer's protection 
amendment.
  Finally, I ask unanimous consent that the modified committee 
substitute be printed as a Senate amendment and the final version 
incorporating all of the modifications only be printed in the Record.
  Mr. HOLLINGS. I object.
  Mr. LOTT. At this point, Mr. President, I ask the Senate if they 
would allow me to go through this.
  Mr. HOLLINGS. I do object.
  Mr. LOTT. I wanted to give you a chance to inquire, but by objecting 
you certainly can inquire.
  Mr. HOLLINGS. I do object. Mr. President, this has been a long, hard 
road, as you well know. Almost a year ago the White House, health 
community and the States, and the States' attorneys general all met and 
everyone was provided for except the person who really depended on his 
living--that is, the tobacco farmer. So I got together during the fall 
with the distinguished Senator from Kentucky, Senator Ford, and he and 
I worked diligently over the fall period developing what we call the 
LEAF Act, which not only took care of the farmer but the farm 
community; namely, the warehousemen, the bank that is financing, the 
equipment dealer, and everything else of that kind.

  There is no question that if this so-called tobacco bill works, there 
can't be any tobacco farmer unless they are tobacco companies. This is 
going to diminish the tobacco companies to a great extent and limit the 
tobacco farmers, as they go down or out of business. We have included 
the LEAF Act as sort of a safety net. Now, we met in the Commerce 
Committee on that basis. I know the distinguished chairman, Senator 
McCain, came to me, and on the basis of him going along with the LEAF 
Act, we made it a bipartisan bill and voted it out 19-1.
  The distinguished chairman also went to South Carolina before 
thousands of farmers and represented: Don't worry about the LEAF Act. 
Mr. President, I have been in five conferences now--two actually in my 
own hideaway in the Capitol--with the White House, the majority 
leadership, Senator McCain, and others, on this pack of bills. It 
included Senators on both sides of the aisle, with staffs and 
everything else. In the five meetings, including the one at 4 o'clock 
this afternoon, I was always counseled: Don't worry, the LEAF Act is 
intact.
  Don't give me the double talk that it is still intact, not when you 
put in the Lugar bill by a majority vote. The Lugar bill, by a majority 
vote, puts that farmer out of business. That is the one thing that the 
distinguished Senator from Kentucky, and others, have worked and 
counseled against, and everything else of that kind.
  I question, respectfully, that the majority leader identified the 
majority of the Commerce Committee members. That is all your 
Republicans; is that what you say?
  Mr. LOTT. Yes, it is.
  Mr. HOLLINGS. I am dismayed. About a half-hour ago, I had a chance to 
talk, of course, just a bit with the majority leader. Until now, 
nothing has been said, and this kind of conduct and course of conduct 
is just the worst I have seen in my 30-some years up here. There is 
nothing you can do if they want to change their votes. They all voted 
for the bill, and I know how they felt because I talked to various 
Members. I have been talking to them intermittently over the past 
several months, and over the past 1 month in conferences with the White 
House. And now, to come at the last minute and have the ground cut from 
under you with this particular request on the premise that you want to 
be fair and give everybody a fair vote, that isn't what I worked for. I 
worked to give this a particular priority that no one else has given 
it--and certainly not to tobacco companies. I think the tobacco 
companies have the pressure on at this point to go along with the Lugar 
amendment and save them billions of dollars. That could be the case.
  I yield to my distinguished friend from Kentucky.
  Mr. FORD. Mr. President, reserving the right to object, I say this 
with all respect to the majority leader and to my colleague. It is very 
difficult to understand what has developed. I thought I understood the 
rules very well and worked diligently, along with the distinguished 
Senator from South Carolina, and others, including Senator Frist, who 
worked hard to work out the FDA amendment that is in the bill; all of 
us worked hard to put this together.

  I understand the 60-vote rule. I understand that very well, because 
this amendment by Senator Lugar cannot raise the money. They talked 
about a lump sum payment and had to change it today because it is 3 
years or more. There is no lump sum payment here. You are fooling the 
farmers, misrepresenting things to the farmer, if the Lugar amendment 
gets in here. It is

[[Page S5002]]

the farmer versus the manufacturer. The manufacturer, under the Lugar 
amendment, will save a billion dollars a year, minimum--a billion 
dollars a year. You are going to see that check signed tomorrow. You 
are going to see the press conference tomorrow. You are going to see 
the farmers come in here tomorrow, because they are opposed to Lugar. 
You can have all the misgivings you want. There could be ghosts behind 
every tombstone about the future, but you have to lay groundwork.
  I say to the majority leader, with all respect, if this is done to 
us, I am going to make it as difficult as I can to see that the bill is 
not passed this week, and probably not in June. I believe my 
responsibility here is to the farmer, not to the manufacturer and not 
to misrepresent that 40 percent of all the money raised by the McCain 
bill will go to the farmers under 3 years.
  Think about that 40 percent. What are you going to reduce? Research? 
What are you going to reduce? Advertising? What are you going to reduce 
in order to get that money? Sure, you have to raise it $1.50 to pay for 
Lugar, and you may not be able to do it then. So here we are, saying to 
those of us who have worked for months--and I have been on the front 
porches of grocery stores, in kitchens of farmers, I have been in six 
States talking to farmers, and this is what the farmers wrote--the LEAF 
Act. They didn't write the Lugar amendment.
  I am sorry that the chairman of the Agriculture Committee is not 
going to have a vote. I feel sorry for him, but this is the nature of 
this institution. This is the nature, this is the rule, and this is the 
precedent. You are following the rules, that is true. But when it comes 
down to the farmer versus the manufacturer--and this Lugar amendment 
will give billions to the manufacturer--then I think that the Senate 
will have a question of whether they want to support the farmer or 
whether they want to support the tobacco manufacturer.
  I know there is nothing I can do, Mr. President. I can object to the 
unanimous consent, but eventually we will vote on it. Everybody is 
working hard on the other side to get a bill out of here--just get it 
out of here. We don't want to touch it, we don't want to fool with it 
anymore, because what comes out of conference is going to be a 
minuscule bill. You will have a hard time getting that bill through 
this body. So rather than starting to take the hide off of folks in the 
beginning before you even bring the bill up, it seems to me it is a 
little bit disconcerting.
  The chairman of the Commerce Committee has been as straight with me 
and with us as he could be. I find no fault with what he has attempted 
to do, because some things we can't agree on. But we were not 
disagreeable. Everything has always been on top of the table with us, 
and his word has been as good as gold; his word has been his bond. And 
now the majority leader takes over all this hard work he has done and 
say to the chairman of the committee, and to us who worked to 
cooperate, that what you did and your cooperation is for naught.
  I yield the floor.
  The PRESIDING OFFICER. Is there objection to the unanimous consent 
request of the majority leader?
  Mr. HOLLINGS. I object.
  The PRESIDING OFFICER. Objection is heard.
  Mr. LOTT. Mr. President, there is objection. Before I renew the 
request that I made, which was merely that this substitute be printed 
as a Senate amendment and the final version only be printed in the 
Record, I want to note that all this means is that we would have to 
print all three of these documents, which are all pretty substantial in 
size. We can do that, but there is a cost involved and there is time 
involved. I hoped that there would not be objection to having this 
document printed. It would be available to the Members to review. But 
if there is objection to that, it won't stop anything. We will go 
forward.
  Let me respond to a lot that has been said because I thought it was 
important that the former chairman of the Commerce Committee, the 
Senator from South Carolina who worked with Senator McCain, be heard, 
and I thought it was very important that the Senator from Kentucky make 
his case. But let me also explain what is going on here.
  Everybody knows this has not been easy to get through the committee 
process to get at this point on the floor of the Senate with a lot of 
give and take and a lot of Senators who had to take positions that were 
hard for them, including the Senator from Arizona, Senator McCain. And 
other Senators who are going to be involved in this have had to accept 
some things they didn't go along with. I acknowledge that the Senator 
from South Carolina has worked very carefully with the Senator from 
Arizona. But also it is my job as majority leader to try to find a 
responsible way to move this forward to get it to the floor in the 
fairest possible way. There is no way to do that without some people 
feeling like, ``Well it is not exactly the way I wanted it,'' or ``It 
doesn't give me a fair position,'' or ``It doesn't give me more than a 
fair position. All I want is an advantage.''
  Now the Senator from Indiana is chairman of the Agriculture 
Committee. It seems rational to me that you would understand that as 
majority leader I would be interested and concerned in the position, or 
an amendment to be offered on this important piece of legislation by 
the chairman of the Agriculture Committee, and, if we didn't do it this 
way, he would be disadvantaged in that he would have to have 60 votes, 
not 51--not a majority, a supermajority of 60 votes. I understand that 
the Senator from Kentucky wanted to require that, and he has used his 
influence to get it in the position where that could have occurred. He 
also understands that what I am doing here is perfectly within the 
rules. I am trying to get everybody on a fair and equal footing. I 
don't know how the votes are going to go.
  Mr. FORD. Will the majority leader yield?
  Mr. LOTT. If I could, because I didn't interrupt the Senator from 
Kentucky.
  I don't know how the voting is going to go. Senator Lugar might get 
51 votes. Senator Ford might win and prevail because 51 votes cannot be 
achieved for the Lugar amendment. There are a lot of people who don't 
think either one of these are all that hot. Quite frankly, they would 
like a whole different arrangement to be of assistance legitimately to 
the tobacco farmers. These are not the only two solutions in the world. 
There might be some other ones.
  I do not want to disadvantage anybody. But this is an amendment that 
has been around on this subject for quite some time. Senator Lugar has 
never made it a secret of the fact that he would want this to be 
offered, or as an alternative available to him to be offered. There are 
others who do not like this provision or that provision that is 
included or not included. But, in other instances, the Senators would 
have to offer an amendment only to get 50 votes.
  So I think this is a fair way to go. I am sorry the Senator doesn't 
agree with it. But I have been very meticulous to make sure that 
everybody was aware of what we were trying to do here. I have not been 
in all of these substantive negotiations. I have been strictly looking 
at how we can move this forward and what the process is to have it come 
up and considered in a fair way.
  The chairman of the Finance Committee is standing here now wanting to 
ask some questions of the Chair about what this means for the Finance 
Committee and what they did. They had a tough time. They came up with 
some improvements. They came up with some things certainly I don't 
agree with, and I don't think the chairman does, either. But he is 
willing to get a clarification of what it means for him, and to go 
forward. I think he has taken the right position.
  So I just wanted to take this opportunity to say that I understand 
where everybody is coming from but that I think this is the fair way to 
do it.
  I don't think we ought to start over by saying, ``Well, if we don't 
get this, or don't get that, we are going to kill it.'' I don't think 
anybody wants that to happen on your side of the aisle. Let's go 
forward. Let's have some amendments. And let's see where the votes are. 
That is the way to do this.
  Mr. FORD. Mr. President, continuing to reserve the right to object.
  Mr. LOTT. I believe there is no reservation.
  The PRESIDING OFFICER. An objection was heard, and the majority 
leader is recognized.

