[Congressional Record Volume 149, Number 176 (Tuesday, December 9, 2003)]
[Senate]
[Pages S16202-S16212]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 PREVENT ALL CIGARETTE TRAFFICKING ACT

  Mr. FRIST. Mr. President, I ask unanimous consent that the Senate 
proceed to the immediate consideration of Calendar No. 241, S. 1177.
  The PRESIDING OFFICER. The clerk will report the bill by title.
  The legislative clerk read as follows:

       A bill (S. 1177) to ensure the collection of all cigarette 
     taxes, and for other purposes.

  There being no objection, the Senate proceeded to consider the bill 
which had been reported from the Committee on the Judiciary with an 
amendment and an amendment to the title, as follows:
  [Strike the part in black brackets and insert the part printed in 
italic.]
       S. 1177
         Be it enacted by the Senate and House of Representatives 
     of the United States of America in Congress assembled,

     [SECTION 1. SHORT TITLE.

         [This Act may be cited as the ``Prevent All Cigarette 
     Trafficking Act'' or ``PACT Act''.

     [SEC. 2. COLLECTION OF STATE CIGARETTE TAXES.

         [(a) Definitions.--Section 1 of the Act of October 19, 
     1949 (15 U.S.C. 375; commonly referred to as the ``Jenkins 
     Act''), is amended--
         [(1) in paragraph (1), by inserting ``and other legal 
     entities'' after ``individuals'';
         [(2) by striking paragraph (3);
         [(3) by redesignating paragraphs (4) through (7) as 
     paragraphs (3) through (6), respectively; and
         [(4) by adding at the end the following new paragraphs:
         [``(7) The term `delivery sale' means any sale of 
     cigarettes to a consumer if--
         [``(A) the consumer submits the order for such sale by 
     means of a telephone or other

[[Page S16203]]

     method of voice transmission, the mails, or the Internet or 
     other online service; or
         [``(B) the cigarettes are delivered by use of a common 
     carrier.
         [``(8) The term `common carrier' means any person (other 
     than a local messenger service or the United States Postal 
     Service (as defined in section 102 of title 39, United States 
     Code)) that holds itself out to the general public as a 
     provider for hire of the transportation by water, land, or 
     air of merchandise, whether or not the person actually 
     operates the vessel, vehicle, or aircraft by which the 
     transportation is provided, between a port or place and a 
     port or place in the United States.''.
         [(b) Reports to State Tobacco Tax Administrators.--
     Section 2 of that Act (15 U.S.C. 376) is amended--
         [(1) in subsection (a)--
         [(A) by striking ``or transfers'' and inserting ``, 
     transfers, or ships''; and
         [(B) by striking ``to other than a distributor licensed 
     by or located in such State,''; and
         [(2) in subsection (b)--
         [(A) by striking ``(1)''; and
         [(B) by striking ``, and (2)'' and all that follows and 
     inserting a period.
         [(c) Requirements for Delivery Sales.--That Act is 
     further amended by inserting after section 2 the following 
     new section:
         [``Sec. 2A. (a) Each person making a delivery sale into a 
     State shall comply with--
         [``(1) the shipping requirements set forth in subsection 
     (b);
         [``(2) the recordkeeping requirements set forth in 
     subsection (c); and
         [``(3) all laws of the State generally applicable to 
     sales of cigarettes that occur entirely within the State, 
     including laws imposing--
         [``(A) excise taxes;
         [``(B) sales taxes;
         [``(C) licensing and tax-stamping requirements; and
         [``(D) other payment obligations.
         [``(b)(1) Each person who takes a delivery sale order 
     shall include on the bill of lading included with the 
     shipping package containing cigarettes sold pursuant to such 
     order a clear and conspicuous statement providing as follows: 
     `CIGARETTES: FEDERAL LAW REQUIRES THE PAYMENT OF ALL 
     APPLICABLE EXCISE AND SALES TAXES, AND COMPLIANCE WITH 
     APPLICABLE LICENSING AND TAX-STAMPING OBLIGATIONS'.
         [``(2) Any shipping package described in paragraph (1) 
     that is not labeled in accordance with that paragraph shall 
     be treated as non-deliverable matter by common carriers.
         [``(c)(1) Each person making delivery sales into a State 
     shall keep a record of all delivery sales so made, organized 
     by State into which such delivery sales are so made.
         [``(2) Records of delivery sales shall be kept under 
     paragraph (1) in the year in which made and for the next four 
     years.
         [``(3) Records kept under paragraph (1) shall be made 
     available to tobacco tax administrators of the States in 
     order to ensure the compliance of persons making delivery 
     sales with the requirements of this Act.
         [``(d) Each State shall have the authority to require any 
     person making a delivery sale of cigarettes into such State--
         [``(1) to collect or pay the taxes referred to in 
     subsection (a)(3); and
         [``(2) to provide evidence that the manufacturer of the 
     cigarettes sold in such State is in compliance with all 
     Federal, State, or local laws generally applicable to the 
     sale or distribution of cigarettes.''.
         [(d) Penalties.--Section 3 of that Act (15 U.S.C. 377) is 
     amended--
         [(1) by inserting ``(a)'' before ``Whoever'';
         [(2) in subsection (a), as so designated, by striking 
     ``shall be guilty of a misdemeanor and shall be fined not 
     more than $1,000, or imprisoned not more than 6 months'' and 
     inserting ``shall be fined not more than $100,000, imprisoned 
     not more than 2 years''; and
         [(3) by adding at the end the following new subsection:
         [``(b)(1) Whoever violates any provision of this Act 
     shall be subject to a civil penalty in an amount not to 
     exceed 2 percent of the gross sales of cigarettes of such 
     person during the one-year period ending on the date of the 
     violation.
         [``(2) A civil penalty under paragraph (1) for a 
     violation of this Act is in addition to any criminal penalty 
     under subsection (a) for the violation.''.
         [(e) Injunctions.--Section 4 of that Act (15 U.S.C. 378) 
     is amended--
         [(1) by inserting ``(a)'' before ``The United States 
     district courts''; and
         [(2) by adding at the end the following new subsections:
         [``(b)(1) A State, through its attorney general, or any 
     person who holds a permit under section 5712 of the Internal 
     Revenue Code of 1986, may bring an action in the United 
     States district courts to prevent and restrain violations of 
     this Act by any person (or by any person controlling such 
     person).
         [``(2) Nothing in this section shall be construed to 
     prohibit an authorized State official from proceeding in 
     State court on the basis of an alleged violation of State 
     law.
         [``(c) The Attorney General, acting through the Director 
     of the Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
     shall administer and enforce the provisions of this Act.''.

     [SEC. 3. TREATMENT OF CIGARETTES AS NONMAILABLE MATTER.

         [Section 1716 of title 18, United States Code, is 
     amended--
         [(1) by redesignating subsection (j) as subsection (k); 
     and
         [(2) by inserting after subsection (i) the following new 
     subsection (j):
         [``(j) The transmission in the mails of cigarettes (as 
     that term is defined in section 2341(1) of this title) for 
     purposes of sale is prohibited, and cigarettes for such 
     purposes are nonmailable and shall not be deposited in or 
     carried through the mails.''.

     [SEC. 4. PENAL PROVISIONS REGARDING TRAFFICKING IN CONTRABAND 
                   CIGARETTES.

         [(a) Threshold Quantity for Treatment as Contraband.--(1) 
     Section 2341(2) of title 18, United States Code, is amended 
     by striking ``60,000 cigarettes'' and inserting ``10,000 
     cigarettes''.
         [(2) Section 2342(b) of that title is amended by striking 
     ``60,000'' and inserting ``10,000''.
         [(3) Section 2343 of that title is amended--
         [(A) in subsection (a), by striking ``60,000'' and 
     inserting ``10,000''; and
         [(B) in subsection (b), by striking ``60,000'' and 
     inserting ``10,000''.
         [(b) Recordkeeping, Reporting, and Inspection.--Section 
     2343 of that title, as amended by subsection (a)(3) of this 
     section, is further amended--
         (1) in subsection (a)--
         [(A) in the matter preceding paragraph (1), by striking 
     ``only--'' and inserting ``such information as the Attorney 
     General considers appropriate for purposes of enforcement of 
     this chapter, including--''; and
         [(B) in the flush matter following paragraph (3), by 
     striking the second sentence;
         [(2) by redesignating subsection (b) as subsection (c);
         [(3) by inserting after subsection (a) the following new 
     subsection (b):
         [``(b) Any person who engages in a delivery sale, and who 
     ships, sells, distributes, or receives any quantity in excess 
     of 10,000 cigarettes within a single month, shall submit to 
     the Attorney General, pursuant to rules or regulations 
     prescribed by the Attorney General, a report that sets forth 
     the following:
         [``(1) The person's beginning and ending inventory of 
     cigarettes (in total) for such month.
         [``(2) The total quantity of cigarettes that the person 
     received within such month from each other person (itemized 
     by name and address).
         [``(3) The total quantity of cigarettes that the person 
     distributed within such month to each person (itemized by 
     name and address) other than a retail purchaser.''; and
         [(4) by adding at the end the following new subsections:
         [``(d) Any report required to be submitted under this 
     chapter to the Attorney General shall also be submitted to 
     the Secretary of the Treasury.
         [``(e) In this section:
         [``(1) The term `delivery sale' means any sale of 
     cigarettes to a consumer if--
         [``(A) the consumer submits the order for such sale by 
     means of a telephone or other method of voice transmission, 
     the mails, or the Internet or other online service; or
         [``(B) the cigarettes are delivered by use of a common 
     carrier.
         [``(2) The term `common carrier' means any person (other 
     than a local messenger service or the United States Postal 
     Service (as defined in section 102 of title 39, United States 
     Code)) that holds itself out to the general public as a 
     provider for hire of the transportation by water, land, or 
     air of merchandise, whether or not the person actually 
     operates the vessel, vehicle, or aircraft by which the 
     transportation is provided, between a port or place and a 
     port or place in the United States.''.
         [(c) Disposal or Use of Forfeited Cigarettes.--Section 
     2344(c) of that title is amended by striking ``seizure and 
     forfeiture,'' and all that follows and inserting ``seizure 
     and forfeiture, and any cigarettes so seized and forfeited 
     shall be either--
         [``(1) destroyed and not resold; or
         [``(2) used for undercover investigative operations for 
     the detection and prosecution of crimes, and then destroyed 
     and not resold.''.
         [(d) Enforcement.--Section 2346 of that title is 
     amended--
         [(1) by inserting ``(a)'' before ``The Attorney 
     General''; and
         [(2) by adding at the end the following new subsection:
         [``(b) A State, through its attorney general, or any 
     person who holds a permit under section 5712 of the Internal 
     Revenue Code of 1986, may bring an action in the United 
     States district courts to prevent and restrain violations of 
     this chapter by any person (or by any person controlling such 
     person).''.
         [(e) Conforming and Clerical Amendments.--(1) The section 
     heading for section 2343 of that title is amended to read as 
     follows:

     [``Sec. 2343. Recordkeeping, reporting, and inspection''.

         [(2) The table of sections at the beginning of chapter 
     114 of that title is amended by striking the item relating to 
     section 2343 and inserting the following new item:

[``2343. Recordkeeping, reporting, and inspection.''.

     [SEC. 5. COMPLIANCE WITH MODEL STATUTE OR QUALIFYING STATUTE.

