[Congressional Record Volume 148, Number 99 (Friday, July 19, 2002)]
[Senate]
[Pages S7104-S7126]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. ENZI (for himself, Mr. Lieberman, Mr. Allen, Mrs. Boxer, 
        Mr. Burns, Mr. Frist, and Mr. Ensign):
  S. 2760. A bill to direct the Securities and Exchange Commission to 
conduct a study and make recommendations regarding the accounting 
treatment of stock options for purposes of the Federal securities laws; 
to the Committee on Banking, Housing, and Urban Affairs.

  Mr. ENZI. Mr. President, I rise today to introduce the Enzi-
Lieberman-Allen-Boxer amendment on stock options. Our bipartisan 
amendment helps solve many of the perceived problems with the issuance 
of stock options by giving the SEC a broad mandate to look into and 
analyze numerous issues concerning stock options, including disclosure, 
corporate governance, and the benefits and detriments of expensing 
stock options.
  After its analysis, the SEC will be required to furnish 
recommendations, if any, for changes in corporate America's uses of 
stock options, and we envision that being done through FASB. We are not 
trying to tell FASB, the Federal Accounting Standards Board, how to do 
their work; we are trying to provide them with more information so they 
can make a consideration of that issue again.
  I and the other original cosponsors of this bill have sent a letter 
to Chairman Harvey Pitt and the other Commissioners on the SEC asking 
them to initiate on their own the action items outlined in our bill and 
to make recommendations on these issues in the next 60 days. I hope 
they take such initiative.
  Mr. President, I ask unaimous consent the letter be printed in the 
Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:


                                                  U.S. Senate,

                                    Washington, DC, July 19, 2002.
     Hon. Harvey L. Pitt, Chairman,
     Hon. Isaac C. Hunt, Jr., Commissioner,
     Hon. Cynthia A. Glassman, Commissioner,
     Mr. Robert K. Herdman, Chief Accountant,
     Securities and Exchange Commission, Washington, DC.
       Dear Chairman Pitt, Commissioners Hunt and Glassman, and 
     Mr. Herdman: We are writing to request that the Securities 
     and Exchange Commission (SEC) analyze and propose 
     recommendations, if needed, on issues regarding stock 
     options. We have introduced legislation mandating such action 
     by the Commission, but ask that you proceed before this 
     legislation is enacted.
       The legislation is the Stock Option Fairness and 
     Accountability Act. This legislation focuses on key issues 
     regarding stock options, which include stock option pricing 
     models; disclosure to investors and shareholders; shareholder 
     approval of stock option plans; and restrictions on senior 
     management sale of stock. The bill also mandates a review of 
     the benefits and detriments of any new options expensing 
     rules on the productivity and performance of companies and 
     start-up enterprises, the recruitment retention of skilled 
     workers, and employees at various income levels, with 
     particular focus

[[Page S7105]]

     on the effect on rank-and-file employees and the income of 
     women.
       It is our view the debate on stock options has focused 
     narrowly on the accounting of stock options, and failed to 
     focus on other critical stock option policy issues. We seek 
     to broaden the debate to ensure that Congress, the 
     Commission, and other relevant agencies take action to 
     eliminate any problems which might exist with stock options, 
     while ensuring their benefits are retained.
       We believe options should be preserved and protected 
     because, when they are properly structured, they are 
     incentives for productivity and growth. In most instances, 
     they reflect America's best business values--the willingness 
     to take business risks, the vision to develop new 
     entrepreneurial companies and technologies, a way to broaden 
     ownership and participation among employees, and a strong 
     performance incentive for both management and employees. We 
     should focus on strengthening stock option incentives and 
     enabling them to yield even greater economic growth dividends 
     for our economy.
       In general, we believe the Senate should not be legislating 
     detailed accounting or regulatory standards regarding stock 
     options or other accounting issues. These are issues best 
     left to the SEC and its expert staff. The Financial 
     Accounting Standards Board (FASB) has independent authority 
     to set accounting standards, and should continue to do so. 
     That is why our legislation and this letter request that the 
     Commission address all of these issues and make 
     recommendations.
       Regarding shareholder approval of stock option plans, a 
     Special Committee of New York Stock Exchange recommended 
     shareholder approval of all stock option plans, while the 
     NASDAQ has recommended shareholder approval of any plan that 
     includes officers and directors. We want the SEC to examine 
     whether these measures are adequate, and whether any 
     additional accountability to shareholders is needed.
       Current disclosure requirements for stock options exist 
     which focus on the potential cost of stock options when they 
     are exercised, the potential dilution of earnings per share, 
     and other issues. We believe the SEC should look at whether 
     these disclosure rules should be strengthened in order to 
     provide investors and shareholders more accurate and complete 
     information.
       We understand that restricting the sale of stock acquired 
     through stock option plans is a complex and controversial 
     issue. We ask you to review whether a need exists for 
     imposition of a holding period for senior executives and 
     whether the benefits of such a rule would outweigh the costs. 
     Should you recommend such a rule, we suggest you also review 
     whether any exemptions are necessary, given individuals may 
     have a legitimate need to sell stock to raise cash to pay 
     taxes on their options or for personal emergencies. We urge 
     you to also consider whether a holding period might impose a 
     special burden on small companies and start-up enterprises, 
     where stock options form a greater proportion of employee 
     compensation.
       We appreciate the assistance of the Commission addressing 
     these vital issues and promptly making recommendations. We 
     believe we have presented you with a comprehensive agenda of 
     stock option policy issues, which will ensure positive action 
     is taken to restore investor and shareholder confidence, calm 
     and markets, and prevent perceived problems associated with 
     stock options. We look forward to receiving a response with 
     your recommendations and plan for action within 60 days.
           Sincerely,
         Senator Mike Enzi, Senator Joseph Lieberman, Senator 
           Barbara Boxer, Senator Conrad Burns, Senator John 
           Ensign, Senator George Allen, Senator Bill Frist.

  Mr. ENZI. How did we get here, to this point of perhaps possibly 
legislating on stock options? The debate on stock options became heated 
over the last few months, following the accounting debacles of Enron, 
WorldCom, and Global Crossing. I think we can all agree that the use of 
stock options did not cause the demise of these companies, but 
nevertheless their use by these and other companies has become 
increasingly scrutinized during the current accounting debate and 
evidence of top exeuctive abuse.
  What initially raised everyone's attention to stock options was 
Enron. As we all know, Enron's executives and employees were issued 
numerous stock options. It is now clear that months before Enron filed 
for bankruptcy, executives who were aware of the true condition of the 
company, exercised millions of dollars of their options. Now, Enron 
employees--kept in the dark on company finances--are left with 
worthless Enron stock and retirement savings. While these Enron 
executives absconded with money from the sell of stock options, we all 
know the financial collapse of Enron had little to do with its 
accounting procedures on stock options. Enron went bankrupt. 
Nevertheless, concerns about stock option use by corporations have 
become magnified.
  We all know that when properly used, stock options can be a marvelous 
opportunity for all employees. In addition, small businesses and 
startup companies use stock options as an incentive and sometimes the 
only means to attract qualified employees.
  There have been many suggestions on what will stop future Enrons, and 
included in that debate has been a discussion on improving the 
accounting practices and other issues concerning stock options. Some 
members have come up with some creative and not so creative ideas on 
how to improve their use.
  Some have not considered how their ideas will affect rank-and-file 
employees, while others have kept that as their primary consideration. 
Some members have proposed setting a new expensing standard or 
directing the Federal Accounting Standards Board to take some specific 
action in setting new expensing rules. But, these amendments have pre-
ordained what the solution to stock options will be.
  Members promoting these amendments are furnishing their own 
conclusions. They mandate either codification of new expensing rules, 
or direct the Federal Accounting Standards Board, known as FASB, to 
require stock option expensing at the time of grant or exercise. This 
is a conclusion some of us do not believe should be made by non-experts 
in Congress, without careful analysis.
  Our bipartisan amendment is different. It doesn't preordain what the 
solution to stock options will be. Instead, it directs the SEC to 
analyze the treatment of stock options in several categories, not just 
stock option expensing, and lend its superior expertise in furnishing a 
report and making useful recommendations.
  This is a smart amendment because 99 non-accountant Senators, and one 
accountant Senator, all without expertise in securities accounting and 
law, have no business making a definitive decision on what the answer 
to stock option problems should be. Instead, the SEC should analyze the 
problem and make recommendations on what is needed.

  Let me get to the specifics of our amendment. First, it requires an 
analysis of the accounting treatment of employee stock options, 
including the accuracy of available stock option pricing models. What 
are these models?
  Currently, companies estimate the value of granted stock options 
using something called the Black-Scholes model. This is because they do 
not know what the future value of their stock will be when the options 
are actually exercised and sold. So they make an educated guess with 
the Black-Scholes model.
  However, many believe the current practice of using the Black-Scholes 
method to value stock options, as currently used on footnotes, is 
fatally flawed. This method will be just as flawed if it must be used 
for expensing stock options at the time of grant. This amendment 
directs the SEC to look at the accuracy of this and other pricing 
models.
  Second, our amendment directs the SEC to analyze the adequacy of 
current disclosure requirements to investors and shareholders on stock 
options. The SEC needs to determine whether better disclosure 
provisions would solve the current, perceived problem with stock option 
reporting. The SEC can study what further disclosure and transparency 
provisions, if any, would be useful.
  We do not know what the SEC's recommendations might be. They might 
include a recommendation for user-friendly disclosure in clear, plain 
English with graphs and charts, which are comparable with other company 
disclosures. They might recommend increased quarterly reporting on 
certain information.
  Even high profile financial celebrities have differing view on 
expensing and disclosure. Like me, Secretary O'Neill has advocated 
fuller disclosure as a means to cure the present perceived problems 
with the information provided to investors and shareholders in 
footnotes on company financial statements, rather than expensing. 
Others, like Warren Buffet, have said fuller disclosure and 
transparency will not cure these problems, and Congress should do 
something about expensing. Alan Greenspan believes expensing of stock 
options at the time of grant is needed, but that Congress should not be 
the one deciding this or setting accounting standards.

[[Page S7106]]

  Given these differing views by financial heavy weights like Secretary 
O'Neill, Greenspan and Buffett, it makes sense to let the SEC analyze 
this issue and make the determination of what, if any, disclosure 
improvements are necessary, taking into account the effect on all 
affected parties--companies, shareholders, investors, and rank-and-file 
employees.
  Next, our amendment would direct the SEC to analyze the adequacy of 
corporate governance requirements on stock options, including the 
usefulness of having shareholders approve stock option plans.
  Previously, I advocated shareholder approval of stock option issuance 
to top corporate executives to prevent them from abusing stock options. 
Now, I and others of us are leaving it to the SEC to determine whether 
this will prevent stock option abuse.
  Our bipartisan amendment also requires an analysis of the need, if 
any, for stock holding period requirements for senior executives. Some 
Senators have advocated a holding period during which top executives 
cannot sell their stock options. One suggestion was that a 90-day 
cooling off period occur before a top executive can sell his stock. 
Another suggestion was that these executives could not sell their stock 
until they left the company and a two-year period expired.

  These suggestions pose a dramatic solution which needs more study by 
the SEC. These are not provisions to be taken lightly, nor drafted 
hurriedly by Senators. This type of amendment could possibly help 
prevent abuses, or have the opposite effect of chilling the future use 
of stock options entirely. Because I do not know what the effect of 
this will be and whether it will prevent executive fraud and abuse, I 
am at least willing to let the SEC study it to see if there is any 
merit to it.
  And finally, our amendment directs the SEC to look at the benefit and 
detriment of any new options expensing rules. So, instead of Senators, 
who have little knowledge of securities accounting, making an 
accounting decision on stock option expensing, we are leaving it in the 
hands of the SEC to see how expensing will affect all segments related 
to stock options.
  Our bipartisan amendment directs the SEC to look at the benefit and 
detriment of stock option expensing on companies and start-up 
enterprises. Specifically, it requires the SEC to look at what stock 
options expensing would do to the productivity and performance of all 
sizes of companies, and start-up enterprises.
  I am particularly concerned about the effect of expensing stock 
options on small companies and start-up enterprises. Many small 
businesses and start-up companies cannot afford to offer the salaries 
larger companies give, so they offer stock options as an incentive to 
attract highly-skilled employees. In addition, our amendment would 
require the SEC to look at the benefits and detriments of stock option 
expensing on the recruitment and retention of skilled workers.
  Currently, employees who risk working for start-up companies have the 
ability to make much more money than through traditional methods of 
payment by salaries or wages. Those who stay with the company tend to 
have a vested interest in the company through the issuance of stock 
options. Stock options may be the very reason that some employees start 
with a company and stay with it. We are asking the SEC to look at the 
issue of what effect stock option expensing will have on future 
recruitment and retention of employees.
  Finally, and most importantly, our amendment asks the SEC to look at 
the benefits and detriments of stock options on employees at all income 
levels, with particular emphasis on rank-and-file employees.
  These are some of the questions the SEC needs to look at and make a 
recommendation on.
  Whatever we do, we need to make sure the cure is not worse than the 
disease. We should not rush to pass something just for the sake of 
legislating on stock options. Let us step back and see what 
recommendations the SEC makes. Then, with cooler heads, perhaps we can 
prevail in getting rules and regulations on stock options which are 
truly needed, and not merely an overreaction to the current atmosphere 
of Enron.
  I would hate to see any hastly decision chill the ability of 
companies to issue stock options to millions of rank-and-file 
employees. Or chill new start-up companies' use of stock options to 
attract employees. At the same time, we have to stop future abuses by 
corporate executives who thumb their noses while plundering companies 
resources.
  For these reasons, I ask you to vote in favor of the Enzi-Lieberman-
Allen-Boxer Amendment.
                                 ______
                                 
      By Mr. FEINGOLD:
  S. 2761. A bill to amend the Internal Revenue Code of 1986 to provide 
that reimbursements for costs of using passenger automobiles for 
charitable and other organizations are excluded from gross income, and 
for other purposes; to the Committee on Finance.
  Mr. FEINGOLD. Mr. President, I am pleased to offer legislation today 
that will increase the mileage reimbursement rate for volunteers.
  Under current law, when volunteers use their cars for charitable 
purposes, the volunteers may be reimbursed up to 14 cents per mile for 
their donated services without triggering a tax consequence for either 
the organizations or the volunteers. If the charitable organization 
reimburses any more than that, they are required to file an information 
return indicating the amount, and the volunteers must include the 
amount over 14 cents per mile in their taxable income. By contrast, the 
mileage reimbursement level currently permitted for businesses is 36.5 
cents per mile.
  At a time when government is asking volunteers and volunteer 
organizations to bear a greater burden of delivering essential 
services, the 14 cents per mile limit is posing a very real hardship.
  I have heard from a number of groups in Wisconsin in recent weeks on 
the need to increase this reimbursement limit. One organization, the 
Portage County Department on Aging, explained just how important 
volunteer drivers are to their ability to provide services to seniors 
in that county. The Department on Aging reported that last year 54 
volunteer drivers delivered meals to homes and transported people to 
medical appointments, meal sites, and other essential services. The 
Department noted that their volunteer drivers provided 4,676 rides, and 
drove nearly 126,000 miles. They also delivered 9,385 home-delivered 
meals, and nearly two-thirds of the drivers logged more than 100 miles 
per month in providing these needed services. Altogether, volunteers 
donated over 5,200 hours last year, and as the Department notes, at the 
rate of minimum wage, that amounts to over $27,000, not including other 
benefits.
  The senior meals program is one of the most vital services provided 
under the Older Americans Act, and ensuring that meals can be delivered 
to seniors or that seniors can be taken to meal sites is an essential 
part of that program. Unfortunately, Federal support for the senior 
nutrition programs has stagnated in recent years. This has increased 
pressure on local programs to leverage more volunteer services to make 
up for lagging federal support. The 14 cent per mile reimbursement 
limit, though, increasingly poses a barrier to obtaining those 
contributions. Portage County reports that the many of their volunteers 
cannot afford to offer their services under such a restriction. And if 
volunteers cannot be found, their services will have to be replaced by 
contracting with a provider, greatly increasing costs to the 
Department, costs that come directly out of the pot of funds available 
to pay for meals and other services.
  By contrast, businesses do not face this restrictive mileage 
reimbursement limit. The comparable mileage rate for someone who works 
for a business is currently 36.5 cents per mile. This disparity means 
that a business hired to deliver the same meals delivered by volunteers 
for Portage County may reimburse their employees over double the amount 
permitted the volunteer without a tax consequence.
  This doesn't make sense.
  Morever, the 14 cent per mile volunteer reimbursement limit is 
outdated. According to the Congressional Research Service, Congress 
first set a reimbursement rate of 12 cents per mile as part of the 
Deficit Reduction Act of 1984, and did not increase it until 1997, when 
the level was raised slightly, to

[[Page S7107]]

14 cents per mile, as part of the Taxpayer Relief Act of 1997.
  The bill I am introducing today raises the limit on volunteer mileage 
reimbursement to the level permitted to businesses. It is essentially 
the same provision passed by the Senate as part of a tax bill passed in 
1999 that was vetoed by President Clinton. At the time of the 1999 
measure, the Joint Committee on Taxation, JCT, estimated that the 
mileage reimbursement provision would result in the loss of $1 million 
over the five year fiscal period from 1999 to 2004. The revenue loss 
was so small that the JCT did not make the estimate on a year by year 
basis.
  Though the revenue loss is small, I have also included an offset to 
make the measure deficit neutral by including a provision that would 
impose a civil penalty of up to $5,000 on failure to report interest in 
foreign financial transactions. That provision was recently included in 
the CARE Act legislation by the Senate Finance Committee.
  I urge my colleagues to support this measure. It will help ensure 
charitable organizations can continue to attract the volunteers that 
play such a critical role in helping to deliver services and it will 
simplify the tax code both for non-profit groups and the volunteers 
themselves.
  I ask unanimous consent that the text of the legislation be printed 
in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2761

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

     SECTION 1. MILEAGE REIMBURSEMENTS TO CHARITABLE VOLUNTEERS 
                   EXCLUDED FROM GROSS INCOME.

       (a) In General.--Part III of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 is amended by inserting 
     after section 139 the following new section:

     ``SEC. 139A. MILEAGE REIMBURSEMENTS TO CHARITABLE VOLUNTEERS.

       ``(a) In General.--Gross income of an individual does not 
     include amounts received, from an organization described in 
     section 170(c), as reimbursement of operating expenses with 
     respect to use of a passenger automobile for the benefit of 
     such organization. The preceding sentence shall apply only to 
     the extent that such reimbursement would be deductible under 
     this chapter if section 274(d) were applied--
       ``(1) by using the standard business mileage rate 
     established under such section, and
       ``(2) as if the individual were an employee of an 
     organization not described in section 170(c).
       ``(b) No Double Benefit.--Subsection (a) shall not apply 
     with respect to any expenses if the individual claims a 
     deduction or credit for such expenses under any other 
     provision of this title.
       ``(c) Exemption From Reporting Requirements.--Section 6041 
     shall not apply with respect to reimbursements excluded from 
     income under subsection (a).''
       (b) Clerical Amendment.--The table of sections for part III 
     of subchapter B of chapter 1 of such Code is amended by 
     inserting after the item relating to section 139 and 
     inserting the following new item:

``Sec. 139A. Reimbursement for use of passenger automobile for 
              charity.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 2. PENALTY ON FAILURE TO REPORT INTERESTS IN FOREIGN 
                   FINANCIAL ACCOUNTS.

       (a) In General.--Section 5321(a)(5) of title 31, United 
     States Code, is amended to read as follows:
       ``(5) Foreign financial agency transaction violation.--
       ``(A) Penalty authorized.--The Secretary of the Treasury 
     may impose a civil money penalty on any person who violates, 
     or causes any violation of, any provision of section 5314.
       ``(B) Amount of penalty.--
       ``(i) In general.--Except as provided in subparagraph (C), 
     the amount of any civil penalty imposed under subparagraph 
     (A) shall not exceed $5,000.
       ``(ii) Reasonable cause exception.--No penalty shall be 
     imposed under subparagraph (A) with respect to any violation 
     if--

       ``(I) such violation was due to reasonable cause, and
       ``(II) the amount of the transaction or the balance in the 
     account at the time of the transaction was properly reported.

