[Congressional Record Volume 144, Number 66 (Thursday, May 21, 1998)]
[Senate]
[Pages S5334-S5341]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          AMENDMENTS SUBMITTED

                                 ______
                                 

        NATIONAL TOBACCO POLICY AND YOUTH SMOKING REDUCTION ACT

                                 ______
                                 

                        SMITH AMENDMENT NO. 2435

  (Ordered to lie on the table.)
  Mr. SMITH of Oregon submitted an amendment intended to be proposed by 
him to the bill (S. 1415) to reform and

[[Page S5335]]

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; as follows:

       On page 182, strike lines 11 through 23, and insert the 
     following:
       (b) Annual Payments.--Each calendar year beginning after 
     the required payment date under subsection (a)(3) the 
     participating tobacco product manufacturers shall make total 
     payments into the Fund for each calendar year in the 
     following applicable base amounts, subject to adjustment as 
     provided in paragraph (4) and section 403:
       (1) For year 1--$14,400,000,000;
       (2) For year 2, an amount equal to the product of $1.00 and 
     the total number of units of tobacco products that were sold 
     in the United States in the previous year.
       (3) For year 3, an amount equal to the product of $1.50 and 
     the total number of units of tobacco products that were sold 
     in the United States in the previous year.
       (4) For year 4, and each subsequent year, an amount equal 
     to the amount paid in the prior year, multiplied by a ratio 
     in which the numerator is the number of units of tobacco 
     products sold in the prior year and the denominator is the 
     number of units of tobacco products sold in the year before 
     the prior year, adjusted in accordance with section 403.
       Beginning on page 192, strike line 6 and all that follows 
     through line 23 on page 199, and insert the following:

     SEC. 451. ALLOCATION ACCOUNTS.

       (a) State Litigation Settlement Account.--
       (1) In general.--There is established within the Trust Fund 
     a separate account, to be known as the State Litigation 
     Settlement Account. Of the net revenues credited to the Trust 
     Fund under section 401(b)(1) for each fiscal year, 10 percent 
     of the amounts designated for allocation under the settlement 
     payments shall be allocated to this account. Such amounts 
     shall be reduced by the additional estimated Federal 
     expenditures that will be incurred as a result of State 
     expenditures under section 452, which amounts shall be 
     transferred to the miscellaneous receipts of the Treasury.
       (2) Appropriation.--Amounts so calculated are hereby 
     appropriated and available until expended and shall be 
     available to States for grants authorized under this Act.
       (3) Distribution formula.--The Secretary of the Treasury 
     shall consult with the National Governors Association, the 
     National Association of Attorneys General, and the National 
     Conference of State Legislators on a formula for the 
     distribution of amounts in the State Litigation Settlement 
     Account and report to the Congress within 90 days after the 
     date of enactment of this Act with recommendations for 
     implementing a distribution formula.
       (4) Use of funds.--A State may use amounts received under 
     this subsection as the State determines appropriate, 
     consistent with the other provisions of this Act including 
     smoking cessation and related public health programs.
       (5) Funds not available as Medicaid reimbursement.--Funds 
     in the account shall not be available to the Secretary as 
     reimbursement of Medicaid expenditures or considered as 
     Medicaid overpayments for purposes of recoupment.
       (b) Health and Health-related Research Allocation 
     Account.--
       (1) In general.-- There is established within the trust 
     fund a separate account, to be known as the Health and 
     Health-Related Research Account. Of the net revenues credited 
     to the trust fund under section 401(b)(1), 10 percent shall 
     be allocated to this account.
       (2) Authorization of appropriations.--Amounts in the Health 
     and Health-Related Research Account shall be available to the 
     extent and in the amounts provided in advance in 
     appropriations acts, to remain available until expended, only 
     for the following purposes:
       (A) For the Centers for Disease Control under section 1991C 
     of the Public Health Service Act, as added by this Act, of 
     the total amounts allocated to this account, not more than 5 
     percent shall be used for this purpose.
       (B) For the National Institutes of Health under section 
     1991D of the Public Health Service Act, as added by this Act. 
     Of the total amounts allocated to this account, not more than 
     5 percent shall be used for this purpose.
       (c) Farmers Assistance Allocation Account.--
       (1) In general.-- There is established within the trust 
     fund a separate account, to be known as the Farmers 
     Assistance Account. Of the net revenues credited to the trust 
     fund under section 401(b)(1) in each fiscal year 10 percent 
     shall be allocated to this account for the first 10 years 
     after the date of enactment of this Act.
       (2) Appropriation.--Amounts allocated to this account are 
     hereby appropriated and shall be available until expended for 
     the purposes of section 1012.
       (d) Medicare Preservation Account.--There is established 
     within the trust fund a separate account, to be known as the 
     Medicare Preservation Account. Of the net revenues credited 
     to the trust fund under section 401(b)(1) in each fiscal year 
     70 percent, and all of the revenues credited to the trust 
     fund under section 401(b)(3), shall be allocated to this 
     account for the first 10 years after the date of enactment of 
     this Act. Funds credited to this account shall be transferred 
     to the Medicare Hospital Insurance Trust Fund.
                                 ______
                                 

                 GRAMM (AND OTHERS) AMENDMENT NO. 2436

  Mr. GRAMM (for himself, Mr. Domenici, and Mr. Faircloth) proposed an 
amendment to the motion to recommit proposed by Mr. Gramm to the bill, 
S. 1415, supra; as follows:

     SEC. 1406. RESOLUTION OF AND LIMITATIONS ON CIVIL ACTIONS.