[[Page S5003]]

  Mr. LOTT. Let me do this, Mr. President, so that the Senator can 
respond. I yield to the Senator from Kentucky so he can respond.
  Mr. FORD. I say to the majority leader that I understand that Senator 
Lugar is chairman of the Agriculture Committee. I understand that 
Senator Lugar has been around here more than a week or two. I 
understand that Senator Lugar should understand the rules. And I 
understand that he has been working diligently, along with others, to 
make this work. I have been doing the same. And then when I get it to a 
point where you have it where you think you are safe and that you are 
protected, then in order to be fair about it, in order to be fair about 
it, you change everything we have done for the last 10 months, except 
that I get a vote up and down. But I had the position--or we had it in 
a position where it would take 60.

  So I think that the fairness now in all of the work that you do that 
is not fair, and so, therefore, the work you do is out the window 
because it is not fair. I thought when you made it through here, and 
you got it through the committee, and you got it on the floor, that was 
pretty fair after 10 months. Now because another Senator doesn't have 
an opportunity to bring it up----
  Mr. LOTT. The only time there would be a guarantee of that is when it 
has gone through the Senate, the House, then a conference, and the 
President puts pen to paper.
  Mr. FORD. I understand you are talking about fairness here and you 
are being unfair to those of us who worked so hard.
  Mr. LOTT. Mr. President, I renew my request with respect to the 
subcommittee substitute.
  Mr. KERRY. Reserving the right to object.
  Mr. HOLLINGS. Reserving the right to object.
  The PRESIDING OFFICER. The Senator from Massachusetts is recognized 
under the reservation.
  Mr. KERRY. Mr. President, nobody needs to speak for either the 
Senator from Kentucky or the Senator from South Carolina. They have 
done it for many years here, and they are as capable as anybody. But I 
would like to say that I understand the difficulties in which the 
majority leader finds himself. He gets approached by people on both 
sides, from all sides, and it is difficult to bring this piece to the 
floor. But there is a process by which we have been working and by 
which, I think, most of us understood that we were sort of teeing this 
legislation up for the floor. I think it has been an exceptional 
process. I applaud the Senator from Arizona, the chairman of the 
Commerce Committee, for the way in which he has tried to meld those 
forces over the course of the last months.
  The truth is that the Senator from Kentucky and the Senator from 
South Carolina, who is the ranking member and who could have stood in 
the way, significantly along the way here, of progress, has moved along 
the way to get us to where we are with an understanding of where he 
stood with respect to critical issues. Everybody here understands how 
you approach any of these negotiations. There is a certain amount that 
you are willing to give up with an understanding of what you are 
getting and that you are where you are.
  Through all of these meetings, through all of the interventions to 
this point in time, neither the Senator from South Carolina nor I have 
been part of those meetings, nor any of my colleagues have had any 
knowledge whatsoever that this ``rule'' might be invoked. They have had 
no opportunity to think about an alternative process to work with their 
colleagues, or otherwise.
  I simply say that suddenly at 4 o'clock in the afternoon the entire 
ground has shifted. That is within the rules. The Senator from Kentucky 
has acknowledged that. I acknowledge that. That may be one of the very 
difficult decisions that the majority leader has to make.
  But if fairness is what we are really looking for here, it seems to 
me that maybe there is a way to find some alternative method of 
including the Senator from Kentucky and the Senator from South Carolina 
and the chairman of the Agriculture Committee to find out how you might 
resolve this other than to do it in this sort of fairly unilateral 
fashion. I don't know if that is possible. But I would certainly say 
that in the context of the way in which the negotiations have been 
conducted to reach this point that also strikes me as being fair.
  Mr. LOTT. Mr. President, will the Senator yield?
  Mr. KERRY. I am happy to yield.
  Mr. LOTT. The Senator from Massachusetts is speaking under 
reservation.
  Let me assure him that I have looked at all of the alternatives. I 
have looked at the best possible way to bring this up. I didn't know it 
was going to wind up having to be done this way. We didn't know 2 weeks 
ago that we would have the Finance Committee angles. I have said all 
along that Senator Lugar, chairman of the Agriculture Committee, was 
going to have a fair shot, along with anybody else, to offer his 
amendment and win or lose by majority vote. I am surprised that some 
people are surprised by this. But I understand. But I just say that I 
have been having people on this side of the aisle complain about this, 
too. There are a lot of people on my side of the aisle who do not want 
this brought up under this concept, or any other.
  But I will say this to Senators on both sides of the aisle: Anybody 
who wants to stand in the way of this bill, if you don't want us to try 
to find a way to deal with children's porn, and drug abuse by children, 
if you don't want us to find a way to try to deal with the health 
problems caused by tobacco--all I am trying to do is get a 51-vote 
majority for an amendment--go right ahead. There are people on both 
sides of the aisle threatening to do just that.

  Now, I know the Senator from Massachusetts is trying to contribute by 
saying let's keep calm and can we find a way to work this out. I think 
this is a fair way, and I admonish everybody to stay calm, too, and 
keep our eye on what is the target here. It is bigger than the sum of 
its parts, and we ought to keep that in mind. We may not be able to do 
it this week. We may never be able to do it. The odds are very strong 
that this thing is going to implode by the weight we are placing on it. 
Every time we tested it, it has gotten bigger, fatter and more 
difficult to get through. So it is OK with me however it works out. But 
I believe we have here a reasonable way to begin this process, and I 
urge my colleagues, hold your fire. Let's go ahead with the opening 
statements by the Senators. Let's get some amendments going. Who knows 
for sure how it is going to work out?
  Mr. McCAIN. Will the Senator yield?
  Mr. KERRY. I would be happy to yield after I finish my comment.
  I will not object, Mr. President. But I would simply say that I think 
the Senator from Arizona would agree that in the judgment of most of us 
we thought we made it smaller and slimmer and easier, but that will be 
proven over the course of the next days. I appreciate what the majority 
leader has said, and I think hopefully we can find some way to resolve 
this as we go through the next days.
  Mr. McCAIN. Will the Senator yield?
  Mr. KERRY. I will yield the floor.
  The PRESIDING OFFICER. Is there objection to the majority leader's--
--
  Mr. McCAIN addressed the Chair.
  Mr. HOLLINGS. Reserving the right to object.
  Mr. KERRY. I yield to the Senator from Arizona.
  The PRESIDING OFFICER. The Senator from Massachusetts has not had the 
floor--
  Mr. McCAIN. Reserving the right to object.
  The PRESIDING OFFICER. And thereby does not have the authority to 
yield. The majority leader has the floor.
  Mr. McCAIN. Will the majority leader yield to me for a brief comment? 
The majority leader has the floor.
  Mr. LOTT. Mr. President, I had a request pending, but if I have the 
time----
  The PRESIDING OFFICER. Is there an objection?
  Mr. McCAIN. Reserving the right to object.
  Mr. HOLLINGS. Reserving the right to object.
  The PRESIDING OFFICER. The Senator is recognized.
  Mr. McCAIN. This is a difficult situation and not the first that we 
have been through in this process, nor regrettably, I feel, will it be 
the last. I

[[Page S5004]]

have great sympathy for my two dear friends--one from Kentucky, one 
from South Carolina--who fought very hard for the people they 
represent. I also understand, and I think we all should, the position 
of the majority leader, who, despite the predictions of many, has been 
steadfast throughout as far as saying this bill would come to the floor 
and we would resolve it, if there was anything within his power to do 
it.
  It was my understanding I would be managing this bill with the 
distinguished Senator from South Carolina. I will make every effort to 
make sure that fairness is the order of the day, which has been the way 
we have conducted our relationship and our negotiations throughout this 
bill. I will do everything in my power.
  I understand very well how concerned the Senators from South Carolina 
and Kentucky are. I also understand that the majority leader has the 
right to do these things. We saw them when the other side of the aisle 
was in the majority. I saw it on several bills where modifications were 
put into bills which made it no longer a 60-vote proposition but 51-49. 
I didn't like that at the time. But it is perfectly correct in the 
parliamentary fashion.
  I would, again, like to echo the words of the majority leader. We are 
going to hear attacks. There are people waiting right now to attack 
this bill in the most vociferous and passionate fashion, and there are 
people on the other side who will say: You guys aren't tough enough on 
these tobacco companies; you have got to do more. The first amendment 
is going to smack them for a buck 50 instead of a buck ten. We will 
hear over here: This is the biggest tax increase in history; you are 
doing way too much.
  But I believe the great center will hold on this bill, and I believe 
that a fair procedure will follow. And I want to commit to my 
colleagues that will happen. I am sorry, I say to my friends from South 
Carolina and from Kentucky, this has been distressing to them, but I 
hope we can move forward in a fair and equitable fashion.
  The PRESIDING OFFICER. Is there objection to the majority leader's--
--
  Mr. HOLLINGS. Reserving the right to object.
  Mr. DASCHLE. Reserving the right to object.
  The PRESIDING OFFICER. The distinguished Democratic leader is 
recognized.
  Mr. DASCHLE. Mr. President, I have not wanted to get into this until 
now, but I must say I applaud what the distinguished chairman has said 
in a couple of aspects. First of all, I think that it is true; up until 
now, there has been a good deal of effort on both sides to bring this 
bill to the floor. We wouldn't be here today were it not for the 
leadership of the Senator from Arizona and the tremendous work put 
forth by the Senator from South Carolina, as well as the Senator from 
Kentucky. It is the only way we got to this point. We got here because 
the ranking member and the chairman concluded that this bill needed to 
get to the floor, and we were under a timeframe within which to do 
that.
  That has now happened. It was only through that effort that we were 
able to get this far. And I think it is fair to say both sides have 
been working in good faith to bring us to this point.
  So there is really two questions here. No. 1, is it within the right 
of the majority leader to amend his legislation as he has proposed to 
do? And clearly he is within his rights to do that. The real question 
is, Is it in keeping with what we have established as the working order 
here? Are we in the same kind of partnership that we thought we had all 
the way through this process as we moved procedurally to the floor?
  The answer clearly is no; this was a surprise. Senator Hollings has 
been in the meetings discussing what would go in the managers' 
amendment until at least 4 o'clock this afternoon. Senator Hollings, 
the administration and others have signed off on every single piece of 
what was to go into the managers' amendment.
  I just left the floor to check with the administration to see if they 
knew that this was in the managers' amendment, and the answer was 
emphatically no. No one told them this was going to be included. No one 
gave them any indication.
  So clearly we start this debate with a very serious misunderstanding 
and a very serious violation of good faith. It is within the right of 
the majority to take steps of this kind, but, unfortunately, it comes 
at a price. That price is the cooperation needed to complete our work. 
The price is coming to terms with all the other procedural questions we 
have to face.
  How is it possible to get unanimous consent under these 
circumstances? How is it possible to get any understanding about the 
degree to which we can agree on amendments with this problem?
  So, Mr. President, we have compounded the problem this afternoon, 
unnecessarily it seems to me. The majority leader has a job to do. He 
has to make choices, and I understand that. But I hope as those choices 
are made, we clearly demonstrate the appreciation for the kind of 
communication that is going to be absolutely essential if we get 
anything done at all. I hope we can work through this. I hope before 
the night is out, or at the very latest tomorrow morning, we can 
resolve this matter, because if we are going to move forward 
adequately, successfully, it has to be resolved. I yield the floor.
  Mr. HOLLINGS addressed the Chair.
  The PRESIDING OFFICER (Mr. Frist). Is there objection?
  Mr. HOLLINGS. Reserving the right to object.
  The PRESIDING OFFICER. The Senator from South Carolina.
  Mr. HOLLINGS. I thank the distinguished Chair.
  Mr. President, there is not any question about the majority leader's 
right to proceed as he does and make that request. But he only does 
that with the majority vote of the Commerce Committee. That is the 
dismaying thing to this particular Senator, because when you meet as 
the ranking member, you represent not only yourself but the committee 
members and other Senators interested, of course, in the tobacco 
farmer. And you are not just wanting to assure yourself. You are 
wanting to assure others you represent because they are constantly 
asking these questions. So everyone, the White House, the health 
community, everyone now has gotten in step as of 4 o'clock on the LEAF 
Act, and to come now with this procedure and say they have the 
majority, which would include the distinguished chairman of the 
committee, is a shocking surprise to me. I can tell you that right now 
because I have been with him. I got with him only on this 
understanding. And to come now and put the LEAF Act in jeopardy with 
this particular procedure, I just had to stand up here and register my 
objection.
  Now, I don't want to object in a silly fashion to the printing, so I 
will withhold it, but the bipartisanship is ended.
  Mr. ROTH. Parliamentary inquiry, Mr. President.
  The PRESIDING OFFICER. Without objection, the majority leader's 
request is agreed to.
  (The committee substitute, as modified to incorporate the text of 
amendment No. 2420, will be printed in a future edition of the Record.)
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. ROTH. Mr. President, I rise to make a parliamentary inquiry on 
behalf of my distinguished ranking member, Senator Moynihan, and 
myself, as chairman of the Finance Committee.
  The Senate has before it a modification to the Commerce Committee 
substitute and Finance Committee amendment to S. 1415, the National 
Tobacco Policy and Youth Smoking Reduction Act. If the modification 
were introduced as a bill, would it be referred to the Finance 
Committee?
  The PRESIDING OFFICER. Yes, it will.
  Mr. ROTH. Mr. President, further parliamentary inquiry----
  Mr. MOYNIHAN addressed the Chair.
  The PRESIDING OFFICER. Yes, it would.
  Mr. ROTH. The modification contains settlement payments and health 
fees. Is it true that these provisions, no matter how they are 
designated, are revenue measures, and, thus, within the jurisdiction of 
the Finance Committee?
  The PRESIDING OFFICER. The Senator is correct.
  Mr. ROTH. Mr. President, Senator Moynihan and myself would like to 
note for the record that the modification of the Commerce Committee 
substitute violates Rule 15 of the Standing