       ``(C) Willful violations.--In the case of any person 
     willfully violating, or willfully causing any violation of, 
     any provision of section 5314--
       ``(i) the maximum penalty under subparagraph (B)(i) shall 
     be increased to the greater of--

       ``(I) $25,000, or
       ``(II) the amount (not exceeding $100,000) determined under 
     subparagraph (D), and

       ``(ii) subparagraph (B)(ii) shall not apply.
       ``(D) Amount.--The amount determined under this 
     subparagraph is--
       ``(i) in the case of a violation involving a transaction, 
     the amount of the transaction, or
       ``(ii) in the case of a violation involving a failure to 
     report the existence of an account or any identifying 
     information required to be provided with respect to an 
     account, the balance in the account at the time of the 
     violation.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to violations occurring after the date of the 
     enactment of this Act.
                                 ______
                                 
      By Mrs. FEINSTEIN (for herself, Mr. Hutchinson, and Mr. Kohl):
  S. 2763. A bill to respond to the illegal production distribution, 
and use of methamphetamines in the United States, and for other 
purposes; to the Committee on the Judiciary.
  Mrs. FEINSTEIN. Mr. President, I rise today to introduce the ``CLEAN-
UP Meth Act,'' a bill to address illegal and environmentally disastrous 
methamphetamine production.
  I am pleased to submit this bill on behalf of myself, Senator 
Hutchinson of Arkansas, and Senator Kohl.
  Essentially, this bill would help our Federal, State and local 
governments combat methamphetamine on a number of levels, from 
production to clean-up, prosecution to prevention.
  The legislation would accomplish this with two key components: First, 
the bill would allocate $125 million for important training and cleanup 
efforts, including training local law enforcement to effectively clean 
up meth lab and dump sites. And second, we would make it much harder 
for meth dealers to get the precursor pseudoephedrine products 
necessary to make this illegal drug.
  Once predominantly found in the American Southwest, methamphetamine's 
presence now stretches from coast to coast. Once predominantly found in 
rural areas, its harmful effects now extend from our smallest towns to 
our biggest cities.
  For instance, the number of clandestine meth labs discovered in North 
Carolina has doubled every year for the past four years.
  In New Orleans, police in the Jefferson district seized a total of 
828 grams of methamphetamine in all of the year 2000. Last year, they 
seized more than ten times that amount, 9,003 grams, with a street 
value of more than $1 million.
  I'm sorry to say that my home State of California has been referred 
to as the ``Colombia of meth production.'' In fact, our State is known 
as the ``source country'' for the drug, producing roughly 80 percent of 
the Nation's methamphetamine supply. According to the DEA, 1,847 
clandestine meth labs were found last year in California alone.
  Each of these 1,847 labs in California, and each of the labs 
scattered around this Nation near schools, on farms, in trailer parks 
and in quiet suburban neighborhoods, creates a whole host of dangers 
and toxic waste.
  The actual production of methamphetamine is harmful in a number of 
ways. First, the hazardous chemicals used in meth production are toxic, 
and long-term exposure is damaging. Furthermore, the materials can also 
be explosive and dangerous. Production using these volatile materials 
has resulted in countless accidents, houses and even apartment 
buildings burned to the ground, explosions that scatter chemicals and 
flames, and chemical reactions that cause untold damage to the 
individuals involved in meth production or simply living in the same 
household, individuals that, too often, include children.
  Meth production also poses risks to the health of the surrounding 
public and environment. According to the National Drug Intelligence 
Center, NDIC, for every pound of meth produced, five to seven pounds of 
hazardous waste results from the production as well. Meth producers 
dump this waste anywhere and everywhere, from nearby ditches to public 
lands, from pits dug in the middle of a farm to rivers and lakes.
  One private contractor hired to clean up meth-related hazardous dump 
sites in California responded to more than 500 calls in 2000 alone. And 
one of those dump sites was located along the banks of the California 
Aqueduct, which is a direct source of water for Los Angeles.
  NDIC investigators have found also found toxic chemicals discarded 
into

[[Page S7108]]

household drains and storm drains. And the precursors used to make 
meth, and the toxic byproducts, may last for years in the soil. 
Decontaminating these sites is what makes clean-up so expensive, with 
costs ranging from $5,000 to $150,000 per site. State police in 
Baltimore, MD claim that its costs taxpayers nearly $75,000 each time a 
meth lab must be cleaned up. According to the DEA, that agency spent 
more than $22 million cleaning up 6,609 labs nationwide.
  These extraordinary costs simply cannot be maintained on the local 
level without Federal support. These costs are proof of why Federal 
funding for such valuable efforts is necessary.
  So the first thing this legislation would do is help law enforcement 
as well as the public pay these important costs, by providing millions 
to help clean-up labs and train law enforcement authorities to properly 
and safety do this important work.
  Specifically, the CLEAN-UP Meth bill would provide: $15 million for 
clean-up and remediation of meth contaminated lands managed by the 
Departments of Agriculture or Interior; $15 million for Department of 
Agriculture grants to State and local governments and to private 
persons to clean up meth contaminated lands; $20 million for OSHA 
grants to local law enforcement agencies for training and equipment for 
the safe identification, handling, clean-up and disposal of meth labs; 
and $10 million for Department of Labor grants to local law enforcement 
agencies to help them comply with Federal laws regarding cleanup and 
disposal of meth labs.
  Second, this legislation includes resources to help State and local 
officials prosecute meth offenses, educate the public, and study the 
effects of meth use.
  Methamphetamine is so prevalent partly because it is simple to make 
and is profitable. Producers of meth range from people with advanced 
chemistry degrees to those who are self-taught. Recipes are easily 
available in books as well as over the Internet.
  The drug does not have to be smuggled in across secured international 
borders. Fifty percent of the Nation's consumed methamphetamine is 
produced right here in our country. In fact, the basic ingredients can 
be found in your local pharmacy. These relatively inexpensive materials 
can be used to create a drug that fetches much higher prices. For 
example, ounce quantities are worth between $1,500 and $2,000 and can 
be sold to individual users for about $100 a gram in crystallized 
powder form that can be smoked, snorted, swallowed or turned into 
liquid and injected. According to the Office of National drug Control 
Policy, ONDCP, methamphetamine users spent nearly $6 billion on the 
drug in 1999.
  Methamphetamine is also highly addictive. Known on the street as 
crank, speed, ice and zip, methamphetamine is cheaper than cocaine, 
more addictive than crack and causes more brain damage than heroin or 
alcohol. A single dose of this ``poor man's cocaine'' can keep a person 
awake for three to four days at a time and has been associated with 
paranoia and often violence. In California's Central Valley, 
methamphetamine has become the drug of choice and a principal cause of 
crime.
  I firmly believe that law enforcement officials cannot effectively 
fight this drug and its harmful effects unless we provide them with the 
proper resources. Already this year, police in Oklahoma City have 
seized 115 meth labs. Law enforcement officials there have attributed 
these seizures to the support from Federal grants.
  Keith Cain, a sheriff in Daviess County, KY also claims that Federal 
funding has proved to be crucial to the war against meth. According to 
Cain, ``Without that money, we would not have been able to be as 
proactive as we've been.''
  Last year, the federally funded Central Valley High-Intensity Drug 
Trafficking project to restrict the supply of the chemical agents used 
in making the deadly drug was showing impressive results. A team of 
specialists from local drug units, the California Highway Patrol, DEA 
and FBI averaged one bust a week of the clandestine ``super labs'' that 
had made the Central Valley the national center for the production of 
methamphetamine. These triumphs were the direct result of federal 
funding and proof that allocating Federal resources is imperative to 
progress.
  However, since September 11, agents have been removed from the 
project and transferred to anti-terrorism work. The lack of drug 
enforcement resources has created a strain on the project and threatens 
the progress it has had combating methamphetamine.
  It would be a tragedy to California and the country if we lost all of 
the progress this program and others like it have made in the war on 
meth simply due to a lack of resources. Programs like this one have 
proven to be effective and need our continued support.
  Our bill would provide: $20 million for training of State and local 
prosecutors and law enforcement agents for prosecution of meth 
offenses, $5 million of which will be dedicated for rural communities 
and $2 million to reimburse the DEA for existing training programs; $10 
million additional for training at the DEA's Clandestine Laboratory 
Training Facility in Quantico, VA; $2 million for the Department of 
Justice for the collection, aggregation and dissemination of meth lab 
seizure stats by the El Paso Intelligence Center, EPIC.
  Third, we address the problems of our children. Raids and seizures of 
clandestine meth labs have been instrumental to the war on meth and 
have uncovered a number of alarming issues, but none more troubling 
than the effect meth production has on the children of meth dealers and 
their friends.
  Drug rings and meth trafficking organizations found throughout the 
American West have been linked to Mexican drug traffickers as well as 
white supremacist groups. Last year, for instance, law enforcement 
authorities in Los Angeles County uncovered a sophisticated meth 
trafficking ring that includes suspects with tattoos of Nazi swastikas 
and belong to a local gang called the ``Untouchables.'' During police 
raids of their meth labs and headquarters, agents seized nearly 
$500,000 in cash and more than 100 high-powered weapons, including 
assault rifles and a grenade launcher.
  Earlier this year, Central Valley investigators raided a 
methamphetamine super-lab in a farmhouse on the outskirts on Merced, 
CA. Inside, investigators found vats of toxic chemicals, large supplies 
of pseudoephedrine used in producing meth and three illegal firearms.
  Yet, the most disturbing part of this story is that while the 
manufacturers were engaged in the potentially explosive process of 
extracting pure methamphetamine, four small children watched television 
in the next room. The children were taken to a local hospital and 
tested positive for methamphetamine contamination.
  I would like to say that this is a rare case. However, this story is 
no exception. In 2001, 1,989 children were found in clandestine meth 
labs, materials storage sites and dump sites across the country.
  The CLEAN-UP Meth Act would provide $2.5 million for grants to states 
for treatment of children suffering adverse health impacts from meth-
related exposure.
  The bill also includes $20 million for the development of anti-
methamphetamine education programs in our nation's schools. Informing 
and educating our children on the dangers of this drug is the first 
step in reducing the number of new users of methamphetamine.
  In addition to the funding provisions of the bill, which were 
introduced by Representative Ose in the House, this legislation also 
contains language to close the ``Blister Pack Loophole'' in current 
law, which currently allows meth dealers to purchase unlimited 
quantities of pseudoephedrine products, generally cold and sinus 
medication, as long as it is packaged in blister packs, those tin foil 
and plastic packages most of us buy these days, which require that each 
pill be separate rather than simply poured into a bottle.
  Our current law limits retail sales of bottled pseudoephedrine to 
just 9 grams, because we found several years ago that meth dealers 
would go into a pharmacy, a Costco or other large store, sweep the 
shelves clean of cold medicine, bring the bottles back to the lab, cut 
off the tops of the bottles without even bothering to unscrew the caps 
instead, and pour the pills out as the first step to making meth.
  When we passed the 9 gram threshold, and before that the 24-gram

[[Page S7109]]

threshold, for bottled pills, I made the case that if limits were 
placed on bottles only, meth dealers would simply start buying blister-
packed pills instead. At the time, some argued that blister packs were 
simply too unwieldy for meth manufacturers to bother with, the process 
of popping individual pills out of each blister would be too time 
consuming. But we had evidence from California that dealers were 
already using these blister packs, so as a compromise we asked the DEA 
to conduct a nationwide study of whether blister packs posed a problem. 
Well, guess what, they do.
  According to the report we requested from the DEA, which was 
finalized late last year, blister packaged pseudoephedrine products 
seized at clandestine methamphetamine laboratories and other locations, 
such as dumpsites, have involved seizures of over a million tablets. 
The seizure of so many blister packaged pseudoephedrine products shows 
convincingly that blister packaging is not a deterrent to ordinary, 
over-the-counter pseudoephedrine use in clandestine methamphetamine 
laboratories.
  Indeed, the report even includes information about automated machines 
whose sole purpose is to remove pills from blister packs on a massive 
scale. These machines have been found in meth labs, along with 
hundreds, even thousands, of empty blister packs.
  So clearly, what we argued in 1999, and in 1996, is true. Meth 
manufacturers are using blister packs, and something must be done to 
stop them as best we can.
  In order to address this problem, DEA recommended in the report it 
released late last year that the blister pack loophole be closed, and 
that the current retail sales limit of 9 grams for bottled 
pseudoephedrine be extended to blister packed products as well. And 
that is what this bill would do.
  The meth problem is not just a California problem, or a New York 
problem, or even an Iowa problem. The meth problem is a national 
problem, with tragic consequences across this great country. Without a 
continuing, nationwide, relentless effort on the part of the Federal 
Government, this problem will continue to grow and to infect our 
children and our communities with the scourge of methamphetamine 
production and use.
  I believe DEA Director Hutchinson put it best this spring when he 
argued in support of Federal efforts to crack down on meth. ``It 
clearly impacts every one of our districts, every segment of our 
society and every age group.''
  I urge my colleagues to support this legislation and join the latest 
step towards progress in our war against methamphetamine.
  Mr. KOHL. Mr. President, I rise in support of the CLEAN-UP Meth Act 
of 2002. I am pleased to join my fellow cosponsors, Senators Feinstein 
and Hutchinson in introducing this legislation.
  Methamphetamine is a plague in Wisconsin that affects not only the 
people who purchase and use it, their families and friends, but also 
the law enforcement officials who are involved in cleaning up the 
abandoned meth laboratories. These home grown meth labs inflict 
significant damage to the environment unlike other illicit drugs. The 
labs contaminate the environment and threaten those who discover and 
break down the labs, are exposed to t4he precursor chemicals and clean 
up the polluted environment.
  The meth scourge is growing every day. In 1998, Wisconsin State 
authorities seized only two methamphetamine labs. By 2001, that number 
had increased to 52 and shows no signs of abating. Its appearance in 
the last few years in the western part of Wisconsin, trafficked from 
Minnesota and Iowa, has created a dramatic new problem for law 
enforcement. And, production in the State has grown dramatically in the 
last four years.
  The amount of methamphetamine produced in Wisconsin is also growing 
by leaps and bounds. In 1999, State drug task forces seized 1.6 
kilograms of methamphetamine. In 2000, the number increased to 2.5 
kilograms. Finally, in 2001, the amount of methamphetamine seized in 
Wisconsin skyrocketed to 20.9 kilograms, an increase of 13 fold in only 
two years.
  The existence of a significant and growing meth problem comes as no 
surprise to us. In fact, with the assistance of Wisconsin's Department 
of Narcotics Enforcement, we have attempted to fight the spread of meth 
for the past several years. We have augmented DEA's representation in 
Wisconsin, specifically adding new agents in the western part of the 
state to work in conjunction with state drug officials. We have secured 
DEA mobile drug teams to traverse the northwestern part of the State 
where much of the meth can be found. We have also secured millions of 
dollars in the appropriations process to aid in prevention and clean up 
efforts in western Wisconsin.
  Unfortunately, this has not stemmed the spread of meth. We fear to 
consider how much worse the problem would be if it were not for the 
efforts of our state and local law enforcement officials.
  We must do more. The legislation we introduced today is another 
weapon in the battle against the spread of meth. The bill authorizes 
more funding for the education, prevention and clean up of 
methamphetamine.
  Educating more people about the dangers of meth and assisting in safe 
environmental cleanup are important, long-term approaches to the meth 
problem. There is, however, something that can be done immediately to 
make it more difficult for meth producers to manufacture the drugs.
  We need to make it more difficult for meth producers to get access to 
the precursor chemicals they use to produce methamphetamine. That means 
closing a loophole in the law that currently makes it too easy for meth 
producers to get pseudophedrine. Pseudophedrine is the central 
ingredient in both methamphetamine and most major cold medicines sold 
over the counter.
  To combat the sale of pseudophedrine to meth producers, Congress 
passed the Comprehensive Methamphetamine Control Act of 1996. This 
limited the amount of pseudophedrine or ephedrine that any one person 
could purchase at one time. Yet, Congress did not proscribe the 
purchase of pseudophedrine in so-called ``blister packs.'' The 
pharmaceutical industry argued that it is sufficiently difficult to 
remove each pill from a blister pack, that the sale of pseudophedrine 
in that form need not be limited. Only the sale of pseodphedrine in 
bottles where it would be easy for meth producers to access large 
quantities needed to be restricted.
  As it turns out, the meth producers adapted their behavior to take 
advantage of the loophole in the law by finding a way to make the 
blister packaged pseudophedrine economical to purchase. They did so 
with the advent of presses that simply punctured all of the blister 
packs--therefore removing the type of packaging as an impediment to 
their access to the pseudophedrine.
  The DEA conducted a study on the use of blister packs and found that 
among the refuse left at meth labs are more and more blister packs. 
This demonstrates, in the DEA's view, that the blister pack loophole 
needs to be closed. We agree with their recommendation and therefore 
recommend limiting the amount of pseudophedrine that can be purchased 
by any one person at any one time.
  Closing this loophole in the law governing the manufacture of meth is 
one more weapon in the battle against the drug. Combined with 
education, prevention and greater resources for law enforcement 
throughout Wisconsin, we can stem the tide of this scourge before it 
does even more damage.
                                 ______
                                 
      By Mr. MILLER:
  S. 2764. A bill to eliminate the Federal quota and price support for 
tobacco, to compensate quota holders and active producers for the loss 
of tobacco quota asset value, to establish a permanent advisory board 
to determine and describe the physical characteristics of domestic and 
imported tobacco, and for other purposes; to the Committee on Finance.
  Mr. MILLER. Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2764

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

[[Page S7110]]

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Tobacco 
     Livelihood and Economic Assistance for Our Farmers Act of 
     2002''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.

            TITLE I--TERMINATION OF CURRENT TOBACCO PROGRAMS

Sec. 101. Termination of tobacco production adjustment programs.
Sec. 102. Termination of tobacco price support program.
Sec. 103. Geographical restrictions on expansion of tobacco production.
Sec. 104. Continued availability of Federal crop insurance.

       TITLE II--PAYMENTS TO TOBACCO QUOTA HOLDERS AND PRODUCERS

Sec. 201. Definitions.
Sec. 202. Payments to tobacco quota holders.
Sec. 203. Transition payments for active producers of quota tobacco.

                    TITLE III--TOBACCO QUALITY BOARD

Sec. 301. Definitions.
Sec. 302. Establishment of Board.
Sec. 303. Duties.
Sec. 304. Administration.

     TITLE IV--TOBACCO PRODUCT MANUFACTURER AND IMPORTER USER FEES

Sec. 401. User fee.
Sec. 402. Allocation of user fees.

              TITLE V--FDA REGULATION OF TOBACCO PRODUCTS

Sec. 501. Findings.

           Subtitle A--FDA Jurisdiction Over Tobacco Products

Sec. 511. Definition of tobacco product.
Sec. 512. Tobacco products.
Sec. 513. Conforming and technical amendments.

             Subtitle B--Cigarette Labeling and Advertising

Sec. 521. Definition of cigarette.
Sec. 522. Cigarette label and advertising warnings.

     Subtitle C--Smokeless Tobacco Labels and Advertising Warnings

Sec. 531. Smokeless tobacco labels and advertising warnings.

                       Subtitle D--Administration

Sec. 541. FTC jurisdiction not affected.

            TITLE I--TERMINATION OF CURRENT TOBACCO PROGRAMS

     SEC. 101. TERMINATION OF TOBACCO PRODUCTION ADJUSTMENT 
                   PROGRAMS.

       (a) Tobacco Control.--The Act of April 25, 1936 (commonly 
     known as the Tobacco Control Act; 7 U.S.C. 515 et seq.), is 
     repealed.
       (b) Commodity Handling Orders.--Section 8c(2)(A) of the 
     Agricultural Adjustment Act (7 U.S.C. 608c(2)(A)), reenacted 
     with amendments by the Agricultural Marketing Agreement Act 
     of 1937, is amended by striking ``tobacco,''.
       (c) Processing Tax.--Section 9(b) of the Agricultural 
     Adjustment Act (7 U.S.C. 609(b)), reenacted with amendments 
     by the Agricultural Marketing Agreement Act of 1937, is 
     amended--
       (1) in paragraph (2), by striking ``tobacco,''; and
       (2) in paragraph (6)(B)(i), by striking ``, or, in the case 
     of tobacco, is less than the fair exchange value by not more 
     than 10 per centum,''.
       (d) Burley Tobacco Import Review.--Section 3 of Public Law 
     98-59 (7 U.S.C. 625) is repealed.
       (e) Declaration of Policy.--Section 2 of the Agricultural 
     Adjustment Act of 1938 (7 U.S.C. 1282) is amended by striking 
     ``tobacco,''.
       (f) Definitions.--Section 301(b) of the Agricultural 
     Adjustment Act of 1938 (7 U.S.C. 1301(b)) is amended--
       (1) in paragraph (3)--
       (A) by striking subparagraph (C); and
       (B) by redesignating subparagraph (D) as subparagraph (C);
       (2) in paragraph (6)(A), by striking ``tobacco,'';
       (3) in paragraph (7), by striking the following:
       ``Tobacco (Flue-cured), July 1--June 30;
       ``Tobacco (other than Flue-cured), October 1-September 
     30;'';
       (4) in paragraph (10)--
       (A) by striking subparagraph (B); and
       (B) by redesignating subparagraph (C) as subparagraph (B);
       (5) in paragraph (11)(B), by striking ``and tobacco'';
       (6) in paragraph (12), by striking ``tobacco,'';
       (7) in paragraph (14)--
       (A) in subparagraph (A), by striking ``(A)''; and
       (B) by striking subparagraphs (B), (C), and (D);
       (8) by striking paragraph (15);
       (9) in paragraph (16)--
       (A) by striking subparagraph (B); and
       (B) by redesignating subparagraph (C) as subparagraph (B);
       (10) by striking paragraph (17); and
       (11) by redesignating paragraph (16) as paragraph (15).
       (g) Parity Payments.--Section 303 of the Agricultural 
     Adjustment Act of 1938 (7 U.S.C. 1303) is amended in the 
     first sentence by striking ``rice, or tobacco,'' and 
     inserting ``or rice,''.
       (h) Marketing Quotas.--Part I of subtitle B of title III of 
     the Agricultural Adjustment Act of 1938 (7 U.S.C. 1311 et 
     seq.) is repealed.
       (i) Administrative Provisions.--Section 361 of the 
     Agricultural Adjustment Act of 1938 (7 U.S.C. 1361) is 
     amended by striking ``tobacco,''.
       (j) Adjustment of Quotas.--Section 371 of the Agricultural 
     Adjustment Act of 1938 (7 U.S.C. 1371) is amended--
       (1) in the first sentence of subsection (a), by striking 
     ``rice, or tobacco'' and inserting ``or rice''; and
       (2) in the first sentence of subsection (b), by striking 
     ``rice, or tobacco'' and inserting ``or rice''.
       (k) Reports and Records.--Section 373 of the Agricultural 
     Adjustment Act of 1938 (7 U.S.C. 1373) is amended--
       (1) by striking ``rice, or tobacco'' each place it appears 
     in subsections (a) and (b) and inserting ``or rice''; and
       (2) in subsection (a)--
       (A) in the first sentence, by striking ``all persons 
     engaged in the business of redrying, prizing, or stemming 
     tobacco for producers,''; and
       (B) in the last sentence, by striking ``$500;'' and all 
     that follows through the period at the end of the sentence 
     and inserting ``$500.''.
       (l) Regulations.--Section 375(a) of the Agricultural 
     Adjustment Act of 1938 (7 U.S.C. 1375(a)) is amended by 
     striking ``peanuts, or tobacco'' and inserting ``or 
     peanuts''.
       (m) Eminent Domain.--Section 378 of the Agricultural 
     Adjustment Act of 1938 (7 U.S.C. 1378) is amended--
       (1) in the first sentence of subsection (c), by striking 
     ``cotton, and tobacco'' and inserting ``and cotton''; and
       (2) by striking subsections (d), (e), and (f).
       (n) Burley Tobacco Farm Reconstitution.--Section 379 of the 
     Agricultural Adjustment Act of 1938 (7 U.S.C. 1379) is 
     amended--
       (1) in subsection (a)--
       (A) by striking ``(a)''; and
       (B) in paragraph (6), by striking ``, but this clause (6) 
     shall not be applicable in the case of burley tobacco''; and
       (2) by striking subsections (b) and (c).
       (o) Acreage-Poundage Quotas.--Section 4 of the Act of April 
     16, 1955 (Public Law 89-12; 7 U.S.C. 1314c note), is 
     repealed.
       (p) Burley Tobacco Acreage Allotments.--The Act of July 12, 
     1952 (7 U.S.C. 1315), is repealed.
       (q) Transfer of Allotments.--Section 703 of the Food and 
     Agriculture Act of 1965 (7 U.S.C. 1316) is repealed.
       (r) Advance Recourse Loans.--Section 13(a)(2)(B) of the 
     Food Security Improvements Act of 1986 (7 U.S.C. 1433c-
     1(a)(2)(B)) is amended by striking ``tobacco and''.
       (s) Tobacco Field Measurement.--Section 1112 of the Omnibus 
     Budget Reconciliation Act of 1987 (Public Law 100-203) is 
     amended by striking subsection (c).
       (t) Liability.--The amendments made by this section shall 
     not affect the liability of any person under any provision of 
     law as in effect before the effective date under subsection 
     (u).
       (u) Crops.--This section and the amendments made by this 
     section shall apply with respect to the 2003 and subsequent 
     crops of the kind of tobacco involved.

     SEC. 102. TERMINATION OF TOBACCO PRICE SUPPORT PROGRAM.

       (a) Parity Price Support.--Section 101 of the Agricultural 
     Act of 1949 (7 U.S.C. 1441) is amended--
       (1) in the first sentence of subsection (a), by striking 
     ``tobacco (except as otherwise provided herein), corn,'' and 
     inserting ``corn'';
       (2) by striking subsections (c), (g), (h), and (i);
       (3) in subsection (d)(3)--
       (A) by striking ``, except tobacco,''; and
       (B) by striking ``and no price support shall be made 
     available for any crop of tobacco for which marketing quotas 
     have been disapproved by producers;''; and
       (4) by redesignating subsections (d) and (e) as subsections 
     (c) and (d), respectively.
       (b) Termination of Tobacco Price Support and No Net Cost 
     Provisions.--Sections 106, 106A, and 106B of the Agricultural 
     Act of 1949 (7 U.S.C. 1445, 1445-1, 1445-2) are repealed.
       (c) Definition of Basic Agricultural Commodity.--Section 
     408(c) of the Agricultural Act of 1949 (7 U.S.C. 1428(c)) is 
     amended by striking ``tobacco,''.
       (d) Review of Burley Tobacco Imports.--Section 3 of Public 
     Law 98-59 (7 U.S.C. 625) is repealed.
       (e) Powers of Commodity Credit Corporation.--Section 5 of 
     the Commodity Credit Corporation Charter Act (15 U.S.C. 714c) 
     is amended by inserting ``(other than tobacco)'' after 
     ``agricultural commodities'' each place it appears.
       (f) Transition Provisions.--
       (1) Liability.--The amendments made by this section shall 
     not affect the liability of any person under any provision of 
     law as in effect before the date of enactment of this Act.
       (2) Tobacco stocks and loans.--The Secretary of Agriculture 
     shall promulgate regulations that require--
       (A) the orderly disposition of quota tobacco held by any 
     producer-owned cooperative marketing association that has 
     entered into a loan agreement with the Commodity Credit 
     Corporation to make price support available to producers of 
     quota tobacco; and
       (B) the repayment of all tobacco price support loans or 
     surrender of collateral by the associations not later than 1 
     year after the date of enactment of this Act.