       (a) State Attorney General Actions.--
       (1) Pending claims.--With respect to a State, to be 
     eligible to receive payments from the State Litigation 
     Settlement Account, the attorney general for such State shall 
     resolve any civil action seeking recovery for expenditures 
     attributable to the treatment of tobacco related illnesses 
     and conditions that have been commenced by the State against 
     a tobacco product manufacturer, distributor, or retailer that 
     is pending on the date of enactment of this Act.
       (2) Future actions based on prior conduct.--With respect to 
     a State, to be eligible to receive payments from the State 
     Litigation Settlement Account, the attorney general for such 
     State shall agree that the State will not commence any new 
     tobacco claim after the date of enactment of this Act (other 
     than to enforce the terms of a previous judgment) that is 
     based on the conduct of a participating tobacco product 
     manufacturer, distributor, or retailer that occurred prior to 
     the date of enactment of this Act, seeking recovery for 
     expenditures attributable to the treatment of tobacco induced 
     illnesses and conditions against such a participating tobacco 
     product manufacturer, distributor, or retailer.
       (3) Application to local governmental entities.--The 
     requirements described in paragraphs (1) and (2) shall apply 
     to civil actions commenced by or on behalf of local 
     governmental entities for the recovery of costs attributable 
     to tobacco-related illnesses if such localities are within a 
     State whose attorney general has elected to resolve claims 
     under paragraph (1) and enter into the agreement described in 
     paragraph (2). Such provisions shall not apply to those local 
     governmental entities that are within a State whose attorney 
     general has not resolved such claims or entered into such 
     agreements.
       (b) State and Local Option for One-Time Opt Out.--
       (1) In general.--The Secretary shall establish procedures 
     under which the attorney general of a State may, not later 
     than 1 year after the date of enactment of this Act, elect 
     not to resolve an action described in subsection (a)(1) or 
     not to enter into an agreement under subsection (a)(2). A 
     State whose attorney general makes such an election shall not 
     be eligible to receive payments from the State Litigation 
     Settlement Account. Procedures under this paragraph shall 
     permit such a State to make such an election on a one-time 
     basis.
       (2) Extension.--In the case of a State that has secured a 
     judgment against a participating tobacco product 
     manufacturer, distributor, or retailer in an action described 
     in subsection (a)(1) prior to or during the period described 
     in paragraph (1), and such judgment has been appealed by such 
     manufacturer, distributor, or retailer, such period shall be 
     extended during the pendency of the appeal and for an 
     additional period as determined appropriate by the Secretary, 
     not to exceed one year.
       (3) Application to certain states.--A State that has 
     resolved a tobacco claim described in subsection (a)(1) with 
     a participating tobacco product manufacturer, distributor, or 
     retailer prior to the date of enactment of this Act may not 
     make an election described in paragraph (1) if, as part of 
     the resolution of such claim, the State agreed that the 
     enactment of any national tobacco settlement legislation 
     would supersede the provisions of the resolution.
       (4) Local governmental entity option for one-time opt 
     out.--
       (A) In general.--The Secretary shall establish procedures 
     under which the attorney for a local governmental entity 
     which commenced a civil action prior to June 20, 1997, 
     against a participating tobacco product manufacturer, 
     distributor, or retailer seeking recovery for expenditures 
     attributable to the treatment of tobacco related illnesses 
     and conditions, not later that 1 year after the date of 
     enactment of this Act, may elect not to resolve any action 
     described in subsection (a)(3). A local governmental entity 
     whose attorney makes such an election shall not be eligible 
     to receive payments from the State Litigation Settlement 
     Account. Procedures under this paragraph shall permit such a 
     local governmental entity to make such an election on a one-
     time basis.
       (B) Extension.--In the case of a local governmental entity 
     that has secured a judgment against a participating tobacco 
     product manufacturer, distributor, or retailer in a claim 
     described in subsection (a)(3) prior to or during the period 
     described in subparagraph (A), and such judgment has been 
     appealed by such manufacturer, distributor, or retailer, such 
     period shall be extended during the pendency of the appeal 
     and for an additional period as determined appropriate by the 
     Secretary, not to exceed one year.

[[Page S5336]]

       (C) Application to certain local governmental entities.--A 
     local governmental entity that has resolved a claim described 
     in subsection (a)(3) with a participating tobacco product 
     manufacturer, distributor, or retailer prior to the date of 
     enactment of this Act may not make an election described in 
     subparagraph (A) if, as part of the resolution of such claim, 
     the local governmental entity agreed that the enactment of 
     any national tobacco settlement legislation would supersede 
     the provisions of the resolution.
       (c) Addiction and Dependency Claims; Castano Civil 
     Actions.--
       (1) Addiction and dependence claims barred.--In any civil 
     action to which this title applies, no addiction claim or 
     dependence claim may be filed or maintained against a 
     participating tobacco product manufacturer.
       (2) Castano civil actions.--
       (A) In general.--The rights and benefits afforded in 
     section 221 of this Act, and the various research activities 
     envisioned by this Act, are provided in settlement of, and 
     shall constitute a remedy for the purpose of determining 
     civil liability as to those addiction or dependence claims 
     asserted in the Castano Civil Actions. The Castano Civil 
     Actions shall be dismissed to the extent that they seek 
     relief in the nature of public programs to assist addicted 
     smokers to overcome their addiction or other publicly 
     available health programs with full reservation of the rights 
     of individual class members to pursue claims not based on 
     addiction or dependency in civil actions in accordance with 
     this Act.
       (B) Arbitration.--For purposes of awarding attorneys fees 
     and expenses for those actions subject to this subsection, 
     the matter at issue shall be submitted to arbitration before 
     one panel of arbitrators. In any such arbitration, the 
     arbitration panel shall consist of 3 persons, one of whom 
     shall be chosen by the attorneys of the Castano Plaintiffs' 
     Litigation Committee who were signatories to the Memorandum 
     of Understanding dated June 20, 1997, by and between tobacco 
     product manufacturers, the Attorneys General, and private 
     attorneys, one of whom shall be chosen by the participating 
     tobacco product manufacturers, and one of whom shall be 
     chosen jointly by those 2 arbitrators.
       (C) Payment of awards.--The participating tobacco product 
     manufacturers shall pay the arbitration award.
       (d) Rules of Construction.--
       (1) Post enactment claims.--Nothing in this title shall be 
     construed to limit the ability of a government or person to 
     commence an action against a participating tobacco product 
     manufacturer, distributor, or retailer with respect to a 
     claim that is based on the conduct of such manufacturer, 
     distributor, or retailer that occurred after the date of 
     enactment of this Act.
       (2) No limitation on person.--Nothing in this title shall 
     be construed to limit the right of a government (other than a 
     State or local government as provided for under subsection 
     (a) and (b)) or person to commence any civil claim for past, 
     present, or future conduct by participating tobacco product 
     manufacturers, distributors, or retailers.
       (3) Criminal liability.--Nothing in this title shall be 
     construed to limit the criminal liability of a participating 
     tobacco product manufacturer, distributor or retailer or its 
     officers, directors, employees, successors, or assigns.
       (e) Definitions.--In this section:
       (1) Person.--The term ``person'' means an individual, 
     partnership, corporation, parent corporation or any other 
     business or legal entity or successor in interest of any such 
     person.
       (2) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
       At the appropriate place, insert:

     SEC. ____. ELIMINATION OF MARRIAGE PENALTY.

       (a) In General.--Part VII of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to additional 
     itemized deductions for individuals) is amended by 
     redesignating section 222 as section 223 and by inserting 
     after section 221 the following new section:

     ``SEC. 222. DEDUCTION FOR MARRIED COUPLES TO ELIMINATE THE 
                   MARRIAGE PENALTY.

       ``(a) In General.--In the case of a joint return under 
     section 6013 for the taxable year, there shall be allowed as 
     a deduction an amount equal to the excess (if any) of--
       ``(1) the sum of the amounts determined under subparagraphs 
     (B) and (C) of section 63(c)(2) for such taxable year 
     (relating to the basic standard deduction for a head of a 
     household and a single individual, respectively), over
       ``(2) the amount determined under section 63(c)(2)(A) for 
     such taxable year (relating to the basic standard deduction 
     for a joint return).
       ``(b) Limitation Based on Modified Adjusted Gross Income.--
       ``(1) In general.--No deduction shall be allowed under 
     subsection (a) if the modified adjusted gross income of the 
     taxpayer for the taxable year exceeds $50,000.
       ``(2) Modified adjusted gross income.--For purposes of this 
     subsection, the term `modified adjusted gross income' means 
     adjusted gross income determined--
       ``(A) after application of sections 86, 219, and 469, and
       ``(B) without regard to sections 135, 137, and 911 or the 
     deduction allowable under this section.
       ``(3) Cost-of-living adjustment.--In the case of any 
     taxable year beginning in a calendar year after 1999, the 
     $50,000 amount under paragraph (1) shall be increased by an 
     amount equal to such dollar amount multiplied by the cost-of-
     living adjustment determined under section 1(f)(3) for the 
     calendar year in which the taxable year begins, except that 
     subparagraph (B) thereof shall be applied by substituting 
     `calendar year 1998' for `calendar year 1992'. If any amount 
     as adjusted under this paragraph is not a multiple of $5,000, 
     such amount shall be rounded to the next lowest multiple of 
     $5,000.''
       (b) Deduction To Be Above-the-Line.--Section 62(a) of the 
     Internal Revenue Code of 1986 (defining adjusted gross 
     income) is amended by adding after paragraph (17) the 
     following new paragraph:
       ``(18) Deduction for married couples.--The deduction 
     allowed by section 222.''
       (c) Earned Income Credit Phaseout To Reflect Deduction.--
     Section 32(c)(2) of the Internal Revenue Code of 1986 
     (defining earned income) is amended by adding at the end the 
     following new subparagraph:
       ``(C) Marriage penalty reduction.--Solely for purposes of 
     applying subsection (a)(2)(B), earned income for any taxable 
     year shall be reduced by an amount equal to the amount of the 
     deduction allowed to the taxpayer for such taxable year under 
     section 222.''
       (d) Clerical Amendment.--The table of sections for part VII 
     of subchapter B of chapter 1 of such Code is amended by 
     striking the item relating to section 222 and inserting the 
     following new items:

``Sec. 222. Deduction for married couples to eliminate the marriage 
              penalty.
``Sec. 223. Cross reference.''