[[Page S5005]]

Rules of the Senate. Neither Senator Moynihan nor I will raise the 
point of order because, even if we did raise the point of order, the 
leaders or managers could accomplish the same result by offering the 
identical text as a floor amendment.
  Mr. President, I ask unanimous consent that additional material be 
printed in the Record. This material is the technical explanation that 
describes the amendments made by the Committee on Finance to S. 1415, 
as reported by the Committee on Commerce, Science, and Transportation.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

  TECHNICAL EXPLANATION OF FINANCE COMMITTEE AMENDMENT TO S. 1415 (AS 
                       APPROVED ON MAY 14, 1998)

            I. Tobacco Excise Tax and Trust Fund Provisions


              A. Present-Law Tax and Trust Fund Provisions

       Excise taxes on tobacco products. Excise taxes imposed on 
     cigarettes, cigars, chewing tobacco and snuff, pipe tobacco, 
     and cigarette papers and tubes (Code sec. 5701). In addition, 
     tax will be extended to ``roll-your-own tobacco'' at the same 
     rates as pipe tobacco, effective on January 1, 2000. These 
     taxes are imposed upon removal of the taxable tobacco 
     products by the manufacturer, or on importation into the 
     United States.\1\ The current tax rates are shown in the 
     table below:
---------------------------------------------------------------------------
     \1\ Footnotes appear at end of article.

------------------------------------------------------------------------
            Tobacco product                         Tax rate            
------------------------------------------------------------------------
Cigarettes:                                                             
  Small cigarettes\2\.................  $12.00 per thousand (24 cents   
                                         per pack of 20 cigarettes).    
  Large cigarettes....................  $25.20 per thousand.            
Cigars:                                                                 
  Small cigars........................  $1.125 per thousand.            
  Large cigars........................  12.75% of manufacturer's price, 
                                         up to $30 per thousand.        
Chewing tobacco.......................  $0.12 per pound.                
Snuff.................................  $0.36 per pound.                
Pipe tobacco..........................  $0.675 per pound.               
Cigarette papers......................  $0.0075 per 50 papers.          
Cigarette tubes.......................  $0.15 per 50 tubes.             
------------------------------------------------------------------------

       Effective on January 1, 2000, the tax rate on small 
     cigarettes is scheduled to increase by $5 per thousand (to 34 
     cents per pack of 20 small cigarettes), and the tax rates on 
     other taxable tobacco products are scheduled to increase by 
     proportionate amounts. Effective on January 1, 2002, a 
     further increase of $2.50 per thousand (to 39 cents per pack 
     of 20 small cigarettes) is scheduled to become effective. 
     (Tax rates on other taxable tobacco products will increase 
     proportionately on that date as well.)
       Generally, excise taxes on tobacco products that are 
     removed during any semimonthly period must be paid by the 
     14th day after the last day of such semimonthly 
     period. Late payment of tobacco excise taxes is subject to 
     interest charges and penalties in the same manner as the late 
     payment of other types of taxes. In addition, a failure to 
     pay penalty equal to 5 percent of the tax due, but unpaid, is 
     assessed under section 5761(b).
       Revenues from the current tobacco products excise taxes are 
     deposited in the General Fund of the Treasury.
       Tobacco occupational excise tax. An annual excise tax of 
     $1,000 per premise generally is imposed on manufacturers of 
     tobacco products, manufacturers of cigarette papers and 
     tubes, and export warehouse proprietors (Code sec. 5731). The 
     occupational tax is $500 per premise for taxpayers with 
     annual gross receipts less than $500,000. Revenues from the 
     occupational tax are deposited in the General Fund of the 
     Treasury.
       Penaly excise taxes. In addition to excise taxes imposed 
     primarily to raise revenue, the Internal Revenue Code (the 
     ``Code'') includes several excise taxes imposed as 
     ``penalties'' for taking (or failing to take) certain 
     required actions. Examples of these excise taxes include 
     taxes on excess lobbying expenditures by charitable 
     organizations, certain ``self-dealing'' activities by 
     officers and others involved with private foundations, 
     failures by private foundations to distribute required 
     percentages of income, and numerous regulatory excise taxes 
     imposed with respect to specified activities of qualified 
     pension plans. Present law does not establish any underage 
     smoking reduction goals or impose any penalty excise tax with 
     respect to such goals.
       Overview of Internal Revenue Code Trust Funds. Most Trust 
     Funds that are financed with dedicated excise tax revenues 
     are established in the Code (secs 9501 et. seq.). Examples of 
     these Trust Funds are the Airport and Airway Trust Fund, the 
     Highway Trust Fund, the Black Lung Trust Fund, the Aquatic 
     Resources Trust Fund, the Inland Waterways Trust Fund, the 
     Hazardous Substance Superfund, the Leaking Underground 
     Storage Tank Trust Fund and the Oil Spill Liability Trust 
     Fund. Each of these Trust Funds includes provisions 
     dedicating specified revenues to the Trust Fund and 
     provisions approving expenditure purposes of the Trust Fund 
     (generally as those purposes are in effect on the date of 
     enactment of specific authorizing legislation). The Code also 
     contains general provisions relating to the management of 
     these Trust Funds. In general, Trust Fund expenditures are 
     subject to the annual appropriations process. Under present 
     law, there is no Federal trust fund relating to tobacco taxes 
     and spending programs.


b. description of finance committee amendment relating to tobacco taxes 
                             and trust fund