[[Page S7111]]

       (3) Special rules for termination of no net cost funds and 
     accounts.--Notwithstanding any other provision of law, on the 
     repeal by subsection (b) of the authority under section 106A 
     and 106B of the Agricultural Act of 1949 (7 U.S.C. 1445-1, 
     1445-2) for the establishment of the No Net Cost Tobacco 
     Funds and Accounts, respectively--
       (A) any obligation of a tobacco producer, purchaser, or 
     importer to make payments into the Fund or Account shall 
     terminate; and
       (B) any amounts in the Fund or Account shall be disposed of 
     in the manner prescribed by the Secretary of Agriculture, 
     except that--
       (i) to the extent necessary, the amounts shall be applied 
     or used for the purposes prescribed by that section; and
       (ii) if any funds remain, the Secretary shall transfer the 
     funds to the Secretary of Health and Human Services for use 
     in accordance with section 402.
       (g) Crops.--This section and the amendments made by this 
     section shall apply with respect to the 2003 and subsequent 
     crops of the kind of tobacco involved.

     SEC. 103. GEOGRAPHICAL RESTRICTIONS ON EXPANSION OF TOBACCO 
                   PRODUCTION.

       (a) Purposes.--The purposes of this section are--
       (1) to provide an orderly economic transition from the 
     marketing of tobacco based on quotas and price support; and
       (2) to address the economic dislocation, and the resulting 
     impact on interstate commerce, that the termination of the 
     tobacco program might cause for producers of certain 
     agricultural communities.
       (b) Definitions.--In this section:
       (1) Marketing quota.--The term ``marketing quota in the 
     2002 marketing year'' means a quota established for the 2002 
     marketing year pursuant to part I of subtitle B of title III 
     of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1311 et 
     seq.) (as in effect before the amendment made by section 
     101(h)) and related provisions of law, as in effect for that 
     marketing year.
       (2) Marketing year.--The term ``marketing year'' means--
       (A) in the case of Flue-cured tobacco, July 1 through June 
     30; and
       (B) in the case of each other kind of tobacco, October 1 
     through September 30.
       (c) Penalty Applicable to Tobacco Grown in Nonquota 
     Counties and States.--The marketing in the 2003 or subsequent 
     marketing years of a kind of tobacco that was subject to a 
     marketing quota in the 2002 marketing year shall be subject 
     to a penalty equal to 100 percent of the total amount 
     received for the marketing of the tobacco, unless the 
     Secretary of Agriculture determines that the tobacco was 
     grown in a county in which the kind of tobacco was grown 
     pursuant to a marketing quota in the 2002 marketing year.

     SEC. 104. CONTINUED AVAILABILITY OF FEDERAL CROP INSURANCE.

       Nothing in this title affects the eligibility of a tobacco 
     producer to obtain crop insurance for a crop of the producer 
     under the Federal Crop Insurance Act (7 U.S.C. 1501 et seq.).

       TITLE II--PAYMENTS TO TOBACCO QUOTA HOLDERS AND PRODUCERS

     SEC. 201. DEFINITIONS.

       In this title:
       (1) Active producer of quota tobacco.--The term ``active 
     producer of quota tobacco'' means a person that was the 
     actual producer of tobacco marketed under a marketing quota 
     for the 2001 tobacco marketing year, as determined by the 
     Secretary.
       (2) Quota tobacco.--The term ``quota tobacco'' means a kind 
     of tobacco that is subject to a farm marketing quota or farm 
     acreage allotment for the 1999, 2000, 2001, and 2002 tobacco 
     marketing years under a marketing quota or allotment program 
     established under part I of subtitle B of title III of the 
     Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.) 
     (as in effect before the amendment made by section 101(h)).
       (3) Secretary.--The term ``Secretary'' means the Secretary 
     of Agriculture.
       (4) Tobacco quota holder.--The term ``tobacco quota 
     holder'' means an owner of a farm on January 1, 2002, for 
     which a tobacco farm marketing quota or farm acreage 
     allotment for quota tobacco was established with respect to 
     the 2002 tobacco marketing year under a marketing quota 
     program established under part I of subtitle B of title III 
     of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et 
     seq.) (as in effect before the amendment made by section 
     101(h)).

     SEC. 202. PAYMENTS TO TOBACCO QUOTA HOLDERS.

       (a) Payment Required.--The Secretary shall make payments to 
     each eligible tobacco quota holder for the termination of 
     tobacco marketing quotas and related price support under the 
     amendments made by title I, which shall constitute full and 
     fair compensation for any losses relating to the termination 
     of the quotas and support.
       (b) Eligibility.--
       (1) In general.--To be eligible to receive a payment under 
     this section, a person shall submit to the Secretary an 
     application containing such information as the Secretary may 
     require to demonstrate to the satisfaction of the Secretary 
     that the person is a tobacco quota holder.
       (2) Administration.--The application shall be submitted 
     within such time, in such form, and in such manner as the 
     Secretary may require.
       (c) Base Quota Level.--
       (1) In general.--The Secretary shall establish a base quota 
     level applicable to each eligible tobacco quota holder, as 
     determined under subsection (b).
       (2) Poundage quotas.--For each kind of tobacco for which a 
     marketing quota is expressed in pounds, the base quota level 
     for each tobacco quota holder shall be equal to the basic 
     tobacco marketing quota under part I of subtitle B of title 
     III of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 
     et seq.) (as in effect before the amendment made by section 
     101(h)) for the 1998 marketing year for quota tobacco on the 
     farm owned by the tobacco quota holder.
       (3) Marketing quotas other than poundage quotas.--For each 
     kind of tobacco for which there is a marketing quota or 
     allotment on an acreage basis, the base quota level for each 
     tobacco quota holder shall be the quantity obtained by 
     multiplying--
       (A) the basic tobacco farm marketing quota or allotment for 
     the 1998 marketing year established by the Secretary for 
     quota tobacco on the farm owned by the tobacco quota holder; 
     by
       (B) the average county production yield per acre for the 
     county in which the farm is located for the kind of tobacco 
     for the 1998 marketing year.
       (d) Payment.--The Secretary shall make payments to each 
     eligible tobacco quota holder under subsection (b) in an 
     amount obtained by multiplying--
       (1) $8 per pound; by
       (2) the base quota level established for the quota holder 
     under subsection (c).
       (e) Time for Payment.--The payments to eligible tobacco 
     quota holders required under this section shall be made in 5 
     equal installments during fiscal years 2003, 2004, 2005, 
     2006, and 2007.
       (f) Resolution of Disputes.--Any dispute regarding the 
     eligibility of a person to receive a payment under this 
     section, or the amount of the payment, shall be resolved by 
     the county committee established under section 8(b)(5) of the 
     Soil Conservation and Domestic Allotment Act (16 U.S.C. 
     590h(b)(5)) for the county or other area in which the farm 
     owned by the person is located.
       (g) Commodity Credit Corporation.--The Secretary shall use 
     the funds, facilities, and authorities of the Commodity 
     Credit Corporation to carry out this section.

     SEC. 203. TRANSITION PAYMENTS FOR ACTIVE PRODUCERS OF QUOTA 
                   TOBACCO.

       (a) Transition Payments Required.--The Secretary shall make 
     transition payments under this section to eligible active 
     producers of quota tobacco.
       (b) Eligibility.--
       (1) In general.--To be eligible to receive a transition 
     payment under this section, a person shall submit to the 
     Secretary an application containing such information as the 
     Secretary may require to demonstrate to the satisfaction of 
     the Secretary that the person is an active producer of quota 
     tobacco.
       (2) Administration.--The application shall be submitted 
     within such time, in such form, and in such manner as the 
     Secretary may require.
       (c) Production Base.--
       (1) In general.--The Secretary shall establish a production 
     base applicable to each eligible active producer of quota 
     tobacco, as determined under subsection (b).
       (2) Quantity.--The production base of a producer shall be 
     equal to the quantity, in pounds, of quota tobacco subject to 
     the basic marketing quota produced and marketed by the 
     producer under part I of subtitle B of title III of the 
     Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.) 
     (as in effect before the amendment made by section 101(h)) 
     for the 2001 marketing year.
       (d) Payment.--The Secretary shall make payments to each 
     eligible active producer of quota tobacco, as determined 
     under subsection (b), in an amount obtained by multiplying--
       (1) $4 per pound; by
       (2) the production base established for the active producer 
     under subsection (c).
       (e) Time for Payment.--The payments to eligible active 
     producers of quota tobacco required under this section shall 
     be made in 5 equal installments during fiscal years 2003, 
     2004, 2005, 2006, and 2007.
       (f) Resolution of Disputes.--Any dispute regarding the 
     eligibility of a person to receive a payment under this 
     section, or the amount of the payment, shall be resolved by 
     the county committee established under section 8(b)(5) of the 
     Soil Conservation and Domestic Allotment Act (16 U.S.C. 
     590h(b)(5)) for the county or other area in which the farming 
     operation of the person is located.
       (g) Commodity Credit Corporation.--The Secretary shall use 
     the funds, facilities, and authorities of the Commodity 
     Credit Corporation to carry out this section.

                    TITLE III--TOBACCO QUALITY BOARD

     SEC. 301. DEFINITIONS.

       In this title:
       (1) Board.--The term ``Board'' means the Tobacco Quality 
     Board established under section 302.
       (2) Secretary.--The term ``Secretary'' means the Secretary 
     of Agriculture.

     SEC. 302. ESTABLISHMENT OF BOARD.

       (a) In General.--The Secretary shall establish a permanent 
     advisory board within the Department of Agriculture to be 
     known as the Tobacco Quality Board.
       (b) Nomination and Appointment.--The Board shall consist of 
     11 members, of which--
       (1) 5 members shall be appointed by the Secretary from 
     nominations submitted by representatives of tobacco producers 
     in the United States;

[[Page S7112]]

       (2) 5 members shall be appointed by the Secretary from 
     nominations submitted by representatives of tobacco product 
     manufacturers in the United States; and
       (3) 1 member shall be an officer or employee of the 
     Department of Agriculture appointed by the Secretary, who 
     shall serve as Chairperson of the Board.
       (c) Terms.--
       (1) Chairperson.--The Chairperson of the Board shall serve 
     at the pleasure of the Secretary.
       (2) Other members.--Other members of the Board shall serve 
     for 2-year terms, except that of the members first appointed 
     to the Board, 2 producer representatives and 2 manufacturer 
     representatives shall have initial terms of 1 year, as 
     determined by the Secretary.

     SEC. 303. DUTIES.

       The Board shall--
       (1) determine and describe the physical characteristics of 
     tobacco produced in the United States and unmanufactured 
     tobacco imported into the United States;
       (2) assemble and evaluate, in a systematic manner, concerns 
     and problems with the quality of tobacco produced in the 
     United States, expressed by domestic and foreign buyers and 
     manufacturers of tobacco products;
       (3) review data collected by Federal agencies on the 
     physical and chemical integrity of tobacco produced in the 
     United States and unmanufactured tobacco imported into the 
     United States, to ensure that tobacco being used in 
     domestically-manufactured tobacco products is of the highest 
     quality and is free from prohibited physical and chemical 
     agents;
       (4) investigate and communicate to the Secretary--
       (A) conditions with respect to the production of tobacco 
     that discourage improvements in the quality of tobacco 
     produced in the United States; and
       (B) recommendations for regulatory changes that would 
     address tobacco quality issues; and
       (5) carry out such other related activities as are assigned 
     to the Board by the Secretary.

     SEC. 304. ADMINISTRATION.

       (a) In General.--The Secretary shall provide the Board with 
     (as determined by the Secretary)--
       (1) a staff that is--
       (A) experienced in the sampling and analysis of 
     unmanufactured tobacco; and
       (B) capable of collecting data and monitoring tobacco 
     production information; and
       (2) other resources necessary for the Board to perform the 
     duties of the Board under this title.
       (b) Commodity Credit Corporation.--The Secretary shall use 
     the funds, facilities, and authorities of the Commodity 
     Credit Corporation to carry out this title.

     TITLE IV--TOBACCO PRODUCT MANUFACTURER AND IMPORTER USER FEES

     SEC. 401. USER FEE.

       (a) In General.--
       (1) Assessment.--The Secretary of Health and Human Services 
     shall assess an annual user fee, calculated in accordance 
     with this section, on each tobacco product manufacturer and 
     tobacco product importer that sells tobacco products in 
     domestic commerce in the United States.
       (2) Commencement.--The assessments shall commence during 
     calendar year 2003, based on domestic sales of tobacco 
     products during fiscal year 2003.
       (b) Base Amount of User Fee for Each Class of Tobacco 
     Product.--The base amount of the user fee shall be--
       (1) for cigarette manufacturers and importers, 
     $2,116,252,000;
       (2) for small cigar manufacturers and importers, 
     $1,051,000;
       (3) for large cigar manufacturers and importers, 
     $164,274,000;
       (4) for snuff manufacturers and importers, $9,920,000;
       (5) for chewing tobacco manufacturers and importers, 
     $2,275,000;
       (6) for pipe tobacco manufacturers and importers, 
     $1,505,000; and
       (7) for roll-your-own tobacco manufacturers and importers, 
     $3,231,000.
       (c) Determination of Annual User Fee for Each Class of 
     Tobacco Product.--The total user fee to be assessed on, and 
     paid by, the manufacturers and importers of each class of 
     tobacco product in each calendar year, as allocated pursuant 
     to subsection (d), shall be the amount obtained by 
     multiplying--
       (1) the base amount for that class of tobacco product 
     provided under subsection (b); by
       (2) a fraction--
       (A) the numerator of which is the total volume of domestic 
     sales of that class of tobacco product during the fiscal year 
     ending on September 30 of that calendar year; and
       (B) the denominator of which is the total volume of 
     domestic sales of that class of tobacco product during fiscal 
     year 2003.
       (d) Allocation of Total User Fee Amounts by Market Share--
       (1) Definition of market share.--In this subsection, the 
     term ``market share'' means the share of each manufacturer or 
     importer of a class of tobacco product (expressed as a 
     decimal to the fourth place) of the total volume of domestic 
     sales of the class of tobacco product during the calendar 
     year immediately preceding the calendar year of an assessment 
     under this section.
       (2) Allocation.--The amount of the user fee for each class 
     of tobacco product to be paid by each manufacturer or 
     importer of the class of tobacco product under subsection (a) 
     shall be determined for each calendar year by multiplying--
       (A) the market share of the manufacturer or importer, as 
     calculated with respect to the calendar year, of the class of 
     tobacco product; by
       (B) the total user fee amount for the calendar year, as 
     determined under subsection (c), for the class of tobacco 
     product.
       (e) Determination of Volume of Domestic Sales.--
       (1) In general.--The calculation of the volume of domestic 
     sales of a class of tobacco product by a manufacturer or 
     importer, and by all manufacturers and importers as a group, 
     shall be made by the Secretary of Health and Human Services 
     based on certified reports submitted by the manufacturers and 
     importers pursuant to subsection (f).
       (2) Measurement.--For purposes of the calculations under 
     this subsection and the certifications under subsection (f) 
     by the Secretary of Health and Human Services, the volumes of 
     domestic sales shall be measured by--
       (A) in the case of cigarettes, the numbers of cigarettes 
     sold; and
       (B) in the case of each other class of tobacco products, 
     such unit as is specified by regulation by the Secretary.
       (f) Certification of Volume of Domestic Sales.--
       (1) In general.--Each manufacturer and importer of tobacco 
     products shall submit for each year a certified report to the 
     Secretary of Health and Human Services setting forth for each 
     class of tobacco products marketed or imported the total, for 
     the preceding year, of domestic sales of the tobacco products 
     by the manufacturer and importer, respectively, to 
     wholesalers and retailers and directly to consumers.
       (2) Deadline.--The certified report shall be submitted to 
     the Secretary of Health and Human Services not later than 
     March 1 of the year after the year for which the certified 
     report is made.

     SEC. 402. ALLOCATION OF USER FEES.

       (a) In General.--The user fees collected pursuant to 
     section 401 and any funds transferred to the Secretary of 
     Health and Human Services by the Secretary of Agriculture 
     pursuant to section 102(f)(3)(B)(ii) shall be available, 
     without further appropriation, in accordance with, and for 
     the purposes described in, this section, to remain available 
     until expended.
       (b) Funding for FDA Regulation of Tobacco Products.--The 
     Secretary of Health and Human Services shall make 15 percent 
     of the user fee amounts collected pursuant to section 401 for 
     each year available to the Secretary, acting through the 
     Commissioner of Food and Drugs, for the regulation of tobacco 
     products under chapter IX of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 391 et seq.).
       (c) Funding for Other Tobacco-Related Programs.--The 
     Secretary of Health and Human Services shall use the 
     remaining 85 percent of the user fee amounts collected each 
     year pursuant to section 401 and any amounts transferred to 
     the Secretary of Health and Human Services by the Secretary 
     of Agriculture pursuant to section 102(f)(3)(B)(ii)--
       (1) to reimburse the Commodity Credit Corporation for the 
     expenditures made by the Commodity Credit Corporation under 
     title II; and
       (2) if any funds remain after carrying out paragraph (1), 
     to fund any other program that relates to tobacco products.

              TITLE V--FDA REGULATION OF TOBACCO PRODUCTS

     SEC. 501. FINDINGS.

       Congress finds that--
       (1) the use of tobacco products by the children of the 
     United States is a pediatric disease of epic proportions that 
     results in new generations of tobacco-dependent children and 
     adults;
       (2) a consensus exists within the scientific and medical 
     communities that tobacco products are inherently dangerous 
     and cause cancer, heart disease, and other serious adverse 
     health effects;
       (3) nicotine is addictive;
       (4) virtually all new users of tobacco products are under 
     the minimum legal age to purchase tobacco products;
       (5) tobacco advertising and marketing contribute 
     significantly to the use of nicotine-containing tobacco 
     products by adolescents;
       (6) since past efforts to restrict advertising and 
     marketing of tobacco products have failed adequately to curb 
     tobacco use by adolescents, comprehensive restrictions on the 
     sale, promotion, and distribution of tobacco products are 
     needed;
       (7) Federal and State governments have lacked the legal and 
     regulatory authority and resources to address comprehensively 
     the public health and societal problems caused by the use of 
     tobacco products;
       (8) Federal and State public health officials, the public 
     health community, and the public at large recognize that the 
     tobacco industry should be subject to ongoing oversight;
       (9) under article I, section 8 of the Constitution, 
     Congress is vested with the responsibility for regulating 
     interstate commerce and commerce with Indian tribes;
       (10) the sale, distribution, marketing, advertising, and 
     use of tobacco products are activities in and substantially 
     affect interstate

[[Page S7113]]

     commerce because tobacco products are sold, marketed, 
     advertised, and distributed in interstate commerce on a 
     nationwide basis;
       (11) the sale, distribution, marketing, advertising, and 
     use of tobacco products substantially affect interstate 
     commerce through the health care and other costs attributable 
     to the use of tobacco products;
       (12) it is in the public interest for Congress to adopt 
     comprehensive public health legislation because of--
       (A) the unique position of tobacco in the history and 
     economy of the United States; and
       (B) the need to prevent the sale, distribution, marketing 
     and advertising of tobacco products to persons under the 
     minimum legal age to purchase tobacco products;
       (13) the public interest requires a timely, fair, 
     equitable, and consistent result that will serve the public 
     interest by restricting throughout the United States the 
     sale, distribution, marketing, and advertising of tobacco 
     products only to persons of legal age to purchase tobacco 
     products;
       (14) public health authorities estimate that the benefits 
     to the United States of enacting Federal legislation to 
     accomplish the goals described in this section would be 
     significant in human and economic terms;
       (15) reducing the use of tobacco by minors by 50 percent 
     would prevent well over 60,000 early deaths each year and 
     save up to $43,000,000,000 each year in reduced medical 
     costs, improved productivity, and the avoidance of premature 
     deaths;
       (16)(A) advertising, marketing, and promotion of tobacco 
     products have been especially directed to attract young 
     persons to use tobacco products, resulting in increased use 
     of tobacco products by youth; and
       (B) past efforts to oversee those activities have not been 
     successful in adequately preventing the increased use;
       (17) tobacco advertising increases the size of the market 
     consumption of tobacco products and the use of tobacco by 
     young people;
       (18) children--
       (A) are more influenced by tobacco advertising than adults; 
     and
       (B) smoke the most advertised brands;
       (19) tobacco company documents indicate that young people 
     are an important and often crucial segment of the tobacco 
     market;
       (20) advertising restrictions will have a positive effect 
     on the smoking rates of young people;
       (21) restrictions on advertising are necessary to prevent 
     unrestricted tobacco advertising from undermining legislation 
     prohibiting access to young people; and
       (22) it is in the public interest for Congress to adopt 
     legislation to address the public health crisis created by 
     actions of the tobacco industry.

           Subtitle A--FDA Jurisdiction Over Tobacco Products

     SEC. 511. DEFINITION OF TOBACCO PRODUCT.

       Section 201 of the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 321) is amended by adding at the end the following:
       ``(ll) Tobacco product.--
       ``(A) In general.--The term `tobacco product' means any 
     product made or derived from tobacco that is intended for 
     human consumption.
       ``(B) Inclusions.--The term `tobacco product' includes any 
     component, part, or accessory of a tobacco product.
       ``(C) Exclusions.--The term `tobacco product' does not 
     include any raw material, other than tobacco, used in 
     manufacturing a component, part, or accessory of a tobacco 
     product.''.

     SEC. 512. TOBACCO PRODUCTS.

       The Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et 
     seq.) is amended--
       (1) by redesignating chapter IX (21 U.S.C. 391 et seq.) as 
     chapter X;
       (2) by redesignating sections 901 through 907 (21 U.S.C. 
     391 through 397) as sections 1001 through 1007, respectively; 
     and
       (3) by inserting after chapter VIII (21 U.S.C. 381 et seq.) 
     the following:

                     ``CHAPTER IX--TOBACCO PRODUCTS

     ``SEC. 901. DEFINITIONS.