       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.
                                 ______
                                 

                 DURBIN (AND OTHERS) AMENDMENT NO. 2437

  Mr. DASCHLE (for Mr. Durbin, for himself, Mr. DeWine, Mr. Wyden, Mr. 
Chafee, Mr. Harkin, Ms. Collins, Mr. Kennedy, Ms. Snowe, Mr. Daschle, 
Mr. Conrad, and Mr. Reed) proposed an amendment to amendment No. 2436 
proposed by Mr. Gramm to the bill, S. 1415, supra; as follows:

       In the amendment strike pages 10 through 13 and insert the 
     following:
       Subtitle A--Performance Objectives to Reduce Underage Use

     SEC. 201. FINDINGS.

       Congress finds the following:
       (1) Reductions in the underage use of tobacco products are 
     critically important to the public health.
       (2) Achieving this critical public health goal can be 
     substantially furthered by increasing the price of tobacco 
     products to discourage underage use if reduction targets are 
     not achieved and by creating financial incentives for 
     manufacturers to discourage youth from using their tobacco 
     products.
       (3) When reduction targets in underage use are not achieved 
     on an industry-wide basis, the price increases that will 
     result from an industry-wide assessment will provide an 
     additional deterrence to youth tobacco use.
       (4) Manufacturer-specific incentives that will be imposed 
     if reduction targets are not met by a manufacturer provide a 
     strong incentive for each manufacturer to make all efforts to 
     discourage youth use of its brands and insure the 
     effectiveness of the industry-wide assessments.

     SEC. 202. PURPOSES AND GOALS.

       (a) Purpose.--It is the purpose of this subtitle to create 
     incentives to achieve reductions in the percentage of 
     children who use tobacco products and to ensure that, in the 
     event that other measures contained in this Act prove to be 
     inadequate to produce substantial reductions in tobacco use 
     by minors, tobacco companies will pay additional assessments. 
     These additional assessments are designed to lower youth 
     tobacco consumption in a variety of ways, including by 
     triggering further increases in the price of tobacco 
     products, by encouraging tobacco companies to work to meet 
     statutory targets for reductions in youth tobacco 
     consumption, and by providing support for further reduction 
     efforts.
       (b) Goals.--As part of a comprehensive national tobacco 
     control policy, the Secretary, working in cooperation with 
     State, Tribal, and local governments and the private sector, 
     shall take all actions under this Act necessary to ensure 
     that the required performance objectives for percentage 
     reductions in underage use of tobacco products set forth in 
     this title are achieved.

     SEC. 203. ANNUAL PERFORMANCE SURVEYS.

       (a) Annual Performance Survey.--Beginning not later than 
     1999 and annually thereafter the Secretary shall conduct a 
     survey, in accordance with the methodology in subsection 
     (e)(1), to determine for each type of tobacco product--
       (1) the percentage of all children who used such type of 
     tobacco product within the past 30 days; and
       (2) the percentage of children who identify each brand of 
     each type of tobacco product as the usual brand of the type 
     smoked or used within the past 30 days.
       (b) Use of Product.--A child shall be considered to have 
     used a manufacturer's tobacco product if the child identifies 
     the manufacturer's tobacco product as the usual brand of 
     tobacco product smoked or used by the child within the past 
     30 days.

[[Page S5337]]

       (c) Separate Types of Products.--For purposes of this 
     subtitle (except as provided in subsection 205(h)), 
     cigarettes and smokeless tobacco shall be considered separate 
     types of tobacco products.
       (d) Confidentiality of data.--The Secretary may conduct a 
     survey relating to tobacco use involving minors. If the 
     information collected in the course of conducting the annual 
     performance survey results in the individual supplying the 
     information, or described in the information, being 
     identifiable, the information may not be used for any purpose 
     other than the purpose for which it was supplied unless that 
     individual (or that individual's guardian) consents to its 
     use for such other purposes. The information may not be 
     published or released in any other form if the individual 
     supplying the information, or described in the information, 
     is identifiable unless that individual (or that individual's 
     guardian) consents to its publication or release in other 
     form.
       (e) Methodology.--
       (1) In general.--The survey required by subsection (a) 
     shall--
       (A) be based on a nationally representative sample of young 
     individuals;
       (B) measure use of each type of tobacco product within the 
     past 30 days;
       (C) identify the usual brand of each type of tobacco 
     product used within the past 30 days; and
       (D) permit the calculation of the actual percentage 
     reductions in underage use of a type of tobacco product (or, 
     in the case of the manufacturer-specific surcharge, the use 
     of a type of the tobacco products of a manufacturer) based on 
     the point estimates of the percentage of young individuals 
     reporting use of a type of tobacco product (or, in the case 
     of the manufacturer-specific surcharge, the use of a type of 
     the tobacco products of a manufacturer) from the annual 
     performance survey.
       (2) Criteria for deeming point estimates correct.--Point 
     estimates under paragraph (1)(D) are deemed conclusively to 
     be correct and accurate for calculating actual percentage 
     reductions in underage use of a type of tobacco product (or, 
     in the case of the manufacturer-specific surcharge, the use 
     of a type of the tobacco products of a manufacturer) for the 
     purpose of measuring compliance with percent reduction 
     targets and calculating surcharges provided that the 
     precision of estimates (based on sampling error) of the 
     percentage of children reporting use of a type of tobacco 
     product (or, in the case of the manufacturer-specific 
     surcharge, the use of a type of the tobacco products of a 
     manufacturer) is such that the 95 percent confidence interval 
     around such point estimates is no more than plus or minus 1 
     percent.
       (3) Survey deemed correct, proper, and accurate.--A survey 
     using the methodology required by this subsection is deemed 
     conclusively to be proper, correct, and accurate for purposes 
     of this Act.
       (4) Secretary may adopt different methodology.--The 
     Secretary by notice and comment rulemaking may adopt a survey 
     methodology that is different than the methodology described 
     in paragraph (1) if the different methodology is at least as 
     statistically precise as that methodology.
       (f) Additional Measures.--In order to increase the 
     understanding of youth tobacco product use, the Secretary 
     may, for informational purposes only, add additional measures 
     to the survey under subsection (a), conduct periodic or 
     occasional surveys at other times, and conduct surveys of 
     other populations such as young adults. The results of such 
     surveys shall be made available to manufacturers and the 
     public to assist in efforts to reduce youth tobacco use.
       (g) Technical Adjustments.--The Secretary may make 
     technical changes in the manner in which surveys are 
     conducted under this section so long as adjustments are made 
     to ensure that the results of such surveys are comparable 
     from year to year.