       Increase in tobacco products excise tax rates. In lieu of 
     the payments (including the initial $10 billion payment) 
     required of tobacco manufacturers under S. 1415, as reported 
     by the Committee on Commerce, Science, and Transportation 
     (the ``Commerce Committee''), the current Federal excise tax 
     rate on small cigarettes is increased by $1.50 per pack of 20 
     small cigarettes. The tax rates on all other taxable tobacco 
     products are increased proportionately to the increases 
     specified for small cigarettes. In addition, the effective 
     date for imposition of tax on ``roll-your-own'' tobacco is 
     accelerated from January 1, 2000, to January 1, 1999. Each of 
     these rate increases will be phased-in ratably over a three-
     year period (calender years 1999, 2000, and 2001). Thus, for 
     example, the tax rate on small cigarettes will increase by 50 
     cents per pack of 20 cigarettes on January 1, 1999, by an 
     additional 50 cents per pack on January 1, 2000, and by an 
     additional 50 cents per pack on January 1, 2001. (These 
     increases are in addition to the rate increases currently 
     scheduled to take effect in 2001 and 2003.)
       On each January 1 beginning in calendar year 2002, all 
     tobacco excise tax rates will be adjusted for inflation, as 
     measured by changes in the CPI occurring during the 12-month 
     period ending on the preceding August 31.
       Floor stocks taxes comparable to those imposed when tobacco 
     excise tax rates previously have been increased will be 
     imposed on each tax increase date. Floor stocks taxes must be 
     paid no later than July 1 of the year of tax increase.
       As stated above in the description of present law, the 
     current tobacco products excise taxes apply to tobacco 
     products manufactured in, or imported into, the United 
     States. Solely for purposes of these increased tax amounts, 
     the term United States includes U.S. possessions as well as 
     the 50 States and the District of Columbia. Accordingly, no 
     amount of the increase will be covered-over to U.S. 
     possessions under Code section 7652.
       Further, the effective date of certain compliance 
     provisions relating to exported cigarettes is accelerated 
     from January 1, 2000, to January 1, 1999.
       Impose penalty excise tax for failure to meet underage 
     smoking reducing goals. Both the National Tobacco Proposed 
     Resolution (the ``Proposed Resolution'') and S. 1415, as 
     reported by the Commerce Committee, would establish goals for 
     the reduction of underage smoking and would impose lookback 
     ``surcharges'' or ``assessments'' on tobacco manufacturers if 
     these goals are not met. In lieu of the lookback surcharges 
     or assessments, the Finance Committee amendment imposes a 
     non-deductible penalty excise tax on all manufacturers and 
     importers of cigarettes and smokeless tobacco.
       All manufacturers and importers of cigarettes and smokeless 
     tobacco are subject to the penalty excise tax. Imposition of 
     this penalty excise tax is governed by the smoking reduction 
     goals and imposed at the rates specified in S. 1415, as 
     reported by the Commerce Committee. In addition, the Finance 
     Committee amendment provides that the determination of 
     whether underage smoking goals are met is determined under 
     rules prescribed by the Secretary of the Treasury (in 
     consultation with the Public Health Service). Beginning in 
     that year, the Secretary of the Treasury is directed to 
     publish by February 15 of each calendar year the amount of 
     tax allocated to each cigarette and smokeless tobacco 
     manufacturer and importer based on their prior year's excise 
     tax liability.
       The penalty excise tax is payable in full no later than 
     April 1 of each calendar year. Cigarette manufacturers and 
     importers are jointly and severally liable for payment of 
     this tax imposed with respect to cigarettes as provided in 
     the Proposed Resolution and S. 1415, as reported by the 
     Commerce Committee. Smokeless tobacco manufacturers and 
     importers similarly are jointly and severally liable for 
     payment of tax attributable to smokeless tobacco. Other Code 
     administrative and enforcement provisions applicable to 
     excise taxes generally apply to this tax.
       Deletion of Federal requirements relating to ``pass 
     through'' of payments. The provisions in S. 1415, as reported 
     by the Commerce Committee, requiring that tobacco 
     manufacturers use their best efforts to pass through to 
     consumers the amount of any payments on a per unit basis are 
     deleted.
       Deletion or modification of miscellaneous ``fees'' 
     contained in S. 1415. The provisions of S. 1415, as reported 
     by the Commerce Committee, that impose separate ``fees'' to 
     support the Tobacco Community Revitalization Trust Fund 
     programs, the ``fees'' and operative Trust Fund provisions 
     related to international tobacco control, the ``fees'' and 
     ``assessments'' on nonparticipating manufacturers, the 
     Tobacco Asbestos Trust Fund and related programmatic 
     provisions, the Compliance Bonus Fund, and the provision 
     relating to child care and early childhood development 
     spending are deleted from the bill.
       The Finance Committee amendment provides that, 
     notwithstanding any other provision of law, all charges or 
     user fees imposed under the titles of the bill other than the 
     revenue title must be set in amounts that recover only costs 
     attributable to providing services to the party paying the 
     fees (i.e.,

[[Page S5006]]

     must be true, or cost-based, user fees rather than disguised 
     taxes).
       Establishment of National Tobacco Settlement Trust Fund. In 
     lieu of the multiple separate Trust Funds provided for under 
     the Commerce Committee titles of S. 1415, as reported, a 
     National Tobacco Settlement Trust Fund (the ``Tobacco 
     Trust Fund'') is established in the Treasury Department 
     pursuant to provisions enacted into the Trust Fund 
     provisions of the Code. Amounts equal to the net revenues 
     \4\ from the changes made by the Finance Committee 
     amendment are to be deposited in the Tobacco Trust 
     Fund.\5\ The Tobacco Trust Fund further will receive 
     amounts equal to all penalties imposed under S. 1415.
       Amounts in the Tobacco Trust Fund generally are available 
     for expenditure as provided in subsequently enacted 
     appropriations Acts.\6\
       Amounts in the Tobacco Trust Fund are available for 
     expenditure for the programs provided in S. 1415, as those 
     programs are in effect on the date of the bill's enactment.
       The Tobacco Trust Fund includes a separate account, the 
     State Tobacco Settlement Account (the ``State Account''), to 
     administer distribution of Trust Fund monies to States. The 
     State Account will receive revenues equal to 30 percent of 
     the net revenues produced by the increases in tobacco taxes 
     during the five calendar years, 1999 through 2003. In 
     calendar year 2004 and thereafter, this percentage will 
     increase to 45 percent. These revenues are not available to 
     finance any other Trust Fund expenditure purposes. States are 
     eligible for payments from the State Account and the Tobacco 
     Trust Fund generally only if they waive their rights to any 
     future payments under State settlements with the tobacco 
     manufacturers or importers.
       Each State is eligible to receive the portion of the monies 
     in the State Account shown in the table entitled 
     ``Distribution of Funds to States'' below, except the States 
     of Mississippi, Florida, Texas, and Minnesota are guaranteed 
     that amounts those States receive will not be less than the 
     amounts they would have received under their previously 
     negotiated settlements with the tobacco companies, determined 
     on a year-by-year basis.
       In general, there are no requirements or restrictions on 
     the use of funds appropriated to the States from the Tobacco 
     Trust Fund; however, the Finance Committee amendment 
     clarifies that the Medicaid cost recovery provisions apply to 
     States that use Tobacco Trust Fund payments in their Medicaid 
     programs. Cost recovery is waived for States that use the 
     Tobacco Trust Fund for other purposes.
       Provisions further are included ensuring that no tax 
     revenues are deposited into the Tobacco Trust Fund if any 
     monies are spent other than as authorized under these 
     provisions.
       General administrative provisions applicable to Code Trust 
     Funds apply to the Tobacco Trust Fund, except no interest 
     would accrue on unspent balances in the Tobacco Trust Fund. 
     As with other Code Trust Funds, the Tobacco Trust Fund is not 
     permitted to borrow from the General Fund.

                     DISTRIBUTION OF FUNDS TO STATES                    
------------------------------------------------------------------------
                           State                              Percentage
------------------------------------------------------------------------
Alabama....................................................        1.237
Alaska.....................................................        0.400
Arizona....................................................        1.709
Arkansas...................................................        0.954
California.................................................        8.695
Colorado...................................................        0.990
Connecticut................................................        1.548
Delaware...................................................        0.400
D.C........................................................        0.474
Florida....................................................        4.768
Georgia....................................................        2.735
Hawaii.....................................................        0.800
Idaho......................................................        0.400
Illinois...................................................        3.930
Indiana....................................................        1.490
Iowa.......................................................        0.932
Kansas.....................................................        0.800
Kentucky...................................................        1.664
Louisiana..................................................        1.723
Maine......................................................        0.800
Maryland...................................................        1.425
Massachusetts..............................................        3.802
Michigan...................................................        3.586
Minnesota..................................................        1.246
Mississippi................................................        1.701
Missouri...................................................        1.701
Montana....................................................        0.400
Nebraska...................................................        0.400
Nevada.....................................................        0.400
New Hampshire..............................................        0.400
New Jersey.................................................        3.755
New Mexico.................................................        0.800
New York...................................................       12.812
North Carolina.............................................        1.977
North Dakota...............................................        0.400
Ohio.......................................................        4.205
Oklahoma...................................................        0.800
Oregon.....................................................        1.353
Pennsylvania...............................................        4.421
Rhode Island...............................................        0.800
South Carolina.............................................        1.090
South Dakota...............................................        0.400
Tennessee..................................................        2.851
Texas......................................................        5.930
Utah.......................................................        0.400
Vermont....................................................        0.400
Virginia...................................................        1.348
Washington.................................................        1.726
West Virginia..............................................        0.782
Wisconsin..................................................        1.841
Wyoming....................................................        0.400
------------------------------------------------------------------------

                          II. Trade Provisions

       1. Section 1107--Ban on distribution of tobacco products 
     produced by child labor. The Finance Committee amendment to 
     Section 1107 clarifies that the amendment to Section 307 of 
     the Tariff Act of 1930 contained in S. 1415 applies to 
     imports of tobacco products produced by forced or indentured 
     child labor.
       2. Section 1133--Limits on the authority to promote the 
     exportation of tobacco. The Finance Committee amendment 
     codifies current policy set out in the Departments of 
     Commerce, Justice and State, the Judiciary and Related 
     Agencies Appropriations Act, 1998, which prohibits any 
     officer, employee, department or agency of the United States 
     from promoting the sale or export of tobacco products, or 
     from seeking the removal of nondiscriminatory barriers to 
     trade in tobacco. The Finance Committee amendment clarifies 
     that ministerial or clerical functions, such as the 
     collection of export documents by Customs Service officials 
     upon export through a U.S. port, would not constitute 
     promotion of the sale or export of tobacco products within 
     the meaning of section 1133. The Finance Committee clarifies 
     further that United States Trade Representative (USTR) 
     retains the authority to seek redress from discriminatory 
     barriers to U.S. market access, with the proviso that USTR 
     must consult with the Department of Health and Human Services 
     prior to taking such action. Finally, in the Committee's 
     view, nothing in section 1133 should be construed to prohibit 
     the reduction of tariffs or other trade barriers through 
     comprehensive trade negotiations that incidentally include 
     tobacco products, provided that such reductions are not 
     primarily directed at reducing tariffs or trade restraints on 
     tobacco products.
       3. Section 1134--Report on impact on U.S. international 
     obligations. The Finance Committee amendment strikes Section 
     1134 from the bill.
       4. Section 1145--Anti-smuggling provisions/prohibition on 
     imports except under a permit. The Finance Committee 
     amendment ensures that the bill imposes identical permit 
     requirements on persons engaged in the production or 
     marketing of tobacco products, regardless of the country or 
     origin of the product and irrespective of their role in the 
     distribution chain, whether through the manufacture, import, 
     sale, distribution or warehousing of tobacco products. The 
     Finance Committee amendment clarifies that the legislation 
     does not create a separate import licensing regime for 
     imports. The legislation does not affect the administration 
     of tariff rate quotas the United States currently imposes on 
     imports of tobacco and manufactured tobacco.
       5. Section 1147--Ships stores, duty-free shops, and foreign 
     trade zones. The Finance Committee amendment would permit the 
     continued use of duty-free stores and foreign trade zones for 
     the import, sale, manufacture, distribution, and export of 
     tobacco products, provided that such activities comply with 
     all applicable U.S. laws relating to the import, sale, 
     distribution and/or marking of tobacco products in the 
     customs territory of the United States, including 
     restrictions on sales to minors. The Finance Committee 
     amendment would also prohibit the importation of tobacco or 
     tobacco products previously sold for export and exempt from 
     excise tax as ships stores or in duty-free shops.

    III. Elimination of Limitation on Medicaid Coverage of Smoking 
                            Cessation Agents

       Under the committee amendment, states will not be allowed 
     to exclude from coverage or restrict agents when used to 
     promote smoking cessation. States will maintain the authority 
     to exclude from coverage or restrict nonprescription drugs 
     when used to promote smoking cessation.