       ``In this title:
       ``(1) Brand.--The term `brand' means a variety of tobacco 
     product distinguished by the tobacco used, tar content, 
     nicotine content, flavoring used, size, filtration, or 
     packaging, logo, registered trademark or brand name, 
     identifiable pattern of colors, or any combination of those 
     attributes.
       ``(2) Cigarette.--The term `cigarette' has the meaning 
     given the term in section 3 of the Federal Cigarette Labeling 
     and Advertising Act (15 U.S.C. 1332).
       ``(3) Commerce.--The term `commerce' has the meaning given 
     the term in section 3 of the Federal Cigarette Labeling and 
     Advertising Act (15 U.S.C. 1332).
       ``(4) Constituent.--The term `constituent' means, with 
     respect to cigarettes, any element of mainstream or 
     sidestream smoke.
       ``(5) Distributor.--
       ``(A) In general.--The term `distributor' means, with 
     respect to a tobacco product, any person that furthers the 
     distribution of cigarette or smokeless tobacco, whether 
     domestic or imported, at any point from the original place of 
     manufacture to the place of business of a person that sells 
     or distributes the product to individuals for personal 
     consumption.
       ``(B) Exclusion.--The term `distributor' does not include a 
     common carrier.
       ``(6) Ingredient.--
       ``(A) In general.--The term `ingredient' means, with 
     respect to cigarettes or smokeless tobacco products, any 
     substance, chemical, or compound (other than tobacco, water, 
     or reconstituted tobacco sheet made wholly from tobacco) 
     added, or specified for addition, by a manufacturer to the 
     tobacco, paper, or filter of a cigarette, or to the tobacco 
     of a smokeless tobacco product.
       ``(B) Inclusions.--The term `ingredient' includes, with 
     respect to cigarettes or smokeless tobacco products, 
     flavorants, processing aids, casing sauces, preservatives, 
     and combustion modifiers.
       ``(7) Manufacturer.--
       ``(A) In general.--The term `manufacturer' means any person 
     that manufactures a tobacco product intended to be sold in 
     the United States.
       ``(B) Inclusions.--The term ``manufacturer'' includes an 
     importer, or other first purchaser for resale in the United 
     States, of--
       ``(i) a tobacco product manufactured outside of the United 
     States; or
       ``(ii a tobacco product manufactured in the United States 
     but not intended for sale in the United States.
       ``(8) Nicotine.--The term `nicotine' means the chemical 
     substance named 3-(1-Methyl-2-pyrrolidinyl) pyridine or 
     C[10]H[14]N[2], including any salt or complex of nicotine.
       ``(9) Package.--The term `package' means--
       ``(A) a pack, box, carton, or container of any kind; or
       ``(B) if no other container is used, any wrapping 
     (including cellophane) in which cigarettes or smokeless 
     tobacco is offered for sale, sold, or otherwise distributed 
     to consumers.
       ``(10) Retailer.--The term `retailer' means any person 
     that--
       ``(A) sells cigarettes or smokeless tobacco to individuals 
     for personal consumption; or
       ``(B) operates a facility at which self-service displays of 
     tobacco products are permitted.
       ``(11) Smokeless tobacco.--The term `smokeless tobacco' 
     means any product that--
       ``(A) consists of cut, ground, powdered, or leaf tobacco; 
     and
       ``(B) is intended to be placed in the oral or nasal cavity.

     ``SEC. 902. FDA JURISDICTION OVER TOBACCO PRODUCTS.

        ``(a) In General.--A tobacco product shall be regulated by 
     the Secretary under this chapter and shall not be subject to 
     the provisions of chapter V, except to the extent that--
       ``(1) the tobacco product is intended for use in the 
     diagnosis, cure, mitigation, treatment, or prevention of 
     disease (within the meaning of section 201(g)(1)(B) or 
     201(h)(2)); or
       ``(2) a health claim is made for the tobacco product under 
     section 201(g)(1)(C) or 201(h)(3), except that this paragraph 
     shall not apply to a reduced exposure tobacco product or a 
     reduced risk tobacco product covered by section 913.
       ``(b) Applicability.--This chapter shall apply to--
       ``(1) all tobacco products subject to part 897 of title 21, 
     Code of Federal Regulations and any successor regulations; 
     and
       ``(2) any other tobacco product that the Secretary by 
     regulation determines to be subject to this chapter.
       ``(c) Scope.--
       ``(1) Other products.--Nothing in this chapter affects the 
     authority of the Secretary over, or the regulation of, 
     products under this Act that are not tobacco products under 
     chapter V or any other chapter of this Act.
       ``(2) Leaf tobacco.--
       ``(A) Definition of controlled by.--In this paragraph, the 
     term `controlled by' means, when used with respect to a 
     tobacco product manufacturer, that the tobacco product 
     manufacturer--
       ``(i) is a member of the same controlled group of 
     corporations (as that term is used in section 52(a) of the 
     Internal Revenue Code of 1986); or
       ``(ii) is under common control (within the meaning of the 
     regulations promulgated under section 52(b) of that Code).
       ``(B) Nonapplicability.--This chapter shall not apply to--
       ``(i) leaf tobacco that is not in the possession of a 
     manufacturer; or
       ``(ii) a producer of leaf tobacco, including a tobacco 
     grower, tobacco warehouse, and tobacco grower cooperative.
       ``(C) Entry onto farms.--An officer or employee of the Food 
     and Drug Administration shall not have any authority to enter 
     onto a farm owned by a producer of leaf tobacco without the 
     written consent of the producer.
       ``(D) Dual capacity as leaf tobacco producer and 
     manufacturer.--Notwithstanding any other provision of this 
     subparagraph, if a producer of leaf tobacco is also a tobacco 
     product manufacturer or is controlled by a tobacco product 
     manufacturer, the producer shall be subject to this chapter 
     in the producer's capacity as a manufacturer.
       ``(E) Regulations on leaf tobacco production.--Nothing in 
     this chapter grants the Secretary authority to promulgate 
     regulations on any matter that involves the production of 
     leaf tobacco or a producer of leaf tobacco, other than 
     activities by a manufacturer affecting production.

     ``SEC. 903. ADULTERATED TOBACCO PRODUCTS.

       ``(a) Contaminated Substances.--A tobacco product shall be 
     deemed adulterated if the tobacco product--

[[Page S7114]]

       ``(1) consists in whole or in part of any filthy, putrid, 
     or decomposed substance; or
       ``(2) is otherwise contaminated by any poisonous or 
     deleterious substance that may render the tobacco product 
     more injurious to health.
       ``(b) Unsanitary Conditions.--A tobacco product shall be 
     deemed adulterated if the tobacco product has been prepared, 
     packed, or held under unsanitary conditions under which the 
     tobacco product may have been contaminated with filth, or 
     under which the tobacco product may have been rendered more 
     injurious to health.
       ``(c) Containers.--A tobacco product shall be deemed 
     adulterated if the container of the tobacco product is 
     composed, in whole or in part, of any poisonous or 
     deleterious substance that may render the contents more 
     injurious to health.
       ``(d) Performance Standards.--A tobacco product shall be 
     deemed adulterated if the tobacco product is, purports to be, 
     or is represented as a tobacco product that is subject to a 
     performance standard established under section 908 unless the 
     tobacco product is in all respects in conformity with the 
     standard.
       ``(e) Premarket Approval.--A tobacco product shall be 
     deemed adulterated if the tobacco product--
       ``(1) is required by section 911(b) to have premarket 
     approval;
       ``(2) is not exempt under section 907(f); and
       ``(3) does not have an approved application in effect.
       ``(f) Manufacturing Practices.--A tobacco product shall be 
     deemed adulterated if the methods used in, or the facilities 
     or controls used for, the manufacture, packing, or storage of 
     the tobacco product are not in conformity with applicable 
     requirements under section 907(e)(1) or an applicable 
     condition prescribed by an order under section 907(e)(2).
       ``(g) Investigational Use.--A tobacco product shall be 
     deemed adulterated if--
       ``(1) the tobacco product is a tobacco product for which an 
     exemption has been granted under section 907(f) for 
     investigational use; and
       ``(2) the person that is granted the exemption or any 
     investigator that uses the tobacco product under the 
     exemption fails to comply with a requirement prescribed by or 
     under section 907(f).
       ``(h) Imported Cigarettes.--A tobacco product shall be 
     deemed adulterated if the tobacco product is imported, or 
     offered for import, into the United States in violation of 
     section 5754 of the Internal Revenue Code of 1986 or title 
     VIII of the Tariff Act of 1930 (19 U.S.C. 1681 et seq.).

     ``SEC. 904. MISBRANDED TOBACCO PRODUCTS.

       ``(a) False Labeling.--A tobacco product shall be deemed 
     misbranded if the labeling of the tobacco product is false or 
     misleading.
       ``(b) Mislabeled Packages.--
       ``(1) In general.--Subject to paragraph (2), a tobacco 
     product in package form shall be deemed misbranded unless the 
     tobacco product bears a label containing--
       ``(A) the name and place of business of the tobacco product 
     manufacturer, packer, or distributor; and
       ``(B) an accurate statement of the quantity of the contents 
     in terms of weight, measure, or numerical count.
       ``(2) Administration.--In carrying out paragraph (1)(B), 
     the Secretary shall (by regulation)--
       ``(A) permit reasonable variations; and
       ``(B) establish exemptions for small packages.
       ``(c) Information.--A tobacco product shall be deemed 
     misbranded if any word, statement, or other information 
     required by or under authority of this chapter to appear on 
     the label or labeling is not prominently placed on the label 
     or labeling with such conspicuousness (as compared with other 
     words, statements, or designs in the labeling) and in such 
     terms as to render the information likely to be read and 
     understood by the ordinary individual under customary 
     conditions of purchase and use.
       ``(d) Established Name.--A tobacco product shall be deemed 
     misbranded if--
       ``(1) the tobacco product has an established name; and
       ``(2) the label of the tobacco product does not bear, to 
     the exclusion of any other nonproprietary name, the 
     established name of the tobacco product prominently printed 
     in type, as required by the Secretary by regulation.
       ``(e) Directions.--A tobacco product shall be deemed 
     misbranded if the Secretary has promulgated regulations 
     requiring that the labeling of the tobacco product bear 
     adequate directions for use, or adequate warnings against use 
     by children, that are necessary for the protection of users 
     unless the labeling of the tobacco product conforms in all 
     respects to the regulations.
       ``(f) Processing.--A tobacco product shall be deemed 
     misbranded if--
       ``(1) the tobacco product was manufactured, prepared, 
     propagated, compounded, or processed in any State in an 
     establishment not duly registered under section 906(b);
       ``(2) the tobacco product was not included in a list 
     required by section 906(i);
       ``(3) a notice or other information with respect to the 
     tobacco product was not provided as required by section 
     906(i) or 906(j); or
       ``(4) the tobacco product does not bear such symbols from 
     the uniform system for identification of tobacco products 
     prescribed under section 906(e) as the Secretary by 
     regulation requires.
       ``(g) False Advertising.--In the case of any tobacco 
     product distributed or offered for sale in any State, a 
     tobacco product shall be deemed misbranded if--
       ``(1) the advertising of the tobacco product is false or 
     misleading; or
       ``(2) the tobacco product is sold, distributed, advertised, 
     or promoted in violation of section 916 or regulations 
     prescribed under section 907(d).
       ``(h) Required Statements.--In the case of any tobacco 
     product distributed or offered for sale in any State, a 
     tobacco product shall be deemed misbranded unless the 
     manufacturer, packer, or distributor of the tobacco product 
     includes in all advertisements and other descriptive printed 
     matter issued or caused to be issued by the manufacturer, 
     packer, or distributor with respect to the tobacco product--
       ``(1) a true statement of the established name of the 
     tobacco product (as required under subsection (d)), printed 
     prominently; and
       ``(2) a brief description of--
       ``(A) the uses of the tobacco product and relevant 
     warnings, precautions, side effects, and contraindications; 
     and
       ``(B) in the case of specific tobacco products made subject 
     to a finding by the Secretary after notice and opportunity 
     for comment that the action is necessary to protect the 
     public health, a full description of the components of the 
     tobacco product or the formula showing quantitatively each 
     ingredient of the tobacco product, to the extent required in 
     regulations which shall be promulgated by the Secretary after 
     an opportunity for a hearing.
       ``(i) Mandatory Disclaimers.--In the case of any tobacco 
     product distributed or offered for sale in any State, a 
     tobacco product shall be deemed misbranded unless the 
     manufacturer, packer, or distributor of the tobacco product 
     includes in all advertisements the information required by 
     section 917(c).
       ``(j) Performance Standards.--A tobacco product shall be 
     deemed misbranded if the tobacco product is a tobacco product 
     subject to a performance standard established under section 
     908, unless the tobacco product bears such labeling as may be 
     prescribed in the performance standard.
       ``(k) Notice.--A tobacco product shall be deemed misbranded 
     if there is a failure or refusal--
       ``(1) to comply with any requirement prescribed under 
     section 905 or 909; or
       ``(2) to furnish any material or information required by or 
     under section 910.
       ``(l) Labeling.--A tobacco product shall be deemed 
     misbranded if the tobacco product is not in compliance with--
       ``(1) the Federal Cigarette Labeling and Advertising Act 
     (15 U.S.C. 1331 et seq.); or
       ``(2) the Comprehensive Smokeless Tobacco Health Education 
     Act of 1986 (15 U.S.C. 4401 et seq.).
       ``(m) Prior Approval of Statements on Label.--
       ``(1) In general.--Subject to paragraphs (2) and (3), the 
     Secretary may, by regulation, require prior approval of 
     statements made on the label of a tobacco product.
       ``(2) Advertisement content.--In the case of matters 
     specified in this section or covered by regulations 
     promulgated under this section--
       ``(A) no regulation promulgated under this subsection may 
     require prior approval by the Secretary of the content of any 
     advertisement; and
       ``(B) no advertisement of a tobacco product, published 
     after the date of enactment of the Tobacco Livelihood and 
     Economic Assistance for Our Farmers Act of 2002, shall be 
     subject to sections 12 through 15 of the Federal Trade 
     Commission Act (15 U.S.C. 52 through 55).
       ``(3) Labeling.--This subsection does not apply to any 
     printed matter that the Secretary determines to be labeling 
     (as defined in section 201).

     ``SEC. 905. SUBMISSION OF HEALTH INFORMATION TO THE 
                   SECRETARY.

       ``(a) Requirement.--Not later than 180 days after the date 
     of enactment of the Tobacco Livelihood and Economic 
     Assistance for Our Farmers Act of 2002, each tobacco product 
     manufacturer or importer of tobacco products, or their 
     agents, shall submit to the Secretary the following 
     information:
       ``(1) A listing of all tobacco ingredients, substances, and 
     compounds that are, as of that date, added by the 
     manufacturer to the tobacco, paper, filter, or other 
     component of each tobacco product by brand and by quantity in 
     each brand and subbrand.
       ``(2) A description of the content, delivery, and form of 
     nicotine in each tobacco product measured in milligrams of 
     nicotine.
       ``(3) All documents (including underlying scientific 
     information) relating to research activities and research 
     findings conducted, supported, or possessed by the 
     manufacturer (or agents) on the health, behavioral, or 
     physiological effects of tobacco products, their 
     constituents, ingredients, and components, and tobacco 
     additives described in paragraph (1).
       ``(4) All documents (including underlying scientific 
     information) relating to research activities, and research 
     findings, conducted, supported, or possessed by the 
     manufacturer (or agents) that relate to the issue of whether 
     a reduction in risk to health from tobacco products can occur 
     on the employment of technology available or known to the 
     manufacturer.
       ``(5) All documents (including underlying scientific 
     information) relating to marketing research involving the use 
     of tobacco products.

[[Page S7115]]

       ``(b) Annual Submission of Information.--A tobacco product 
     manufacturer or importer that is required to submit 
     information under subsection (a) shall update the information 
     on an annual basis in accordance with a schedule determined 
     by the Secretary.
       ``(c) Time for Submission.--
       ``(1) New products.--At least 90 days prior to the delivery 
     for introduction into interstate commerce of a tobacco 
     product not on the market on the date of enactment of the 
     Tobacco Livelihood and Economic Assistance for Our Farmers 
     Act of 2002--
       ``(A) the manufacturer of the tobacco product shall provide 
     the information required under subsection (a); and
       ``(B) the tobacco product shall be subject to the annual 
     submission requirement under subsection (b).
       ``(2) Modification of existing products.--Not later than 60 
     days after the date of an action described in this paragraph, 
     a tobacco product manufacturer shall advise the Secretary of 
     the action in writing, and reference the action in 
     submissions made under subsection (b), if the manufacturer--
       ``(A) adds to the tobacco product a new tobacco additive;
       ``(B) increases or decreases the quantity of an existing 
     tobacco additive or the nicotine content, delivery, or form; 
     or
       ``(C) eliminates a tobacco additive from the tobacco 
     product.

     ``SEC. 906. ANNUAL REGISTRATION.

       ``(a) Definitions.--In this section:
       ``(1) Manufacture, preparation, compounding, or 
     processing.--The term `manufacture, preparation, compounding, 
     or processing' includes (consistent with section 902(c)(2)) 
     repackaging or otherwise changing the container, wrapper, or 
     labeling of any tobacco product package in furtherance of the 
     distribution of the tobacco product from the original place 
     of manufacture of the tobacco product to the place of 
     business of the person that makes final delivery or sale to 
     the ultimate consumer or user.
       ``(2) Name.--The term `name' includes--
       ``(A) in the case of a partnership, the name of each 
     partner; and
       ``(B) in the case of a corporation--
       ``(i) the name of each corporate officer and director; and
       ``(ii) the State of incorporation.
       ``(b) Registration by Owners and Operators.--On or before 
     December 31 of each year, each person that owns or operates 
     any establishment in any State engaged in the manufacture, 
     preparation, compounding, or processing of 1 or more tobacco 
     products shall register with the Secretary the name, places 
     of business, and all such establishments of the person.
       ``(c) Registration of New Owners and Operators.--On first 
     engaging in the manufacture, preparation, compounding, or 
     processing of a tobacco product or tobacco products in an 
     establishment owned or operated in any State by a person, the 
     person shall immediately register with the Secretary the 
     person's name, place of business, and the establishment.
       ``(d) Registration of Added Establishments.--Each person 
     required to register under subsection (b) or (c) shall 
     immediately register with the Secretary any additional 
     establishment that person owns or operates in any State and 
     at which the person begins the manufacture, preparation, 
     compounding, or processing of 1 or more tobacco products.
       ``(e) Uniform Product Identification System.--The Secretary 
     may by regulation--
       ``(1) prescribe a uniform system for the identification of 
     tobacco products; and
       ``(2) require that persons that are required to list the 
     tobacco products under subsection (i) shall list the tobacco 
     products in accordance with the system.
       ``(f) Public Access to Registration Information.--On 
     request, the Secretary shall make available for inspection 
     any registration filed under this section.
       ``(g) Biennial Inspection of Registered Establishments.--
       ``(1) In general.--Each establishment in any State 
     registered with the Secretary under this section shall be 
     subject to inspection under section 704.
       ``(2) Administration.--Each such establishment engaged in 
     the manufacture, compounding, or processing of a tobacco 
     product or tobacco products shall be so inspected by 1 or 
     more officers or employees duly designated by the Secretary--
       ``(A) at least once during the 2-year period beginning with 
     the date of registration of the establishment under this 
     section; and
       ``(B) at least once in every successive 2-year period 
     thereafter.
       ``(h) Foreign Establishments.--
       ``(1) Registration.--Any establishment within any foreign 
     country engaged in the manufacture of a tobacco product that 
     is imported, or offered for import, into the United States 
     shall register with the Secretary the name and place of 
     business of the establishment and the name of the United 
     States agent for the establishment.
       ``(2) Registration information.--Any establishment required 
     to be registered under paragraph (1) shall--
       ``(A) provide to the Secretary the information required by 
     subsection (i); and
       ``(B) comply with any other requirement of this section 
     that is applicable to domestic manufacturers.
       ``(3) Inspections.--Any establishment required to be 
     registered under paragraph (1) shall--
       ``(A) be subject to inspection under section 704; and
       ``(B) be inspected under that section by 1 or more officers 
     or employees designated by the Secretary at least once 
     during--
       ``(i) the 2-year period beginning on the date of the 
     registration of the establishment under paragraph (1); and
       ``(ii) each 2-year period thereafter.
       ``(4) Cooperative agreements.--The Secretary may enter into 
     cooperative agreements with officials of foreign countries to 
     ensure that adequate and effective means are available for 
     purposes of determining, from time to time, whether tobacco 
     products manufactured by an establishment required to be 
     registered under paragraph (1), if imported or offered for 
     import into the United States, shall be refused admission 
     under section 801(a).
       ``(i) Registration Information.--
       ``(1) Product list.--Each person that registers with the 
     Secretary under subsection (b), (c), or (d) shall, at the 
     time of registration under any of those subsections, file 
     with the Secretary a list of all tobacco products that--
       ``(A) are being manufactured, prepared, compounded, or 
     processed by the person for commercial distribution; and
       ``(B) have not been included in any list of tobacco 
     products filed by that person with the Secretary under this 
     paragraph or paragraph (2) before the time of registration.
       ``(2) Contents of list.--The list shall be prepared in such 
     form and manner as the Secretary may prescribe and shall be 
     accompanied by--
       ``(A) in the case of a tobacco product contained in the 
     applicable list with respect to which a performance standard 
     has been established under section 908 or that is subject to 
     section 911--
       ``(i) a reference to the authority for the marketing of the 
     tobacco product; and
       ``(ii) a copy of all labeling for the tobacco product;
       ``(B) in the case of any other tobacco product contained in 
     an applicable list--
       ``(i) a copy of all consumer information and other labeling 
     for the tobacco product;
       ``(ii) a representative sampling of advertisements for the 
     tobacco product; and
       ``(iii) on request made by the Secretary for good cause, a 
     copy of all advertisements for a particular tobacco product; 
     and
       ``(C) if the registrant filing a list has determined that a 
     tobacco product contained in the list is not subject to a 
     performance standard established under section 908, a brief 
     statement of the basis on which the registrant made the 
     determination, if the Secretary requests such a statement 
     with respect to the particular tobacco product.
       ``(3) Semiannual report of any change in product list.--
     Each person that registers with the Secretary under this 
     subsection shall report to the Secretary once during the 
     month of June of each year and once during the month of 
     December of each year the following:
       ``(A)(i) A list of each tobacco product introduced by the 
     registrant for commercial distribution that has not been 
     included in any list previously filed by the person with the 
     Secretary under this subparagraph or paragraph (1).
       ``(ii) A list under this subparagraph shall list a tobacco 
     product by the established name of the tobacco product and 
     shall be accompanied by the other information required by 
     paragraphs (1) and (2).
       ``(B) If, since the date the registrant last made a report 
     under this paragraph, the person has discontinued the 
     manufacture, preparation, compounding, or processing for 
     commercial distribution of a tobacco product included in a 
     list filed under subparagraph (A) or paragraph (1)--
       ``(i) notice of the discontinuance;
       ``(ii) the date of the discontinuance; and
       ``(iii) the identity of the established name of the tobacco 
     product.
       ``(C) If, since the date the registrant reported under 
     subparagraph (B), a notice of discontinuance that person has 
     resumed the manufacture, preparation, compounding, or 
     processing for commercial distribution of the tobacco product 
     with respect to which a notice of discontinuance was 
     reported, notice of the resumption, the date of the 
     resumption, the identity of the tobacco product by 
     established name, and other information required by 
     paragraphs (1) and (2), unless the registrant has previously 
     reported the resumption to the Secretary under this 
     subparagraph.
       ``(D) Any material change in any information previously 
     submitted under this paragraph or paragraph (1).
       ``(j) Report Preceding Introduction of Certain 
     Substantially Equivalent Products Into Interstate Commerce.--
     Each person that is required to register under this section 
     and that proposes to begin the introduction or delivery for 
     introduction into interstate commerce for commercial 
     distribution of a tobacco product intended for human use that 
     was not commercially marketed in the United States as of the 
     date of enactment of the Tobacco Livelihood and Economic 
     Assistance for Our Farmers Act of 2002 (as defined by the 
     Secretary by regulation) shall, at least 90 days before 
     making the introduction or delivery, report to the Secretary 
     (in such form and manner as the Secretary shall by regulation 
     prescribe)--
       ``(1) the basis for the person's determination that the 
     tobacco product is substantially equivalent (as defined in 
     section 911) to a tobacco product commercially marketed in 
     the United States as of the date of enactment of the Tobacco 
     Livelihood and Economic Assistance for Our Farmers Act of

[[Page S7116]]

     2002 that is in compliance with the requirements of this Act; 
     and
       ``(2) action taken by the person to comply with the 
     requirements under section 908 that are applicable to the 
     tobacco product.