     SEC. 204. PERFORMANCE OBJECTIVES.

       (a) Baseline Level.--The baseline level for each type of 
     tobacco product, and for each manufacturer with respect to 
     each type of tobacco product, is the percentage of children 
     determined to have used such tobacco product in the first 
     annual performance survey (in 1999).
       (b) Industry-Wide Non-Attainment Assessments.--For the 
     purpose of determining industry-wide non-attainment 
     assessments, the performance objective for the reduction of 
     the percentage of children determined to have used each type 
     of tobacco product is the percentage in subsection (d) as 
     measured from the baseline level for such type of tobacco 
     product.
       (c) Performance Objectives for Existing Manufacturers.--
     Each existing manufacturer shall have as a performance 
     objective the reduction of the percentage of children 
     determined to have used each type of such manufacturer's 
     tobacco products by at least the percentage specified in 
     subsection (d) as measured from the baseline level for such 
     manufacturer for such product.
       (d) Required Percentage Reductions.--The reductions 
     required in this subsection are as follows:
       (1) In the case of cigarettes--
       (A) with respect to the third and fourth annual performance 
     surveys, 20 percent;
       (B) with respect to the fifth and sixth annual performance 
     surveys, 40 percent;
       (C) with respect to the seventh, eighth, and ninth annual 
     performance surveys, 55 percent; and
       (D) with respect to the 10th annual performance survey and 
     each annual performance survey thereafter, 67 percent.
       (2) In the case of smokeless tobacco--
       (A) with respect to the third and fourth annual performance 
     surveys, 12.5 percent;
       (B) with respect to the fifth and sixth annual performance 
     surveys, 25 percent;
       (C) with respect to the seventh, eighth, and ninth annual 
     performance surveys, 35 percent; and
       (D) with respect to the 10th annual performance survey and 
     each annual performance survey thereafter, 45 percent.
       (e) Report on Further Reductions.--The Secretary shall 
     report to Congress by the end of 2006 on the feasibility of 
     further reduction in underage tobacco use.
       (f) Performance Objective Relative to the De Minimis 
     Level.--If the percentage of children determined to have used 
     a type of the tobacco products of an existing manufacturer in 
     an annual performance survey is equal to or less than the de 
     minimis level, the manufacturer shall be considered to have 
     achieved the applicable performance objective.
       (g) Performance Objectives for New Manufacturers.--Each new 
     manufacturer shall have as its performance objective 
     maintaining the percentage of children determined to have 
     used each type of such manufacturer's tobacco products in 
     each annual performance survey at a level equal to or less 
     than the de minimis level for that year.
       (h) De Minimis Level.--The de minimis level shall be 1 
     percent of children for the applicable year.

     SEC. 205. MEASURES TO HELP ACHIEVE THE PERFORMANCE 
                   OBJECTIVES.

       (a) Annual Determination.--Beginning in 2001, and annually 
     thereafter, the Secretary shall, based on the annual 
     performance surveys conducted under section 203, determine if 
     the performance objectives for each type of tobacco product 
     under section 204 has been achieved and if each manufacturer 
     has achieved the applicable performance objective under 
     section 204. The Secretary shall publish in the Federal 
     Register such determinations and any appropriate additional 
     information regarding actions taken under this section.
       (b) Industry-Wide Non-Attainment Assessments.--
       (1) Industry-wide non-attainment percentage.--The Secretary 
     shall determine the industry-wide non-attainment percentage, 
     if any, for cigarettes and for smokeless tobacco for each 
     calendar year.
       (2) Non-attainment assessment for cigarettes.--For each 
     calendar year in which the performance objective under 
     section 204(b) is not attained for cigarettes, the Secretary 
     shall assess a surcharge on cigarette manufacturers as 
     follows:

----------------------------------------------------------------------------------------------------------------
                If the non-attainment percentage is:                             The surcharge is:              
----------------------------------------------------------------------------------------------------------------
Not more than 5 percentage points                                   $40,000,000 multiplied by the non-attainment
                                                                                                      percentage
More than 5 but not more than 20 percentage points                 $200,000,000, plus $120,000,000 multiplied by
                                                                    the non-attainment percentage in excess of 5
                                                                       but not in excess of 20 percentage points
More than 20 percentage points                                                                    $2,000,000,000
----------------------------------------------------------------------------------------------------------------

       (3) Non-attainment assessment for smokeless tobacco.--For 
     each year in which the performance objective under section 
     204(b) is not attained for smokeless tobacco, the Secretary 
     shall assess a surcharge on smokeless tobacco product 
     manufacturers as follows:

----------------------------------------------------------------------------------------------------------------
                If the non-attainment percentage is:                             The surcharge is:              
----------------------------------------------------------------------------------------------------------------
Not more than 5 percentage points                                    $4,000,000 multiplied by the non-attainment
                                                                                                      percentage
More than 5 but not more than 20 percentage points                   $20,000,000, plus $12,000,000 multiplied by
                                                                    the non-attainment percentage in excess of 5
                                                                       but not in excess of 20 percentage points
More than 20 percentage points                                                                      $200,000,000
----------------------------------------------------------------------------------------------------------------

       (4) Strict liability; joint and several liability.--
     Liability for any surcharge imposed under this subsection 
     shall be--
       (A) strict liability; and
       (B) joint and several liability--
       (i) among all cigarette manufacturers for surcharges 
     imposed under paragraph (2); and
       (ii) among all smokeless tobacco manufacturers for 
     surcharges imposed under paragraph (3).
       (5) Surcharge liability among manufacturers.--A tobacco 
     product manufacturer shall be liable under this subsection to 
     one or more other manufacturers if the plaintiff tobacco 
     product manufacturer establishes by a preponderance of the 
     evidence that the defendant tobacco product manufacturer, 
     through its acts or omissions, was responsible for a 
     disproportionate share of the non-attainment surcharge as 
     compared to the responsibility of the plaintiff manufacturer.
       (6) Exemptions for small manufacturers.--
       (A) Allocation by market share.--The Secretary shall 
     allocate the assessments under this subsection according to 
     each manufacturer's share of the domestic cigarette or 
     domestic smokeless tobacco market, as appropriate, in the 
     year for which the surcharge is being assessed, based on 
     actual Federal excise tax payments.
       (B) Exemption.--In any year in which a surcharge is being 
     assessed, the Secretary shall exempt from payment any tobacco

[[Page S5338]]

     product manufacturer with less than 1 percent of the domestic 
     market share for a specific category of tobacco product 
     unless the Secretary finds that the manufacturer's products 
     are used by underage individuals at a rate equal to or 
     greater than the manufacturer's total market share for the 
     type of tobacco product.
       (c) Manufacturer-Specific Surcharges.--
       (1) In general.--If the Secretary determines that the 
     required percentage reduction in use of a type of tobacco 
     product has not been achieved by a manufacturer for a year, 
     the Secretary shall impose a surcharge on such manufacturer 
     under this paragraph.
       (2) Cigarettes.--For each calendar year in which a 
     cigarette manufacturer fails to achieve the performance 
     objective under section 204(c), the Secretary shall assess a 
     surcharge on that manufacturer in an amount equal to the 
     manufacturer's share of youth incidence for cigarettes 
     multiplied by the following surcharge level:

----------------------------------------------------------------------------------------------------------------
     If the non-attainment percentage for the manufacturer is:                The surcharge level is:           
----------------------------------------------------------------------------------------------------------------
Not more than 5 percentage points                                   $80,000,000 multiplied by the non-attainment
                                                                                                      percentage
More than 5 but not more than 24.1 percentage points               $400,000,000, plus $240,000,000 multiplied by
                                                                    the non-attainment percentage in excess of 5
                                                                     but not in excess of 24.1 percentage points
More than 24.1 percentage points                                                                  $5,000,000,000
----------------------------------------------------------------------------------------------------------------

       (3) Smokeless tobacco.--For each calendar year in which a 
     smokeless tobacco product manufacturer fails to achieve the 
     performance objective under section 204(c), the Secretary 
     shall assess a surcharge on that manufacturer in an amount 
     equal to the manufacturer's share of youth incidence for 
     smokeless tobacco products multiplied by the following 
     surcharge level:

----------------------------------------------------------------------------------------------------------------
     If the non-attainment percentage for the manufacturer is:                The surcharge level is:           
----------------------------------------------------------------------------------------------------------------
Not more than 5 percentage points                                    $8,000,000 multiplied by the non-attainment
                                                                                                      percentage
More than 5 but not more than 24.1 percentage points                 $40,000,000, plus $24,000,000 multiplied by
                                                                    the non-attainment percentage in excess of 5
                                                                     but not in excess of 24.1 percentage points
More than 24.1 percentage points                                                                    $500,000,000
----------------------------------------------------------------------------------------------------------------

       (4) Manufacturer's share of youth incidence.--For purposes 
     of this subsection, the them ``manufacturer's share of youth 
     incidence'' means--
       (A) for cigarettes, the percentage of all youth smokers 
     determined to have used that manufacturer's cigarettes; and
       (B) for smokeless tobacco products, the percentage of all 
     youth users of smokeless tobacco products determined to have 
     used that manufacturer's smokeless tobacco products.
       (5) De minimis levels.--If a manufacturer is a new 
     manufacturer or the manufacturer's baseline level for a type 
     of tobacco product is less than the de minimis level, the 
     non-attainment percentage (for purposes of paragraph (2) or 
     (3)) shall be equal to the number of percentage points by 
     which the percentage of children who used the manufacturer's 
     tobacco products of the applicable type exceeds the de 
     minimis level.
       (d) Surcharges To Be Adjusted for Inflation.--
       (1) In general.--Beginning with the fourth calendar year 
     after the date of enactment of this Act, each dollar amount 
     in the tables in subsections (b)(2), (b)(3), (c)(2), and 
     (c)(3) shall be increased by the inflation adjustment.
       (2) Inflation adjustment.--For purposes of paragraph (1), 
     the inflation adjustment for any calendar year is the 
     percentage (if any) by which--
       (A) the CPI for the preceding calendar year; exceeds
       (B) the CPI for the calendar year 1998.
       (3) CPI.--For purposes of paragraph (2), the CPI for any 
     calendar year is the average of the Consumer Price Index for 
     all-urban consumers published by the Department of Labor.
       (4) Rounding.--If any increase determined under paragraph 
     (1) is not a multiple of $1,000, the increase shall be 
     rounded to the nearest multiple of $1,000.
       (e) Method of Surcharge Assessment.--The Secretary shall 
     assess a surcharge for a specific calendar year on or before 
     May 1 of the subsequent calendar year. Surcharge payments 
     shall be paid on or before July 1 of the year in which they 
     are assessed. The Secretary may establish, by regulation, 
     interest at a rate up to 3 times the prevailing prime rate at 
     the time the surcharge is assessed, and additional charges in 
     an amount up to 3 times the surcharge, for late payment of 
     the surcharge.
       (f) Business Expense Deduction.--In order to maximize the 
     financial deterrent effect of the assessments and surcharges 
     established in this section, any such payment shall not be 
     deductible as an ordinary and necessary business expense or 
     otherwise under the Internal Revenue Code of 1986.
       (g) Procedures.--In assessing price increase assessments 
     and enforcing other measures under this section, the 
     Secretary shall have in place procedures to take into account 
     the effect that the margin of error of the annual performance 
     survey may have on the amounts assessed to or measures 
     required of such manufacturers.
       (h) Other Products.--The Secretary shall promulgate 
     regulations establishing performance objectives for the 
     reduction of the use by children of other products made or 
     derived from tobacco and intended for human consumption if 
     significant percentages of children use or begin to use such 
     products and the inclusion of such products as types of 
     tobacco products under this subtitle would help protect the 
     public health. Such regulations shall contain provisions, 
     consistent with the provisions in this subtitle applicable to 
     cigarettes and smokeless tobacco, for the application of 
     assessments and surcharges to achieve reductions in the 
     percentage of children who use such products.
       (i) Appeal Rights.--The amount of any surcharge is 
     committed to the sound discretion of the Secretary and shall 
     be subject to judicial review by the United States Court of 
     Appeals for the District of Columbia Circuit, based on the 
     arbitrary and capricious standard of section 706(2)(A) of 
     title 5, United States Code. Notwithstanding any other 
     provisions of law, no court shall have authority to stay any 
     surcharge payments due the Secretary under this Act pending 
     judicial review.
       (j) Responsibility for Agents.--In any action brought under 
     this subsection, a tobacco product manufacturer shall be held 
     responsible for any act or omission of its attorneys, 
     advertising agencies, or other agents that contributed to 
     that manufacturer's responsibility for the surcharge assessed 
     under this section.

     SEC. 206. DEFINITIONS.

       In this subtitle:
       (1) Children.--The term ``children'' means individuals who 
     are 12 years of age or older and under the age of 18.
       (2) Cigarette manufacturers.--The term ``cigarette 
     manufacturers'' means manufacturers of cigarettes sold in the 
     United States.
       (3) Existing manufacturer.--The term ``existing 
     manufacturer'' means a manufacturer which manufactured a 
     tobacco product on or before the date of the enactment of 
     this title.
       (4) New manufacturer.--The term ``new manufacturer'' means 
     a manufacturer which begins to manufacture a type of tobacco 
     product after the date of the enactment of this title.
       (5) Non-attainment percentage.--The term ``non-attainment 
     percentage'' means the number of percentage points yielded--
       (A) for a calendar year in which the percent incidence of 
     underage use of the applicable type of tobacco product is 
     less than the baseline level, by subtracting--
       (i) the percentage by which the percent incidence of 
     underage use of the applicable type of tobacco product in 
     that year is less than the baseline level, from
       (ii) the required percentage reduction applicable in that 
     year; and
       (B) for a calendar year in which the percent incidence of 
     underage use of the applicable type of tobacco product is 
     greater than the baseline level, adding--
       (i) the percentage by which the percent incidence of 
     underage use of the applicable type of tobacco product in 
     that year is greater than the baseline level; and
       (ii) the required percentage reduction applicable in that 
     year.
       (6) Smokeless tobacco product manufacturers.--The term 
     ``smokeless tobacco product manufacturers'' means 
     manufacturers of smokeless tobacco products sold in the 
     United States.
                                 ______
                                 

                 DURBIN (AND OTHERS) AMENDMENT NO. 2438

  Mr. DASCHLE (for Mr. Durbin, for himself, Mr. DeWine, Mr. Wyden, Mr. 
Chafee, Mr. Harkin, Ms. Collins, Mr. Kennedy, Ms. Snowe, Mr. Daschle, 
Mr. Conrad, and Mr. Reed) proposed an amendment to amendment No. 2437 
proposed by Mr. Durbin to the bill, S. 1415, supra; as follows:

       In the Amendment strike all after ``Subtitle'' and insert 
     the following:
         In title II, strike subtitle A and insert the following:
       Subtitle A--Performance Objectives to Reduce Underage Use

     SEC. 201. FINDINGS.