         [(a) In General.--An interstate tobacco seller may not 
     sell in, deliver to, or place for delivery to a State that is 
     a party to the

[[Page S16204]]

     Master Settlement Agreement any cigarette manufactured by a 
     Tobacco Product Manufacturer that is not in full compliance 
     with the terms of the Model Statute or Qualifying Statute 
     enacted by such State requiring funds to be placed into a 
     qualified escrow account under specified conditions, or any 
     regulations promulgated pursuant to such statute.
         [(b) Penalties.--(1) Whoever shall knowingly and 
     willfully violate subsection (a) shall be fined not more than 
     $100,000, imprisoned not more than 2 years, or both.
         [(2) Whoever shall violate subsection (a) shall be 
     subject to a civil penalty in an amount not to exceed 2 
     percent of the gross sales of cigarettes of such person 
     during the one-year period ending on the date of the 
     violation.
         [(3) A civil penalty under paragraph (2) for a violation 
     of subsection (a) is in addition to any criminal penalty 
     under paragraph (1) for the violation.
         [(c) Jurisdiction To Prevent and Restrain Violations.--
     (1) The United States district courts shall have jurisdiction 
     to prevent and restrain violations of subsection (a).
         [(2) A State, through its attorney general, or any person 
     who holds a permit under section 5712 of the Internal Revenue 
     Code of 1986, may bring an action in the United States 
     district courts to prevent and restrain violations of 
     subsection (a) by any person (or by any person controlling 
     such person).
         [(3) Nothing in this subsection shall be construed to 
     prohibit an authorized State official from proceeding in 
     State court on the basis of an alleged violation of State 
     law.
         [(4) The Attorney General, acting through the Director of 
     the Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
     shall administer and enforce subsection (a).
         [(d) Definitions.--In this section:
         [(1) Master settlement agreement.-- The term ``Master 
     Settlement Agreement'' means the agreement executed November 
     23, 1998, by the Attorneys General of 46 States, the District 
     of Columbia, the Commonwealth of Puerto Rico, and four 
     Territories of the United States, on the one hand, and 
     certain tobacco manufacturers on the other hand.
         [(2) Tobacco product manufacturer.--The term ``Tobacco 
     Product Manufacturer'' has the meaning given that term in 
     section II(uu) of the Master Settlement Agreement.
         [(3) Model statute; qualifying statute.--The terms 
     ``Model Statute'' and ``Qualifying Statute'' means a statute 
     as defined in section IX(d)(2)(e) of the Master Settlement 
     Agreement.

     [SEC. 6. UNDERCOVER CRIMINAL INVESTIGATIONS OF THE BUREAU OF 
                   ALCOHOL, TOBACCO, FIREARMS, AND EXPLOSIVES.

         [(a) In General.--(1) Commencing as of the date of the 
     enactment of this Act and without fiscal year limitation, the 
     authorities in section 102(b) of the Department of Justice 
     and Related Agencies Appropriations Act, 1993 (title I of 
     Public Law 102-395; 106 Stat. 1838) shall be available to the 
     Bureau of Alcohol, Tobacco, Firearms, and Explosives for 
     undercover investigative operations of the Bureau which are 
     necessary for the detection and prosecution of crimes against 
     the United States.
         [(2) For purposes of the exercise of the authorities 
     referred to in paragraph (1) by the Bureau, a reference in 
     such section 102(b) to the Federal Bureau of Investigation 
     shall be deemed to be a reference to the Bureau of Alcohol, 
     Tobacco, Firearms, and Explosives, and a reference to the 
     Director of the Federal Bureau of Investigation shall be 
     deemed to be a reference to the Director of the Bureau of 
     Alcohol, Tobacco, Firearms, and Explosives.
         [(b) Limitations in Appropriations Acts.--The exercise of 
     the authorities referred to in subsection (a)(1) by the 
     Bureau of Alcohol, Tobacco, Firearms, and Explosives shall be 
     subject to the provisions of appropriations Acts.

     [SEC. 7. INSPECTION BY BUREAU OF ALCOHOL, TOBACCO, FIREARMS, 
                   AND EXPLOSIVES OF RECORDS OF CERTAIN CIGARETTE 
                   SELLERS.

         [(a) In General.--Any officer of the Bureau of Alcohol, 
     Tobacco, Firearms and Explosives may, during normal business 
     hours, enter the premises of any person described in 
     subsection (b) for the purposes of inspecting--
         [(1) any records or information required to be maintained 
     by such person under the provisions of law referred to in 
     subsection (c); or
         [(2) any cigarettes kept or stored by such person at such 
     premises.
         [(b) Covered Persons.--A person described in this 
     subsection is any person who engages in a delivery sale, and 
     who ships, sells, distributes, or receives any quantity in 
     excess of 10,000 cigarettes within a single month.
         [(c) Covered Provisions of Law.--The provisions of law 
     referred to in this subsection are as follows:
         [(1) The Act of October 19, 1949 (15 U.S.C. 375; commonly 
     referred to as the ``Jenkins Act'').
         [(2) Chapter 114 of title 18, United States Code.
         [(3) This Act.
         [(d) Delivery Sale Defined.--In this section, the term 
     ``delivery sale'' has the meaning given that term in 
     2343(e)(1) of title 18, United States Code, as amended by 
     section 4(b)(3) of this Act.

     [SEC. 8. EFFECTIVE DATE.

         [(a) In General.--Except as provided in subsection (b), 
     this Act shall take effect 90 days after the date of the 
     enactment of this Act.
         [(b) ATFE Authority.--
         [(1) In general.--Sections 6 and 7 shall take effect on 
     the date of the enactment of this Act.
         [(2) Definition.--For purposes of section 7, the 
     definition of delivery sale in section 2343(e)(1) of title 
     18, United States Code, as amended by section 4(b)(3) of this 
     Act, shall take effect on the date of the enactment of this 
     Act.]

     SECTION 1. SHORT TITLE.

         This Act may be cited as the ``Prevent All Cigarette 
     Trafficking Act'' or ``PACT Act''.

     SEC. 2. COLLECTION OF STATE CIGARETTE AND SMOKELESS TOBACCO 
                   TAXES.

         (a) Definitions.--Section 1 of the Act of October 19, 
     1949 (15 U.S.C. 375; commonly referred to as the ``Jenkins 
     Act''), is amended--
         (1) by striking paragraphs (1), (2), and (3) and 
     inserting the following new paragraphs:
         ``(1) The term `attorney general', with respect to a 
     State, means the attorney general or other chief law 
     enforcement officer of the State, or the designee of that 
     officer.
         ``(2) The term `cigarette' means--
         ``(A) any roll of tobacco wrapped in paper or in any 
     substance not containing tobacco which is to be heated or 
     burned;
         ``(B) any roll of tobacco wrapped in any substance 
     containing tobacco that, because of its appearance, the type 
     of tobacco used in the filler, or its packaging or labeling, 
     is likely to be offered to, or purchased by, consumers as a 
     cigarette described in subparagraph (A);
         ``(C) any roll of tobacco wrapped in any substance that 
     because of its appearance, the type of tobacco used in the 
     filler, or its packaging or labeling, is likely to be offered 
     to, or purchased by, consumers as a cigarette; or
         ``(D) loose rolling tobacco that, because of its 
     appearance, type, packaging, or labeling, is likely to be 
     offered to, or purchased by, consumers as tobacco for making 
     cigarettes.
         ``(3) The term `smokeless tobacco' means any finely cut, 
     ground, powdered, or leaf tobacco that is intended to be 
     placed in the oral or nasal cavity or otherwise consumed 
     without being combusted.'';
         (2) by striking paragraph (6) and inserting the following 
     new paragraph (6):
         ``(6) The term `delivery sale' means any sale of 
     cigarettes or smokeless tobacco in interstate commerce to a 
     consumer if--
         ``(A) the consumer submits the order for such sale by 
     means of a telephone or other method of voice transmission, 
     the mails, or the Internet or other online service, or the 
     seller is otherwise not in the physical presence of the buyer 
     when the request for purchase or order is made; or
         ``(B) the cigarettes or smokeless tobacco are delivered 
     by use of a common carrier, private delivery service, or the 
     mails, or the seller is not in the physical presence of the 
     buyer when the buyer obtains personal possession of the 
     delivered cigarettes or smokeless tobacco.''; and
         (3) by adding at the end the following new paragraphs:
         ``(8) The term `delivery seller' means a person who makes 
     a delivery sale.
         ``(9) The term `common carrier' means any person (other 
     than a local messenger service or the United States Postal 
     Service (as defined in section 102 of title 39, United States 
     Code)) that holds itself out to the general public as a 
     provider for hire of the transportation by water, land, or 
     air of merchandise, whether or not the person actually 
     operates the vessel, vehicle, or aircraft by which the 
     transportation is provided, between a port or place and a 
     port or place in the United States.
         ``(10) The term `interstate commerce' means commerce 
     between a State and any place outside the State, commerce 
     between a State and any Indian lands in the State, or 
     commerce between points in the same State but though any 
     place outside the State or through any Indian lands.
         ``(11) The term `person' means an individual, 
     corporation, company, association, firm, partnership, 
     society, State government, local government, Indian tribal 
     government, governmental organization of such government, or 
     joint stock company.
         ``(12) The term `State' means a State of the United 
     States, the District of Columbia, the Commonwealth of Puerto 
     Rico, or any territory or possession of the United States.''.
         (b) Reports to State Tobacco Tax Administrators.--Section 
     2 of that Act (15 U.S.C. 376) is amended--
         (1) by striking ``cigarettes'' each place it appears and 
     inserting ``cigarettes or smokeless tobacco'';
         (2) in subsection (a)--
         (A) in the matter preceding paragraph (1)--
         (i) by striking ``or transfers'' and inserting ``, 
     transfers, or ships''; and
         (ii) by striking ``to other than a distributor licensed 
     by or located in such State,'';
         (B) in paragraph (1), by inserting before the semicolon 
     the following: ``, as well as telephone numbers for each 
     place of business, a principal electronic mail address, any 
     website addresses, and the name, address, and telephone 
     number of an agent in the State authorized to accept service 
     on behalf of such person''; and
         (C) in paragraph (2), by striking ``and the quantity 
     thereof'' and inserting ``the quantity thereof, and the name, 
     address, and phone number of the person delivering the 
     shipment to the recipient on behalf of the delivery seller''; 
     and
         (3) in subsection (b)--
         (A) by striking ``(1)''; and
         (B) by striking ``, and (2)'' and all that follows and 
     inserting a period.
         (c) Requirements for Delivery Sales.--That Act is further 
     amended by inserting after section 2 the following new 
     section:
         ``Sec. 2A. (a) Each delivery seller shall comply with--

[[Page S16205]]