     ``SEC. 907. GENERAL PROVISIONS CONCERNING CONTROL OF TOBACCO 
                   PRODUCTS.

       ``(a) In General.--
       ``(1) Applicable requirements.--Any requirement established 
     by or under section 903, 904, 906, or 910 that is applicable 
     to a tobacco product shall apply to the tobacco product until 
     the applicability of the requirement to the tobacco product 
     has been changed by action taken under section 908, section 
     911, or subsection (d).
       ``(2) Inapplicable requirements.--Any requirement 
     established by or under section 903, 904, 906, or 910 that is 
     inconsistent with a requirement imposed on the tobacco 
     product under section 908, section 911, or subsection (d) 
     shall not apply to the tobacco product.
       ``(b) Information on Public Access and Comment.--
       ``(1) Application.--This subsection applies to--
       ``(A) each notice of proposed rulemaking under this section 
     or section 908, 909, 910, or 911;
       ``(B) any other notice that is published in the Federal 
     Register with respect to any other action taken under any 
     such section and that states the reasons for the action; and
       ``(C) each publication of findings required to be made in 
     connection with rulemaking under any such section.
       ``(2) Information.--Each notice and publication described 
     in paragraph (1) shall set forth--
       ``(A) the manner in which interested persons may examine 
     data and other information on which the notice or findings 
     are based; and
       ``(B) the period within which interested persons may 
     present their comments on the notice or findings (including 
     the need for the notice or findings) orally or in writing, 
     which period shall be not less than 60 days, and not more 
     than 90 days, unless the period is extended by the Secretary 
     by a notice published in the Federal Register stating good 
     cause for the extension.
       ``(c) Limited Confidentiality of Information.--
       ``(1) In general.--Except as provided in paragraph (2), any 
     information reported to or otherwise obtained by the 
     Secretary or the Secretary's representative under section 
     704, 905, 906, 908, 909, 910, 911, or 913, or under 
     subsection (e) or (f), that is exempt from disclosure under 
     section 552(a) of title 5, United States Code, by reason of 
     section 552(b)(4) of that title shall be considered 
     confidential and shall not be disclosed.
       ``(2) Exceptions.--Information described in paragraph (1) 
     may be disclosed--
       ``(A) to other officers or employees that are carrying out 
     this chapter; or
       ``(B) when relevant in any proceeding under this chapter.
       ``(d) Restrictions.--
       ``(1) In general.--The Secretary may by regulation require 
     that a tobacco product be restricted to sale or distribution 
     on such conditions (including restrictions on the access to, 
     and the advertising and promotion of, the tobacco product) as 
     the Secretary may prescribe in the regulation if the 
     Secretary determines that the regulation would be appropriate 
     for the prevention of, or decrease in, the use of tobacco 
     products by children under the age at which tobacco products 
     may be legally purchased.
       ``(2) Prescriptions.--No condition under paragraph (1) may 
     require that the sale or distribution of a tobacco product be 
     limited to the written or oral authorization of a 
     practitioner licensed by law to prescribe medical products.
       ``(3) Labels.--The label of a tobacco product shall bear 
     such appropriate statements of the restrictions required by a 
     regulation under subsection (a) as the Secretary may by 
     regulation prescribe.
       ``(4) Face-to-face transactions.--No restriction under 
     paragraph (1) may prohibit the sale of any tobacco product in 
     face-to-face transactions by a specific category of retail 
     outlets.
       ``(e) Good Manufacturing Practices.--
       ``(1) Methods, facilities, and controls.--
       ``(A) In general.--The Secretary may, in accordance with 
     subparagraph (B), prescribe regulations requiring that the 
     methods used in, and the facilities and controls used for, 
     the manufacture, pre-production design validation (including 
     a process to assess the performance of a tobacco product), 
     and packing, and storage of a tobacco product conform to 
     current good manufacturing practice for an agricultural 
     product, as prescribed in the regulations, to ensure that the 
     public health is protected and that the tobacco product is in 
     compliance with this chapter.
       ``(B) Administration.--The Secretary shall--
       ``(i) before promulgating any regulation under subparagraph 
     (A), afford an advisory committee an opportunity to submit 
     recommendations with respect to the regulation proposed to be 
     promulgated;
       ``(ii) before promulgating any regulation under 
     subparagraph (A), afford opportunity for an oral hearing;
       ``(iii) provide the advisory committee a reasonable time to 
     make the recommendation of the advisory committee with 
     respect to a proposed regulation under subparagraph (A); and
       ``(iv) in establishing the effective date of a regulation 
     promulgated under this subsection--

       ``(I) take into account the differences in--

       ``(aa) the manner in which the different types of tobacco 
     products have historically been produced;
       ``(bb) the financial resources of the different tobacco 
     product manufacturers; and
       ``(cc) the state of their existing manufacturing 
     facilities; and

       ``(II) provide for a reasonable period of time for the 
     manufacturers to conform to good manufacturing practices.

       ``(2) Exemptions; variances.--
       ``(A) In general.--Any person subject to any requirement 
     prescribed under paragraph (1) may petition the Secretary for 
     a permanent or temporary exemption or variance from the 
     requirement.
       ``(B) Content.--The petition shall be submitted to the 
     Secretary in such form and manner as the Secretary shall 
     prescribe and shall--
       ``(i) in the case of a petition for an exemption from a 
     requirement, set forth the basis for the petitioner's 
     determination that compliance with the requirement is not 
     required to ensure that the tobacco product will be in 
     compliance with this chapter;
       ``(ii) in the case of a petition for a variance from a 
     requirement, set forth the methods proposed to be used in, 
     and the facilities and controls proposed to be used for, the 
     manufacture, packing, and storage of the tobacco product in 
     lieu of the methods, facilities, and controls prescribed by 
     the requirement; and
       ``(iii) contain such other information as the Secretary 
     shall prescribe.
       ``(C) Advisory committee.--
       ``(i) Referral.--The Secretary may refer to an advisory 
     committee any petition submitted under subparagraph (A).
       ``(ii) Recommendations.--The advisory committee shall 
     report the recommendations of the advisory committee to the 
     Secretary with respect to a petition referred to the advisory 
     committee within 60 days after the date of the petition's 
     referral.
       ``(iii) Deadline for approval or denial.--The Secretary 
     shall by order either approve or deny the petition not later 
     than 60 days after the later of--

       ``(I) the date on which the petition was submitted to the 
     Secretary under subparagraph (A); or
       ``(II) the day after the date on which the petition was 
     referred to an advisory committee.

       ``(D) Grounds for approval.--The Secretary may approve--
       ``(i) a petition for an exemption for a tobacco product 
     from a requirement if the Secretary determines that 
     compliance with the requirement is not required to ensure 
     that the tobacco product will be in compliance with this 
     chapter; and
       ``(ii) a petition for a variance for a tobacco product from 
     a requirement if the Secretary determines that the methods to 
     be used in, and the facilities and controls to be used for, 
     the manufacture, packing, and storage of the tobacco product 
     in lieu of the methods, controls, and facilities prescribed 
     by the requirement are sufficient to ensure that the tobacco 
     product will be in compliance with this chapter.
       ``(E) Conditions.--An order of the Secretary approving a 
     petition for a variance shall prescribe such conditions 
     respecting the methods used in, and the facilities and 
     controls used for, the manufacture, packing, and storage of 
     the tobacco product to be granted the variance under the 
     petition as may be necessary to ensure that the tobacco 
     product will be in compliance with this chapter.
       ``(F) Hearing.--After the issuance of an order under 
     subparagraph (C) with respect to a petition, the petitioner 
     shall have an opportunity for an informal hearing on the 
     order.
       ``(f) Exemption for Investigational Use.--The Secretary may 
     exempt tobacco products intended for investigational use from 
     this chapter under such conditions as the Secretary may 
     prescribe by regulation.
       ``(g) Research and Development.--The Secretary may enter 
     into contracts for research, testing, and demonstrations with 
     respect to tobacco products, and may obtain tobacco products 
     for research, testing, and demonstration purposes, without 
     regard to section 3324(a) and (b) of title 31, United States 
     Code, and section 5 of title 41, United States Code.

     ``SEC. 908. PERFORMANCE STANDARDS.

       ``(a) In General.--
       ``(1) Finding.--
       ``(A) Requirement.--The Secretary may adopt a performance 
     standard for a tobacco product if the Secretary finds that 
     the performance standard is appropriate for the protection of 
     the public health.
       ``(B) Basis.--The finding shall be determined with respect 
     to the risks and benefits to the population as a whole, 
     including users and non-users of the tobacco product, and 
     taking into account--
       ``(i) the increased or decreased likelihood that existing 
     users of tobacco products will stop using tobacco products; 
     and
       ``(ii) the increased or decreased likelihood that those 
     individuals who do not use tobacco products will start using 
     tobacco products.
       ``(2) Content of performance standards.--A performance 
     standard established under this section for a tobacco 
     product--
       ``(A) shall include provisions to provide performance that 
     is appropriate for the protection of the public health, 
     including provisions, where appropriate--

[[Page S7117]]

       ``(i) for the reduction of nicotine yields of the tobacco 
     product;
       ``(ii) for the reduction or elimination of other harmful 
     constituents or harmful components of the tobacco product; or
       ``(iii) relating to any other requirement under 
     subparagraph (B);
       ``(B) shall, if necessary for the protection of public 
     health, include--
       ``(i) provisions respecting the construction, components, 
     ingredients, and properties of the tobacco product;
       ``(ii) provisions for the testing (on a sample basis or, if 
     necessary, on an individual basis) of the tobacco product;
       ``(iii) provisions for the measurement of the performance 
     characteristics of the tobacco product; and
       ``(iv) provisions requiring that the results of each or of 
     certain of the tests of the tobacco product required to be 
     made under clause (ii) demonstrate that the tobacco product 
     is in conformity with the portions of the standard for which 
     the test or tests were required; and
       ``(C) shall not render the tobacco product unacceptable for 
     adult consumption.
       ``(3) Periodic reevaluation of performance standards.--
       ``(A) In general.--The Secretary shall provide for periodic 
     evaluation of performance standards established under this 
     section to determine whether the standards should be changed 
     to reflect new medical, scientific, or other technological 
     data.
       ``(B) Tester.--The Secretary may provide for testing under 
     paragraph (2) by any person.
       ``(4) Involvement of other agencies; informed persons.--In 
     carrying out duties under this section, the Secretary shall, 
     to the maximum extent practicable--
       ``(A) use available personnel, facilities, and other 
     technical support of other Federal agencies;
       ``(B) consult with other Federal agencies concerned with 
     standard-setting and other nationally or internationally 
     recognized standard-setting entities; and
       ``(C) invite appropriate participation, through joint or 
     other conferences, workshops, or other means, by informed 
     persons representative of scientific, professional, industry, 
     or consumer organizations who, in the Secretary's judgment, 
     can make a significant contribution.
       ``(b) Establishment, Amendment, or Revocation of 
     Standards.--
       ``(1) Notice.--
       ``(A) In general.--The Secretary shall publish in the 
     Federal Register a notice of proposed rulemaking for the 
     establishment, amendment, or revocation of any performance 
     standard for a tobacco product.
       ``(B) Establishment or amendment.--A notice of proposed 
     rulemaking for the establishment or amendment of a 
     performance standard for a tobacco product shall--
       ``(i) set forth a finding with supporting justification 
     that the performance standard is appropriate for the 
     protection of the public health;
       ``(ii) set forth proposed findings with respect to the risk 
     of illness or injury that the performance standard is 
     intended to reduce or eliminate; and
       ``(iii) invite interested persons to submit an existing 
     performance standard for the tobacco product, including a 
     draft or proposed performance standard, for consideration by 
     the Secretary.
       ``(C) Revocation.--A notice of proposed rulemaking for the 
     revocation of a performance standard shall set forth a 
     finding with supporting justification that the performance 
     standard is no longer necessary for the protection of the 
     public health.
       ``(D) Administration.--The Secretary shall--
       ``(i) consider all information submitted in connection with 
     a proposed standard, including information concerning the 
     countervailing effects of the performance standard on the 
     health of adolescent tobacco users, adult tobacco users, or 
     non-tobacco users, such as the creation of a significant 
     demand for contraband or other tobacco products that do not 
     meet the requirements of this chapter and the significance of 
     the demand; and
       ``(ii) issue the standard, if the Secretary determines that 
     the standard would be appropriate for the protection of the 
     public health.
       ``(E) Comment period.--In issuing a standard under this 
     subsection, the Secretary shall provide for a comment period 
     of not less than 60 days.
       ``(2) Promulgation.--
       ``(A) In general.--After the expiration of the period for 
     comment on a notice of proposed rulemaking published under 
     paragraph (1) with respect to a performance standard and 
     after consideration of the comments and any report from an 
     advisory committee, the Secretary shall--
       ``(i) promulgate a regulation establishing a performance 
     standard and publish in the Federal Register findings on the 
     matters referred to in paragraph (1); or
       ``(ii) publish a notice terminating the proceeding for the 
     development of the standard, together with the reasons for 
     the termination.
       ``(B) Effective date.--
       ``(i) In general.--Subject to clauses (ii) and (iii), a 
     regulation establishing a performance standard shall set 
     forth the 1 or more dates on which the standard takes effect.
       ``(ii) Earliest effective date.--No such regulation may 
     take effect before the date that is 1 year after the date of 
     the publication of the regulation unless the Secretary 
     determines that an earlier effective date is necessary for 
     the protection of the public health.
       ``(iii) Basis.--The 1 or more effective dates shall be 
     established so as to minimize, consistent with the public 
     health, economic loss to, and disruption or dislocation of, 
     domestic and international trade.
       ``(3) Powers reserved to congress.--Congress expressly 
     reserves the power to make a decision establishing a 
     performance standard--
       ``(A) eliminating all cigarettes, all smokeless tobacco 
     products, or any similar class of tobacco products; or
       ``(B) requiring the reduction of nicotine yields of a 
     tobacco product to zero.
       ``(4) Amendment; revocation.--
       ``(A) In general.--On the Secretary's own initiative or on 
     petition of an interested person, the Secretary may, by 
     regulation promulgated in accordance with paragraphs (1) and 
     (2)(B), amend or revoke a performance standard.
       ``(B) Interim effectiveness.--The Secretary may declare a 
     proposed amendment of a performance standard to be effective 
     on and after the publication of the amendment in the Federal 
     Register and until the effective date of any final action 
     taken on the amendment, if the Secretary determines that 
     making it so effective is in the public interest.
       ``(5) Reference to advisory committee.--
       ``(A) In general.--In the case of a proposed regulation for 
     the establishment, amendment, or revocation of a performance 
     standard, the Secretary--
       ``(i) on the Secretary's own initiative, may refer to an 
     advisory committee, for a report and recommendation, any 
     matter involved in the proposed regulation that requires the 
     exercise of scientific judgment; and
       ``(ii) on the request of an interested person that 
     demonstrates good cause for referral and that is made before 
     the expiration of the period for submission of comments on a 
     proposed regulation, shall refer to an advisory committee, 
     for a report and recommendation, any matter described in 
     clause (i).
       ``(B) Information.--If a proposed regulation is referred to 
     the advisory committee under this paragraph, the Secretary 
     shall provide the advisory committee with the data and 
     information on which the proposed regulation is based.
       ``(C) Report and recommendation.--Not later than 60 days 
     after the referral of a proposed regulation, the advisory 
     committee shall--
       ``(i) conduct an independent study of the data and 
     information furnished to the advisory committee by the 
     Secretary and other data and information before the advisory 
     committee; and
       ``(ii) submit to the Secretary a report and recommendation 
     with respect to the proposed regulation, together with all 
     underlying data and information and a statement of the reason 
     or basis for the recommendation.
       ``(D) Copy.--A copy of the report and recommendation shall 
     be made public by the Secretary.

     ``SEC. 909. NOTIFICATION AND OTHER REMEDIES.

       ``(a) Notification.--
       ``(1) Conditions.--The Secretary may issue an order 
     described in paragraph (2) if the Secretary determines that--
       ``(A) a tobacco product that is introduced or delivered for 
     introduction into interstate commerce for commercial 
     distribution presents a risk of substantial harm to the 
     public health that exceeds the risks posed by similar tobacco 
     products marketed before the date of enactment of the Tobacco 
     Livelihood and Economic Assistance for Our Farmers Act of 
     2002; and
       ``(B)(i) notification under this subsection is necessary to 
     eliminate the unreasonable risk of the harm; and
       ``(ii) no more practicable means is available under the 
     provisions of this chapter (other than this section) to 
     eliminate the risk.
       ``(2) Order.--If the Secretary makes a determination 
     described in paragraph (2), the Secretary may issue such 
     order as may be necessary to ensure that adequate 
     notification is provided in an appropriate form, by the 
     persons and means best suited under the circumstances 
     involved, to all persons that should properly receive the 
     notification in order to eliminate the risk.
       ``(3) Means.--The Secretary may order notification by any 
     appropriate means, including public service announcements.
       ``(4) Consultation.--Before issuing an order under this 
     subsection, the Secretary shall consult with the persons that 
     are to give notice under the order.
       ``(b) No Exemption From Other Liability.--Compliance with 
     an order issued under this section shall not relieve any 
     person from liability under Federal or State law.
       ``(c) Recall Authority.--
       ``(1) In general.--If the Secretary finds that there is a 
     reasonable probability that a tobacco product contains a 
     manufacturing or other defect not ordinarily contained in 
     tobacco products on the market that would cause serious, 
     adverse health consequences or death, the Secretary shall 
     issue an order requiring the appropriate person (including 
     the manufacturers, importers, distributors, or retailers of 
     the tobacco product) to immediately cease distribution of the 
     tobacco product.

[[Page S7118]]

       ``(2) Hearing.--The order shall provide the person subject 
     to the order with an opportunity for an informal hearing, to 
     be held not later than 10 days after the date of the issuance 
     of the order, on the actions required by the order and on 
     whether the order should be amended to require a recall of 
     the tobacco product.
       ``(3) Vacation of order.--If, after providing an 
     opportunity for such a hearing, the Secretary determines that 
     inadequate grounds exist to support the actions required by 
     the order, the Secretary shall vacate the order.
       ``(4) Amendment of order to require recall.--
       ``(A) In general.--Except as provided in subparagraph (C), 
     if, after providing an opportunity for an informal hearing 
     under paragraph (1), the Secretary determines that the order 
     should be amended to include a recall of the tobacco product 
     with respect to which the order was issued, the Secretary 
     shall amend the order to require a recall.
       ``(B) Timetable.--The Secretary shall specify a timetable 
     during which the tobacco product recall will occur and shall 
     require periodic reports to the Secretary describing the 
     progress of the recall.
       ``(C) Contents.--An amended order under subparagraph (A)--
       ``(i) shall not include recall of a tobacco product from 
     individuals; and
       ``(ii) shall provide for notice to persons subject to the 
     risks associated with the use of the tobacco product.
       ``(D) Notification by retailers.--In providing the notice 
     required by subparagraph (C)(ii), the Secretary may use the 
     assistance of retailers and other persons that distribute the 
     tobacco product.
       ``(E) Notification by secretary.--If a significant number 
     of persons described in subparagraph (D) cannot be 
     identified, the Secretary shall notify the persons under 
     section 705(b).
       ``(3) Remedy not exclusive.--The remedy provided by this 
     subsection shall be in addition to remedies provided by 
     subsection (a).

     ``SEC. 910. RECORDS AND REPORTS ON TOBACCO PRODUCTS.

       ``(a) In General.--Each person that is a tobacco product 
     manufacturer or importer of a tobacco product shall establish 
     and maintain such records, make such reports, and provide 
     such information as the Secretary may by regulation 
     reasonably require to ensure that the tobacco product is not 
     adulterated or misbranded and to otherwise protect public 
     health.
       ``(b) Administration.--Regulations promulgated under 
     subsection (a)--
       ``(1) may require a tobacco product manufacturer or 
     importer to report to the Secretary in any case in which the 
     manufacturer or importer receives or otherwise becomes aware 
     of information that reasonably suggests that 1 of the 
     marketed tobacco products of the manufacturer or importer may 
     have caused or contributed to a serious, unexpected adverse 
     experience associated with the use of the product or any 
     significant increase in the frequency of a serious, expected 
     adverse product experience;
       ``(2) shall require reporting of other significant adverse 
     tobacco product experiences as determined by the Secretary to 
     be necessary to be reported;
       ``(3) shall not impose requirements that are unduly 
     burdensome to a tobacco product manufacturer or importer, 
     taking into account the cost of complying with the 
     requirements and the need for the protection of the public 
     health and the implementation of this chapter;
       ``(4) when prescribing the procedure for making requests 
     for reports or information, shall require that each request 
     made under the regulations for submission of a report or 
     information to the Secretary state the reason or purpose for 
     the request and identify, to the maximum extent practicable, 
     the report or information;
       ``(5) when requiring submission of a report or information 
     to the Secretary, shall state the reason or purpose for the 
     submission of the report or information and identify to the 
     maximum extent practicable the report or information; and
       ``(6) may not require that the identity of any patient or 
     user be disclosed in records, reports, or information 
     required under this subsection unless disclosure is 
     necessary--
       ``(A) to protect the medical welfare of an individual;
       ``(B) to determine risks to public health of a tobacco 
     product; or
       ``(C) to verify a record, report, or information submitted 
     under this chapter.
       ``(c) Medical Ethics and Patient Interests.--
       ``(1) In general.--In promulgating regulations under this 
     section, the Secretary shall have due regard for the 
     professional ethics of the medical profession and the 
     interests of patients.
       ``(2) Confidentiality.--The prohibitions of subsection 
     (b)(6) shall continue to apply to records, reports, and 
     information concerning any individual that has been a 
     patient, irrespective of whether or when the individual 
     ceases to be a patient.
       ``(d) Reports of Removals and Corrections.--
       ``(1) In general.--Except as provided in paragraph (3), the 
     Secretary shall by regulation require a tobacco product 
     manufacturer or importer of a tobacco product to report 
     promptly to the Secretary any corrective action taken, or 
     removal from the market of a tobacco product undertaken, by 
     the manufacturer or importer if the removal or correction was 
     undertaken--
       ``(A) to reduce a risk to health posed by the tobacco 
     product; or
       ``(B) to remedy a violation of this chapter caused by the 
     tobacco product that may present a risk to health.
       ``(2) Record.--A tobacco product manufacturer or importer 
     of a tobacco product that undertakes a corrective action or 
     removal from the market of a tobacco product that is not 
     required to be reported under this subsection shall keep a 
     record of the correction or removal.
       ``(3) Previous report.--No report of the corrective action 
     or removal of a tobacco product may be required under 
     paragraph (1) if a report of the corrective action or removal 
     is required and has been submitted under subsection (a).

     ``SEC. 911. PREMARKET REVIEW OF CERTAIN TOBACCO PRODUCTS.