                  IV. Mastectomy Health Care Provision


                             a. present law

       Under present law, group health plans must meet certain 
     requirements with respect to limitations on exclusions of 
     preexisting conditions and must not discriminate against 
     individuals based on health status. An excise tax of $100 per 
     day during the period of noncompliance is imposed on the 
     employer sponsoring the plan if the plan fails to meet these 
     requirements. The maximum tax that can be imposed during 
     taxable year cannot exceed the lesser of 10 percent of the 
     employer's group health plan expenses for the prior year or 
     $500,000. No tax is imposed if the Secretary determines that 
     the employer did not know, and exercising reasonable 
     diligence would not have known, that the failure existed.


             b. description of finance committee amendment

       The Finance Committee amendment requires that certain group 
     health plans satisfy two additional requirements: (1) provide 
     for impatient coverage with respect to the treatment of 
     breast cancer, and (2) provide inpatient coverage for 
     reconstructive surgery following mastectomies. Failure to 
     comply with these requirements would result in the same 
     exercise tax applicable to failure to comply with the 
     limitations on exclusions of preexisting conditions and 
     discriminating against individuals based on health status.
       The amendment requires a group health plan that provides 
     medical and surgical benefits to ensure that inpatient 
     coverage with respect to the treatment of breast cancer is 
     provided for a period of time as determined by the attending 
     physician to be medically appropriate following: (1) a 
     mastectomy; (2) a lumpectomy; or (3) a lymph node dissection 
     for the treatment of breast cancer.
       The amendment requires a group health plan that provides 
     medical and surgical benefits with respect to a mastectomy to 
     ensure that, in a case in which a mastectomy patient elect 
     breast reconstruction, coverage is provided for: (1) all 
     stages of reconstruction

[[Page S5007]]

     of the breast on which the mastectomy has been performed; (2) 
     surgery and reconstruction of the other breast to produce a 
     symmetrical appearance; and (3) the costs of prostheses and 
     complications of mastectomy including lymphodemas, in the 
     manner determined by the attending physician and the patient 
     to be appropriate.
       The amendment requires a group health plan to provide 
     notice to all participants and beneficiaries under the plan 
     of the inpatient coverage available with respect to the 
     treatment of breast cancer and reconstructive surgery 
     following mastectomies.
       The amendment does not pre-empt any State law in effect on 
     the date of enactment with respect to health insurance 
     coverage that: (1) requires coverage for a minimum length of 
     hospital stay following a surgical treatment for breast 
     cancer; (2) requires coverage of at least the coverage of 
     reconstructive breast surgery required under the proposal; or 
     (3) requires coverage for breast cancer treatments (including 
     breast reconstruction) in accordance with scientific 
     evidence-based practices or guidelines recommended by 
     established medical associations.


                               footnotes

     \1\ The term United States includes the 50 States and the 
     District of Columbia.
     \2\ A significant majority of taxable cigarettes, and of 
     taxable tobacco products, is small cigarettes.
     \3\ These rules may be, but are not required to be, based on 
     the University of Michigan's National High School Drug Use 
     Survey, ``Monitoring the Future'' (the specified source under 
     the Proposed Resolution and S. 1415, as reported by the 
     Commerce Committee.
     \4\ The term ``net revenues'' means the gross payments 
     received less an income tax offset.
     \5\ These amounts would be reduced by any refunds of tax 
     previously paid that were properly allocable to revenues 
     deposited into the Tobacco Trust Fund.
     \6\ As reported by the Commerce Committee, S. 1415 provides 
     that spending for certain programs is to be direct spending. 
     This provision in the Finance Committee amendment supersedes 
     those direct spending provisions (except in the case of 
     amounts deposited into the State Account, described below, 
     and S. 1415's provisions for payments to tobacco farmers).

  Several Senators addressed the Chair.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. MOYNIHAN. Mr. President, I concur in the judgment of our 
distinguished chairman on the important question of the jurisdiction of 
the Committee on Finance and I thank him for insisting that it be made 
clear for the record, as indeed has been done thanks to the 
distinguished Presiding Officer.
  Mr. President, S. 1415, the tobacco legislation now before the 
Senate, was ordered referred to the Committee on Finance on May 13, 
1998. It was so referred because the Senate Parliamentarian determined 
that the bill is in the jurisdiction of the Finance Committee. That 
action preserved the jurisdiction over tax legislation for which the 
Finance Committee has been responsible for 181 years.
  The Record should be clear that this is indeed a tax bill. The 
Parliamentarian has so determined; the Joint Committee on Taxation has 
concurred.
  One may refer to certain provisions of this legislation as ``annual 
payments,'' ``lookback assessments,'' or ``fees,'' but they are taxes. 
As Richard Cardinal Cushing said, ``When I see a bird that walks like a 
duck and swims like a duck and quacks like a duck, I call that bird a 
duck.'' Call it whatever you like, but this bill raises taxes on 
tobacco, and we're not fooling anybody to suggest otherwise.
  And as I have said, taxes have been the jurisdiction of the Committee 
on Finance for going on two centuries now. In the case of excise taxes, 
which figure prominently in this bill, the Finance Committee's 
jurisdiction has been recognized since 1817, the year after the 
Committee was established. That was the 14th Congress. George W. 
Campbell of Tennessee, was Chairman; Senator Rufus King, of New York, 
was Ranking Member.
  Likewise our jurisdiction over income taxes has been recognized since 
the first income tax was enacted in 1861. And the Standing Rules of the 
Senate have explicitly provided for our jurisdiction over ``revenue 
measures generally''--tax bills--since 1946, the year that the 
jurisdictions of all Senate Committees were first set forth in the 
Rules. I might add that our jurisdiction over international trade 
matters, which also arise in this bill, is equally clear and equally 
longstanding.
  Our revered Chairman, Senator Roth, last week insisted--with the full 
support of our Committee Members--that this legislation be considered 
by the Finance Committee before it went to the floor. It was referred 
to us on Wednesday, and we marked it up on Thursday. The vote to report 
favorably the Finance Committee amendments was 13-6.
  The Finance Committee made several important improvements to the 
bill. First, we converted the assorted ``payments'' and ``assessments'' 
to taxes. Second, we approved an increase of $1.50 per pack in the tax 
on tobacco, to be phased in over three years. Third, we struck from the 
bill a tax on exports that was a clear violation of Article I, Section 
9 of the U.S. Constitution. And finally, we adopted an amendment by 
Senator D'Amato to require that health plans provide coverage for 
minimum hospital stays and reconstructive surgery associated with the 
treatment of breast cancer.
  Some of these changes have now been included in the pending Commerce 
Committee substitute. Owning to the parliamentary situation, some of 
the other Finance Committee amendments will require separate votes. But 
thanks to our Chairman, the essential point has been made; the 
jurisdiction of the Committee on Finance has been preserved and 
affirmed.
  I thank the Chair and yield the floor.
  Mr. McCAIN. Mr. President, I now ask unanimous consent that there be 
a period for the transaction of routine morning business until 8 p.m., 
with Senators permitted to speak for up to 10 minutes each.
  Mr. ASHCROFT. I object.
  The PRESIDING OFFICER. Objection is heard.
  Mr. ASHCROFT. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The Senator from Arizona has the floor.
  Mr. McCAIN. Mr. President, the Senator from Missouri is not 
recognized for suggesting the absence of a quorum, is that right?
  The PRESIDING OFFICER. The Senator from Arizona does not lose the 
floor when he makes a unanimous consent request.
  Mr. McCAIN. Thank you. Mr. President, the Senate will now take up the 
National Tobacco Policy and Youth Smoking Reduction Act (S. 1415). Six 
weeks ago, the Senate Commerce Committee approved this measure by an 
overwhelming vote of 19-1.
  I want to thank the Majority Leader and Senator Daschle, and all 
Senators for allowing this bill to come to the floor. Thanks to the 
work of so many people including the medical community, especially Dr. 
Koop, Dr. Kessler; the attorneys general, and so many of our colleagues 
on both sides of the aisle over many years, Congress has a rare and 
historic opportunity to put an end to what the American Medical 
Association calls a ``pediatric epidemic.''
  Mr. President tobacco is a legal product that adults may acquire if 
they choose to do so. Under this bill it will remain so. But the 
widespread use of tobacco in this country presents a problem every 
responsible adult would concede will not go away on its own.
  Three thousand American children take up the smoking habit every day. 
For one thousand of them the decision will prove to be fatal. Those 
children will be among the 460,000 Americans a year who die early--
substantially early--from smoking related disease including cancer, 
emphysema, stroke and heart disease. Warnings about the lethal effect 
of tobacco have not discouraged juvenile smoking. Sadly, the Center for 
Disease Control reports that teen smoking is on the rise today.
  In recent years, we have learned how callously indifferent tobacco 
companies are to the loss and suffering their product causes. We have 
learned how tobacco companies will undermine any public good if it 
serves their commercial interests. We have learned that nothing, not 
even the health of children, is off limits to tobacco companies if it 
serves their bottom line. What profits the nation is a matter of no 
consequence to tobacco companies if it does not profit them.
  Mr. President, we have learned that the tobacco companies, well aware 
that kids make up the vast majority of their ``replacement'' market 
have, for years, intentionally and systematically targeted children in 
their marketing and advertising--kids as young as 13 years old, and 
even younger.
  The disclosure of truckloads of internal industry documents have 
exposed once and for all the appallingly malicious lie that tobacco 
executives have for years sworn, often under oath, to be true--that 
they do not market to children.
  They not only have marketed to children, they have thrived on it. And 
I am

[[Page S5008]]

entirely confident that they will continue to do so unless we who are 
elected to protect the national interest, stand up, at long last, to 
the tobacco interests. That is what this legislation is intended to do.
  Studies show that children are particularly susceptible to the 
industry's marketing pitches. So effective have these companies been at 
appealing to youth, many children can identify Joe Camel as readily as 
they do Barney or cartoon characters.
  We have come to learn that as part of their strategy to hook kids 
early, at any cost, tobacco companies manipulated nicotine levels to 
enhance its addictive qualities; engaged in sham medical research; 
quashed information about the danger and addictiveness of tobacco; 
abused the nation's laws to cloak their activities and lied to Congress 
and the American people.
  Tobacco companies have long hoped that money, in the form of campaign 
contributions, would enable them to maintain the status quo, and 
insulate them from the consequences of their actions. For too long, I 
fear, they have been right.
  We are all too familiar with the influence of tobacco money. I appeal 
to my colleagues, now is the time to stop tobacco companies from buying 
political indulgence of their intentional sacrifice of our children to 
the imperatives of preserving a market for their product.
  It is illegal for children to purchase tobacco in every state in the 
country. And in every state in the country, tobacco companies have 
invested enormous sums of money and time to encourage widespread law 
breaking.
  Now is the time to put an end to it. And, Mr. President, now is also 
the time to stop the endless drain on taxpayers, which amounts to an 
annual tax of $50 billion imposed on taxpayers to underwrite tobacco 
related health care costs--an estimated $1.7 trillion over the life of 
this bill.
  Over the past 3 weeks, the tobacco companies have launched a massive 
campaign of diversion. Once again, they hope to use their vast 
resources to divert the country from the truth, and to frustrate us in 
our task to defend against the threat they pose to our children. As 
they have so often in the past, the tobacco companies are lying to all 
of us again, and using their wealth to frighten us all into submission.
  I would like to quote Dr. C. Everett Koop who said about this 
campaign.