         Congress finds the following:
         (1) Reductions in the underage use of tobacco products 
     are critically important to the public health.
         (2) Achieving this critical public health goal can be 
     substantially furthered by increasing the price of tobacco 
     products to discourage underage use if reduction targets are 
     not achieved and by creating financial incentives for 
     manufacturers to discourage youth from using their tobacco 
     products.
         (3) When reduction targets in underage use are not 
     achieved on an industry-wide basis, the price increases that 
     will result from an industry-wide assessment will provide an 
     additional deterrence to youth tobacco use.
         (4) Manufacturer-specific incentives that will be imposed 
     if reduction targets are not met by a manufacturer provide a 
     strong incentive for each manufacturer to make all efforts to 
     discourage youth use of its brands and insure the 
     effectiveness of the industry-wide assessments.

     SEC. 202. PURPOSES AND GOALS.

         (a) Purpose.--It is the purpose of this subtitle to 
     create incentives to achieve reductions in the percentage of 
     children who use tobacco products and to ensure that, in

[[Page S5339]]

     the event that other measures contained in this Act prove to 
     be inadequate to produce substantial reductions in tobacco 
     use by minors, tobacco companies will pay additional 
     assessments. These additional assessments are designed to 
     lower youth tobacco consumption in a variety of ways, 
     including by triggering further increases in the price of 
     tobacco products, by encouraging tobacco companies to work to 
     meet statutory targets for reductions in youth tobacco 
     consumption, and by providing support for further reduction 
     efforts.
         (b) Goals.--As part of a comprehensive national tobacco 
     control policy, the Secretary, working in cooperation with 
     State, Tribal, and local governments and the private sector, 
     shall take all actions under this Act necessary to ensure 
     that the required performance objectives for percentage 
     reductions in underage use of tobacco products set forth in 
     this title are achieved.

     SEC. 203. ANNUAL PERFORMANCE SURVEYS.

         (a) Annual Performance Survey.--Beginning not later than 
     1999 and annually thereafter the Secretary shall conduct a 
     survey, in accordance with the methodology in subsection 
     (e)(1), to determine for each type of tobacco product--
         (1) the percentage of all children who used such type of 
     tobacco product within the past 30 days; and
         (2) the percentage of children who identify each brand of 
     each type of tobacco product as the usual brand of the type 
     smoked or used within the past 30 days.
         (b) Use of Product.--A child shall be considered to have 
     used a manufacturer's tobacco product if the child identifies 
     the manufacturer's tobacco product as the usual brand of 
     tobacco product smoked or used by the child within the past 
     30 days.
         (c) Separate Types of Products.--For purposes of this 
     subtitle (except as provided in subsection 205(h)), 
     cigarettes and smokeless tobacco shall be considered separate 
     types of tobacco products.
         (d) Confidentiality of data.--The Secretary may conduct a 
     survey relating to tobacco use involving minors. If the 
     information collected in the course of conducting the annual 
     performance survey results in the individual supplying the 
     information, or described in the information, being 
     identifiable, the information may not be used for any purpose 
     other than the purpose for which it was supplied unless that 
     individual (or that individual's guardian) consents to its 
     use for such other purposes. The information may not be 
     published or released in any other form if the individual 
     supplying the information, or described in the information, 
     is identifiable unless that individual (or that individual's 
     guardian) consents to its publication or release in other 
     form.
         (e) Methodology.--
         (1) In general.--The survey required by subsection (a) 
     shall--
         (A) be based on a nationally representative sample of 
     young individuals;
         (B) measure use of each type of tobacco product within 
     the past 30 days;
         (C) identify the usual brand of each type of tobacco 
     product used within the past 30 days; and
         (D) permit the calculation of the actual percentage 
     reductions in underage use of a type of tobacco product (or, 
     in the case of the manufacturer-specific surcharge, the use 
     of a type of the tobacco products of a manufacturer) based on 
     the point estimates of the percentage of young individuals 
     reporting use of a type of tobacco product (or, in the case 
     of the manufacturer-specific surcharge, the use of a type of 
     the tobacco products of a manufacturer) from the annual 
     performance survey.
         (2) Criteria for deeming point estimates correct.--Point 
     estimates under paragraph (1)(D) are deemed conclusively to 
     be correct and accurate for calculating actual percentage 
     reductions in underage use of a type of tobacco product (or, 
     in the case of the manufacturer-specific surcharge, the use 
     of a type of the tobacco products of a manufacturer) for the 
     purpose of measuring compliance with percent reduction 
     targets and calculating surcharges provided that the 
     precision of estimates (based on sampling error) of the 
     percentage of children reporting use of a type of tobacco 
     product (or, in the case of the manufacturer-specific 
     surcharge, the use of a type of the tobacco products of a 
     manufacturer) is such that the 95 percent confidence interval 
     around such point estimates is no more than plus or minus 1 
     percent.
         (3) Survey deemed correct, proper, and accurate.--A 
     survey using the methodology required by this subsection is 
     deemed conclusively to be proper, correct, and accurate for 
     purposes of this Act.
         (4) Secretary may adopt different methodology.--The 
     Secretary by notice and comment rulemaking may adopt a survey 
     methodology that is different than the methodology described 
     in paragraph (1) if the different methodology is at least as 
     statistically precise as that methodology.
         (f) Additional Measures.--In order to increase the 
     understanding of youth tobacco product use, the Secretary 
     may, for informational purposes only, add additional measures 
     to the survey under subsection (a), conduct periodic or 
     occasional surveys at other times, and conduct surveys of 
     other populations such as young adults. The results of such 
     surveys shall be made available to manufacturers and the 
     public to assist in efforts to reduce youth tobacco use.
         (g) Technical Adjustments.--The Secretary may make 
     technical changes in the manner in which surveys are 
     conducted under this section so long as adjustments are made 
     to ensure that the results of such surveys are comparable 
     from year to year.

     SEC. 204. PERFORMANCE OBJECTIVES.