         ``(1) the shipping requirements set forth in subsection 
     (b);
         ``(2) the recordkeeping requirements set forth in 
     subsection (c);
         ``(3) all State and other laws generally applicable to 
     sales of cigarettes or smokeless tobacco that occur entirely 
     within the State, including laws imposing--
         ``(A) excise taxes;
         ``(B) sales taxes;
         ``(C) licensing and tax-stamping requirements; and
         ``(D) other payment obligations or legal requirements 
     relating to the sale, distribution, or delivery of cigarettes 
     or smokeless tobacco; and
         ``(4) the tax collection requirements set forth in 
     subsection (d).
         ``(b)(1) Each delivery seller shall include on the bill 
     of lading included with the shipping package containing 
     cigarettes or smokeless tobacco sold pursuant to such order a 
     clear and conspicuous statement providing as follows: 
     `CIGARETTES/SMOKELESS TOBACCO: FEDERAL LAW REQUIRES THE 
     PAYMENT OF ALL APPLICABLE EXCISE AND SALES TAXES, AND 
     COMPLIANCE WITH APPLICABLE LICENSING AND TAX-STAMPING 
     OBLIGATIONS'.
         ``(2) Any shipping package described in paragraph (1) 
     that is not labeled in accordance with that paragraph shall 
     be treated as non-deliverable matter by a common carrier or 
     the United States Postal Service if the common carrier or the 
     United States Postal Service, as the case may be, knows or 
     should know the contents of the package.
         ``(c)(1) Each delivery seller shall keep a record of all 
     delivery sales so made, including all of the information 
     described in section 2(a)(2), organized by State into which 
     such delivery sales are so made.
         ``(2) Records of delivery sales shall be kept under 
     paragraph (1) in the year in which made and for the next four 
     years.
         ``(3) Records kept under paragraph (1) shall be made 
     available to tobacco tax administrators of the States, 
     attorneys general of the States, and the Attorney General of 
     the United States in order to ensure the compliance of 
     persons making delivery sales with the requirements of this 
     Act.
         ``(d) Unless the law of the State and place in which 
     cigarettes or smokeless tobacco are delivered pursuant to a 
     delivery sale in interstate commerce requires otherwise for 
     the payment to the government of an excise tax imposed on the 
     delivery sale, or provides, for delivery sales of smokeless 
     tobacco, for the delivery seller to collect the excise tax 
     from the consumer and remit the excise tax to the government, 
     the cigarettes or smokeless tobacco may not be delivered to 
     the buyer unless in advance of the delivery--
         ``(1) the excise tax has been paid to the government; and
         ``(2) any required stamps or other indicia that the 
     excise tax has been paid are properly affixed or applied to 
     the cigarettes or smokeless tobacco.
         ``(e)(1) Each State may compile a list of delivery 
     sellers who are in compliance with this Act with respect to 
     such State. If a State posts a list pursuant to this 
     subsection that specifically refers to this subsection, no 
     common carrier or other person may knowingly deliver 
     cigarettes or smokeless tobacco to consumers in such State 
     unless the delivery seller is on the list at the time of 
     delivery.
         ``(2)(A) Each State may compile a list of delivery 
     sellers who are not in compliance with this Act with respect 
     to such State.
         ``(B) A State may provide such a list to a common 
     carrier, the United States Postal Service, or other person. 
     Such a list shall be confidential, and a common carrier, the 
     United States Postal Service, or other person that receives 
     such a list shall maintain the confidentiality of such list.
         ``(C) If a State provides such a list pursuant to this 
     subsection that specifically refers to this subsection, no 
     common carrier, the United States Postal Service, or other 
     person may knowingly deliver any item to a consumer in such 
     State for a delivery seller on such list unless the common 
     carrier, the United States Postal Service, or person in good 
     faith determines that the item does not include cigarettes or 
     smokeless tobacco.
         ``(f) For purposes of this Act, a delivery sale shall be 
     deemed to have occurred in the State and place where the 
     buyer obtains personal possession of the cigarettes or 
     smokeless tobacco, and a delivery pursuant to a delivery sale 
     is deemed to have been initiated or ordered by the delivery 
     seller.''.
         (d) Penalties.--Section 3 of that Act (15 U.S.C. 377) is 
     amended--
         (1) by inserting ``(a)'' before ``Whoever'';
         (2) in subsection (a), as so designated, by striking 
     ``shall be guilty of a misdemeanor and shall be fined not 
     more than $1,000, or imprisoned not more than 6 months'' and 
     inserting ``shall be guilty of a felony, fined under 
     subchapter C of chapter 227 of title 18, imprisoned not more 
     than three years, or both''; and
         (3) by adding at the end the following new subsection:
         ``(b)(1) Whoever violates any provision of this Act shall 
     be subject to a civil penalty in an amount not to exceed the 
     greater of--
         ``(A) $5,000 in the case of the first violation, or 
     $10,000 for any other violation; or
         ``(B) for any violation, 2 percent of the gross sales of 
     cigarettes or smokeless tobacco of such person during the 
     one-year period ending on the date of the violation.
         ``(2) A civil penalty under paragraph (1) for a violation 
     of this Act is in addition to any criminal penalty under 
     subsection (a) for the violation.''.
         (e) Enforcement.--Section 4 of that Act (15 U.S.C. 378) 
     is amended--
         (1) by inserting ``(a)'' before ``The United States 
     district courts'';
         (2) in subsection (a), as so designated, by inserting 
     before the period the following: ``, and to provide other 
     appropriate injunctive or equitable relief, including money 
     damages, for such violations''; and
         (3) by adding at the end the following new subsections:
         ``(b)(1) A State, through its attorney general, or any 
     person who holds a permit under section 5712 of the Internal 
     Revenue Code of 1986, may bring an action in the United 
     States district courts to prevent and restrain violations of 
     this Act by any person (or by any person controlling such 
     person).
         ``(2) A State, through its attorney general, may in a 
     civil action under this Act obtain any other appropriate 
     relief for violations of this Act by any person (or from any 
     person controlling such person), including civil penalties, 
     money damages, and injunctive or other equitable relief.
         ``(3) The remedies available under paragraphs (1) and (2) 
     are in addition to any other remedies available under 
     Federal, State, or other law.
         ``(4) Nothing in this Act shall be construed to prohibit 
     an authorized State official from proceeding in State court, 
     or taking other enforcement actions, on the basis of an 
     alleged violation of State or other law.
         ``(c) The Attorney General shall administer and enforce 
     the provisions of this Act.
         ``(d)(1) Any person who holds a permit under section 5712 
     of the Internal Revenue Code of 1986 who commences a civil 
     action under paragraph (1) shall inform the Attorney General 
     of the United States of the action.
         ``(2) It is the sense of Congress that any attorney 
     general of a State who commences a civil action under 
     paragraph (1) or (2) should inform the Attorney General of 
     the United States of the action.
         ``(e) The Attorney General of the United States shall 
     make available to the public information about all actions 
     under subsection (a), and the resolution of such actions, 
     including by posting such information on the Internet and by 
     other means.''.

     SEC. 3. TREATMENT OF CIGARETTES AND SMOKELESS TOBACCO AS 
                   NONMAILABLE MATTER.

         Section 1716 of title 18, United States Code, is 
     amended--
         (1) by redesignating subsections (j) and (k) as 
     subsections (k) and (l), respectively; and
         (2) by inserting after subsection (i) the following new 
     subsection (j):
         ``(j) The transmission in the mails of any tobacco 
     product, including cigarettes (as that term is defined in 
     section 1(2) of the Act of October 19, 1949 (15 U.S.C. 375; 
     commonly referred to as the `Jenkins Act')) and smokeless 
     tobacco (as that term is defined in section 1(3) of that 
     Act), is prohibited, and tobacco products are nonmailable and 
     shall not be deposited in or carried through the mails.''.

     SEC. 4. PENAL PROVISIONS REGARDING TRAFFICKING IN CONTRABAND 
                   CIGARETTES OR SMOKELESS TOBACCO.

         (a) Threshold Quantity for Treatment as Contraband 
     Cigarettes.--(1) Section 2341(2) of title 18, United States 
     Code, is amended by striking ``60,000 cigarettes'' and 
     inserting ``10,000 cigarettes''.
         (2) Section 2342(b) of that title is amended by striking 
     ``60,000'' and inserting ``10,000''.
         (3) Section 2343 of that title is amended--
         (A) in subsection (a), by striking ``60,000'' and 
     inserting ``10,000''; and
         (B) in subsection (b), by striking ``60,000'' and 
     inserting ``10,000''.
         (b) Contraband Smokeless Tobacco.--(1) Section 2341 of 
     that title is amended--
         (A) in paragraph (4), by striking ``and'' at the end;
         (B) in paragraph (5), by striking the period at the end 
     and inserting a semicolon; and
         (C) by adding at the end the following new paragraphs:
         ``(6) the term `smokeless tobacco' means any finely cut, 
     ground, powdered, or leaf tobacco that is intended to be 
     placed in the oral or nasal cavity or otherwise consumed 
     without being combusted; and
         ``(7) the term `contraband smokeless tobacco' means a 
     quantity in excess of 500 single-unit consumer-sized cans or 
     packages of smokeless tobacco, or their equivalent, that are 
     in the possession of any person other than--
         ``(A) a person holding a permit issued pursuant to 
     chapter 52 of the Internal Revenue Code of 1986 as 
     manufacturer of tobacco products or as an export warehouse 
     proprietor, a person operating a customs bonded warehouse 
     pursuant to section 311 or 555 of the Tariff Act of 1930 (19 
     U.S.C. 1311, 1555), or an agent of such person;
         ``(B) a common carrier transporting such smokeless 
     tobacco under a proper bill of lading or freight bill which 
     states the quantity, source, and designation of such 
     smokeless tobacco;
         ``(C) a person who--
         ``(i) is licensed or otherwise authorized by the State 
     where such smokeless tobacco is found to engage in the 
     business of selling or distributing tobacco products; and
         ``(ii) has complied with the accounting, tax, and payment 
     requirements relating to such license or authorization with 
     respect to such smokeless tobacco; or
         ``(D) an officer, employee, or agent of the United States 
     or a State, or any department, agency, or instrumentality of 
     the United States or a State (including any political 
     subdivision of a State), having possession of such smokeless 
     tobacco in connection with the performance of official 
     duties.''.
         (2) Section 2342(a) of that title is amended by inserting 
     ``or contraband smokeless tobacco'' after ``contraband 
     cigarettes''.
         (3) Section 2343(a) of that title is amended by inserting 
     ``, or any quantity of smokeless tobacco in excess of 500 
     single-unit consumer-sized

[[Page S16206]]

     cans or packages,'' before ``in a single transaction''.
         (4) Section 2344(c) of that title is amended by inserting 
     ``or contraband smokeless tobacco'' after ``contraband 
     cigarettes''.
         (5) Section 2345 of that title is amended by inserting 
     ``or smokeless tobacco'' after ``cigarettes'' each place it 
     appears.
         (c) Recordkeeping, Reporting, and Inspection.--Section 
     2343 of that title, as amended by this section, is further 
     amended--
         (1) in subsection (a)--
         (A) in the matter preceding paragraph (1), by striking 
     ``only--'' and inserting ``such information as the Attorney 
     General considers appropriate for purposes of enforcement of 
     this chapter, including--''; and
         (B) in the flush matter following paragraph (3), by 
     striking the second sentence;
         (2) by redesignating subsection (b) as subsection (c);
         (3) by inserting after subsection (a) the following new 
     subsection (b):
         ``(b) Any person who engages in a delivery sale, and who 
     ships, sells, or distributes any quantity in excess of 10,000 
     cigarettes, or any quantity in excess of 500 single-unit 
     consumer-sized cans or packages of smokeless tobacco, or 
     their equivalent, within a single month, shall submit to the 
     Attorney General, pursuant to rules or regulations prescribed 
     by the Attorney General, a report that sets forth the 
     following:
         ``(1) The person's beginning and ending inventory of 
     cigarettes and cans or packages of smokeless tobacco (in 
     total) for such month.
         ``(2) The total quantity of cigarettes and cans or 
     packages of smokeless tobacco that the person received within 
     such month from each other person (itemized by name and 
     address).
         ``(3) The total quantity of cigarettes and cans or 
     packages of smokeless tobacco that the person distributed 
     within such month to each person (itemized by name and 
     address) other than a retail purchaser.''; and
         (4) by adding at the end the following new subsections:
         ``(d) Any report required to be submitted under this 
     chapter to the Attorney General shall also be submitted to 
     the Secretary of the Treasury and to the attorneys general 
     and the tax administrators of the States from where the 
     shipments, deliveries, or distributions both originated and 
     concluded.
         ``(e) In this section, the term `delivery sale' means any 
     sale of cigarettes or smokeless tobacco in interstate 
     commerce to a consumer if--
         ``(A) the consumer submits the order for such sale by 
     means of a telephone or other method of voice transmission, 
     the mails, or the Internet or other online service, or by any 
     other means where the consumer is not in the same physical 
     location as the seller when the purchase or offer of sale is 
     made; or
         ``(B) the cigarettes or smokeless tobacco are delivered 
     by use of the mails, common carrier, private delivery 
     service, or any other means where the consumer is not in the 
     same physical location as the seller when the consumer 
     obtains physical possession of the cigarettes or smokeless 
     tobacco.
         ``(f) In this section, the term `interstate commerce' 
     means commerce between a State and any place outside the 
     State, commerce between a State and any Indian lands in the 
     State, or commerce between points in the same State but 
     through any place outside the State or though any Indian 
     lands.''.
         (d) Disposal or Use of Forfeited Cigarettes and Smokeless 
     Tobacco.--Section 2344(c) of that title, as amended by this 
     section, is further amended by striking ``seizure and 
     forfeiture,'' and all that follows and inserting ``seizure 
     and forfeiture, and any cigarettes or smokeless tobacco so 
     seized and forfeited shall be either--
         ``(1) destroyed and not resold; or
         ``(2) used for undercover investigative operations for 
     the detection and prosecution of crimes, and then destroyed 
     and not resold.''.
         (e) Enforcement.--Section 2346 of that title is amended--
         (1) by inserting ``(a)'' before ``The Attorney General''; 
     and
         (2) by adding at the end the following new subsection:
         ``(b)(1) A State, through its attorney general, or any 
     person who holds a permit under section 5712 of the Internal 
     Revenue Code of 1986, may bring an action in the United 
     States district courts to prevent and restrain violations of 
     this chapter by any person (or by any person controlling such 
     person).
         ``(2) A State, through its attorney general, may in a 
     civil action under paragraph (1) also obtain any other 
     appropriate relief for violations of this chapter from any 
     person (or by any person controlling such person), including 
     civil penalties, money damages, and injunctive or other 
     equitable relief.
         ``(3) The remedies under paragraphs (1) and (2) are an 
     addition to any other remedies under Federal, State, or other 
     law.
         ``(4) Nothing in this subsection shall be construed to 
     prohibit an authorized State official from proceeding in 
     State court, or taking other enforcement actions, on the 
     basis of an alleged violation of State or other law.''.
         (f) Conforming and Clerical Amendments.--(1) The section 
     heading for section 2343 of that title is amended to read as 
     follows:

     ``Sec. 2343. Recordkeeping, reporting, and inspection''.