       ``(a) Definition of Substantially Equivalent.--
       ``(1) In general.--In this section and section 906(j), the 
     term `substantially equivalent' or `substantial equivalence' 
     mean, with respect to the tobacco product being compared to 
     the predicate tobacco product, that the Secretary by order 
     has determined that--
       ``(A) the tobacco product has the same characteristics as 
     the predicate tobacco product; or
       ``(B) the tobacco product has different characteristics, 
     and the information for the tobacco product submitted 
     contains information, including clinical data if considered 
     necessary by the Secretary, that demonstrates that it is not 
     appropriate to regulate the product under the applicable 
     section because the product could not reasonably be expected 
     to increase the health risks to consumers compared to a 
     conventional tobacco product that is commercially marketed in 
     the United States and that is in compliance with the 
     requirements of this Act.
       ``(2) Definition of characteristics.--In subparagraph (A), 
     the term `characteristics' means the materials, ingredients, 
     design, composition, heating source, or other features of a 
     tobacco product.
       ``(3) Inapplicable tobacco products.--A tobacco product may 
     not be found to be substantially equivalent to a predicate 
     tobacco product that has been removed from the market at the 
     initiative of the Secretary or that has been determined by a 
     judicial order to be misbranded or adulterated.
       ``(b) Requirement for Premarket Approval.--
       ``(1) In general.--Approval under this section of an 
     application for premarket approval for any tobacco product, 
     other than a reduced exposure tobacco product or a reduced 
     risk tobacco product under section 913, that is not 
     commercially marketed in the United States as of the date of 
     enactment of the Tobacco Livelihood and Economic Assistance 
     for Our Farmers Act of 2002 shall be required unless--
       ``(A) the manufacturer has submitted a report under section 
     906(j); and
       ``(B) the Secretary has not suspended the distribution of 
     the product under this paragraph.
       ``(2) Suspension of distribution.--Not later than 90 days 
     after the submission of a report under section 906(j), the 
     Secretary may by order suspend the distribution of the 
     tobacco product that is the subject of the report if the 
     Secretary determines that there is a reasonable likelihood 
     that the tobacco product is not substantially equivalent to a 
     tobacco product that is--
       ``(A) commercially marketed in the United States as of the 
     date of the Tobacco Livelihood and Economic Assistance for 
     Our Farmers Act of 2002; and
       ``(B) in compliance with the requirements of this Act.
       ``(3) Failure to issue order.--If the Secretary fails to 
     issue an order within the 90-day period described in 
     paragraph (2), the tobacco product that is the subject of the 
     report shall be deemed to be substantially equivalent to a 
     predicate tobacco product.
       ``(4) Final agency action.--
       ``(A) In general.--Subject to subparagraph (B), the 
     issuance of an order under this paragraph shall constitute 
     final agency action for purposes of section 702 of title 5, 
     United States Code.
       ``(B) Rescission or modification.--The Secretary may 
     rescind or modify an order issued under this subsection at 
     any time.
       ``(c) Health Information.--
       ``(1) In general.--As part of a submission under section 
     906(j) with respect to a tobacco product, the person required 
     to file a premarket notification under section 906(j) shall 
     provide an adequate summary of any health information 
     relating to the tobacco product or state that the information 
     will be made available on request by any person.
       ``(2) Administration.--Any summary under paragraph (1) 
     respecting a tobacco product shall--
       ``(A) contain detailed information regarding data 
     concerning adverse health effects; and
       ``(B) be made available to the public by the Secretary not 
     later than 30 days after the date of issuance of a 
     determination that the tobacco product is substantially 
     equivalent to another tobacco product.
       ``(3) Requirements.--The communication that the product is 
     a reduced exposure tobacco product or a reduced risk tobacco 
     product shall comply with requirements prescribed by the 
     Secretary relating to the communication.

[[Page S7119]]

       ``(4) Prior approval.--The Secretary may require prior 
     approval of the communication in each case in accordance with 
     section 913.
       ``(d) Application.--
       ``(1) Contents.--An application for premarket approval 
     shall contain--
       ``(A) full reports of all information, published or known 
     to, or that should reasonably be known to, the applicant, 
     concerning investigations that have been made to show the 
     health risks of the tobacco product and whether the tobacco 
     product presents greater risk than other tobacco products;
       ``(B) a full statement of the components, ingredients, and 
     properties, and of the principle or principles of operation, 
     of the tobacco product;
       ``(C) a full description of the methods used in, and the 
     facilities and controls used for, the manufacture, 
     processing, and, when relevant, packing and installation of, 
     the tobacco product;
       ``(D) an identifying reference to any performance standard 
     under section 908 that would be applicable to any aspect of 
     the tobacco product, and either adequate information to show 
     that the aspect of the tobacco product fully meets the 
     performance standard or adequate information to justify any 
     deviation from the standard;
       ``(E) such samples of the tobacco product and of components 
     of the tobacco product as the Secretary may reasonably 
     require;
       ``(F) specimens of the labeling proposed to be used for the 
     tobacco product; and
       ``(G) such other information relevant to the subject matter 
     of the application as the Secretary may require.
       ``(2) Reference to advisory committee.--On receipt of an 
     application meeting the requirements set forth in paragraph 
     (1), the Secretary--
       ``(A) on the Secretary's own initiative, may refer the 
     application to an advisory committee for submission (within 
     such period as the Secretary may establish) of a report and 
     recommendation respecting approval of the application, 
     together with all underlying data and the reasons or basis 
     for the recommendation; or
       ``(B) on the request of an applicant, shall refer the 
     application to an advisory committee in accordance with 
     subparagraph (A).
       ``(e) Action on Application.--
       ``(1) Deadline.--
       ``(A) In general.--As promptly as practicable, but not 
     later than 180 days, after the date of receipt of an 
     application under subsection (d), the Secretary, after 
     considering the report and recommendation submitted under 
     subsection (d)(2), shall--
       ``(i) issue an order approving the application, if the 
     Secretary finds that none of the grounds for denying approval 
     specified in paragraph (2) applies; or
       ``(ii) deny approval of the application, if the Secretary 
     finds (and sets forth the basis for the finding as part of or 
     accompanying the denial) that 1 or more grounds for denial 
     specified in paragraph (2) apply.
       ``(B) Sales restrictions.--An order approving an 
     application for a tobacco product may require as a condition 
     to the approval that the sale and distribution of the tobacco 
     product be restricted, but only to the extent that the sale 
     and distribution of a tobacco product may be restricted under 
     a regulation promulgated under section 907(d).
       ``(2) Denial of approval.--The Secretary shall deny 
     approval of an application for a tobacco product if, on the 
     basis of the information submitted to the Secretary as part 
     of the application and any other information before the 
     Secretary with respect to the tobacco product, the Secretary 
     finds that--
       ``(A) there is a lack of a showing that permitting the 
     tobacco product to be marketed would pose no greater risk to 
     the public health than currently marketed tobacco products;
       ``(B) the methods used in, or the facilities or controls 
     used for, the manufacture, processing, or packing of the 
     tobacco product do not conform to the requirements of section 
     907(e);
       ``(C) based on a fair evaluation of all material facts, the 
     proposed labeling is false or misleading; or
       ``(D)(i) the tobacco product is not shown to conform in all 
     respects to a performance standard in effect under section 
     908, compliance with which is a condition to approval of the 
     application; and
       ``(ii) there is a lack of adequate information to justify 
     the deviation from the standard.
       ``(3) Denial information.--Any denial of an application 
     shall, to the extent that the Secretary determines to be 
     practicable, be accompanied by a statement informing the 
     applicant of the measures required to make the application 
     approvable (which measures may include further research by 
     the applicant in accordance with 1 or more protocols 
     prescribed by the Secretary).
       ``(4) Basis for action.--
       ``(A) In general.--For purposes of paragraph (2)(A), 
     whether permitting a tobacco product to be marketed would be 
     appropriate for the protection of the public health shall, 
     when appropriate, be determined on the basis of well-
     controlled investigations, which may include 1 or more 
     clinical investigations by experts qualified by training and 
     experience to evaluate the tobacco product.
       ``(B) Evidence.--If the Secretary determines that there 
     exists valid scientific evidence (other than evidence derived 
     from investigations described in subparagraph (A)) that is 
     sufficient to evaluate the tobacco product, the Secretary may 
     authorize that the determination under paragraph (2)(A) be 
     made on the basis of the evidence.
       ``(f) Withdrawal and Temporary Suspension.--
       ``(1) In general.--The Secretary shall, on obtaining, where 
     appropriate, advice on scientific matters from an advisory 
     committee, and after due notice and opportunity for informal 
     hearing to the holder of an approved application for a 
     tobacco product, issue an order withdrawing approval of the 
     application if the Secretary finds that--
       ``(A) the continued marketing of the tobacco product poses 
     greater risks to the public health than other available 
     products;
       ``(B) the application contained or was accompanied by a 
     false or misleading statement of a material fact;
       ``(C) the applicant--
       ``(i) has failed to establish a system for maintaining 
     records, or has repeatedly or deliberately failed to maintain 
     records or to make reports, required by an applicable 
     regulation under section 910;
       ``(ii) has refused to permit access to, or copying or 
     verification of, the records as required by section 704; or
       ``(iii) has not complied with the requirements of section 
     906;
       ``(D) on the basis of new information before the Secretary 
     with respect to the tobacco product, evaluated, together with 
     the evidence before the Secretary when the application was 
     approved, whether the methods used in, or the facilities and 
     controls used for, the manufacture, processing, packing, or 
     installation of the tobacco product do not conform with the 
     requirements of section 907(e) and were not brought into 
     conformity with the requirements within a reasonable time 
     after receipt of written notice from the Secretary of 
     nonconformity;
       ``(E) on the basis of new information before the Secretary, 
     evaluated, together with the evidence before the Secretary 
     when the application was approved, whether the labeling of 
     the tobacco product, based on a fair evaluation of all 
     material facts, is false or misleading and was not corrected 
     within a reasonable time after receipt of written notice from 
     the Secretary of the fact; or
       ``(F) on the basis of new information before the Secretary, 
     evaluated, together with the evidence before the Secretary 
     when the application was approved, whether the tobacco 
     product is shown to conform in all respects to a performance 
     standard that is in effect under section 908, compliance with 
     which was a condition to approval of the application, and 
     whether there is a lack of adequate information to justify 
     the deviation from the standard.
       ``(2) Appeal.--The holder of an application subject to an 
     order issued under paragraph (1) withdrawing approval of the 
     application may, by petition filed on or before the 30th day 
     after the date on which the holder receives notice of the 
     withdrawal, obtain review of the order in accordance with 
     subsection (e).
       ``(3) Temporary suspension.--
       ``(A) In general.--If, after providing an opportunity for 
     an informal hearing, the Secretary determines there is 
     reasonable probability that the continuation of distribution 
     of a tobacco product under an approved application would 
     cause serious, adverse health consequences or death, that is 
     greater than ordinarily caused by tobacco products on the 
     market, the Secretary shall by order temporarily suspend the 
     approval of the application approved under this section.
       ``(B) Withdrawal of application.--If the Secretary issues 
     such an order, the Secretary shall proceed expeditiously 
     under paragraph (1) to withdraw the application.
       ``(g) Service of Order.--An order issued by the Secretary 
     under this section shall be served--
       ``(1) in person by any officer or employee of the 
     department designated by the Secretary; or
       ``(2) by mailing the order by registered mail or certified 
     mail addressed to the applicant at the applicant's last known 
     address in the records of the Secretary.

     ``SEC. 912. JUDICIAL REVIEW.

       ``(a) Definition of Record.--In this section, the term 
     `record' means--
       ``(1) all notices and other matter published in the Federal 
     Register with respect to a regulation or order reviewed;
       ``(2) all information submitted to the Secretary with 
     respect to--
       ``(A) a regulation or order;
       ``(B) proceedings of any panel or advisory committee with 
     respect to the regulation or order; and
       ``(C) any hearing held with respect to the regulation or 
     order; and
       ``(3) any other information identified by the Secretary, in 
     the administrative proceeding held with respect to the 
     regulation or order, as being relevant to the regulation or 
     order.
       ``(b) Petition.--
       ``(1) In general.--Not later than 30 days after the date of 
     promulgation of a regulation under section 908 establishing, 
     amending, or revoking a performance standard for a tobacco 
     product, or a denial of an application for approval under 
     section 911(c), any person adversely affected by the 
     regulation or order may file a petition with the United 
     States Court of Appeals for the District of Columbia, or for 
     the circuit in which the person resides or has the person's 
     principal place of business, for judicial review of the 
     regulation or order.
       ``(2) Copy of petition.--A copy of the petition shall be 
     transmitted by the clerk of the court to the Secretary or 
     other officer designated by the Secretary for that purpose.

[[Page S7120]]

       ``(3) Record of proceedings.--
       ``(A) Filing.--The Secretary shall file in the court the 
     record of the proceedings on which the Secretary based the 
     Secretary's regulation or order.
       ``(B) Rationale.--Each record or order shall contain a 
     statement of the reasons for the issuance of the order and 
     the basis, on the record, for the issuance of the order.
       ``(c) Additional Findings by Secretary.--
       ``(1) In general.--The court may order the Secretary to 
     provide additional opportunity for the oral presentation of 
     data, views, or arguments and for written submissions if the 
     petitioner--
       ``(A) applies to the court for leave to adduce additional 
     data, views, or arguments respecting the regulation or order 
     being reviewed; and
       ``(B) demonstrates to the satisfaction of the court that--
       ``(i) the additional data, views, or arguments are 
     material; and
       ``(ii) there were reasonable grounds for the petitioner's 
     failure to adduce the data, views, or arguments in the 
     proceedings before the Secretary.
       ``(2) Modification.--The Secretary--
       ``(A) may modify the Secretary's findings, or make new 
     findings by reason of the additional data, views, or 
     arguments so taken; and
       ``(B) shall file with the court--
       ``(i) the modified or new findings;
       ``(ii) the Secretary's recommendation, if any, for the 
     modification or setting aside of the regulation or order 
     being reviewed; and
       ``(iii) the return of the additional data, views, or 
     arguments.
       ``(d) Standard of Review.--
       ``(1) In general.--On the filing of the petition under 
     subsection (a) for judicial review of a regulation or order, 
     the court shall have jurisdiction--
       ``(A) to review the regulation or order in accordance with 
     chapter 7 of title 5, United States Code; and
       ``(B) to grant appropriate relief, including interim 
     relief, as provided in that chapter.
       ``(2) Standard.--A regulation or order described in 
     paragraph (1) or (2) of subsection (a) shall not be affirmed 
     if the regulation or order is found to be unsupported by 
     substantial evidence on the record taken as a whole.
       ``(e) Finality of Judgment.--The judgment of the court 
     affirming or setting aside, in whole or in part, any 
     regulation or order shall be final, subject to review by the 
     Supreme Court of the United States on certiorari or 
     certification, as provided in section 1254 of title 28, 
     United States Code.
       ``(f) Other Remedies.--The remedies provided for in this 
     section shall be in addition to and not in lieu of any other 
     remedy provided by law.
       ``(g) Regulations and Orders Must Recite Basis in Record.--
     To facilitate judicial review under this section or under any 
     other provision of law or a regulation or order issued under 
     section 907, 908, 909, 910, 911, or 914, each such regulation 
     or order shall contain a statement of--
       ``(1) the reasons for the issuance of the regulation or 
     order; and
       ``(2) the basis, in the record of the proceedings held in 
     connection with the issuance of the regulation or order, for 
     the issuance of the regulation or order.

     ``SEC. 913. REDUCED EXPOSURE AND REDUCED RISK TOBACCO 
                   PRODUCTS.

       ``(a) Definitions of Reduced Exposure and Reduced Risk 
     Tobacco Products.--In this section, the terms `reduced 
     exposure tobacco product' and `reduced risk tobacco product' 
     mean a tobacco product designated by the Secretary as a 
     reduced exposure tobacco product or a reduced risk tobacco 
     product, respectively, under subsection (b).
       ``(b) Designation.--
       ``(1) In general.--A product may be designated by the 
     Secretary as a reduced exposure tobacco product or a reduced 
     risk tobacco product if the Secretary finds that the product 
     is demonstrated to significantly reduce harm to individuals 
     caused by a tobacco product in accordance with the standards 
     provided under subparagraph (B), based on an application 
     submitted by the manufacturer of the product (or other 
     responsible person) that--
       ``(A)(i) demonstrates, through appropriate chemical and 
     biological testing (including testing on animals and short-
     term human testing), that use of the product results in 
     ingestion or inhalation of a substantially lower yield of 
     toxic substances than use of another tobacco product in the 
     same or different category as the subject tobacco product; or
       ``(ii) contains scientific evidence showing that use of the 
     product results in a substantially lower potential risk to 
     health in 1 or more specific respects than use of another 
     tobacco product in the same or different category as the 
     proposed reduced exposure tobacco product or the reduced risk 
     product; and
       ``(B) if required by the Secretary, includes studies of the 
     long-term health effects of the product.
       ``(2) Consultation on protocols.--If studies are required 
     under paragraph (1), the manufacturer may consult with the 
     Secretary regarding protocols for conducting the studies.
       ``(3) Basis for finding.--
       ``(A) Reduced exposure tobacco products.--The Secretary 
     shall designate a tobacco product as a reduced exposure 
     tobacco product if the Secretary determines, based on such 
     information as may be submitted by the applicant and other 
     available information, that--
       ``(i) the product substantially reduces exposure to 1 or 
     more tobacco toxicants; and
       ``(ii) independent scientific experts have found or 
     predict, through clinical or epidemiological studies, a 
     measurable reduction in the morbidity or mortality associated 
     with the use of the product compared with the use of other 
     tobacco products (whether in the same or a different 
     category) commercially marketed in the United States.
       ``(B) Reduced risk tobacco products.--The Secretary shall 
     designate a tobacco product as a reduced risk tobacco product 
     only if the Secretary determines, based on such information 
     as may be submitted by the applicant and other available 
     information, that--
       ``(i) the product meets the criteria established under 
     subparagraph (A); and
       ``(ii) there is sufficient evidence that the product can 
     reasonably be expected to reduce the risk of 1 or more 
     specific diseases or other adverse health effects, as 
     compared with the use of other tobacco products (whether in 
     the same or a different category) commercially marketed in 
     the United States.
       ``(4) Marketing requirements.--A tobacco product may be 
     marketed and labeled as a reduced exposure tobacco product or 
     a reduced risk tobacco product if the tobacco product--
       ``(A) has been designated by the Secretary under paragraph 
     (1);
       ``(B) bears a label statement prescribed by the Secretary 
     concerning the product's contribution to reducing harm to 
     health; and
       ``(C) complies with--
       ``(i) requirements prescribed by the Secretary relating to 
     marketing and advertising of the product to ensure that 
     neither the marketing nor the labeling is false or 
     misleading; and
       ``(ii) other provisions of this chapter, as prescribed by 
     the Secretary.
       ``(c) Revocation of Designation.--At any time after the 
     date on which a tobacco product is designated as a reduced 
     exposure tobacco product or a reduced risk tobacco product 
     under this section, the Secretary may, after providing an 
     opportunity for an informal hearing, revoke the designation 
     if the Secretary determines, based on information not 
     available at the time of the designation, that--
       ``(1) the finding made under subsection (b)(1) is no longer 
     valid; or
       ``(2) the product is being marketed in violation of 
     subsection (b)(3).
       ``(d) Limitation.--A tobacco product that is designated as 
     a reduced exposure tobacco product or a reduced risk tobacco 
     product that is in compliance with subsection (b) shall not 
     be regulated as a drug or device.
       ``(e) Development of Reduced Exposure and Risk Tobacco 
     Product Technology.--A tobacco product manufacturer shall 
     provide written notice to the Secretary on the development or 
     acquisition by the manufacturer of any technology that would 
     reduce exposure to 1 or more tobacco toxicants, or the risk 
     of a tobacco product to the health of the user, for which the 
     manufacturer is not seeking designation as a reduced exposure 
     tobacco product or a reduced risk tobacco product under this 
     section.
       ``(f) Postmarket Surveillance.--
       ``(1) Discretionary surveillance.--The Secretary may 
     require a tobacco product manufacturer to conduct postmarket 
     surveillance for a reduced exposure tobacco product or a 
     reduced risk tobacco product of the manufacturer if the 
     Secretary determines that postmarket surveillance of the 
     tobacco product is necessary to protect the public health or 
     is necessary to provide information regarding the health 
     risks and other safety issues involving the tobacco product.
       ``(2) Surveillance approval.--
       ``(A) In general.--Each tobacco product manufacturer 
     required to conduct a surveillance of a reduced exposure 
     tobacco product or a reduced risk tobacco product under 
     paragraph (1) shall, not later than 30 days after receiving 
     notice that the manufacturer is required to conduct the 
     surveillance, submit, for the approval of the Secretary, a 
     protocol for the required surveillance.
       ``(B) Basis.--The Secretary, not later than 60 days after 
     the receipt of the protocol, shall determine if--
       ``(i) the principal investigator proposed to be used in the 
     surveillance has sufficient qualifications and experience to 
     conduct the surveillance; and
       ``(ii) the protocol will result in collection of useful 
     data or other information necessary to protect the public 
     health.
       ``(C) Review.--The Secretary may not approve such a 
     protocol until the protocol has been reviewed by an 
     appropriately qualified scientific and technical review 
     committee established by the Secretary.

     ``SEC. 914. PRESERVATION OF STATE AND LOCAL AUTHORITY.

       ``(a) Additional Requirements.--
       ``(1) In general.--Except as provided in paragraph (2), 
     nothing in this Act prohibits a State or political 
     subdivision of a State from adopting or enforcing a 
     requirement applicable to a tobacco product that is in 
     addition to, or more stringent than, requirements established 
     under this chapter.
       ``(2) Preemption of certain state and local requirements.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     no State or political subdivision of a State may establish or 
     continue in effect with respect to a tobacco product any 
     requirement that is different from, or in

[[Page S7121]]

     addition to, any requirement applicable under the provisions 
     of this chapter relating to performance standards, premarket 
     approval, adulteration, misbranding, registration, labeling, 
     good manufacturing standards, or reduced exposure tobacco 
     products or reduced risk tobacco products.
       ``(B) Sale, distribution, or use.--Subparagraph (A) does 
     not apply to requirements relating to the sale, use, or 
     distribution of a tobacco product, including requirements 
     relating to the access to, and the advertising and promotion 
     of, a tobacco product.
       ``(b) Product Liability.--No provision of this chapter 
     relating to a tobacco product modifies or otherwise affects 
     any action or the liability of any person under the product 
     liability law of any State.

     ``SEC. 915. EQUAL TREATMENT OF RETAIL OUTLETS.

       ``The Secretary shall promulgate regulations that require 
     that retail establishments for which the predominant business 
     is the sale of tobacco products to comply with any 
     advertising restrictions applicable to retail establishments 
     accessible to individuals under the age of 18.

     ``SEC. 916. ACCESS AND MARKETING RESTRICTIONS.

