[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).
____________________