         (2) The table of sections at the beginning of chapter 114 
     of that title is amended by striking the item relating to 
     section 2343 and inserting the following new item:

``2343. Recordkeeping, reporting, and inspection.''.
         (3)(A) The heading for chapter 114 of that title is 
     amended to read as follows:

   ``CHAPTER 114--TRAFFICKING IN CONTRABAND CIGARETTES AND SMOKELESS 
                               TOBACCO''.

         (B) The table of chapters at the beginning of part I of 
     that title is amended by striking the item relating to 
     section 114 and inserting the following new item:

``114. Trafficking in contraband cigarettes and smokeless to2341''.....

     SEC. 5. COMPLIANCE WITH MODEL STATUTE OR QUALIFYING STATUTE.

         (a) In General.--An interstate tobacco seller may not 
     sell in, deliver to, or place for delivery sale in a State 
     that is a party to the Master Settlement Agreement any 
     cigarette manufactured by a Tobacco Product Manufacturer that 
     is not in full compliance with the terms of the Model Statute 
     or Qualifying Statute enacted by such State requiring funds 
     to be placed into a qualified escrow account under specified 
     conditions, or any regulations promulgated pursuant to such 
     terms.
         (b) Penalties.--(1) Whoever shall knowingly and willfully 
     violate subsection (a) shall be fined not more than $100,000, 
     imprisoned not more than 2 years, or both.
         (2) Whoever shall violate subsection (a) shall be subject 
     to a civil penalty in an amount not to exceed 2 percent of 
     the gross sales of cigarettes of such person during the one-
     year period ending on the date of the violation.
         (3) A civil penalty under paragraph (2) for a violation 
     of subsection (a) is in addition to any criminal penalty 
     under paragraph (1) for the violation and in addition to any 
     other damages or relief available under law.
         (c) Jurisdiction to Prevent and Restrain Violations.--(1) 
     The United States district courts shall have jurisdiction to 
     prevent and restrain violations of subsection (a).
         (2) A State, through its attorney general, or any person 
     who holds a permit under section 5712 of the Internal Revenue 
     Code of 1986, may bring an action in the United States 
     district courts to prevent and restrain violations of 
     subsection (a) by any person (or by any person controlling 
     such person).
         (3) A State, through its attorney general, may in a civil 
     action against any person violating subsection (a) obtain any 
     appropriate relief for violations of this section from any 
     person (or by any person controlling such person), including 
     civil penalties, money damages, and injunctive or other 
     equitable relief.
         (4) The remedies available under paragraphs (2) and (3) 
     are in addition to any other remedies available under 
     Federal, State, or other law.
         (5) Nothing in this subsection shall be construed to 
     prohibit an authorized State official from proceeding in 
     State court or taking other enforcement actions on the basis 
     of an alleged violation of State or other law.
         (6) The Attorney General shall administer and enforce 
     subsection (a).
         (d) Definitions.--In this section:
         (1) Master settlement agreement.-- The term ``Master 
     Settlement Agreement'' means the agreement executed November 
     23, 1998, by the Attorneys General of 46 States, the District 
     of Columbia, the Commonwealth of Puerto Rico, and four 
     Territories of the United States, on the one hand, and 
     certain tobacco manufacturers on the other hand.
         (2) Tobacco product manufacturer.--The term ``Tobacco 
     Product Manufacturer'' has the meaning given that term in 
     section II(uu) of the Master Settlement Agreement.
         (3) Model statute; qualifying statute.--The terms ``Model 
     Statute'' and ``Qualifying Statute'' means a statute as 
     defined in section IX(d)(2)(e) of the Master Settlement 
     Agreement.
         (4) Delivery sale.--The term ``delivery sale'' means any 
     sale of cigarettes or smokeless tobacco in interstate 
     commerce to a consumer if--
         (A) the consumer submits the order for such sale by means 
     of a telephone or other method of voice transmission, the 
     mails, or the Internet or other online service, or the seller 
     is otherwise not in the physical presence of the buyer when 
     the request for purchase or order is made; or
         (B) the cigarettes or smokeless tobacco are delivered by 
     use of a common carrier, private delivery service, or the 
     mails, or the seller is not in the physical presence of the 
     buyer when the buyer obtains personal possession of the 
     delivered cigarettes or smokeless tobacco.
         (5) Interstate commerce.--The term ``interstate 
     commerce'' means commerce between a State and any place 
     outside the State, commerce between a State and any Indian 
     lands in the State, or commerce between points in the same 
     State but through any place outside the State or through any 
     Indian lands.

     SEC. 6. UNDERCOVER CRIMINAL INVESTIGATIONS OF THE BUREAU OF 
                   ALCOHOL, TOBACCO, FIREARMS, AND EXPLOSIVES.

         (a) In General.--(1) Commencing as of the date of the 
     enactment of this Act and without fiscal year limitation, the 
     authorities in section 102(b) of the Department of Justice 
     and Related Agencies Appropriations Act, 1993 (title I of 
     Public Law 102-395; 106 Stat. 1838) shall be available to the 
     Bureau of Alcohol, Tobacco, Firearms, and Explosives for 
     undercover investigative operations of the Bureau which are 
     necessary for the detection and prosecution of crimes against 
     the United States.
         (2) For purposes of the exercise of the authorities 
     referred to in paragraph (1) by the Bureau, a reference in 
     such section 102(b) to the Federal Bureau of Investigation 
     shall be deemed to be a reference to the Bureau of Alcohol, 
     Tobacco, Firearms, and Explosives, and a reference to the 
     Director of the Federal Bureau of Investigation shall be 
     deemed to be a reference to the Director of the Bureau of 
     Alcohol, Tobacco, Firearms, and Explosives.
         (b) Limitations in Appropriations Acts.--The exercise of 
     the authorities referred to in

[[Page S16207]]

     subsection (a)(1) by the Bureau of Alcohol, Tobacco, 
     Firearms, and Explosives shall be subject to the provisions 
     of appropriations Acts.

     SEC. 7. INSPECTION BY BUREAU OF ALCOHOL, TOBACCO, FIREARMS, 
                   AND EXPLOSIVES OF RECORDS OF CERTAIN CIGARETTE 
                   AND SMOKELESS TOBACCO SELLERS.

         (a) In General.--Any officer of the Bureau of Alcohol, 
     Tobacco, Firearms, and Explosives may, during normal business 
     hours, enter the premises of any person described in 
     subsection (b) for the purposes of inspecting--
         (1) any records or information required to be maintained 
     by such person under the provisions of law referred to in 
     subsection (d); or
         (2) any cigarettes or smokeless tobacco kept or stored by 
     such person at such premises.
         (b) Covered Persons.--A person described in this 
     subsection is any person who engages in a delivery sale, and 
     who ships, sells, distributes, or receives any quantity in 
     excess of 10,000 cigarettes, or any quantity in excess of 500 
     single-unit consumer-sized cans or packages of smokeless 
     tobacco, within a single month.
         (c) Relief.--(1) The district courts of the United States 
     shall have the authority in a civil action under this 
     subsection to compel inspections authorized by subsection 
     (a).
         (2) Whoever violates subsection (a) or an order issued 
     pursuant to paragraph (1) shall be subject to a civil penalty 
     in an amount not to exceed $10,000 for each violation.
         (d) Covered Provisions of Law.--The provisions of law 
     referred to in this subsection are as follows:
         (1) The Act of October 19, 1949 (15 U.S.C. 375; commonly 
     referred to as the ``Jenkins Act'').
         (2) Chapter 114 of title 18, United States Code.
         (3) This Act.
         (e) Delivery Sale Defined.--In this section, the term 
     ``delivery sale'' has the meaning given that term in 
     2343(e)(1) of title 18, United States Code, as amended by 
     section 4(b)(3) of this Act.

     SEC. 8. EFFECTIVE DATE.

         (a) In General.--Except as provided in subsection (b), 
     this Act shall take effect 90 days after the date of the 
     enactment of this Act.
         (b) BATFE Authority.--
         (1) In general.--Sections 6 and 7 shall take effect on 
     the date of the enactment of this Act.
         (2) Definition.--For purposes of section 7, the 
     definition of delivery sale in section 2343(e)(1) of title 
     18, United States Code, as amended by section 4(b)(3) of this 
     Act, shall take effect on the date of the enactment of this 
     Act.
           Amend the title so as to read: ``A bill to prevent 
     tobacco smuggling, to ensure the collection of all tobacco 
     taxes, and for other purposes.''.