         (a) Baseline Level.--The baseline level for each type of 
     tobacco product, and for each manufacturer with respect to 
     each type of tobacco product, is the percentage of children 
     determined to have used such tobacco product in the first 
     annual performance survey (in 1999).
         (b) Industry-Wide Non-Attainment Assessments.--For the 
     purpose of determining industry-wide non-attainment 
     assessments, the performance objective for the reduction of 
     the percentage of children determined to have used each type 
     of tobacco product is the percentage in subsection (d) as 
     measured from the baseline level for such type of tobacco 
     product.
         (c) Performance Objectives for Existing Manufacturers.--
     Each existing manufacturer shall have as a performance 
     objective the reduction of the percentage of children 
     determined to have used each type of such manufacturer's 
     tobacco products by at least the percentage specified in 
     subsection (d) as measured from the baseline level for such 
     manufacturer for such product.
         (d) Required Percentage Reductions.--The reductions 
     required in this subsection are as follows:
         (1) In the case of cigarettes--
         (A) with respect to the third and fourth annual 
     performance surveys, 20 percent;
         (B) with respect to the fifth and sixth annual 
     performance surveys, 40 percent;
         (C) with respect to the seventh, eighth, and ninth annual 
     performance surveys, 55 percent; and
         (D) with respect to the 10th annual performance survey 
     and each annual performance survey thereafter, 67 percent.
         (2) In the case of smokeless tobacco--
         (A) with respect to the third and fourth annual 
     performance surveys, 12.5 percent;
         (B) with respect to the fifth and sixth annual 
     performance surveys, 25 percent;
         (C) with respect to the seventh, eighth, and ninth annual 
     performance surveys, 35 percent; and
         (D) with respect to the 10th annual performance survey 
     and each annual performance survey thereafter, 45 percent.
         (e) Report on Further Reductions.--The Secretary shall 
     report to Congress by the end of 2006 on the feasibility of 
     further reduction in underage tobacco use.
         (f) Performance Objective Relative to the De Minimis 
     Level.--If the percentage of children determined to have used 
     a type of the tobacco products of an existing manufacturer in 
     an annual performance survey is equal to or less than the de 
     minimis level, the manufacturer shall be considered to have 
     achieved the applicable performance objective.
         (g) Performance Objectives for New Manufacturers.--Each 
     new manufacturer shall have as its performance objective 
     maintaining the percentage of children determined to have 
     used each type of such manufacturer's tobacco products in 
     each annual performance survey at a level equal to or less 
     than the de minimis level for that year.
         (h) De Minimis Level.--The de minimis level shall be 1 
     percent of children for the applicable year.

     SEC. 205. MEASURES TO HELP ACHIEVE THE PERFORMANCE 
                   OBJECTIVES.

         (a) Annual Determination.--Beginning in 2001, and 
     annually thereafter, the Secretary shall, based on the annual 
     performance surveys conducted under section 203, determine if 
     the performance objectives for each type of tobacco product 
     under section 204 has been achieved and if each manufacturer 
     has achieved the applicable performance objective under 
     section 204. The Secretary shall publish in the Federal 
     Register such determinations and any appropriate additional 
     information regarding actions taken under this section.
         (b) Industry-Wide Non-Attainment Assessments.--
         (1) Industry-wide non-attainment percentage.--The 
     Secretary shall determine the industry-wide non-attainment 
     percentage, if any, for cigarettes and for smokeless tobacco 
     for each calendar year.
         (2) Non-attainment assessment for cigarettes.--For each 
     calendar year in which the performance objective under 
     section 204(b) is not attained for cigarettes, the Secretary 
     shall assess a surcharge on cigarette manufacturers as 
     follows:

----------------------------------------------------------------------------------------------------------------
                 If the non-attainment percentage is:                            The surcharge is:              
----------------------------------------------------------------------------------------------------------------
Not more than 5 percentage points                                   $40,000,000 multiplied by the non-attainment
                                                                                                      percentage
More than 5 but not more than 20 percentage points                 $200,000,000, plus $120,000,000 multiplied by
                                                                    the non-attainment percentage in excess of 5
                                                                       but not in excess of 20 percentage points
More than 20 percentage points                                                                    $2,000,000,000
----------------------------------------------------------------------------------------------------------------

         (3) Non-attainment assessment for smokeless tobacco.--For 
     each year in which the performance objective under section 
     204(b) is not attained for smokeless tobacco, the Secretary 
     shall assess a surcharge on smokeless tobacco product 
     manufacturers as follows:

[[Page S5340]]



----------------------------------------------------------------------------------------------------------------
                 If the non-attainment percentage is:                            The surcharge is:              
----------------------------------------------------------------------------------------------------------------
Not more than 5 percentage points                                    $4,000,000 multiplied by the non-attainment
                                                                                                      percentage
More than 5 but not more than 20 percentage points                   $20,000,000, plus $12,000,000 multiplied by
                                                                    the non-attainment percentage in excess of 5
                                                                       but not in excess of 20 percentage points
More than 20 percentage points                                                                      $200,000,000
----------------------------------------------------------------------------------------------------------------

         (4) Strict liability; joint and several liability.--
     Liability for any surcharge imposed under this subsection 
     shall be--
         (A) strict liability; and
         (B) joint and several liability--
         (i) among all cigarette manufacturers for surcharges 
     imposed under paragraph (2); and
         (ii) among all smokeless tobacco manufacturers for 
     surcharges imposed under paragraph (3).
         (5) Surcharge liability among manufacturers.--A tobacco 
     product manufacturer shall be liable under this subsection to 
     one or more other manufacturers if the plaintiff tobacco 
     product manufacturer establishes by a preponderance of the 
     evidence that the defendant tobacco product manufacturer, 
     through its acts or omissions, was responsible for a 
     disproportionate share of the non-attainment surcharge as 
     compared to the responsibility of the plaintiff manufacturer.
         (6) Exemptions for small manufacturers.--
         (A) Allocation by market share.--The Secretary shall 
     allocate the assessments under this subsection according to 
     each manufacturer's share of the domestic cigarette or 
     domestic smokeless tobacco market, as appropriate, in the 
     year for which the surcharge is being assessed, based on 
     actual Federal excise tax payments.
         (B) Exemption.--In any year in which a surcharge is being 
     assessed, the Secretary shall exempt from payment any tobacco 
     product manufacturer with less than 1 percent of the domestic 
     market share for a specific category of tobacco product 
     unless the Secretary finds that the manufacturer's products 
     are used by underage individuals at a rate equal to or 
     greater than the manufacturer's total market share for the 
     type of tobacco product.
         (c) Manufacturer-Specific Surcharges.--
         (1) In general.--If the Secretary determines that the 
     required percentage reduction in use of a type of tobacco 
     product has not been achieved by a manufacturer for a year, 
     the Secretary shall impose a surcharge on such manufacturer 
     under this paragraph.
         (2) Cigarettes.--For each calendar year in which a 
     cigarette manufacturer fails to achieve the performance 
     objective under section 204(c), the Secretary shall assess a 
     surcharge on that manufacturer in an amount equal to the 
     manufacturer's share of youth incidence for cigarettes 
     multiplied by the following surcharge level:

----------------------------------------------------------------------------------------------------------------
      If the non-attainment percentage for the manufacturer is:               The surcharge level is:           
----------------------------------------------------------------------------------------------------------------
Not more than 5 percentage points                                   $80,000,000 multiplied by the non-attainment
                                                                                                      percentage
More than 5 but not more than 24.1 percentage points               $400,000,000, plus $240,000,000 multiplied by
                                                                    the non-attainment percentage in excess of 5
                                                                     but not in excess of 24.1 percentage points
More than 24.1 percentage points                                                                  $5,000,000,000
----------------------------------------------------------------------------------------------------------------

         (3) Smokeless tobacco.--For each calendar year in which a 
     smokeless tobacco product manufacturer fails to achieve the 
     performance objective under section 204(c), the Secretary 
     shall assess a surcharge on that manufacturer in an amount 
     equal to the manufacturer's share of youth incidence for 
     smokeless tobacco products multiplied by the following 
     surcharge level:

----------------------------------------------------------------------------------------------------------------
      If the non-attainment percentage for the manufacturer is:               The surcharge level is:           
----------------------------------------------------------------------------------------------------------------
Not more than 5 percentage points                                    $8,000,000 multiplied by the non-attainment
                                                                                                      percentage
More than 5 but not more than 24.1 percentage points                 $40,000,000, plus $24,000,000 multiplied by
                                                                    the non-attainment percentage in excess of 5
                                                                     but not in excess of 24.1 percentage points
More than 24.1 percentage points                                                                    $500,000,000
----------------------------------------------------------------------------------------------------------------