       ``(a) Definitions.--In this section:
       ``(1) Adult.--The term `adult' means any person who is 
     older than the minimum age at which it is legal to purchase 
     or possess (whichever minimum age is older) tobacco products.
       ``(2) Adult-only facility.--
       ``(A) In general.--The term `adult-only facility' means a 
     facility or restricted area (whether open-air or enclosed) 
     where the operator ensures or has a reasonable basis to 
     believe (such as by checking identification as required under 
     State law, or by checking the identification of any person 
     appearing to be under the age of 27) that only adults are 
     present.
       ``(B) Temporary adult-only facility.--A facility or 
     restricted area need not be permanently restricted to adults 
     in order to constitute an adult-only facility, if the 
     operator ensures or has a reasonable basis to believe that 
     only adults are present during the event or time period in 
     question.
       ``(3) Brand name.--
       ``(A) In general.--The term `brand name' means a brand name 
     (alone or in conjunction with any other word), trademark, 
     logo, symbol, motto, selling message, recognizable pattern of 
     colors, or any other indicia of product identification 
     identical or similar to, or identifiable with, those used for 
     any domestic brand of tobacco products.
       ``(B) Exclusion.--The term `brand name' shall not include 
     the corporate name of any tobacco product manufacturer that 
     does not, after the date of enactment of the Tobacco 
     Livelihood and Economic Assistance for Our Farmers Act of 
     2002, sell a brand of tobacco products in the United States 
     that includes the corporate name.
       ``(b) Cigarette and Smokeless Tobacco Product 
     Requirements.--
       ``(1) Minimum sales age.--No retailer may sell a tobacco 
     product to any person younger than 18 years of age.
       ``(2) Proof of age.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     each retailer shall verify by means of photographic 
     identification containing the bearer's date of birth that no 
     person purchasing the product is younger than 18 years of 
     age.
       ``(B) Maximum age.--No such verification is required for 
     any person over the age of 26.
       ``(3) Enforcement by states.--
       ``(A) In general.--The Secretary may enter into an 
     agreement with a State if--
       ``(i) the State has in effect a State law that is at least 
     as restrictive as this subsection under which the State 
     agrees to enforce the State law in a manner reasonably 
     designed to prevent the violation of the State law; and
       ``(ii) the Secretary provides a grant to the State for the 
     purpose of enforcing the State law.
       ``(B) Authority of secretary.--No action taken by the 
     Secretary under subparagraph (A) limits the authority of the 
     Secretary under this subsection.
       ``(4) Mail order sales.--Not later than 2 years after the 
     date of enactment of the Tobacco Livelihood and Economic 
     Assistance for Our Farmers Act of 2002, the Secretary shall 
     submit to Congress a report describing the extent, if any, to 
     which individuals younger than 18 years of age are obtaining 
     tobacco products through the mail.
       ``(c) Minimum Package Size Requirements.--
       ``(1) Minimum number of cigarettes.--No manufacturer, 
     distributor, or retailer may sell or cause to be sold, or 
     distribute or cause to be distributed, any cigarette package 
     that contains fewer than 20 cigarettes.
       ``(2) Opening tobacco product packages.--No retailer may 
     break or otherwise open any tobacco product package to sell 
     or distribute individual cigarettes or a number of unpackaged 
     cigarettes that is smaller than--
       ``(A) the quantity in the minimum cigarette package size 
     provided under paragraph (1); or
       ``(B) any quantity of another tobacco product that is 
     smaller than the smallest package distributed by the 
     manufacturer for individual consumer use.
       ``(d) Prohibition on Youth Access to Free Samples.--
       ``(1) Definition of free sample.--In this subsection, the 
     term `free sample' does not include a tobacco product that is 
     provided to an adult in connection with--
       ``(A) the purchase, exchange or redemption for proof of 
     purchase of any tobacco product (including a free offer in 
     connection with the purchase of a tobacco product, such as a 
     2-for-1 offer); or
       ``(B) the conducting of consumer testing or evaluation of a 
     tobacco product with persons who certify that they are 
     adults.
       ``(2) Prohibition.--No manufacturer, distributor, or 
     retailer may distribute or cause to be distributed any free 
     sample of a tobacco product, except in an adult-only 
     facility.
       ``(e) Vending Machines, Self-Service Displays, Mail-Order 
     Sales, and Other Impersonal Modes of Sale.--
       ``(1) Definition of self-service display.--In this 
     subsection, the term `self-service display' means any display 
     located in an area in which the customer has access to the 
     tobacco products without the aid of a sales clerk.
       ``(2) Requirement.--Except as provided in paragraph (3), a 
     retailer may sell a tobacco product--
       ``(A) only in a direct, face-to-face exchange between the 
     retailer and the consumer; and
       ``(B) not through a method of sale such as a vending 
     machine or self-service display.
       ``(3) Permitted methods.--The following methods of sale of 
     tobacco products shall be permitted under this subsection:
       ``(A) Mail-order sales, excluding mail-order redemption of 
     coupons and distribution of free samples through the mail.
       ``(B) Vending machines that are located in an adult-only 
     facility.
       ``(f) Prohibition on Youth Targeting.--
       ``(1) Definition of youth.--In this subsection, the term 
     `youth' means any person or persons under 18 years of age.
       ``(2) Prohibition.--No manufacturer, distributor, or 
     retailer may take--
       ``(A) any action, directly or indirectly, to target youth 
     in the advertising, promotion, or marketing of tobacco 
     products; or
       ``(B) any action the primary purpose of which is to 
     initiate, maintain, or increase the incidence of youth 
     smoking.
       ``(g) Prohibition on Use of Cartoons.--
       ``(1) Definition of cartoon.--In this subsection:
       ``(A) In general.--The term `cartoon' means any drawing or 
     other depiction of an object, person, animal, or creature, or 
     any similar caricature, that satisfies any of the following 
     criteria:
       ``(i) The use of comically exaggerated features.
       ``(ii) The attribution of human characteristics to animals, 
     plants, or other objects, or the similar use of 
     anthropomorphic technique.
       ``(iii) The attribution of unnatural or extrahuman 
     abilities, such as imperviousness to pain or injury, X-ray 
     vision, tunneling at very high speeds, or transformation.
       ``(B) Inclusion.--The term `cartoon' includes a drawing or 
     other depiction of the character popularly known as `Joe 
     Camel'.
       ``(C) Exclusions.--The term `cartoon' does not include any 
     drawing or other depiction that, on July 1, 1998, was in use 
     in the United States in any manufacturer's corporate logo or 
     in any manufacturer's tobacco product packaging.
       ``(2) Prohibition.--No manufacturer, distributor, or 
     retailer may use or cause to be used any cartoon in the 
     advertising, promoting, packaging, or labeling of tobacco 
     products.
       ``(h) Prohibition on Outdoor Advertising.--
       ``(1) Definitions.--In this subsection:
       ``(A) Outdoor advertising.--
       ``(i) In general.--The term `outdoor advertising' means 
     advertising through--

       ``(I) billboards;
       ``(II) signs and placards in arenas, stadiums, shopping 
     malls, and video game arcades (regardless of whether located 
     in the open air or enclosed); and
       ``(III) any other advertisements placed--

       ``(aa) outdoors; or
       ``(bb) on the inside surface of a window facing outward.
       ``(ii) Exclusions.--The term `outdoor advertising' does not 
     include--

       ``(I) an advertisement on the outside of a tobacco product 
     manufacturing facility;
       ``(II) an individual advertisement that--

       ``(aa) does not occupy an area larger than 14 square feet;
       ``(bb) is not placed in such proximity to any other such 
     advertisement so as to create a single mosaic-type 
     advertisement larger than 14 square feet;
       ``(cc) does not function solely as a segment of a larger 
     advertising unit or series; and
       ``(dd) is placed on the outside of any retail establishment 
     that sells tobacco products (other than solely through a 
     vending machine), on the outside (but on the property of) any 
     such establishment, or on the inside surface of a window 
     facing outward in any such establishment; or

       ``(III) an advertisement inside a retail establishment that 
     sells tobacco products (other than solely through a vending 
     machine) that is not placed on the inside surface of a window 
     facing outward.

       ``(B) Video game arcade.--The term `video game arcade' 
     means an entertainment establishment primarily consisting of 
     video games (other than video games intended primarily for 
     use by persons 18 years of age or older) or pinball machines.
       ``(2) Prohibition.--No manufacturer, distributor, or 
     retailer may place or cause to be

[[Page S7122]]

     placed any outdoor advertisement for tobacco products.
       ``(i) Prohibition on Transit Advertisements.--
       ``(1) Definition of transit advertisement.--In this 
     subsection:
       ``(A) In general.--The term `transit advertisement' means--
       ``(i) advertising on or within a private or public vehicle; 
     and
       ``(ii) an advertisement placed at, on, or within any bus 
     stop, taxi stand, transportation waiting area, train station, 
     airport, or any similar location.
       ``(B) Exclusion.--The term `transit advertisement' does not 
     include any advertisement placed in, on, or outside the 
     premises of any retail establishment that sells tobacco 
     products (other than solely through a vending machine), 
     unless the individual advertisement--
       ``(i) occupies an area larger than 14 square feet;
       ``(ii) is placed in such proximity to any other such 
     advertisement so as to create a single mosaic-type 
     advertisement larger than 14 square feet; or
       ``(iii) functions solely as a segment of a larger 
     advertising unit or series.
       ``(2) Prohibition.--No manufacturer, distributor, or 
     retailer may place or cause to be placed any transit 
     advertisement advertising tobacco products.
       ``(j) Prohibition on Advertising in Youth-Oriented 
     Publications.--
       ``(1) Definition of youth-oriented publication.--In this 
     subsection, the term `youth-oriented publication' means a 
     newspaper, magazine, periodical, or other publication--
       ``(A) at least 15 percent of the total readership of which 
     is comprised of readers younger than 18 years of age, as 
     measured by competent and reliable survey evidence; or
       ``(B) that is read by 2,000,000 or more persons younger 
     than 18 years of age, as measured by competent and reliable 
     survey evidence.
       ``(2) Prohibition.--No manufacturer, distributor, or 
     retailer shall advertise a tobacco product in any youth-
     oriented publication, regardless of whether the publication 
     has periodic or limited distribution.
       ``(k) Prohibition on Tobacco Product Brand Name 
     Sponsorships.--
       ``(1) In general.--No manufacturer, distributor, or 
     retailer may sponsor or cause to be sponsored any athletic, 
     musical, artistic, or other social or cultural event, or any 
     entry or team in any event, using the brand name (alone or in 
     conjunction with any other word), logo, symbol, motto, 
     selling message, recognizable color or pattern of colors, or 
     any other indicia of product identification identical or 
     similar to, or identifiable with, that used for any brand of 
     cigarettes or smokeless tobacco.
       ``(2) Exceptions.--Nothing in this subsection prevents a 
     manufacturer, distributor, or retailer from sponsoring or 
     causing to be sponsored any athletic, musical, artistic, or 
     other social or cultural event, or team or entry, in the name 
     of the corporation that manufactures the tobacco product, 
     if--
       ``(A) both the corporate name and the corporation were 
     registered and in use in the United States before January 1, 
     2001; and
       ``(B) the corporate name does not include any brand name 
     (alone or in conjunction with any other word), logo, symbol, 
     motto, selling message, recognizable color or pattern of 
     colors, or any other indicia of product identification 
     identical or similar to, or identifiable with, that used for 
     any brand of cigarettes or smokeless tobacco.
       ``(3) Adult-only facilities.--This subsection shall not 
     apply to any event sponsored in an adult-only facility.
       ``(l) Prohibition on Tobacco Brand Name Merchandise.--
       ``(1) In general.--No manufacturer may market, distribute, 
     offer, sell, license or cause to be marketed, distributed, 
     offered, sold, or licensed (including by catalog or direct 
     mail), any apparel or other merchandise that bears the brand 
     name of a tobacco product, other than items the sole function 
     of which is to advertise tobacco products or written or 
     electronic publications.
       ``(2) Exceptions.--Nothing in this subsection shall--
       ``(A) prohibit the distribution to any manufacturer's 
     employee who is an adult of any item described in paragraph 
     (1) that is intended for the personal use of the employee;
       ``(B) require any manufacturer to retrieve, collect, or 
     otherwise recover any item that, before the date of enactment 
     of the Tobacco Livelihood and Economic Assistance for Our 
     Farmers Act of 2002, was marketed, distributed, offered, 
     sold, licensed, or caused to be marketed, distributed, 
     offered, sold, or licensed by the manufacturer;
       ``(C) apply to coupons or other items used by adults solely 
     in connection with the purchase of tobacco products; or
       ``(D) apply to apparel or other merchandise used within an 
     adult-only facility that is not distributed (by sale or 
     otherwise) to any member of the general public.
       ``(m) Prohibition on Gifts to Underage Persons Based on 
     Proofs of Purchase.--
       ``(1) In general.--No manufacturer, distributor, or 
     retailer may provide or cause to be provided to any person, 
     without sufficient proof that the person is an adult, any 
     item in exchange for the purchase of tobacco products, or the 
     furnishing of credits, proofs-of-purchase, or coupons with 
     respect to such a purchase.
       ``(2) Proof of age.--
       ``(A) In general.--For purposes of paragraph (1), a 
     driver's license or other government-issued identification 
     (or legible photocopy of the license or identification), the 
     validity of which is certified by the person to whom the item 
     is provided, shall by itself be deemed to be a sufficient 
     form of proof of age.
       ``(B) Retailers.--In the case of items provided (or to be 
     redeemed) at retail establishments, a manufacturer shall be 
     entitled to rely on verification of proof of age by the 
     retailer, if the retailer is required to obtain verification 
     under applicable Federal, State, or local law.
       ``(n) Prohibition on Non-Tobacco Product Brand Names.--
       ``(1) Definition of other valuable consideration.--In this 
     subsection, the term `other valuable consideration' does not 
     include an agreement between 2 entities that enter into an 
     agreement for the sole purpose of avoiding infringement 
     claims.
       ``(2) Prohibition.--Except as provided in paragraph (3), no 
     manufacturer may, pursuant to any agreement requiring the 
     payment of money or other valuable consideration, use or 
     cause to be used as a brand name of any tobacco product--
       ``(A) any nationally recognized or nationally established 
     brand name or trade name of any non-tobacco item or service; 
     or
       ``(B) any nationally recognized or nationally established 
     sports team, entertainment group, or individual celebrity.
       ``(3) Nonapplicability.--Paragraph (2) shall not apply to 
     any tobacco product brand name in existence as of July 1, 
     1998.
       ``(o) Limitation on Third Party Use of Tobacco Brand 
     Names.--
       ``(1) In general.--No manufacturer may license or otherwise 
     expressly authorize any third party to use or advertise any 
     brand name of a tobacco product in a manner prohibited by 
     this chapter if used or advertised by the manufacturer 
     itself.
       ``(2) Exceptions.--Nothing in this subsection requires any 
     manufacturer to retrieve, collect, or otherwise recover any 
     item that, before the date of enactment of the Tobacco 
     Livelihood and Economic Assistance for Our Farmers Act of 
     2002, was marketed, distributed, offered, sold, licensed, or 
     caused to be marketed, distributed, offered, sold, or 
     licensed by the manufacturer.
       ``(p) Prohibition on Product Placement in Certain Media.--
       ``(1) In general.--Except as provided in paragraph (2), no 
     manufacturer may make, or cause to be made, any payment or 
     other consideration to any other person or entity to use, 
     display, make reference to, or use as a prop any tobacco 
     product, tobacco product package, advertisement for a tobacco 
     product, or any other item bearing a brand name in any motion 
     picture, television show, theatrical production or other live 
     performance, live or recorded performance of music, 
     commercial film or video, or video game (collectively 
     referred to in this subsection as `media').
       ``(2) Exceptions.--Paragraph (1) shall not apply to--
       ``(A) media the audience or viewers of which are within an 
     adult-only facility, if the media are not visible to persons 
     outside the adult-only facility;
       ``(B) media not intended for distribution or display to the 
     public; or
       ``(C) instructional media concerning non-conventional 
     tobacco products or tobacco products designated as reduced 
     exposure tobacco products or reduced risk tobacco products 
     viewed only by or provided only to consumers who are adults.
       ``(q) Effective Dates.--
       ``(1) In general.--Except as provided in paragraph (2), 
     this section shall apply beginning on the date that is 180 
     days after the date of enactment of the Tobacco Livelihood 
     and Economic Assistance for Our Farmers Act of 2002.
       ``(2) Vending machines; sponsorships.--Subsections (e) and 
     (k) shall apply beginning on the date that is 1 year after 
     the date of enactment of that Act.

     ``SEC. 917. MANDATORY DISCLOSURES.

       ``(a) Disclosure of Ingredients to the Public.--
       ``(1) In general.--Not later than 1 year after the date of 
     enactment of the Tobacco Livelihood and Economic Assistance 
     for Our Farmers Act of 2002, except as otherwise provided in 
     this subsection, the Secretary shall promulgate regulations 
     requiring the disclosure to the public on a brand-by-brand 
     basis of the common or usual name of each ingredient of a 
     tobacco product in descending order of predominance by 
     weight.
       ``(2) Spices, flavorings, and colorings.--A manufacturer 
     may elect to designate spices, flavorings, and colorings 
     under paragraph (1) without naming each spice, flavoring, or 
     coloring.
       ``(3) Other laws.--Any ingredient that has been disclosed 
     to the public pursuant to any other law (including 
     regulations) with respect to a particular brand may be 
     required to be disclosed for the brand pursuant to this 
     subsection.
       ``(4) Incidental additives.--The regulations required by 
     this subsection shall provide that incidental additives that 
     are present in a tobacco product at insignificant levels and 
     that do not have any technical or functional effect in the 
     finished tobacco product shall be exempt from disclosure.
       ``(5) Small quantities.--The requirement of this subsection 
     to disclose ingredients in descending order of predominance 
     shall not

[[Page S7123]]

     apply to ingredients in quantities of 2 percent or less by 
     weight if a listing of the ingredients is placed at the end 
     of the ingredients statement following an appropriate 
     quantifying statement, such as `contains ____ percent or less 
     of ____', or `less than ____ percent of ____'.
       ``(6) Means of disclosure.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     any disclosure required pursuant to this subsection may be 
     required by appropriate means.
       ``(B) Listing of ingredients.--Notwithstanding any other 
     provision of this Act, the Secretary shall not require the 
     listing of any ingredient of a tobacco product on any package 
     or in any advertisement.
       ``(b) Disclosure of Percentage of Domestic and Foreign 
     Tobacco.--Not later than 1 year after the date of enactment 
     of the Tobacco Livelihood and Economic Assistance for Our 
     Farmers Act of 2002, the Secretary shall promulgate 
     regulations that require that each package of a tobacco 
     product disclose, with respect to the tobacco contained in 
     that brand--
       ``(1) the percentage of tobacco that is domestic tobacco; 
     and
       ``(2) the percentage of tobacco that is foreign tobacco.
       ``(c) Mandatory Disclaimer.--
       ``(1) In general.--Except as otherwise provided in this 
     subsection, any tobacco product advertising that includes a 
     term classifying a brand of tobacco product according to the 
     tar yield or the yield of the brand to consumers of any 
     substance, including terms such as `light' or `low tar', 
     shall also include the following disclaimer: `[Brand] not 
     shown to be less hazardous than other [type of tobacco 
     product]'.
       ``(2) Filtered.--This section shall apply to the use of the 
     terms `filtered' or `filter'.
       ``(3) Tobacco product packages.--A disclaimer described in 
     paragraph (1) shall not be required on any tobacco product 
     package.
       ``(4) Use of terms.--Not later than 1 year after the date 
     of enactment of the Tobacco Livelihood and Economic 
     Assistance for Our Farmers Act of 2002, the Secretary shall 
     promulgate regulations relating to the use of the terms 
     described in paragraph (1) to ensure that the terms are not 
     false or misleading.
       ``(5) Reduced exposure and reduced risk tobacco products.--
     The Secretary may modify or waive any requirement under this 
     subsection with respect to any product that has been 
     designated by the Secretary as a reduced exposure tobacco 
     product or a reduced risk tobacco product under section 913.

     ``SEC. 918. REGULATORY RECORD.

       ``(a) In General.--Notwithstanding subchapter II of chapter 
     5 of title 5, United States Code, in promulgating regulations 
     under this chapter, the record developed and used by the 
     Secretary for the purposes of promulgating subparts (B) and 
     (D) of the regulations relating to the sale, distribution, 
     and use of tobacco products on or about August 28, 1996, as 
     reflected in articles IV and VI of the preamble to the 1996 
     Food and Drug Administration Tobacco Rule (including public 
     comments, Food and Drug Administration documents, and any 
     other information generated or compiled for purposes of 
     promulgating the regulations), shall be deemed to have the 
     same legal status as if the record had been developed under a 
     rulemaking proceeding conducted pursuant to section 
     907(d)(1).
       ``(b) Other Respects.--In all other respects (including the 
     issue of whether the regulations conform to section 
     907(d)(1)), the procedural requirements of this chapter and 
     subchapter II of chapter 5, and chapter 7, of title 5, United 
     States Code (commonly known as the `Administrative Procedure 
     Act') shall apply to this chapter.

     ``SEC. 919. REGULATION REQUIREMENT.

       ``(a) Testing, Reporting, and Disclosure.--Not later than 2 
     years after the date of enactment of the Tobacco Livelihood 
     and Economic Assistance for Our Farmers Act of 2002, the 
     Secretary, acting through the Commissioner of Food and Drugs, 
     shall promulgate regulations under this Act that meet the 
     requirements of subsection (b).
       ``(b) Contents of Rules.--
       ``(1) In general.--The rules promulgated under subsection 
     (a) shall require the testing, reporting, and disclosure of 
     tobacco product smoke constituents and ingredients that the 
     Secretary determines should be disclosed to the public in 
     order to protect the public health.
       ``(2) Constituents.--The constituents shall include tar, 
     nicotine, carbon monoxide, and such other smoke constituents 
     or ingredients as the Secretary may determine to be 
     appropriate.
       ``(3) Administration.--The rules may require that tobacco 
     product manufacturers, packagers, or importers make--
       ``(A) the disclosures relating to tar and nicotine through 
     labels or advertising; and
       ``(B) the disclosures regarding other smoke constituents or 
     ingredients that the Secretary determines are necessary to 
     protect the public health.
       ``(c) Authority.--The Secretary, acting through the 
     Commissioner of Food and Drugs, shall have authority to 
     conduct or to require the testing, reporting, or disclosure 
     of tobacco product smoke constituents.''.

     SEC. 513. CONFORMING AND TECHNICAL AMENDMENTS.