  Mr. LEAHY. Mr. President, I am pleased that today the Senate is 
taking up and passing the Prevent All Cigarette Trafficking, PACT, Act, 
S. 1177. I commend Chairman Hatch and Senator Kohl for introducing this 
legislation and thank them for working with me, among others, to craft 
the compromise language that we will consider today to crack down on 
the growing problem of cigarette smuggling, both interstate and 
international, as well as to address the connection between cigarette 
smuggling activities and terrorist funding. I am proud to join Senator 
Hatch, Senator Kohl and others as a cosponsor of the underlying bill.
  I also thank the National Association of Attorneys General and the 
Campaign for Tobacco-Free Kids, for working with us and contributing to 
the substitute language. I want to say a special thanks to Vermont 
Attorney General Bill Sorrell, who also serves as the current Chair of 
the NAAG Tobacco Committee, for his valuable input on the problems with 
cigarette smuggling that States are facing and his support for this 
compromise measure. I also want to thank the Vermont Grocers 
Association, the Vermont Retail Association, the Vermont Association of 
Chiefs of Police, and the National Conference of State Legislatures for 
their support for this measure.
  The movement of cigarettes from low-tax areas to high-tax areas in 
order to avoid the payment of taxes when the cigarettes are resold has 
become a public health problem in recent years. As State after State 
chooses to raise its tobacco excise taxes as a means of reducing 
tobacco use and as a source of revenue, many smokers have sought 
cheaper means by which to purchase cigarettes. Smokers can often 
purchase cigarettes and tobacco from remote sellers, Internet or mail 
order at substantial discounts due to avoidance of State taxes. These 
sellers, however, are evading their tax obligations because they 
neither collect nor pay the proper State and local excise taxes for 
cigarette and other tobacco product sales.
  We have the ability to dramatically reduce smuggling without imposing 
undue burdens on manufacturers or law abiding citizens. By reducing 
smuggling, we will also increase government revenues by minimizing tax 
avoidance. My friend General Sorrell has told me that this has become a 
rapidly growing problem in Vermont as more and more tobacco product 
manufacturers fail to collect and pay cigarette taxes. Criminals are 
getting away with smuggling and not paying tobacco taxes because of 
weak punishments, products that are often poorly labeled, the lack of 
tax stamps and the inability of the current distribution system to 
track sales from State to State. These lapses point to a need for 
uniform rules governing group sales to individuals.
  The PACT Act will give States the authority to collect millions of 
dollars in lost State tax revenue resulting from online and other 
remote sales of cigarette and smokeless tobacco. It also ensures that 
every tobacco retailer, whether a brick-and-mortar or remote retailer 
of tobacco products, play by the same rules by equalizing the tax 
burdens.
  Moreover, the PACT Act gives States the authority necessary to 
enforce the Jenkins Act, a law passed in 1949, which requires cigarette 
vendors to report interstate sales of cigarettes. This legislation 
enhances States' abilities to collect all excise taxes and verify the 
deposit of all required escrow payments for cigarette and smokeless 
tobacco sales in interstate commerce, including internet sales. In 
addition, it provides Federal and State law enforcement with additional 
resources to enforce State tobacco excise tax laws.
  Finally, at the request of the National Association of attorneys 
general and many State attorneys general, we have added a new section 
to provide the States with authority to enforce the Imported Cigarette 
Compliance Act to crack down on international tobacco smuggling. This 
additional authority should further reduce tax evasion and eliminate a 
lucrative funding source for terrorist organizations.
  We must not turn a blind eye to the problem of illegal tobacco 
smuggling. Those who smuggle cigarettes are criminals. I look forward 
to the Senate approving the bipartisan PACT Act today to close the 
loopholes that allow cigarette smuggling to continue. I urge the 
leaders of the House to follow our lead and pass this legislation.
  Mr. KOHL. Mr. President, the proceeds of cigarette smuggling from low 
tax States has developed into a popular means of generating revenue for 
organized crime and even terrorist organizations. A recent 
investigation by the Bureau of Alcohol, Tobacco, Firearms, and 
Explosives, BATFE, disrupted a smuggling scheme between North Carolina 
and Michigan, where the revenue generated was being funneled to 
Hezbollah, a terrorist organization. It is evident that the 
consequences of permitting this behavior to continue unchecked cannot 
be underestimated.
  To make matters worse, this problem is on the rise. According to the 
BATFE, 10 cigarette smuggling cases were initiated in 1998. That has 
grown to approximately 160 in 2002.
  Moreover, the sale of tobacco products over the Internet facilitates 
the avoidance of State cigarette taxes, denying States the ability to 
collect tax dollars they are owed--money the States need now more than 
ever.
  The PACT Act take a commonsense approach to addressing these 
problems. It increases penalties, provides more tools for enforcement, 
and closes loopholes in current law. These moderate, but important, 
changes will further enable Federal, State, local, and tribal officials 
to crack down on tobacco smugglers and ensure that Internet tobacco 
sellers pay applicable taxes.
  Despite being passed unanimously by the Judiciary Committee, some 
raised concerns over the legislation, particularly with respect to its 
effect on Indian Tribal sovereignty. After intensive negotiations with 
numerous interested parties, including the Campaign for Tobacco Free 
Kids, the National Association of Attorneys General, the Department of 
Justice and various tribal groups, we have been able to craft language 
that will achieve the goals we set out to attain--to put an end to both 
cigarette trafficking and tobacco tax avoidance--while leaving the 
important principles of Indian Tribal sovereignty unaffected.
  Tobacco companies and antitobacco groups, State law enforcement and 
Federal law enforcement, and Republicans and Democrats all agree that 
this is an issue begging to be addressed. Today, we begin to provide 
the relevant law enforcement authorities

[[Page S16208]]

with the tools they need to put an end to these dangerous practices.
  Mr. FRIST. Mr. President, I ask unanimous consent that the Hatch 
amendment, which is at the desk, be agreed to; that the committee 
substitute amendment, as amended, be agreed to; that the bill, as 
amended, be read the third time and passed; that the title amendment be 
agreed to; that the motions to reconsider be laid upon the table, en 
bloc; and that any statements relating to the bill be printed in the 
Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 2231) was agreed to.
  (The amendment is printed in today's Record under ``Text of 
Amendments.'')
  The committee amendment in the nature of a substitute, as amended, 
was agreed to.
  The title amendment was agreed to.
  The bill (S. 1177), as amended, was read the third time and passed, 
as follows:

                                S. 1177

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Prevent All Cigarette 
     Trafficking Act'' or ``PACT Act''.

     SEC. 2. COLLECTION OF STATE CIGARETTE AND SMOKELESS TOBACCO 
                   TAXES.

       (a) Definitions.--Section 1 of the Act of October 19, 1949 
     (15 U.S.C. 375; commonly referred to as the ``Jenkins Act''), 
     is amended--
       (1) by striking paragraphs (1), (2), and (3) and inserting 
     the following new paragraphs:
       ``(1) The term `attorney general', with respect to a State, 
     means the attorney general or other chief law enforcement 
     officer of the State, or the designee of that officer.
       ``(2) The term `cigarette' means--
       ``(A) any roll of tobacco wrapped in paper or in any 
     substance not containing tobacco which is to be heated or 
     burned;
       ``(B) any roll of tobacco wrapped in any substance 
     containing tobacco that, because of its appearance, the type 
     of tobacco used in the filler, or its packaging or labeling, 
     is likely to be offered to, or purchased by, consumers as a 
     cigarette described in subparagraph (A);
       ``(C) any roll of tobacco wrapped in any substance that 
     because of its appearance, the type of tobacco used in the 
     filler, or its packaging or labeling, is likely to be offered 
     to, or purchased by, consumers as a cigarette; or
       ``(D) loose rolling tobacco that, because of its 
     appearance, type, packaging, or labeling, is likely to be 
     offered to, or purchased by, consumers as tobacco for making 
     cigarettes.
       ``(3) The term `smokeless tobacco' means any finely cut, 
     ground, powdered, or leaf tobacco that is intended to be 
     placed in the oral or nasal cavity or otherwise consumed 
     without being combusted.'';
       (2) in paragraph (5)--
       (A) by inserting ``, local, or Tribal'' after ``the 
     State'';
       (B) by striking ``administer the cigarette tax law'' and 
     inserting ``collect the tobacco tax or administer the tax 
     law''; and
       (C) by inserting ``, locality, or Tribe, respectively'' 
     after ``a State''.
       (3) by striking paragraph (6) and inserting the following 
     new paragraph (6):
       ``(6) The term `delivery sale' means any sale of cigarettes 
     or smokeless tobacco in interstate commerce to a consumer 
     if--
       ``(A) the consumer submits the order for such sale by means 
     of a telephone or other method of voice transmission, the 
     mails, or the Internet or other online service, or the seller 
     is otherwise not in the physical presence of the buyer when 
     the request for purchase or order is made; or
       ``(B) the cigarettes or smokeless tobacco are delivered by 
     use of a common carrier, private delivery service, or the 
     mails, or the seller is not in the physical presence of the 
     buyer when the buyer obtains personal possession of the 
     delivered cigarettes or smokeless tobacco.''; and
       (4) by adding at the end the following new paragraphs:
       ``(8) The term `delivery seller' means a person who makes a 
     delivery sale.
       ``(9) The term `common carrier' means any person (other 
     than a local messenger service or the United States Postal 
     Service (as defined in section 102 of title 39, United States 
     Code)) that holds itself out to the general public as a 
     provider for hire of the transportation by water, land, or 
     air of merchandise, whether or not the person actually 
     operates the vessel, vehicle, or aircraft by which the 
     transportation is provided, between a port or place and a 
     port or place in the United States.
       ``(10) The term `interstate commerce' means commerce 
     between a State and any place outside the State, commerce 
     between a State and any Indian lands in the State, or 
     commerce between points in the same State but though any 
     place outside the State or through any Indian lands.
       ``(11) The term `person' means an individual, corporation, 
     company, association, firm, partnership, society, State 
     government, local government, Indian tribal government, 
     governmental organization of such government, or joint stock 
     company.
       ``(12) The term `State' means a State of the United States, 
     the District of Columbia, the Commonwealth of Puerto Rico, or 
     any territory or possession of the United States.
       ``(13) The term `Indian Country' has the meaning given that 
     term in section 1151 of title 18, United States Code, except 
     that within the State of Alaska that term applies only to the 
     Metlakatla Indian Community, Annette Island Reserve.
       ``(14) The term `Indian Tribe', `Tribe', or `Tribal' refers 
     to an Indian tribe as defined in the Indian Self-
     Determination and Education Assistance Act (25 U.S.C. 
     450b(e)) or as listed pursuant to section 104 of the 
     Federally Recognized Indian Tribe List Act of 1994 (Public 
     Law 103-454; 25 U.S.C. 479a-1).
       ``(15) The term `tobacco tax administrator', in the case of 
     a State, local, or Tribal government, means the official of 
     the government duly authorized to collect the tobacco tax or 
     administer the tax law of the government.''.
       (b) Reports to State Tobacco Tax Administrators.--Section 2 
     of that Act (15 U.S.C. 376) is amended--
       (1) by striking ``cigarettes'' each place it appears and 
     inserting ``cigarettes or smokeless tobacco'';
       (2) in subsection (a)--
       (A) in the matter preceding paragraph (1)--
       (i) by striking ``or transfers'' and inserting ``, 
     transfers, or ships'';
       (ii) by inserting ``, locality, or Indian Country of an 
     Indian Tribe'' after ``a State''; and
       (iii) by striking ``to other than a distributor licensed by 
     or located in such State,'';
       (B) in paragraph (1)--
       (i) by striking ``administrator of the State'' and 
     inserting ``administrators of the State and place''; and
       (ii) by striking ``; and'' and inserting the following: ``, 
     as well as telephone numbers for each place of business, a 
     principal electronic mail address, any website addresses, and 
     the name, address, and telephone number of an agent in the 
     State authorized to accept service on behalf of such 
     person;'';
       (C) in paragraph (2), by striking ``and the quantity 
     thereof.'' and inserting ``the quantity thereof, and the 
     name, address, and phone number of the person delivering the 
     shipment to the recipient on behalf of the delivery seller, 
     with all invoice or memoranda information relating to 
     specific customers to be organized by city or town and by zip 
     code; and''; and
       (D) by adding at the end the following new paragraph:
       ``(3) with respect to each memorandum or invoice filed with 
     a State under paragraph (2), also file copies of such 
     memorandum or invoice with the tobacco tax administrators and 
     chief law enforcement officers of the local governments and 
     Indian Tribes operating within the borders of the State that 
     apply their own local or Tribal taxes on cigarettes or 
     smokeless tobacco.''; and
       (3) in subsection (b)--
       (A) by striking ``(1)''; and
       (B) by striking ``, and (2)'' and all that follows and 
     inserting a period.
       (c) Requirements for Delivery Sales.--That Act is further 
     amended by inserting after section 2 the following new 
     section:
       ``Sec. 2A. (a) With respect to delivery sales into a 
     specific State and place, each delivery seller shall comply 
     with--
       ``(1) the shipping requirements set forth in subsection 
     (b);
       ``(2) the recordkeeping requirements set forth in 
     subsection (c);
       ``(3) all State, local, Tribal, and other laws generally 
     applicable to sales of cigarettes or smokeless tobacco as if 
     such delivery sales occurred entirely within the specific 
     State and place, including laws imposing--
       ``(A) excise taxes;
       ``(B) licensing and tax-stamping requirements; and
       ``(C) other payment obligations or legal requirements 
     relating to the sale, distribution, or delivery of cigarettes 
     or smokeless tobacco; and
       ``(4) the tax collection requirements set forth in 
     subsection (d).
       ``(b)(1) Each delivery seller shall include on the bill of 
     lading included with the shipping package containing 
     cigarettes or smokeless tobacco sold pursuant to such order a 
     clear and conspicuous statement providing as follows: 
     `CIGARETTES/SMOKELESS TOBACCO: FEDERAL LAW REQUIRES THE 
     PAYMENT OF ALL APPLICABLE EXCISE TAXES, AND COMPLIANCE WITH 
     APPLICABLE LICENSING AND TAX-STAMPING OBLIGATIONS'.
       ``(2) Any shipping package described in paragraph (1) that 
     is not labeled in accordance with that paragraph shall be 
     treated as non-deliverable matter by a common carrier or the 
     United States Postal Service if the common carrier or the 
     United States Postal Service, as the case may be, knows or 
     should know the contents of the package.
       ``(c)(1) Each delivery seller shall keep a record of all 
     delivery sales so made, including all of the information 
     described in section 2(a)(2), organized by the State, and 
     within such State, by the city or town and by zip code, into 
     which such delivery sales are so made.
       ``(2) Records of delivery sales shall be kept under 
     paragraph (1) in the year in which made and for the next four 
     years.
       ``(3) Records kept under paragraph (1) shall be made 
     available to tobacco tax administrators of the States, to 
     local governments and Indian Tribes that apply their own 
     local or Tribal taxes on cigarettes or smokeless tobacco, to 
     the attorneys general of the States,