       When you see the advertising from the tobacco industry 
     consider the source. These people are experts at manipulation 
     and have been lying to the American people for decades.

  Dr. Koop called on all Members of Congress to support tough tobacco 
legislation. Mr. President, the bill we are presenting to the Senate is 
indeed tough medicine, for a tough problem. Every expert medical 
witness who has testified before Congress, as well as every living 
Surgeon General has called on Congress to pass tough, comprehensive 
tobacco legislation. The measure we will now consider is exactly that--
tough, comprehensive legislation.
  The bill is based on the framework of the June 20th settlement 
between the industry and the state attorneys general and contains the 
six major elements experts agree are essential if we are to stop kids 
from smoking.
  These include restrictions on marketing aimed at youth; stronger 
youth access prohibitions; deterrant price increases; regulatory 
oversight of tobacco ingredients; and counteradvertising campaigns to 
educate youth.
  I would like to address each of these in greater detail. First, like 
the June 20th settlement, the bill imposes advertising restrictions to 
eliminate marketing appeals to youth. The bill would implement the FDA 
rules banning tobacco billboard and outdoor advertising around schools, 
playgrounds and other areas frequented by children.
  It would restrict point-of-sale advertising to ensure that cigarette 
pitches aren't directed at children and would require bold new warning 
labels on cigarette packaging.
  Second, as contemplated in the June 20th agreement, the bill will 
raise cigarette prices sufficient to deter youth consumption. Experts 
say the most important step to deter youth consumption is a substantial 
hike in the price of tobacco products. I want to say that again, Mr. 
President. Experts say the most important step to deter youth 
consumption is a substantial hike in the price of tobacco products.
  The Centers for Disease Control reports that smoking less than 100 
cigarettes can result in clinical addiction, and that higher pricing is 
essential to deter underage use. Accordingly, the bill would increase 
the price per pack of cigarettes by a minimum of $1.10 over five years 
with a commensurate rise in the price of smokeless tobacco. The 
administration believes that this hike, included in the President's 
budget request, would cut youth consumption in half.

  Three, the bill establishes the same youth smoking reduction targets 
agreed to by the industry last summer. Four and one-half million 
underage Americans use tobacco and the number is growing. The bill 
calls for a 60 percent reduction in youth consumption within 10 years 
and levies heavy financial assessments on the industry if they are not 
achieved. Tobacco companies have skillfully determined how to induce 
kids to smoke. With ample motivation they can apply those skills to 
help reverse their handiwork.
  Four, stronger enforcement of youth access rules. While smoking by 
minors is prohibited in every state, kids continue to buy tobacco. The 
bill would require retailers to be licensed by the state and card 
tobacco purchasers in the same manner as alcohol sales. And it requires 
that tobacco products be stored in areas inaccessible to youth. In 
addition, the bill would ban cigarette sales from vending machines, a 
major conduit of tobacco products to kids. all of these restrictions 
were part of last year's settlement.
  Five, cigarette ingredient regulation. Cigarettes contain numerous 
active ingredients harmful to health including nicotine, tar and 
ammonia. Evidence suggests that the tobacco industry has manipulated 
these ingredients to enhance their addictive qualities, and in some 
instances added benign substances such as molasses to sweeten the taste 
for introductory users, which is how the industry refers to children.
  The bill would permit the FDA to oversee and regulate tobacco 
products to protect public health, and promote the development of safer 
cigarettes. In rulemaking two years ago, FDA asserted authority over 
tobacco under its existing ``drug device powers.'' This bill, thanks to 
the Presiding Officer, Senator Frist--Dr. Frist establishes basically 
the same authorities, but in a separate and distinct chapter of law 
that addresses tobacco products only.
  The legislation, however, imposes several important checks on the FDA 
authority. Any ban on nicotine or class of tobacco product could not go 
into effect for two years, enabling Congress market potential of any 
modification to cigarettes that would push smokers to contraband.
  Again, the attorneys general, in their agreement with the industry 
called for greater FDA oversight of tobacco.
  Six, the bill provides funding for smoking prevention and cessation 
programs; counter-advertising campaigns, and vital health research. 
These initiatives are financed by annual payments made by the industry.
  Smoking related health care costs exceed $50 billion per year. The 
bill would require the industry to pay $526 billion over the next 25 
years to reimburse taxpayers for costs to Medicare and state health 
care programs. Last summer's agreement called on the industry to pay 
$368.5 billion. This would have raised the price per pack of cigarettes 
by $68 cents over 5 years, an amount public health authorities found 
insufficient to effect youth usage. And the sums would not have been 
sufficient to pay for assistance to farmers, who were left out of last 
year's agreement by the industry.
  Finally, the bill would place a cap on the tobacco industry's yearly 
liability exposure without barring any individual or group's ability to 
sue or receive compensation. The tobacco industry has successfully 
fended off lawsuits for years. However, the trend is changing and as 
massive new judgments are awarded against the tobacco industry, 
bankruptcy is always a possibility.
  Experts agree that bankruptcy is an undesirable outcome for the 
nation economically, legally and medically. Involving bankruptcy would 
permit the industry to shield themselves from

[[Page S5009]]

their financial responsibilities including compensation to victims. 
When the asbestos companies went bankrupt and left a financial and 
legal mess that is still with us, only the lawyers made out. Moreover, 
the extinction of domestic manufacturers would simply push tobacco 
users to foreign brands or unregulated contraband which would 
constitute a public health crisis.
  We have heard many opinions about whether the industry will submit to 
this legislation. Legal challenges, of course, would delay reforms, so 
industry cooperation would be advantageous. While, according to public 
health authorities, price hikes are essential, they, alone, won't do 
the job. The proposed advertising restrictions and youth usage 
penalties, which industry is threatening to challenge, are also 
essential parts of the solution.
  The National Tobacco Policy and Youth Smoking Reduction Act, however, 
was never intended to be a ``deal'' with the tobacco industry. Our 
mission was to pass the best possible legislation to stop children from 
smoking.
  As I said, tobacco is a legal product and the decision to use it, 
though risky, is a choice for adults to make. Nevertheless, the Nation 
requires that the tobacco industry join us in the fight to protect our 
children. If they choose not to, the American people will respond 
accordingly, Congress will act, and the States will resume their 
lawsuits to extract in court what we might more efficiently achieve 
through cooperation.
  Mr. President, we sent a modification to the bill to the desk in the 
form of a committee substitute. I would like to take a moment to 
explain how it would modify the bill as passed by the committee.
  First, the amendment addresses the concern expressed by some that the 
bill was too ``bureaucratic.'' Although the bulk of the panels and 
boards were temporary, advisory and entailed little or no additional 
federal costs, and the majority were contemplated in the June 20th 
Agreement, the Committee substitute eliminates all but three: an unpaid 
Scientific advisory board at FDA to help assess lower risk tobacco 
products; a part time board to help formulate counter-advertising 
strategies; and a three judge panel to assess attorney client privilege 
claims.
  Second, all receipts and disbursements under the act are routed 
through a single, on-budget, trust fund operated by the Secretary of 
the Treasury. The amendment eliminates, the role of special trustees; 
the international trust fund, the farmers trust fund as well as the 
asbestos trust funds and associated trustees. All funding under the act 
will come from the single Tobacco trust.
  Third, the amendment toughens enforcement against contraband 
smuggling by requiring that manufacturers and wholesalers be licensed; 
that records be kept for large transactions. These and other anti-
smuggling measures were worked out with the administration.
  Four, the amendment drops certain provisions with respect to 
international marketing that had constitutional problems, or were 
violations of international law. Among the items dropped was the 
special licensing fee, the designated trust fund; prohibitions with 
respect to duty free shops, extra-territorial criminal provisions.
  Five, the amendment imposes tougher look-back assessments on the 
industry. The Committee reported bill capped look-back assessments at 
$3.5 billion per year. The amendment raises the ceiling to $4 billion, 
and establishes a company-specific penalty of $1,000 per underage user 
of a particular tobacco brand beyond the target level.

  Six, the amendment modifies the committee bill with respect to second 
hand smoke. Under the bill as reported, states were given the 
opportunity to opt out of the federal program. Under the amendment, 
negotiated with the White House, state can only opt out if they 
implement their own program that is as effective in protecting public 
health, based on the best available science.
  Seven, the amendment eliminates the asbestos trust fund. In its place 
the modification authorizes appropriations from the main fund to assist 
asbestos victims should Congress establish a program to do so.
  Eight, the amendment ensures that with certain deminimus exceptions, 
all tobacco companies, whether it choses to settle its state cases or 
not, are responsible for the annual payments to effect the $1.10 price 
increase.
  The requirement that non-participating manufacturers pay 150% of the 
annual payment has been dropped. Instead, manufacturers that wish to 
settle their state cases must pay the upfront payment they agreed to 
last year, and sign the state protocols binding them to the additional 
requirements they agreed to with the state attorneys general, including 
tougher advertising and marketing restrictions. In return for agreeing 
to the broader restrictions, and not to challenge their obligations 
under the protocols, participating companies would receive a yearly 
liability cap of $8 billion.
  In addition, the committee modification drops several civil liability 
provisions, including a requirement that civil actions be directed at 
the tobacco manufacturer not its parent company.
  Finally, the Committee modification sets out funding parameters for 
the trust fund.
  The Joint Committee on Tax anticipates receipts into the trust fund 
of nearly $65 billion over five years. Because the payments are volume 
adjusted, this number could rise or fall depending upon the volume of 
tobacco sales.
  For this reason, the amendment expresses annual funding in terms of 
percentage of yearly receipts and, except for state funding, places a 
dollar ceiling should receipt exceed expectations. Any amount above the 
ceiling would be transferred to the Medicare Trust funds.
  Under the modifications, the States would receive 40 percent of the 
yearly receipts; health research--22 percent; public health programs--
22 percent; and farmer assistance--16 percent.
  The Office of Management and Budget estimates that under this 
prescription, States would receive a total of $26 billion over five 
years. In a modification agreed to by the National Governors 
Association, 50 percent of the state funds--regarded as the federal 
share of Medicaid recoupment--will be made available to the states for 
a menu of purposes, including safe and drug free schools, Child Care 
and Development Block Grants, substance abuse grants and others. As I 
said, this menu was agreed to by the National Governors Association.
  The other half of the State money would have no menu attached and 
would be used at the sole discretion of the State.
  Mr. President, I would like to briefly comment on the chief criticism 
of this bill launched by the industry--that it is all about tax and 
spend Government.
  The industry agreed last summer to pay $368 billion and to submit 
itself to almost every aspect of the legislation we are debating. The 
agreed to increase the price per pack of cigarettes to reduce youth 
consumption. They agreed to abide by advertising restrictions. They 
agreed to submit themselves to lookback assessments. They agreed to 
enhanced FDA authority over their products. They agreed to stiffer 
youth access rules and they agreed to open up their documents to the 
public. And they agreed to finance smoking prevention and cessation 
programs and health research.
  Are the measures tougher than they agreed to? Yes, without question.
  Now because the industry fears that the bill may actually achieve 
what it purports to, the effort has been transmuted from enlightened 
public policy to tax and spend Government.
  Let us be clear, those who vote against this measure because they 
believe it is tax will merely kill the ability to settle State suits 
collectively and efficiently so that we can move on to the job at 
hand--protecting the health of our kids.
  If this bill is killed, the States will merely resume their suits, at 
great cost in terms of money and time, and the outcome will be the same 
as it has been in Mississippi, Florida, Texas and Minnesota. If we take 
that unwise course, the ultimate prices in cigarettes will be little 
different from what might result from this bill, but we will pay an 
awful price in terms of the 3,000 children a day who will become 
regular users of tobacco and consign themselves to the consequences 
before they are adult enough to make that life or death decision.
  Mr. President, I asserted earlier that tobacco companies have long 
sought