       (a) Prohibited Acts.--Section 301 of the Federal Food, 
     Drug, and Cosmetic Act (21 U.S.C. 331) is amended--
       (1) in subsections (a), (b), (c), (g), (h), and (k), by 
     inserting ``tobacco product,'' after ``device,'' each place 
     it appears;
       (2) in subsection (e), by striking ``515(f), or 519'' and 
     inserting ``515(f), 519, or 910'';
       (3) in subsection (j), by striking ``708, or 721'' and 
     inserting ``708, 721, 904, 905, 906, 907, 908, 909, 910, 911, 
     or 913'';
       (4) by striking subsection (p) and inserting the following:
       ``(p) The failure--
       ``(1) to register in accordance with section 510 or 906;
       ``(2) to provide any information required by section 
     510(j), 510(k), 906(i), or 906(j); or
       ``(3) to provide a notice required by section 510(j)(2) or 
     906(j)(2).'';
       (5) in subsection (q)--
       (A) by striking paragraph (1) and inserting the following:
       ``(1) The failure or refusal--
       ``(A) to comply with any requirement prescribed under 
     section 518, 520(g), 907(f), or 909;
       ``(B) to furnish any notification or other material or 
     information required by or under section 519, 520(g), 905, 
     907(f), or 910; or
       ``(C) to comply with a requirement under section 522.''; 
     and
       (B) in paragraph (2), by striking ``device,'' and inserting 
     ``device or tobacco product,'';
       (6) in subsection (r), by inserting ``or tobacco product'' 
     after ``device'' each place it appears; and
       (7) by adding at the end the following:
       ``(bb) The sale of a tobacco product in violation of a no-
     tobacco-sale order issued under section 303(g)(3).''.
       (b) Penalties.--Section 303(g) of the Federal Food, Drug, 
     and Cosmetic Act (21 U.S.C. 333(g)) is amended--
       (1) by striking ``(g)(1)(A) Except'' and inserting the 
     following:
       ``(g) Civil Penalties.--
       ``(1) In general.--
       ``(A) Penalty.--Except'';
       (2) in paragraph (1)(A), by inserting ``or tobacco 
     products'' after ``devices'';
       (3) by redesignating paragraphs (3), (4), and (5) as 
     paragraphs (4), (5), and (6), respectively;
       (4) by inserting after paragraph (2) the following:
       ``(3) No-tobacco-sale orders.--
       ``(A) In general.--If the Secretary finds that a person has 
     committed repeated violations of restrictions promulgated 
     under section 906(d) at a particular retail outlet, the 
     Secretary may impose a no-tobacco-sale order on the person 
     prohibiting the sale of tobacco products in the outlet.
       ``(B) Civil penalties.--A no-tobacco-sale order may be 
     imposed with a civil penalty under paragraph (1).'';
       (5) in paragraph (4) (as redesignated by paragraph (3))--
       (A) in subparagraph (A)--
       (i) in the first sentence, by striking ``assessed'' the 
     first place it appears and inserting ``assessed, or a no-
     tobacco-sale order may be imposed,''; and
       (ii) in the second sentence, by striking ``penalty'' and 
     inserting ``penalty, or on whom a no-tobacco-order is to be 
     imposed,'';
       (B) in subparagraph (B)--
       (i) by striking ``(B) In'' and inserting the following:
       ``(B) Administration.--
       ``(i) Factors.--In''
       (ii) by inserting after ``penalty'' the following: ``or the 
     period to be covered by a no-tobacco-sale order,''; and
       (iii) by adding at the end the following:
       ``(ii) No-tobacco-sale orders.--A no-tobacco-sale order 
     permanently prohibiting an individual retail outlet from 
     selling tobacco products shall include provisions that allow 
     the outlet, after a specified period of time, to request that 
     the Secretary compromise, modify, or terminate the order.''; 
     and
       (C) by adding at the end the following:
       ``(D) Compromise, modification, or termination of no-
     tobacco-sale orders.--The Secretary may compromise, modify, 
     or terminate, with or without conditions, any no-tobacco-sale 
     order.'';
       (6) in paragraph (5) (as redesignated by paragraph (3))--
       (A) in the first sentence--
       (i) by striking ``(3)(A)'' and inserting ``(4)(A)''; and
       (ii) by inserting ``or the imposition of a no-tobacco-sale 
     order'' after ``penalty'' the first 2 places it appears; and
       (B) in the second sentence, by inserting before the period 
     at the end the following: ``, or on which the no-tobacco-sale 
     order was imposed, as the case may be''; and
       (7) in paragraph (6) (as redesignated by paragraph (3)), by 
     striking ``paragraph (4)'' each place it appears and 
     inserting ``paragraph (5)''.
       (c) Seizure.--Section 304 of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 334) is amended--
       (1) in subsection (a)(2)--
       (A) by striking ``and'' before ``(D)''; and
       (B) by inserting before the period at the end the 
     following: ``, and (E) Any adulterated or misbranded tobacco 
     product'';
       (2) in the first sentence of subsection (d)(1), by 
     inserting ``tobacco product,'' after ``device,''; and
       (3) in subsection (g), by inserting ``or tobacco product'' 
     after ``device'' each place it appears.
       (d) Examinations and Investigations.--Section 702(a) of the 
     Federal Food, Drug, and Cosmetic Act (21 U.S.C. 372(a)) is 
     amended--
       (1) by striking the section heading through ``(a) The 
     Secretary'' and inserting the following:

[[Page S7124]]

     ``SEC. 702. EXAMINATIONS AND INVESTIGATIONS.

       ``(a) In General.--
       ``(1) Authority.--The Secretary''; and
       (2) by adding at the end the following:
       ``(2) Tobacco products.--In the case of a tobacco product, 
     to the maximum extent practicable, the Secretary shall 
     contract with States in accordance with paragraph (1) to 
     carry out inspections of retailers in connection with the 
     enforcement of this Act.''.
       (e) Records of Interstate Shipment.--Section 703 of the 
     Federal Food, Drug, and Cosmetic Act (21 U.S.C. 373) is 
     amended--
       (1) by inserting ``tobacco products,'' after ``devices,'' 
     each place it appears; and
       (2) by inserting ``tobacco product,'' after ``device,'' 
     each place it appears.
       (f) Factory Inspection.--Section 704 of the Federal Food, 
     Drug, and Cosmetic Act (21 U.S.C. 374) is amended--
       (1) in subsection (a)(1), by inserting ``tobacco 
     products,'' after ``devices,'' each place it appears; and
       (2) in subsection (b), by inserting ``tobacco product,'' 
     after ``device,''.
       (g) Publicity.--Section 705(b) of the Federal Food, Drug, 
     and Cosmetic Act (21 U.S.C. 375(b)) is amended in the first 
     sentence by inserting ``tobacco products,'' after 
     ``devices,''.
       (h) Presumption.--Section 709 of the Federal Food, Drug, 
     and Cosmetic Act (21 U.S. C. 379) is amended by inserting 
     ``tobacco product,'' after ``device,''.
       (i) Imports and Exports.--Section 801 of the Federal Food, 
     Drug, and Cosmetic Act (21 U.S.C. 381) is amended--
       (1) in subsection (a)--
       (A) in the first sentence, by inserting ``tobacco 
     products,'' after ``devices,'';
       (B) in the second sentence, by striking ``subsection (i) of 
     section 510'' and inserting ``section 510(i) or 906(j)''; and
       (C) by striking ``drugs or devices'' each place it appears 
     and inserting ``drugs, devices, or tobacco products''; and
       (2) in subsection (e)(1), by inserting ``tobacco product,'' 
     after ``device,''.
       (j) Food and Drug Administration.--Section 1003(d)(2)(C) of 
     the Federal Food, Drug, and Cosmetic Act (as redesignated by 
     section 512(2)) is amended by striking ``and devices'' and 
     inserting ``devices, and tobacco products''.
       (k) Effective Date for No-Tobacco-Sale Order Amendments.--
     The amendments made by subsection (a), other than the 
     amendment to section 301(b) of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 331(b)) made by subsection (a)(1), 
     shall take effect only on the promulgation of final 
     regulations by the Secretary of Health and Human Services--
       (1) defining the term ``repeated violation'', as used in 
     section 303(g) of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 333(g)) (as amended by subsection (b)), by 
     identifying the number of violations of particular 
     requirements over a specified period of time that constitute 
     a repeated violation;
       (2) providing for notice to the retailer of each violation 
     at a particular retail outlet;
       (3) providing that a person may not be charged with 
     repeated violations at a particular retail outlet unless the 
     Secretary has provided notice of previous violations at the 
     outlet;
       (4) establishing a period of time during which, if there 
     are no violations by a particular retail outlet, the outlet 
     will not be considered to have been the site of repeated 
     violations when the next violation occurs; and
       (5) providing that good faith reliance on false 
     identification does not constitute a violation of any minimum 
     age requirement for the sale of tobacco products.

             Subtitle B--Cigarette Labeling and Advertising

     SEC. 521. DEFINITION OF CIGARETTE.

       Section 3(1) of the Federal Cigarette Labeling and 
     Advertising Act (15 U.S.C. 1332) is amended--
       (1) in subparagraph (A), by striking ``and'' at the end;
       (2) in subparagraph (B), by striking the period at the end 
     and inserting ``; and''; and
       (3) by adding at the end the following:
       ``(C) any tobacco product, in any form (including Bidi and 
     Kretek cigarettes), if--
       ``(i) the tobacco in the product--

       ``(I) is heated or burned; and
       ``(II) is functional in the product; and

       ``(ii) the product, because of the appearance of the 
     product, the type of tobacco used in the filler, or the 
     packaging and labeling of the product, is likely to be 
     offered to, or purchased by, consumers as a cigarette or as 
     roll-your-own tobacco.''.

     SEC. 522. CIGARETTE LABEL AND ADVERTISING WARNINGS.

       Section 4 of the Federal Cigarette Labeling and Advertising 
     Act (15 U.S.C. 1333) is amended to read as follows:

     ``SEC. 4. LABELING.

       ``(a) Label Requirements.--
       ``(1) In general.--It shall be unlawful for any person to 
     manufacture, package, or import for sale or distribution 
     within the United States any cigarettes the package of which 
     fails to bear, in accordance with the requirements of this 
     section, 1 of the following labels:
     ``WARNING: Cigarettes are addictive.
     ``WARNING: Tobacco smoke can harm your children.
     ``WARNING: Cigarettes cause fatal lung disease.
     ``WARNING: Cigarettes cause cancer.
     ``WARNING: Cigarettes cause strokes and heart disease.
     ``WARNING: Smoking during pregnancy can harm your baby.
     ``WARNING: Smoking can kill you.
     ``WARNING: Tobacco smoke causes fatal lung disease in non-
     smokers.
     ``WARNING: Quitting smoking now greatly reduces serious risks 
     to your health.
       ``(2) Format.--
       ``(A) Location.--Each label statement required by paragraph 
     (1) shall be located in the upper portion of the front and 
     rear panels of the package, directly on the package 
     underneath the cellophane or other clear wrapping.
       ``(B) Percentage of panels.--Except as provided in 
     subparagraph (C), each label statement shall comprise at 
     least the top 25 percent of the front and rear panels of the 
     package.
       ``(C) Text.--
       ``(i) In general.--Except as provided in clause (ii), the 
     word `WARNING' shall appear in capital letters and all text 
     shall be in conspicuous and legible 17-point type.
       ``(ii) Smaller type size.--If the text of the label 
     statement would occupy more than 70 percent of the area of a 
     panel, the text may be in a smaller conspicuous and legible 
     type size, if at least 60 percent of the area of the panel is 
     occupied by required text.
       ``(iii) Contrast.--The text shall be black on a white 
     background, or white on a black background, in a manner that 
     contrasts, by typography, layout, or color, with all other 
     printed material on the package, in an alternating fashion 
     under the plan submitted under subsection (b)(4).
       ``(D) Flip-top boxes.--
       ``(i) In general.--For any cigarette brand package 
     manufactured or distributed before January 1, 2000, that 
     employs a flip-top style (if the packaging was used for that 
     brand in commerce before June 21, 1997), the label statement 
     required by paragraph (1) shall be located on the flip-top 
     area of the package, even if the area is less than 25 percent 
     of the area of the front panel.
       ``(ii) Packages.--Except as provided in clause (i), the 
     provisions of this subsection shall apply to the package.
       ``(3) Foreign distribution.--This subsection does not apply 
     to a tobacco product manufacturer or distributor of 
     cigarettes that does not manufacture, package, or import 
     cigarettes for sale or distribution within the United States.
       ``(4) Tar, nicotine, and other smoke constituent disclosure 
     to the public.--
       ``(A) In general.--The Secretary shall, by a rulemaking 
     conducted under section 553 of title 5, United States Code, 
     determine (in the Secretary's sole discretion) whether 
     cigarette and other tobacco product manufacturers shall be 
     required to include in the area of each cigarette 
     advertisement specified by subsection (b), or on the package 
     label, or both, the tar and nicotine yields of the advertised 
     or packaged brand.
       ``(B) Method.--Any such disclosure shall--
       ``(i) be in accordance with the methodology established 
     under the regulations;
       ``(ii) conform to the type size requirements of subsection 
     (b); and
       ``(iii) appear within the area specified in subsection (b).
       ``(C) Consistency with ftc reporting requirements.--Any 
     differences between the requirements established by the 
     Secretary under subparagraph (A) and tar and nicotine yield 
     reporting requirements established by the Federal Trade 
     Commission shall be resolved by a memorandum of understanding 
     between the Secretary and the Federal Trade Commission.
       ``(D) Smoke constituents.--
       ``(i) In general.--In addition to the disclosures required 
     by subparagraph (A), the Secretary may, under a rulemaking 
     conducted under section 553 of title 5, United States Code, 
     prescribe disclosure requirements regarding the level of any 
     cigarette or other tobacco product smoke constituent.
       ``(ii) Conditions.--Any disclosure under this subparagraph 
     may be required if the Secretary determines that disclosure 
     would--
       ``(I) be of benefit to the public health; or
       ``(II) otherwise increase consumer awareness of the health 
     consequences of the use of tobacco products.
       ``(iii) Face of cigarette package or advertisement.--No 
     disclosure shall be required under this subparagraph on the 
     face of any cigarette package or advertisement.
       ``(iv) Other means.--Nothing in this section prohibits the 
     Secretary from requiring disclosure under this subparagraph 
     through a cigarette or other tobacco product package or 
     advertisement insert, or by any other means, under the 
     Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.).
       ``(b) Advertising Requirements.--
       ``(1) In general.--It shall be unlawful for any tobacco 
     product manufacturer, importer, distributor, or retailer of 
     cigarettes to advertise or cause to be advertised within the 
     United States any cigarette unless the advertising for the 
     cigarette bears, in accordance with this section, 1 of the 
     labels specified in subsection (a)(1).
       ``(2) Format.--
       ``(A) In general.--Each label statement required by 
     subsection (a) in cigarette advertising shall comply with the 
     standards set forth in this paragraph.
       ``(B) Press and poster advertisements.--In the case of a 
     press or poster advertisement, each such statement and (if 
     applicable) any required statement relating to tar, nicotine, 
     or other constituent yield shall--

[[Page S7125]]

       ``(i) comprise at least 20 percent of the area of the 
     advertisement; and
       ``(ii) appear in a conspicuous and prominent format and 
     location at the top of each advertisement within the border 
     area.
       ``(C) Revision of type sizes.--The Secretary may revise the 
     required type sizes in the border area in such manner as the 
     Secretary determines appropriate.
       ``(D) Text.--
       ``(i) In general.--The word `WARNING' shall appear in 
     capital letters, and each label statement shall appear in 
     conspicuous and legible type.
       ``(ii) Contrast.--The text of the label statement shall be 
     black if the background is white and white if the background 
     is black, under the plan submitted under paragraph (4).
       ``(E) Border.--The label statement shall be enclosed by a 
     rectangular border that is--
       ``(i) the same color as the letters of the statement; and
       ``(ii) the width of the first downstroke of the capital `W' 
     of the word `WARNING' in the label statement.
       ``(F) Typeface.--The text of the label statement shall be 
     in a typeface pro rata to the following requirements:
       ``(i) 45-point type for a whole-page broadsheet newspaper 
     advertisement.
       ``(ii) 39-point type for a half-page broadsheet newspaper 
     advertisement.
       ``(iii) 39-point type for a whole-page tabloid newspaper 
     advertisement.
       ``(iv) 27-point type for a half-page tabloid newspaper 
     advertisement.
       ``(v) 31.5-point type for a double page spread magazine or 
     whole-page magazine advertisement.
       ``(vi) 22.5-point type for a 28-centimeter-by-3-column 
     advertisement.
       ``(vii) 15-point type for a 20-centimeter-by-2-column 
     advertisement.
       ``(G) Language.--
       ``(i) In general.--Except as provided in clauses (ii) and 
     (iii), the label statements shall be in English.
       ``(ii) Non-english publications.--In the case of an 
     advertisement that appears in a newspaper, magazine, 
     periodical, or other publication that is not in English, the 
     statement shall appear in the predominant language of the 
     publication.
       ``(iii) Non-english advertisements.--In the case of any 
     other advertisement that is not in English, the statement 
     shall appear in the same language as that principally used in 
     the advertisement.
       ``(3) Adjustments by secretary.--
       ``(A) In general.--The Secretary may, through a rulemaking 
     under section 553 of title 5, United States Code--
       ``(i) adjust the format and type sizes for the label 
     statements required by this subsection;
       ``(ii) adjust the text, format, and type sizes of any 
     required tar, nicotine yield, or other constituent 
     disclosures; or
       ``(iii) establish the text, format, and type sizes for any 
     other disclosures required under the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 301 et seq.).
       ``(B) Location.--
       ``(i) In general.--The text of any such label statements or 
     disclosures adjusted under this paragraph shall be required 
     to appear only within the 20 percent area of cigarette 
     advertisements required under paragraph (2).
       ``(ii) Regulations.--The Secretary shall promulgate 
     regulations that provide for adjustments in the format and 
     type sizes of any text required to appear in the 20 percent 
     area to ensure that the total text required to appear by law 
     will fit within the area.
       ``(4) Marketing requirements.--
       ``(A) In general.--The label statements specified in 
     subsection (a)(1) shall be randomly displayed--
       ``(i) in each 12-month period, in as equal a number of 
     times as is practicable on each brand of the product; and
       ``(ii) in all areas of the United States in which the 
     product is marketed in accordance with a plan submitted by 
     the tobacco product manufacturer, importer, distributor, or 
     retailer and approved by the Secretary.
       ``(B) Quarterly rotation.--The label statements specified 
     in subsection (a)(1) shall be rotated quarterly in 
     alternating sequence in advertisements for each brand of 
     cigarettes in accordance with a plan submitted by the tobacco 
     product manufacturer, importer, distributor, or retailer to, 
     and approved by, the Secretary.
       ``(C) Approval of plan.--The Secretary shall review each 
     plan submitted under subparagraph (B) and approve the plan if 
     the plan--
       ``(i) will provide for the equal distribution and display 
     on packaging and the rotation required in advertising under 
     this subsection; and
       ``(ii) ensures that all of the labels required under this 
     section will be displayed by the tobacco product 
     manufacturer, importer, distributor, or retailer at the same 
     time.
       ``(c) Change in Required Statements.--The Secretary may, by 
     a rulemaking conducted under section 553 of title 5, United 
     States Code, adjust the format, type size, and text of any of 
     the warning label statements required by this section 
     (subject to the limitation on proportional size of the 
     warning contained in subsections (a)(2) and (b)(2)), or 
     establish the format, type size, and text of any other 
     disclosures required under the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 301 et seq.), if the Secretary finds 
     that such a change would promote greater public understanding 
     of the risks associated with the use of cigarettes or 
     smokeless tobacco products.''.

     Subtitle C--Smokeless Tobacco Labels and Advertising Warnings

     SEC. 531. SMOKELESS TOBACCO LABELS AND ADVERTISING WARNINGS.

       Section 3 of the Comprehensive Smokeless Tobacco Health 
     Education Act of 1986 (15 U.S.C. 4402) is amended to read as 
     follows:

     ``SEC. 3. SMOKELESS TOBACCO WARNING.

       ``(a) General Rule.--
       ``(1) Labels.--It shall be unlawful for any person to 
     manufacture, package, or import for sale or distribution 
     within the United States any smokeless tobacco product unless 
     the product package bears, in accordance with the 
     requirements of this Act, 1 of the following labels:
     ``WARNING: This product can cause mouth cancer.
     ``WARNING: This product can cause gum disease and tooth loss.
     ``WARNING: This product is not a safe alternative to 
     cigarettes.
     ``WARNING: Smokeless tobacco is addictive.
       ``(2) Format.--
       ``(A) Location.--Each label statement required by paragraph 
     (1) shall be located on the 2 principal display panels of the 
     package.
       ``(B) Percent of panel.--Each label statement shall 
     comprise at least 25 percent of each display panel.
       ``(C) Text.--
       ``(i) In general.--Except as provided in clause (ii), under 
     the plan submitted under subsection (b)(3), each label 
     statement shall be--

       ``(I) in 17-point conspicuous and legible type; and
       ``(II) in black text on a white background, or white text 
     on a black background, in a manner that contrasts by 
     typography, layout, or color, with all other printed material 
     on the package, in an alternating fashion.

       ``(ii) Smaller type.--If the text of a label statement 
     would occupy more than 70 percent of the warning area of a 
     package, the text may appear in a smaller type size, if least 
     60 percent of the warning area is occupied by the label 
     statement.
       ``(3) Concurrent introduction.--The label statements 
     required by paragraph (1) shall be introduced by each tobacco 
     product manufacturer, packager, importer, distributor, or 
     retailer of smokeless tobacco products concurrently into the 
     distribution chain of the products.
       ``(4) Foreign distribution.--This subsection does not apply 
     to a tobacco product manufacturer or distributor of any 
     smokeless tobacco product that does not manufacture, package, 
     or import smokeless tobacco products for sale or distribution 
     within the United States.
       ``(b) Required Labels.--
       ``(1) In general.--It shall be unlawful for any tobacco 
     product manufacturer, packager, importer, distributor, or 
     retailer of smokeless tobacco products to advertise or cause 
     to be advertised within the United States any smokeless 
     tobacco product unless the advertising for the product bears, 
     in accordance with this section, 1 of the labels specified in 
     subsection (a)(1).
       ``(2) Standards.--
       ``(A) In general.--Each label statement required by 
     subsection (a) in smokeless tobacco advertising shall comply 
     with the standards set forth in this paragraph.
       ``(B) Press and poster advertisements.--For press and 
     poster advertisements, each such statement and (where 
     applicable) any required statement relating to tar, nicotine, 
     or other constituent yield shall--
       ``(i) comprise at least 20 percent of the area of the 
     advertisement, and the warning area shall be delineated by a 
     dividing line of contrasting color from the advertisement; 
     and
       ``(ii) the word `WARNING' shall appear in capital letters 
     and each label statement shall appear in conspicuous and 
     legible type.
       ``(C) Text.--The text of the label statement shall be black 
     on a white background, or white on a black background, in an 
     alternating fashion under the plan submitted under paragraph 
     (3).
       ``(3) Marketing requirements.--
       ``(A) In general.--The label statements specified in 
     paragraph (1) shall be randomly displayed--
       ``(i) in each 12-month period, in as equal a number of 
     times as is practicable on each brand of the product; and
       ``(ii) in all areas of the United States in which the 
     product is marketed in accordance with a plan submitted by 
     the tobacco product manufacturer, importer, distributor, or 
     retailer and approved by the Secretary.
       ``(B) Quarterly rotation.--The label statements specified 
     in paragraph (1) shall be rotated quarterly in alternating 
     sequence in advertisements for each brand of smokeless 
     tobacco product in accordance with a plan submitted by the 
     tobacco product manufacturer, importer, distributor, or 
     retailer to, and approved by, the Secretary.
       ``(C) Approval of plan.--The Secretary shall review each 
     plan submitted under subparagraph (B) and approve the plan if 
     the plan, as determined by the Secretary--
       ``(i) will provide for the equal distribution and display 
     on packaging and the rotation required in advertising under 
     this subsection; and
       ``(ii) ensures that all of the labels required under this 
     section will be displayed by the tobacco product 
     manufacturer, importer, distributor, or retailer at the same 
     time.
       ``(c) Television and Radio Advertising.--It is unlawful to 
     advertise smokeless tobacco

[[Page S7126]]

     on any medium of electronic communications subject to the 
     jurisdiction of the Federal Communications Commission.
       ``(d) Authority To Revise Warning Label Statements.--The 
     Secretary may, by a rulemaking conducted under section 553 of 
     title 5, United States Code, adjust the format, type size, 
     and text of any of the warning label statements required by 
     this section (subject to the limitations on proportional size 
     of the warning required under this section), or establish the 
     format, type size, and text of any other disclosures required 
     under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 
     et seq.), if the Secretary finds that such a change would 
     promote greater public understanding of the risks associated 
     with the use of smokeless tobacco products.''.

                       Subtitle D--Administration

     SEC. 541. FTC JURISDICTION NOT AFFECTED.

       (a) In General.--Except as otherwise expressly provided in 
     this Act or an amendment made by this Act, nothing in this 
     Act or an amendment made by this Act limits or diminishes the 
     authority of the Federal Trade Commission to enforce the laws 
     under the jurisdiction of the Commission with respect to the 
     advertising, sale, or distribution of tobacco products.
       (b) Enforcement by FTC.--Any advertising that violates this 
     Act or an amendment made by this Act shall be considered--
       (1) an unfair or deceptive act or practice under section 
     5(a) of the Federal Trade Commission Act (15 U.S.C. 45(a)); 
     and
       (2) a violation of a rule promulgated under section 18 of 
     that Act (15 U.S.C. 57a).

                          ____________________