[[Page S16209]]

     to the chief law enforcement officers of such local 
     governments and Indian Tribes, and to the Attorney General of 
     the United States in order to ensure the compliance of 
     persons making delivery sales with the requirements of this 
     Act.
       ``(d)(1) Except as provided in paragraph (2), no cigarettes 
     or smokeless tobacco may be delivered pursuant to a delivery 
     sale in interstate commerce unless in advance of the 
     delivery--
       ``(A) any cigarette or smokeless tobacco excise tax that is 
     imposed by the State in which the cigarettes or smokeless 
     tobacco are to be delivered has been paid to the State;
       ``(B) any cigarette or smokeless tobacco excise tax that is 
     imposed by the local government of the place in which the 
     cigarette or smokeless tobacco are to be delivered has been 
     paid to the local government; and
       ``(C) any required stamps or other indicia that such excise 
     tax has been paid are properly affixed or applied to the 
     cigarettes or smokeless tobacco.
       ``(2) Paragraph (1) does not apply to a delivery sale of 
     smokeless tobacco if the law of the State or local government 
     of the place where the smokeless tobacco is to be delivered 
     requires or otherwise provides that delivery sellers collect 
     the excise tax from the consumer and remit the excise tax to 
     the State or local government, and the delivery seller 
     complies with the requirement.
       ``(e)(1) Each State, and each local government or Indian 
     Tribal government that levies a tax subject to subsection 
     (a)(3), may compile a list of delivery sellers who are in 
     compliance with this Act with respect to such State, 
     locality, or Indian Tribe. If a State, local government, or 
     Indian Tribe posts a list pursuant to this subsection that 
     specifically refers to this subsection, no common carrier or 
     other person may knowingly deliver cigarettes or smokeless 
     tobacco to consumers in such State or locality or in the 
     Indian Country of such Indian Tribe unless the delivery 
     seller is on the list at the time of delivery.
       ``(2)(A) Each State, and each local government or Indian 
     Tribal government that levies a tax subject to subsection 
     (a)(3), may compile a list of delivery sellers who are not in 
     compliance with this Act with respect to such State, 
     locality, or Indian Tribe.
       ``(B) A State, locality, or Indian Tribal government may 
     provide such a list to a common carrier, the United States 
     Postal Service, or other person. Such a list shall be 
     confidential, and a common carrier, the United States Postal 
     Service, or other person that receives such a list shall 
     maintain the confidentiality of such list.
       ``(C) If a State, local government, or Indian Tribal 
     government provides such a list pursuant to this subsection 
     that specifically refers to this subsection, no common 
     carrier, the United States Postal Service, or other person 
     may knowingly deliver any item to a consumer in such State or 
     locality or in the Indian Country of such Indian Tribe for a 
     delivery seller on such list unless the common carrier, the 
     United States Postal Service, or person in good faith 
     determines that the item does not include cigarettes or 
     smokeless tobacco.
       ``(f) For purposes of this Act, a delivery sale shall be 
     deemed to have occurred in the State and place where the 
     buyer obtains personal possession of the cigarettes or 
     smokeless tobacco, and a delivery pursuant to a delivery sale 
     is deemed to have been initiated or ordered by the delivery 
     seller.''.
       (d) Penalties.--Section 3 of that Act (15 U.S.C. 377) is 
     amended--
       (1) by inserting ``(a)'' before ``Whoever'';
       (2) in subsection (a), as so designated--
       (A) by inserting ``(except for a State, local, or Tribal 
     government)'' after ``this Act''; and
       (B) by striking ``shall be guilty of a misdemeanor and 
     shall be fined not more than $1,000, or imprisoned not more 
     than 6 months'' and inserting ``shall be guilty of a felony, 
     fined under subchapter C of chapter 227 of title 18, United 
     States Code, imprisoned not more than three years, or both''; 
     and
       (3) by adding at the end the following new subsection:
       ``(b)(1) Whoever violates any provision of this Act shall 
     be subject to a civil penalty in an amount not to exceed the 
     greater of--
       ``(A) $5,000 in the case of the first violation, or $10,000 
     for any other violation; or
       ``(B) for any violation, 2 percent of the gross sales of 
     cigarettes or smokeless tobacco of such person during the 
     one-year period ending on the date of the violation.
       ``(2) A civil penalty under paragraph (1) for a violation 
     of this Act is in addition to any criminal penalty under 
     subsection (a) for the violation.''.
       (e) Enforcement.--Section 4 of that Act (15 U.S.C. 378) is 
     amended--
       (1) by inserting ``(a)'' before ``The United States 
     district courts'';
       (2) in subsection (a), as so designated, by inserting 
     before the period the following: ``, and to provide other 
     appropriate injunctive or equitable relief, including money 
     damages, for such violations''; and
       (3) by adding at the end the following new subsections:
       ``(b) The Attorney General of the United States shall 
     administer and enforce the provisions of this Act.
       ``(c)(1)(A) A State, through its attorney general (or a 
     designee thereof), or a local government or Indian Tribe that 
     levies a tax subject to section 2A(a)(3), through its chief 
     law enforcement officer (or a designee thereof), may bring an 
     action in the United States district courts to prevent and 
     restrain violations of this Act by any person (or by any 
     person controlling such person) or to obtain any other 
     appropriate relief from any person (or from any person 
     controlling such person) for violations of this Act, 
     including civil penalties, money damages, and injunctive or 
     other equitable relief.
       ``(B) Nothing in this Act shall be deemed to abrogate or 
     constitute a waiver of any sovereign immunity of a State or 
     local government or Indian Tribe against any unconsented 
     lawsuit under this Act, or otherwise to restrict, expand, or 
     modify any sovereign immunity of a State or local government 
     or Indian Tribe.
       ``(2) A State, through its attorney general, or a local 
     government or Indian Tribe that levies a tax subject to 
     section 2A(a)(3), through its chief law enforcement officer 
     (or a designee thereof), may provide evidence of a violation 
     of this Act by any person not subject to State, local, or 
     Tribal government enforcement actions for violations of this 
     Act to the Attorney General of the United States or a United 
     State Attorney, who shall take appropriate actions to enforce 
     the provisions of this Act.
       ``(3)(A) Notwithstanding any other provision of law and 
     subject to subparagraph (B), an amount equal to 50 percent of 
     any criminal and civil penalties collected by the United 
     States Government in enforcing the provisions of this Act 
     shall be available to the Department of Justice for purposes 
     of enforcing the provisions of this Act and other laws 
     relating to contraband tobacco products.
       ``(B) Of the amount available to the Department under 
     subparagraph (A), not less than 50 percent shall be made 
     available only to the agencies and offices within the 
     Department that were responsible for the enforcement actions 
     in which the penalties concerned were imposed.
       ``(4) The remedies available under this subsection are in 
     addition to any other remedies available under Federal, 
     State, local, Tribal, or other law.
       ``(5) Nothing in this Act shall be construed to expand, 
     restrict, or otherwise modify any right of an authorized 
     State official to proceed in State court, or take other 
     enforcement actions, on the basis of an alleged violation of 
     State or other law.
       ``(6) Nothing in this Act shall be construed to expand, 
     restrict, or otherwise modify any right of an authorized 
     Indian Tribal government official to proceed in Tribal court, 
     or take other enforcement actions, on the basis of an alleged 
     violation of Tribal law.
       ``(7) Nothing in this Act shall be construed to expand, 
     restrict, or otherwise modify any right of an authorized 
     local government official to proceed in State court, or take 
     other enforcement actions, on the basis of an alleged 
     violation of local or other law.
       ``(d) Any person who holds a permit under section 5712 of 
     the Internal Revenue Code of 1986 may bring an action in the 
     United States district courts to prevent and restrain 
     violations of this Act by any person (or by any person 
     controlling such person) other than a State, local, or Tribal 
     government.
       ``(e)(1) Any person who commences a civil action under 
     subsection (d) shall inform the Attorney General of the 
     United States of the action.
       ``(2) It is the sense of Congress that any attorney general 
     of a State, or chief law enforcement officer of a locality or 
     Tribe, who commences a civil action under this section should 
     inform the Attorney General of the United States of the 
     action.
       ``(f)(1) The Attorney General of the United States shall 
     make available to the public, by posting such information on 
     the Internet and by other means, information about all 
     enforcement actions undertaken by the Attorney General or 
     United States Attorneys, or reported to the Attorney General, 
     under this section, including information on the resolution 
     of such actions and, in particular, information on how the 
     Attorney General and the United States Attorney have 
     responded to referrals of evidence of violations pursuant to 
     subsection (b)(2).
       ``(2) The Attorney General shall submit to Congress each 
     year a report containing the information described in 
     paragraph (1).''.

     SEC. 3. TREATMENT OF CIGARETTES AND SMOKELESS TOBACCO AS 
                   NONMAILABLE MATTER.

       Section 1716 of title 18, United States Code, is amended--
       (1) by redesignating subsections (j) and (k) as subsections 
     (k) and (l), respectively; and
       (2) by inserting after subsection (i) the following new 
     subsection (j):
       ``(j)(1) Except as provided in paragraph (2), the 
     transmission in the mails of any tobacco product, including 
     cigarettes (as that term is defined in section 1(2) of the 
     Act of October 19, 1949 (15 U.S.C. 375; commonly referred to 
     as the `Jenkins Act')) and smokeless tobacco (as that term is 
     defined in section 1(3) of that Act), is prohibited, and 
     tobacco products are nonmailable and shall not be deposited 
     in or carried through the mails.
       ``(2) Paragraph (1) shall apply only to States that are 
     contiguous with at least one other State of the United 
     States.''.

     SEC. 4. PENAL PROVISIONS REGARDING TRAFFICKING IN CONTRABAND 
                   CIGARETTES OR SMOKELESS TOBACCO.