[[Page S5010]]

refuge in lies. They have lied about the effects of their product and 
about the strategies they use to market them. They are lying about the 
purposes and effect of the bill we are now considering. They have 
spared no expense to cover their purposes with lies. They have lied, no 
matter the cost to public health. They have sacrificed the truth and 
our children to their greed. They have lied, because lying has been 
profitable, Mr. President, because lying worked. No more. No more. The 
lying stops today.
  Mr. President, I yield the floor.
  Mr. KERRY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KERRY. Mr. President, I thank the distinguished chairman, the 
manager, for his eloquent comments with respect to the debate that now 
begins in the U.S. Senate.
  Senator Hollings has asked me to open on behalf of the committee, and 
I do so with great respect for his leadership and his involvement in 
helping to bring the U.S. Senate to a point where we can engage in this 
consideration. He continues to fight extraordinarily for what he 
believes in very deeply, and particularly, along with the Senator from 
Kentucky, for the farmers who may be impacted by this legislation. And 
that is a fight that we will continue to have over the course of the 
days ahead.
  This is not just the opportunity, Mr. President, for a historic 
debate; it is an extraordinary opportunity for historic action by the 
U.S. Senate.
  For years, many people across this country have worked hard for this 
moment. For years, we have waited for the opportunity for the Senate to 
be able to step up to bat and exercise its responsibility to protect 
the children of the country. And literally we have the opportunity, 
whether it is this week, which we hope it might be, or in the next 
weeks, when it might inevitably be, we have the opportunity to act on 
behalf of the children of this country in a very direct way that expert 
after expert, Surgeon General after Surgeon General, pediatrician after 
pediatrician, cancer specialist after cancer specialist, all have said 
is necessary for the better health policy of our Nation.
  It is a tribute to the outrage in this country that by now millions 
of Americans understand that 3,000 children will start smoking today 
and will get hooked--some 6,000 will try it, but 3,000 children will 
wind up smoking. And of those, 1,000 of them will die early because of 
the habit they get that they could not kick. Every American has now 
come to understand the way in which children have been manipulated, 
aggressively marketed to, in order to suck them into this addiction 
which ultimately can cost their lives.
  That is what we are voting on on the floor of the U.S. Senate. That 
is what this debate will be about over the course of the next few days. 
There is a growing awareness now in America that we lose the lives of 
over 400,000 of our fellow citizens each year because of smoking-
related illnesses--more people than we lost in all of World War II, 
more people than we lost in all of Vietnam and all of Desert Storm 
combined. And we lose this every year. And it costs us billions of 
dollars in the health care system of our Nation, in our insurance, in 
the hospital wards where some people who have no insurance are paid for 
by the rest of their fellow Americans.
  So this week in the Senate, we are moving beyond the point of simply 
articulating a threat to the children of our country. No one, I think, 
now disputes the notion that there is harm associated with smoking. And 
now the U.S. Senate and the Congress need to act with legislation that 
carries the imprints of both parties, of Senators of both parties, of 
Governors of both parties, of 44 very tenacious and courageous 
attorneys general. Now is the time to follow through on their efforts.
  I urge all my colleagues--Democrat, Republican, liberal, 
conservative, no matter what particular passion politically brings them 
to the U.S. Senate--I urge them over the course of the next days to put 
aside that partisanship and to try to set aside the inclination to make 
the perfect the enemy of the very good and to focus today and 
throughout this week on passing effective legislation that puts 
America's children out of harm's way and secures for the Senate's 
legacy one of cooperation and accomplishment, something that many 
people have felt has been too absent in the workings of the Senate 
these recent years.
  There is a growing feeling that unless we act with a sense of 
bipartisan and a real dedication to doing what is in the national 
interest on smoking, that somehow we might let this historic 
opportunity slip through our fingers. I do not dispute the possibility 
of that, but, on the other hand, I believe that the Senate clearly has 
shown its willingness on many occasions in the past to rise to this 
kind of occasion, to ignore those that Senator McCain just referred to 
who will spend billions and billions of dollars, who have a long record 
of misleading America and the Congress with respect to this issue--that 
we will ignore those special, narrow interests in favor of the larger 
common interests of our fellow citizens. That is precisely what most of 
us came here to see this Senate do. And now we can take pride in the 
possibility of being part of that.
  I believe that when my colleagues read the managers' amendment, the 
bill that is before them, they will find that there is in this a 
mainstream concept, that there is in this a view that really does 
represent common sense. I think it is a rare occasion that, on a 
subject as ripe for dissent as the subject of tobacco, any committee in 
the Senate could conceivably send a bill to the floor of the Senate by 
a vote of 19-1.
  The Commerce Committee is, in point of fact, a microcosm of the whole 
Senate. There are the extremes that we have on both sides, the hard-
line points of view on both sides; and there is, of course, every point 
of view in between that somehow finds a center. And I believe that in 
the end, when all of the debate and all of the anguish over this bill 
has been worked through, we will find that we will be somewhere 
relatively close to what the managers' amendment proposes and to what 
the Senate has advocated.
  As I say that, I personally believe there are improvements that can 
be made. There are things in this bill with which I don't agree. There 
are things that we have all reserved the right to try to change. What 
is important, Mr. President, that we permit the Senate, at this moment, 
to affect that change, that we permit it to work its will and to 
ultimately vote on a bill.
  Senator McCain, I might say, has approached this task by reaching out 
all across party lines, reaching out to every sector of interest group 
that is represented in this debate. I know that he and others on the 
committee have tried to listen hard. It is my belief that when Senators 
examine the bill, while they will undoubtedly find a particular point 
of view here or there with which they could find disagreement and make 
suggestions for improvement, I believe the fact is that they will have 
a renewed respect for the way in which Senator McCain and the Commerce 
Committee and Senator Hollings reached out to demonstrate some tough 
decisionmaking under difficult pressures.
  I also believe that in the end the changes that have been made, most 
of those in the managers' amendment, clearly make this a stronger and 
better bill than it was when it did leave the Commerce Committee. I 
remind my colleagues that the Commerce Committee, at the time we sent 
it out of committee, reserved the right at that point, knowing there 
were some issues that weren't quite completely vetted, to make changes 
in a managers' amendment as we brought it to the floor. The structure 
of the bill has now been changed so that the provisions that are most 
critical--for reducing youth smoking, the annual payments, the look-
back assessments, and the advertising restrictions--will be implemented 
without the tobacco industry's assent, if that is our only choice.
  I think every member of the committee, I am sure every Member of the 
Senate, would prefer that the tobacco companies were part of the 
solution and not a continued part of the problem. We would prefer that 
they were, in fact, signing on to all, everything, that we may embrace 
here in the Senate. I believe that the industry's participation in 
youth smoking reduction efforts is obviously preferable, but I think we 
have made a genuine effort to try to respond to most of their needs. As 
the chairman pointed out and I will

[[Page S5011]]

underscore, almost every concept in this bill was embraced by the 
tobacco companies in their settlements that they arrived at with the 
attorneys general. In fact, most of the concepts are arrived at in the 
settlements they have still reached, most recently last week in 
Minnesota, with a few exceptions.
  The fact is there are some aspects of this that are tougher--but 
tougher in fact, not tougher in total concept. They do reach farther in 
amount of money. There are greater limitations on liability because 
many people believe those liability provisions were too great. But the 
fundamental principle that there should be some restraints, that there 
should be some kind of look back, that there should be advertising 
restraints, that there should be an increase in the price, were all 
accepted by the companies themselves, and it is certainly subject to 
debate and to discretion within the Senate to ultimately agree on what 
those levels ought to be.
  When first presented to the Commerce Committee, the tobacco 
settlement would have provided the tobacco companies with what most 
people believe was an unprecedented level of immunity from civil 
action--elimination of class actions, punitive damages. Aggregation of 
claims would not have been allowed. Claims based on addiction would not 
have been allowed. It would have allowed parent companies to shield 
their tobacco profits from liability. It would have risked the ability 
of injured persons to file State claims. It would have kept those State 
claims in State courts.
  Mr. President, those restraints on the ability of our citizens to be 
able to seek redress were plain and simply excessive. These liability 
restrictions are especially dangerous to the public health because this 
kind of liability threat is, in the final analysis, the strongest and 
most important insurance that the tobacco companies will take public 
health concerns seriously, finally, after so many years of ignoring 
them.
  Let me be clear: The bill before the Senate no longer contains 
special protections for the industry. That, I believe, was an important 
step towards a workable piece of legislation.
  We also must pass legislation that contains high compliance standards 
to ensure that retailers will stop selling cigarettes to minors. We 
believe we have strengthened this element of the bill. We penalize 
States which do not achieve a 90-percent compliance rate after a 5-year 
grace period. When 62 percent of 12-to 17-year-old children in this 
Nation report they could succeed in buying their own cigarettes, that 
nearly half of them have never been asked to provide a positive 
identification, it seems to me it is time for us, as a nation, to get 
serious about compliance. This bill does that.
  In order to ensure that the tobacco companies actually have 
sufficient incentives to reduce youth smoking, they and their 
shareholders must now know that they will pay significantly if youth 
smoking rates do not decrease dramatically, which means they must join 
in the efforts to help us reduce smoking among our youth. That is why 
the look-back assessments are so important.