         (4) Manufacturer's share of youth incidence.--For 
     purposes of this subsection, the them ``manufacturer's share 
     of youth incidence'' means--
         (A) for cigarettes, the percentage of all youth smokers 
     determined to have used that manufacturer's cigarettes; and
         (B) for smokeless tobacco products, the percentage of all 
     youth users of smokeless tobacco products determined to have 
     used that manufacturer's smokeless tobacco products.
         (5) De minimis levels.--If a manufacturer is a new 
     manufacturer or the manufacturer's baseline level for a type 
     of tobacco product is less than the de minimis level, the 
     non-attainment percentage (for purposes of paragraph (2) or 
     (3)) shall be equal to the number of percentage points by 
     which the percentage of children who used the manufacturer's 
     tobacco products of the applicable type exceeds the de 
     minimis level.
         (d) Surcharges To Be Adjusted for Inflation.--
         (1) In general.--Beginning with the fourth calendar year 
     after the date of enactment of this Act, each dollar amount 
     in the tables in subsections (b)(2), (b)(3), (c)(2), and 
     (c)(3) shall be increased by the inflation adjustment.
         (2) Inflation adjustment.--For purposes of paragraph (1), 
     the inflation adjustment for any calendar year is the 
     percentage (if any) by which--
         (A) the CPI for the preceding calendar year; exceeds
         (B) the CPI for the calendar year 1998.
         (3) CPI.--For purposes of paragraph (2), the CPI for any 
     calendar year is the average of the Consumer Price Index for 
     all-urban consumers published by the Department of Labor.
         (4) Rounding.--If any increase determined under paragraph 
     (1) is not a multiple of $1,000, the increase shall be 
     rounded to the nearest multiple of $1,000.
         (e) Method of Surcharge Assessment.--The Secretary shall 
     assess a surcharge for a specific calendar year on or before 
     May 1 of the subsequent calendar year. Surcharge payments 
     shall be paid on or before July 1 of the year in which they 
     are assessed. The Secretary may establish, by regulation, 
     interest at a rate up to 3 times the prevailing prime rate at 
     the time the surcharge is assessed, and additional charges in 
     an amount up to 3 times the surcharge, for late payment of 
     the surcharge.
         (f) Business Expense Deduction.--In order to maximize the 
     financial deterrent effect of the assessments and surcharges 
     established in this section, any such payment shall not be 
     deductible as an ordinary and necessary business expense or 
     otherwise under the Internal Revenue Code of 1986.
         (g) Procedures.--In assessing price increase assessments 
     and enforcing other measures under this section, the 
     Secretary shall have in place procedures to take into account 
     the effect that the margin of error of the annual performance 
     survey may have on the amounts assessed to or measures 
     required of such manufacturers.
         (h) Other Products.--The Secretary shall promulgate 
     regulations establishing performance objectives for the 
     reduction of the use by children of other products made or 
     derived from tobacco and intended for human consumption if 
     significant percentages of children use or begin to use such 
     products and the inclusion of such products as types of 
     tobacco products under this subtitle would help protect the 
     public health. Such regulations shall contain provisions, 
     consistent with the provisions in this subtitle applicable to 
     cigarettes and smokeless tobacco, for the application of 
     assessments and surcharges to achieve reductions in the 
     percentage of children who use such products.
         (i) Appeal Rights.--The amount of any surcharge is 
     committed to the sound discretion of the Secretary and shall 
     be subject to judicial review by the United States Court of 
     Appeals for the District of Columbia Circuit, based on the 
     arbitrary and capricious standard of section 706(2)(A) of 
     title 5, United States Code. Notwithstanding any other 
     provisions of law, no court shall have authority to stay any 
     surcharge payments due the Secretary under this Act pending 
     judicial review.
         (j) Responsibility for Agents.--In any action brought 
     under this subsection, a tobacco product manufacturer shall 
     be held responsible for any act or omission of its attorneys, 
     advertising agencies, or other agents that contributed to 
     that manufacturer's responsibility for the surcharge assessed 
     under this section.

     SEC. 206. DEFINITIONS.

         In this subtitle:
         (1) Children.--The term ``children'' means individuals 
     who are 12 years of age or older and under the age of 18.
         (2) Cigarette manufacturers.--The term ``cigarette 
     manufacturers'' means manufacturers of cigarettes sold in the 
     United States.
         (3) Existing manufacturer.--The term ``existing 
     manufacturer'' means a manufacturer which manufactured a 
     tobacco product on or before the date of the enactment of 
     this title.
         (4) New manufacturer.--The term ``new manufacturer'' 
     means a manufacturer which begins to manufacture a type of 
     tobacco product after the date of the enactment of this 
     title.
         (5) Non-attainment percentage.--The term ``non-attainment 
     percentage'' means the number of percentage points yielded--
         (A) for a calendar year in which the percent incidence of 
     underage use of the applicable type of tobacco product is 
     less than the baseline level, by subtracting--
         (i) the percentage by which the percent incidence of 
     underage use of the applicable type of tobacco product in 
     that year is less than the baseline level, from
         (ii) the required percentage reduction applicable in that 
     year; and
         (B) for a calendar year in which the percent incidence of 
     underage use of the applicable type of tobacco product is 
     greater than the baseline level, adding--
         (i) the percentage by which the percent incidence of 
     underage use of the applicable type of tobacco product in 
     that year is greater than the baseline level; and
         (ii) the required percentage reduction applicable in that 
     year.
         (6) Smokeless tobacco product manufacturers.--The term 
     ``smokeless tobacco product manufacturers'' means 
     manufacturers of smokeless tobacco products sold in the 
     United States.
       This section takes effect one day after date of enactment.

[[Page S5341]]

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                       CHAFEE AMENDMENT NO. 2439

  (Ordered to lie on the table.)
  Mr. CHAFEE submitted an amendment intended to be proposed by him to 
the bill, S. 1415, supra; as follows:

       On page 216, between lines 18 and 19, insert the following:

     SEC. 508. PROHIBITIONS AGAINST SMOKING ON SCHEDULED FLIGHTS.

       (a) In General.--Section 41706 of title 49, United States 
     Code, is amended to read as follows:

     ``Sec. 41706. Prohibitions against smoking on scheduled 
       flights

       ``(a) Smoking Prohibition in Intrastate and Interstate Air 
     Transportation.--An individual may not smoke in an aircraft 
     on a scheduled airline flight segment in interstate air 
     transportation or intrastate air transportation.
       ``(b) Smoking Prohibition in Foreign Air Transportation.--
     The Secretary of Transportation shall require all air 
     carriers and foreign air carriers to prohibit, on and after 
     the 120th day following the date of the enactment of this 
     section, smoking in any aircraft on a scheduled airline 
     flight segment within the United States or between a place in 
     the United States and a place outside the United States.
       ``(c) Limitation on Applicability.--With respect to an 
     aircraft operated by a foreign air carrier, the smoking 
     prohibitions contained in subsections (a) and (b) shall apply 
     only to the passenger cabin and lavatory of the aircraft.
       ``(d) Regulations.--The Secretary shall prescribe 
     regulations necessary to carry out this section.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the 60th day following the date of the 
     enactment of this Act.

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