       (a) Threshold Quantity for Treatment as Contraband 
     Cigarettes.--(1) Section 2341(2) of title 18, United States 
     Code, is amended by striking ``60,000 cigarettes'' and 
     inserting ``10,000 cigarettes''.
       (2) Section 2342(b) of that title is amended by striking 
     ``60,000'' and inserting ``10,000''.
       (3) Section 2343 of that title is amended--

[[Page S16210]]

       (A) in subsection (a), by striking ``60,000'' and inserting 
     ``10,000''; and
       (B) in subsection (b), by striking ``60,000'' and inserting 
     ``10,000''.
       (b) Contraband Smokeless Tobacco.--(1) Section 2341 of that 
     title is amended--
       (A) in paragraph (4), by striking ``and'' at the end;
       (B) in paragraph (5), by striking the period at the end and 
     inserting a semicolon; and
       (C) by adding at the end the following new paragraphs:
       ``(6) the term `smokeless tobacco' means any finely cut, 
     ground, powdered, or leaf tobacco that is intended to be 
     placed in the oral or nasal cavity or otherwise consumed 
     without being combusted;
       ``(7) the term `contraband smokeless tobacco' means a 
     quantity in excess of 500 single-unit consumer-sized cans or 
     packages of smokeless tobacco, or their equivalent, that are 
     in the possession of any person other than--
       ``(A) a person holding a permit issued pursuant to chapter 
     52 of the Internal Revenue Code of 1986 as manufacturer of 
     tobacco products or as an export warehouse proprietor, a 
     person operating a customs bonded warehouse pursuant to 
     section 311 or 555 of the Tariff Act of 1930 (19 U.S.C. 1311, 
     1555), or an agent of such person;
       ``(B) a common carrier transporting such smokeless tobacco 
     under a proper bill of lading or freight bill which states 
     the quantity, source, and designation of such smokeless 
     tobacco;
       ``(C) a person who--
       ``(i) is licensed or otherwise authorized by the State 
     where such smokeless tobacco is found to engage in the 
     business of selling or distributing tobacco products or, for 
     smokeless tobacco found in Indian Country, is licensed or 
     otherwise authorized by the Tribal government of such Indian 
     Country to account for and pay smokeless tobacco taxes 
     imposed by the Tribal government; and
       ``(ii) has complied with the accounting, tax, and payment 
     requirements relating to such license or authorization with 
     respect to such smokeless tobacco; or
       ``(D) an officer, employee, or agent of the United States 
     or a State or a Tribe, or any department, agency, or 
     instrumentality of the United States, a State (including any 
     political subdivision of a State), or a Tribe (including any 
     political subdivision of a Tribe), having possession of such 
     smokeless tobacco in connection with the performance of 
     official duties;''.
       (2) Section 2342(a) of that title is amended by inserting 
     ``or contraband smokeless tobacco'' after ``contraband 
     cigarettes''.
       (3) Section 2343(a) of that title is amended by inserting 
     ``, or any quantity of smokeless tobacco in excess of 500 
     single-unit consumer-sized cans or packages,'' before ``in a 
     single transaction''.
       (4) Section 2344(c) of that title is amended by inserting 
     ``or contraband smokeless tobacco'' after ``contraband 
     cigarettes''.
       (5) Section 2345 of that title is amended by inserting ``or 
     smokeless tobacco'' after ``cigarettes'' each place it 
     appears.
       (c) Additional Definitional Matters.--Section 2341 of such 
     title is further amended--
       (1) in paragraph (2), as amended by subsection (a)(1) of 
     this section--
       (A) in the matter preceding subparagraph (A), by striking 
     ``State cigarette taxes in the State where such cigarettes 
     are found, if the State'' and inserting ``State, local, or 
     Tribal cigarette taxes in the State, locality, or Indian 
     Country where such cigarettes are found, if the State, local 
     or Tribal government'';
       (B) in subparagraph (C)(i), by inserting before the 
     semicolon the following: ``, or, for cigarettes found in 
     Indian County, is licensed or otherwise authorized by the 
     Tribal government of such Indian Country to account for and 
     pay cigarette taxes imposed by the Tribal government''; and
       (C) in subparagraph (D)--
       (i) by inserting ``or a Tribe'' after ``a State'' the first 
     place it appears; and
       (ii) by striking ``or a State (or any political subdivision 
     of a State)'' and inserting ``, a State (or any political 
     subdivision of a State), or a Tribe (including any political 
     subdivision of a Tribe)'';
       (2) in paragraph (3), by inserting before the semicolon the 
     following: ``, or, for a carrier making a delivery entirely 
     within Indian Country, under equivalent operating authority 
     from the Indian Tribal government of such Indian Country''; 
     and
       (3) by adding at the end the following new paragraphs:
       ``(8) the term `Indian Country' has the meaning given that 
     term in section 1151 of title 18, United States Code, except 
     that within the State of Alaska that term applies only to the 
     Metlakatla Indian Community, Annette Island Reserve; and
       ``(9) the term `Indian Tribe', `Tribe', or `Tribal' refers 
     to an Indian tribe as defined in the Indian Self-
     Determination and Education Assistance Act (25 U.S.C. 
     450b(e)) or as listed pursuant to section 104 of the 
     Federally Recognized Indian Tribe List Act of 1994 (Public 
     Law 103-454; 25 U.S.C. 479a-1).''.
       (d) Recordkeeping, Reporting, and Inspection.--Section 2343 
     of that title, as amended by this section, is further 
     amended--
       (1) in subsection (a)--
       (A) in the matter preceding paragraph (1), by striking 
     ``only--'' and inserting ``such information as the Attorney 
     General considers appropriate for purposes of enforcement of 
     this chapter, including--''; and
       (B) in the flush matter following paragraph (3), by 
     striking the second sentence;
       (2) by redesignating subsection (b) as subsection (c);
       (3) by inserting after subsection (a) the following new 
     subsection (b):
       ``(b) Any person who engages in a delivery sale, and who 
     ships, sells, or distributes any quantity in excess of 10,000 
     cigarettes, or any quantity in excess of 500 single-unit 
     consumer-sized cans or packages of smokeless tobacco, or 
     their equivalent, within a single month, shall submit to the 
     Attorney General, pursuant to rules or regulations prescribed 
     by the Attorney General, a report that sets forth the 
     following:
       ``(1) The person's beginning and ending inventory of 
     cigarettes and cans or packages of smokeless tobacco (in 
     total) for such month.
       ``(2) The total quantity of cigarettes and cans or packages 
     of smokeless tobacco that the person received within such 
     month from each other person (itemized by name and address).
       ``(3) The total quantity of cigarettes and cans or packages 
     of smokeless tobacco that the person distributed within such 
     month to each person (itemized by name and address) other 
     than a retail purchaser.''; and
       (4) by adding at the end the following new subsections:
       ``(d) Any report required to be submitted under this 
     chapter to the Attorney General shall also be submitted to 
     the Secretary of the Treasury and to the attorneys general 
     and the tax administrators of the States from where the 
     shipments, deliveries, or distributions both originated and 
     concluded, and to the chief law enforcement officer and tax 
     administrator of the Tribe for shipments, deliveries or 
     distributions that originated or concluded on the Indian 
     Country of the Indian Tribe.
       ``(e) In this section, the term `delivery sale' means any 
     sale of cigarettes or smokeless tobacco in interstate 
     commerce to a consumer if--
       ``(A) the consumer submits the order for such sale by means 
     of a telephone or other method of voice transmission, the 
     mails, or the Internet or other online service, or by any 
     other means where the consumer is not in the same physical 
     location as the seller when the purchase or offer of sale is 
     made; or
       ``(B) the cigarettes or smokeless tobacco are delivered by 
     use of the mails, common carrier, private delivery service, 
     or any other means where the consumer is not in the same 
     physical location as the seller when the consumer obtains 
     physical possession of the cigarettes or smokeless tobacco.
       ``(f) In this section, the term `interstate commerce' means 
     commerce between a State and any place outside the State, 
     commerce between a State and any Indian lands in the State, 
     or commerce between points in the same State but through any 
     place outside the State or though any Indian lands.''.
       (e) Disposal or Use of Forfeited Cigarettes and Smokeless 
     Tobacco.--Section 2344(c) of that title, as amended by this 
     section, is further amended by striking ``seizure and 
     forfeiture,'' and all that follows and inserting ``seizure 
     and forfeiture, and any cigarettes or smokeless tobacco so 
     seized and forfeited shall be either--
       ``(1) destroyed and not resold; or
       ``(2) used for undercover investigative operations for the 
     detection and prosecution of crimes, and then destroyed and 
     not resold.''.
       (f) Effect on State, Local, and Tribal Law.--Section 2345 
     of that title is amended--
       (1) in subsection (a), by striking ``a State to enact and 
     enforce'' and inserting ``a State, local government, or Tribe 
     to enact and enforce its own''; and
       (2) in subsection (b), by striking ``of States, through 
     interstate compact or otherwise, to provide for the 
     administration of State'' and inserting ``of State, local, or 
     Tribal governments, through interstate compact or otherwise, 
     to provide for the administration of State, local, or 
     Tribal''.
       (g) Enforcement.--Section 2346 of that title is amended--
       (1) by inserting ``(a)'' before ``The Attorney General''; 
     and
       (2) by adding at the end the following new subsection:
       ``(b)(1) A State, through its attorney general, a local 
     government or Indian Tribe, through its chief law enforcement 
     officer (or a designee thereof), or any person who holds a 
     permit under section 5712 of the Internal Revenue Code of 
     1986, may bring an action in the United States district 
     courts to prevent and restrain violations of this chapter by 
     any person (or by any person controlling such person), except 
     that any person who holds a permit under section 5712 of the 
     Internal Revenue Code of 1986 may not bring such an action 
     against a State, local, or Tribal government.
       ``(2) A State, through its attorney general, or a local 
     government or Indian Tribe, through its chief law enforcement 
     officer (or a designee thereof), may in a civil action under 
     paragraph (1) also obtain any other appropriate relief for 
     violations of this chapter from any person (or by any person 
     controlling such person), including civil penalties, money 
     damages, and injunctive or other equitable relief. Nothing in 
     this chapter shall be deemed to abrogate or constitute a 
     waiver of any sovereign immunity of a State or local 
     government or Indian Tribe against any unconsented lawsuit 
     under this chapter, or otherwise to restrict, expand, or 
     modify any sovereign immunity of a State or local government 
     or Indian Tribe.
       ``(3) The remedies under paragraphs (1) and (2) are an 
     addition to any other remedies under Federal, State, local, 
     Tribal, or other law.

[[Page S16211]]

       ``(4) Nothing in this chapter shall be construed to expand, 
     restrict, or otherwise modify any right of an authorized 
     State official to proceed in State court, or take other 
     enforcement actions, on the basis of an alleged violation of 
     State or other law.
       ``(5) Nothing in this chapter shall be construed to expand, 
     restrict, or otherwise modify any right of an authorized 
     Indian Tribal government official to proceed in Tribal court, 
     or take other enforcement actions, on the basis of an alleged 
     violation of Tribal law.
       ``(6) Nothing in this chapter shall be construed to expand, 
     restrict, or otherwise modify any right of an authorized 
     local government official to proceed in State court, or take 
     other enforcement actions, on the basis of an alleged 
     violation of local or other law.''.
       (h) Conforming and Clerical Amendments.--(1) The section 
     heading for section 2343 of that title is amended to read as 
     follows:

     ``Sec. 2343. Recordkeeping, reporting, and inspection''.

       (2) The section heading for section 2345 of such title is 
     amended to read as follows:

     ``Sec. 2345. Effect on State, Tribal, and local law''.

       (3) The table of sections at the beginning of chapter 114 
     of that title is amended--
       (A) by striking the item relating to section 2343 and 
     inserting the following new item:

``2343. Recordkeeping, reporting, and inspection.'';

     and
       (B) by striking the item relating to section 2345 and 
     insert the following new item:

``2345. Effect on State, Tribal, and local law.''.

       (4)(A) The heading for chapter 114 of that title is amended 
     to read as follows:

   ``CHAPTER 114--TRAFFICKING IN CONTRABAND CIGARETTES AND SMOKELESS 
                               TOBACCO''.

       (B) The table of chapters at the beginning of part I of 
     that title is amended by striking the item relating to 
     section 114 and inserting the following new item:

``114. Trafficking in contraband cigarettes and smokeless to2341''.....

     SEC. 5. COMPLIANCE WITH MODEL STATUTE OR QUALIFYING STATUTE.