  Under the managers' bill, the cap on industry-wide assessments has 
been raised to $4 billion, and there are new uncapped company-by-
company payments of $1,000 per child who smokes. That is an incentive 
to be helpful. Not only have the assessments been significantly 
increased but they are no longer tax deductible. That is, in fact, a 
greater incentive for people to understand that this bill means 
business.
  In addition, and this is very important to many who have been part of 
the process, the look-back assessments are now tied to the liability 
provision so that companies which continue to entice minors will lose 
any liability protections whatever--that is to say the cap particularly 
or any other protections in the aggregation preemption.
  I think it is nearly universally agreed that we cannot fundamentally 
regulate tobacco without a strong and effective FDA authority over 
tobacco products. The distinguished Presiding Officer has played a 
critical role, along with Dr. Koop and Dr. Kessler, the White House, 
and the Department of Health and Human Services, in helping to come 
together in a considerable effort of negotiation in order to come up 
with FDA authority within this legislation.
  The FDA will have specific and broad new authority to regulate 
tobacco products. Indeed, Dr. Koop has publicly praised the provision 
as a substantial improvement over the provision in the proposed 
settlement. I am confident that Dr. Koop, Dr. Kessler, and others will 
continue to work with Congress on this matter to ensure that the FDA 
has the authority it needs to protect kids and to promote public 
health.
  What we have before the Senate is not perfect legislation. None of us 
has ever known a perfect piece, I think, to come to the floor of the 
Senate. We will have a critical debate in the days ahead about whether 
or not we can find room for improvement. There are many ideas that 
different Senators will offer. I look forward to that debate with 
respect to children, with respect to farmers, with respect to 
liability, attorney's fees, and other issues.
  Finally, we owe a great deal to the leadership and hard work of our 
colleague, Senator Kent Conrad, who has spoken out on tobacco with a 
great deal of passion, but more importantly, who helped, through a long 
process of working with the task force, to shape and fold what is in 
front of the Senate today. I appreciate how sensitive Senator Conrad 
has been toward passing legislation in this Congress and how seriously 
he has fought to make certain that Congress will find a middle ground 
place where all of us can, hopefully, ultimately come to agreement.
  In the managers' amendment there are several improvements that 
reflect Senator Conrad's priorities and the great work that he has 
performed as leader of the Democratic task force on tobacco.
  So now the full Senate has the opportunity to work its will, to pass 
this bill with the managers' amendment, to send America into the next 
century with the knowledge that we are a Nation not just with a 
responsible policy toward an addictive substance, not just with a 
responsible policy toward our children, but that we know how to 
translate our conscience into public legislation, that we can reach 
beyond partisanship in order to find the common ground.
  To my colleagues, I say simply that history has finally put this 
legislation on the floor of the Senate in a decade-long fight to 
protect our children. We weren't fighting for party. No one in this 
fight ought to have an ideological ax to grind.
  In the final analysis, the one priority that will bring us together 
is fundamental: This debate is about our children and it is about our 
responsibility of raising a generation of healthy children who will 
live up to their potential, free from the grasp of a dangerous drug. 
That is our challenge, and I believe that the Senate can meet it.
  I join with my colleague, the Senator from Arizona, in suggesting 
that this is the moment for the Senate to break away from the 
mendacity, the deception and willful effort to try to undercut the 
health of our kids over such a long period of time. I hope we are going 
to do that.
  I yield the floor.
  Mr. FRIST addressed the Chair.
  The PRESIDING OFFICER (Mr. Ashcroft). The Senator from Tennessee is 
recognized.

  Mr. FRIST. Mr. President, over the next several days, we will be 
discussing a comprehensive piece of legislation that many of us have 
participated in drafting over the last really 9, 10 months--a piece of 
legislation, which I think is a superb start to accomplishing the goal 
on which I hope we will continue to focus. I think we are going to see, 
over the next several days, a lot of debate and probably a number of 
amendments. We will see a lot of arguing back and forth and a lot of 
turf wars will be expressed here on the floor.
  I just make a plea to my colleagues that, throughout that period of 
time, we keep coming back to what our true focus is, the reason for 
having this bill. It really goes back to some of the data and 
statistics that have already been mentioned, which I am sure we will 
mention again and again. But we are here in order to reduce the number 
of kids smoking, teen smoking, under-age smoking.
  We have heard over the last several months about the number of kids 
who start smoking every day; 3,000 kids start smoking every day. And 
1,000, or

[[Page S5012]]

1 out of every 3 of those kids who start today, will die prematurely. 
That means they will die earlier than they would if they had never 
started smoking. That means a thousand children today, over the last 24 
hours, have started smoking and will die before their time because they 
started smoking today. Ninety percent of all adult smokers began 
smoking at or before age 18. In fact, 50 percent of all adults smoking 
today started under the age of 14--maybe 8, 10, 12, or 13 years of age.
  The problem we face today--and, of course, I speak as a Senator now, 
but I also speak as a physician who has taken an oath to dedicate my 
life to improving the quality of life of others--is that of premature 
death. It is as simple as that. However, the problem is not getting 
better, it is actually getting worse. In fact, the percentage of teens 
smoking every day has increased by 40 percent--these are teenagers, 
children--from 17 percent of 12th graders smoking in 1992 to 24 percent 
in 1997. If you look at the teenagers smoking from the 8th grade to the 
12th grade, it climbed from 13 percent in 1992 to 18 percent in 1997. 
So this problem right now is becoming worse.
  Really, the statement I want to make and urge all my colleagues to 
keep in mind is that our focus has to be on the health of the next 
generation and to keep in mind the challenges that youngsters face as 
they travel from that very tricky path from childhood to adulthood, 
surrounded by these temptations. Really, what we need to do is address 
over the next several days, using the template of this bill now on the 
floor, and ask the question: What can we do to make it more likely that 
these children will arrive at adulthood without crippling addictions?
  Mr. President, I would like to briefly comment on one aspect of this 
bill, on which I have spent a great deal of time. I want to comment on 
it this evening, as this bill is introduced. It is a part of the bill 
that is greatly misunderstood by many because they haven't yet read the 
bill or had it presented to them. It has to do with the Food and Drug 
Administration authority in this bill. I am not going to walk through 
the provisions, but I want to briefly explain what we set out to do and 
what is in the bill.
  Right now, drugs and medical devices are regulated by the FDA in a 
single chapter. An attempt has been made by the current administration 
to regulate tobacco through this chapter, chapter 5 of FDA law, with 
the authorities given the devices. How and why? It basically is a way, 
through existing regulation, existing statute or authority, to regulate 
tobacco as a drug delivery device; but to me it is like taking a round 
peg and trying to put it in a square hole or taking a square peg and 
trying to put it in a round hole--it just doesn't fit. It just doesn t 
fit to try and say that tobacco should be regulated as a drug delivery 
device. The attempt has been made to regulate tobacco by using the 
restrictive device authority in chapter V. I point this out because it 
is the reason we have created a whole new chapter for the regulation of 
tobacco. This new chapter reflects that tobacco is a unique product, 
very different from drugs and very different from devices.

  Chapter 5 of the Federal Food, Drug and Cosmetic Act is that chapter 
that, heretofore, an attempt has been made to regulate tobacco through. 
It is the drug and device chapter. Tobacco just does not fit there. 
Here is one brief example, so that people will understand why we 
created a new chapter. Chapter 5 calls on the Secretary to determine 
whether the regulatory actions taken will ``provide reasonable 
assurance of the safety and effectiveness'' of the drug or the device.
  Well, clearly, tobacco is not safe or effective; we know that. It is 
dangerous to one's health. That has clearly been demonstrated over the 
last 20, 25 years. You can talk about the effectiveness of a pacemaker 
or a heart valve or an artificial heart; you can talk about those 
devices as being safe and effective. You really cannot apply that to 
tobacco. Therefore, instead of taking tobacco and ramming it through 
the drug and device provisions, we felt it was important to look at the 
unique nature of tobacco, write a separate chapter, and that is what is 
in the bill today. It is called chapter 9. This gave us the flexibility 
to create a new standard that was appropriate for tobacco products. The 
bill states that the Secretary may find that regulations and other 
requirements imposed on tobacco products ``are appropriate for the 
protection of public health.'' This is the standard we use instead of 
the safety and effectiveness standard found in chapter 5.
  There are a number of other provisions in the device section that are 
duplicative or not well-suited when you are attempting to regulate 
tobacco. Yes, they are appropriate for drugs and devices, but not for 
tobacco. This chapter 9, which is in the underlying bill, the managers' 
amendment, contains certain new provisions that grant the secretary 
explicit authority to undertake regulatory measures particularly 
relevant to tobacco. It requires manufacturers to submit to the 
secretary information about the ingredients, components and substances 
in their products. It requires reporting of the content delivery and 
form of nicotine in their products. It requires reporting of their 
research on the health, behavioral, and physiological effects of 
tobacco products. It requires reporting on the reductions in risks 
associated with available technology, as well as research on the 
marketing of tobacco products. Yes, this bill does create a new, 
separate chapter for regulation of tobacco products. But the reason it 
is important is because it does not fit, it does not make sense to 
regulate tobacco as safe or effective.

  With that, Mr. President, the only primary change made to the FDA 
provisions in the underlying McCain bill is a revision which I support. 
In the managers' amendment there is a prohibition of the FDA from 
banning tobacco sales from a particular type of retail outlet such as 
convenience stores. In the managers' amendment, we limit the FDA 
authority to the removal of the license of individual operators for 
failure to comply with a licensing agreement. This addresses the 
concerns by many of the retailers who came forward concerned that the 
FDA could ban sales from good operators who are not selling to kids 
because of a few bad actors. I support that revision in the initial FDA 
provisions of the bill.
  In closing, Mr. President, I do have concerns with the McCain bill. I 
will be open minded when considering amendments to it. I think it is a 
very good starting point. But it is a starting point. We can and should 
work on improving it over the next several days as long as we do not 
lose sight of our ultimate objective. And that is a comprehensive 
approach that looks at public health initiatives, that looks at youth 
access issues, that looks at the advertising and marketing, because, I 
believe, that it is only by having a comprehensive approach that we 
will achieve the objective of preventing teen smoking.
  I will be employing one criterion as I look at each of the amendments 
as they come forward. And that is, Is this amendment likely to 
complement a comprehensive campaign to prevent youth smoking? In other 
words, does it help restrict advertising, promote public health, and 
address youth access to tobacco with the end result of a reduction in 
youth smoking?
  Mr. President, I yield the floor.

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