       (a) In General.--A Tobacco Product Manufacturer or importer 
     may not sell in, deliver to, or place for delivery sale, or 
     cause to be sold in, delivered to, or placed for delivery 
     sale in, a State that is a party to the Master Settlement 
     Agreement any cigarette manufactured by a Tobacco Product 
     Manufacturer that is not in full compliance with the terms of 
     the Model Statute or Qualifying Statute enacted by such State 
     requiring funds to be placed into a qualified escrow account 
     under specified conditions, or any regulations promulgated 
     pursuant to such terms.
       (b) Jurisdiction to Prevent and Restrain Violations.--(1) 
     The United States district courts shall have jurisdiction to 
     prevent and restrain violations of subsection (a) in 
     accordance with this subsection.
       (2) A State, through its attorney general, may bring an 
     action in the United States district courts to prevent and 
     restrain violations of subsection (a) by any person (or by 
     any person controlling such person).
       (3) In any action under paragraph (2), a State, through its 
     attorney general, shall be entitled to reasonable attorney 
     fees from a person found to have willfully and knowingly 
     violated subsection (a).
       (4) The remedy available under paragraph (2) is in addition 
     to any other remedies available under Federal, State, or 
     other law.
       (5) Nothing in this subsection shall be construed to 
     prohibit an authorized State official from proceeding in 
     State court or taking other enforcement actions on the basis 
     of an alleged violation of State or other law.
       (6) The Attorney General may administer and enforce 
     subsection (a).
       (c) Definitions.--In this section:
       (1) Master settlement agreement.-- The term ``Master 
     Settlement Agreement'' means the agreement executed November 
     23, 1998, by the Attorneys General of 46 States, the District 
     of Columbia, the Commonwealth of Puerto Rico, and four 
     Territories of the United States, on the one hand, and 
     certain tobacco manufacturers on the other hand.
       (2) Tobacco product manufacturer.--The term ``Tobacco 
     Product Manufacturer'' has the meaning given that term in 
     section II(uu) of the Master Settlement Agreement.
       (3) Importer.--The term ``importer'' means each of the 
     following:
       (A) Any person in the United States to whom non-tax-paid 
     tobacco products manufactured in a foreign country, Puerto 
     Rico, the Virgin Islands, or a possession of the United 
     States are shipped or consigned.
       (B) Any person who removes cigars or cigarettes for sale or 
     consumption in the United States from a customs bonded 
     manufacturing warehouse.
       (C) Any person who smuggles or otherwise unlawfully brings 
     tobacco products into the United States.
       (4) Model statute; qualifying statute.--The terms ``Model 
     Statute'' and ``Qualifying Statute'' means a statute as 
     defined in section IX(d)(2)(e) of the Master Settlement 
     Agreement.
       (5) Delivery sale.--The term ``delivery sale'' means any 
     sale of cigarettes or smokeless tobacco in interstate 
     commerce to a consumer if--
       (A) the consumer submits the order for such sale by means 
     of a telephone or other method of voice transmission, the 
     mails, or the Internet or other online service, or the seller 
     is otherwise not in the physical presence of the buyer when 
     the request for purchase or order is made; or
       (B) the cigarettes or smokeless tobacco are delivered by 
     use of a common carrier, private delivery service, or the 
     mails, or the seller is not in the physical presence of the 
     buyer when the buyer obtains personal possession of the 
     delivered cigarettes or smokeless tobacco.
       (6) Interstate commerce.--The term ``interstate commerce'' 
     means commerce between a State and any place outside the 
     State, commerce between a State and any Indian lands in the 
     State, or commerce between points in the same State but 
     through any place outside the State or through any Indian 
     lands.

     SEC. 6. UNDERCOVER CRIMINAL INVESTIGATIONS OF THE BUREAU OF 
                   ALCOHOL, TOBACCO, FIREARMS, AND EXPLOSIVES.

       (a) In General.--(1) Commencing as of the date of the 
     enactment of this Act and without fiscal year limitation, the 
     authorities in section 102(b) of the Department of Justice 
     and Related Agencies Appropriations Act, 1993 (title I of 
     Public Law 102-395; 106 Stat. 1838) shall be available to the 
     Bureau of Alcohol, Tobacco, Firearms, and Explosives for 
     undercover investigative operations of the Bureau which are 
     necessary for the detection and prosecution of crimes against 
     the United States.
       (2) For purposes of the exercise of the authorities 
     referred to in paragraph (1) by the Bureau, a reference in 
     such section 102(b) to the Federal Bureau of Investigation 
     shall be deemed to be a reference to the Bureau of Alcohol, 
     Tobacco, Firearms, and Explosives, and a reference to the 
     Director of the Federal Bureau of Investigation shall be 
     deemed to be a reference to the Director of the Bureau of 
     Alcohol, Tobacco, Firearms, and Explosives.
       (b) Limitations in Appropriations Acts.--The exercise of 
     the authorities referred to in subsection (a)(1) by the 
     Bureau of Alcohol, Tobacco, Firearms, and Explosives shall be 
     subject to the provisions of appropriations Acts.

     SEC. 7. INSPECTION BY BUREAU OF ALCOHOL, TOBACCO, FIREARMS, 
                   AND EXPLOSIVES OF RECORDS OF CERTAIN CIGARETTE 
                   AND SMOKELESS TOBACCO SELLERS.

       (a) In General.--Any officer of the Bureau of Alcohol, 
     Tobacco, Firearms, and Explosives may, during normal business 
     hours, enter the premises of any person described in 
     subsection (b) for the purposes of inspecting--
       (1) any records or information required to be maintained by 
     such person under the provisions of law referred to in 
     subsection (d); or
       (2) any cigarettes or smokeless tobacco kept or stored by 
     such person at such premises.
       (b) Covered Persons.--A person described in this subsection 
     is any person who engages in a delivery sale, and who ships, 
     sells, distributes, or receives any quantity in excess of 
     10,000 cigarettes, or any quantity in excess of 500 single-
     unit consumer-sized cans or packages of smokeless tobacco, 
     within a single month.
       (c) Relief.--(1) The district courts of the United States 
     shall have the authority in a civil action under this 
     subsection to compel inspections authorized by subsection 
     (a).
       (2) Whoever violates subsection (a) or an order issued 
     pursuant to paragraph (1) shall be subject to a civil penalty 
     in an amount not to exceed $10,000 for each violation.
       (d) Covered Provisions of Law.--The provisions of law 
     referred to in this subsection are as follows:
       (1) The Act of October 19, 1949 (15 U.S.C. 375; commonly 
     referred to as the ``Jenkins Act'').
       (2) Chapter 114 of title 18, United States Code.
       (3) This Act.
       (e) Delivery Sale Defined.--In this section, the term 
     ``delivery sale'' has the meaning given that term in 
     2343(e)(1) of title 18, United States Code, as amended by 
     section 4(b)(3) of this Act.

     SEC. 8. COMPLIANCE WITH TARIFF ACT OF 1930.

       (a) Inapplicability of Exemptions from Requirements for 
     Entry of Certain Cigarettes.--Subsection (b)(1) of section 
     802 of the Tariff Act of 1930 (19 U.S.C. 1681a) is amended by 
     adding at the end the following new sentence: ``The preceding 
     sentence shall not apply to any cigarettes sold in connection 
     with a delivery sale (as that term is defined in section 1 of 
     the Act of October 19, 1949 (15 U.S.C. 375; commonly referred 
     to as the `Jenkins Act')).''.
       (b) State and Tribal Access to Customs Certifications.--
     Section 802 of that Act is further amended by adding at the 
     end the following new subsection:
       ``(d) State and Tribal Access to Customs Certifications.--A 
     State, through its attorney general, and an Indian tribe (as 
     that term is defined in the Indian Self-Determination and 
     Education Assistance Act (25 U.S.C. 450b(e)) through its 
     chief law enforcement officer, shall be entitled to obtain 
     copies of any certification required pursuant to subsection 
     (c) directly--
       ``(1) upon request to the agency of the United States 
     responsible for collecting such certification; or
       ``(2) upon request to the importer, manufacturer, or 
     authorized official of such importer or manufacturer.''.
       (c) Enforcement Provisions.--Section 803 of such Act (19 
     U.S.C. 1681b) is amended--

[[Page S16212]]

       (1) in subsection (b)--
       (A) in the first sentence--
       (i) by inserting ``any of'' before ``the United States'' 
     the first and second places it appears; and
       (ii) by inserting before the period the following: ``, to 
     any State in which such tobacco product, cigarette papers, or 
     tube was imported, or to the Indian Tribe of any Indian 
     Country (as that term is defined in section 1151 of title 18, 
     United States Code) in which such tobacco product, cigarette 
     papers, or tube was imported''; and
       (B) in the second sentence, by inserting ``, or to any 
     State or Indian Tribe,'' after ``the United States''; and
       (2) by adding at the end the following new subsection:
       ``(c) Actions by States and Others.--
       ``(1) In general.--Any person who holds a permit under 
     section 5712 of the Internal Revenue Code of 1986 may bring 
     an action in the United States district courts to prevent and 
     restrain violations of this title by any person (or by any 
     person controlling such person), other than by a State, 
     local, or Tribal government.
       ``(2) Relief for state, local, and tribal governments.--A 
     State, through its attorney general, or a local government or 
     Tribe through its chief law enforcement officer (or a 
     designee thereof), may in a civil action under this title to 
     prevent and restrain violations of this title by any person 
     (or by any person controlling such person) or to obtain any 
     other appropriate relief for violations of this title by any 
     person (or from any person controlling such person), 
     including civil penalties, money damages, and injunctive or 
     other equitable relief.
       ``(3) Construction generally.--
       ``(A) In general.--Nothing in this subsection shall be 
     deemed to abrogate or constitute a waiver of any sovereign 
     immunity of a State or local government or Indian Tribe 
     against any unconsented lawsuit under this title or to 
     otherwise restrict, expand, of modify any sovereign immunity 
     of a State local government or Indian Tribe.
       ``(B) Construction with other relief.--The remedies 
     available under this subsection are in addition to any other 
     remedies available under Federal, State, local, Tribal, or 
     other law.
       ``(4) Construction with forfeiture provisions.--Nothing in 
     this subsection shall be construed to require a State or 
     Indian Tribe to first bring an action pursuant to paragraph 
     (1) when pursuing relief under subsection (b).
       ``(d) Construction With Other Authorities.--
       ``(1) State authorities.--Nothing in this title shall be 
     construed to expand, restrict, or otherwise modify the right 
     of an authorized State official from proceeding in State 
     court, or taking other enforcement actions, on the basis of 
     alleged violation of State or other law.
       ``(2) Tribal authorities.--Nothing in this title shall be 
     construed to expand, restrict, or otherwise modify the right 
     of an authorized Indian Tribal government official from 
     proceeding in Tribal court, or taking other enforcement 
     actions, on the basis of alleged violation of Tribal law.
       (d) Inclusion of Smokeless Tobacco.--(1) Sections 802 and 
     803(a) of such Act are further amended by inserting ``or 
     smokeless tobacco products'' after ``cigarettes'' each place 
     it appears.
       (2) Section 802 of such Act is further amended--
       (A) in subsection (a)--
       (i) in paragraph (1), by inserting ``or section 4 of the 
     Comprehensive Smokeless Tobacco Health Education Act of 1986 
     (15 U.S.C. 4403), respectively'' after ``section 7 of the 
     Federal Cigarette Labeling and Advertising Act (15 U.S.C. 
     1335a)'';
       (ii) in paragraph (2), by inserting ``or section 3 of the 
     Comprehensive Smokeless Tobacco Health Education Act of 1986 
     (15 U.S.C. 4402), respectively,'' after ``section 4 of the 
     Federal Cigarette Labeling and Advertising Act (15 U.S.C. 
     1333)''; and
       (iii) in paragraph (3), by inserting ``or section 3(c) of 
     the Comprehensive Smokeless Tobacco Health Education Act of 
     1986 (15 U.S.C. 4402(c)), respectively,'' after ``section 
     4(c) of the Federal Cigarette Labeling and Advertising Act 
     (15 U.S.C. 1333(c))'';
       (B) in subsection (b)--
       (i) in the paragraph caption of paragraph (1), by inserting 
     ``or smokeless tobacco'' after ``cigarettes''; and
       (ii) in the paragraph caption of paragraphs (2) and (3), by 
     inserting ``or smokeless tobacco'' after ``Cigarettes''; and
       (C) in subsection (c)--
       (i) in the subsection caption, by inserting ``or Smokeless 
     Tobacco'' after ``Cigarette'';
       (ii) in paragraph (1), by inserting ``or section 4 of the 
     Comprehensive Smokeless Tobacco Health Education Act of 1986 
     (15 U.S.C. 4403), respectively'' after ``section 7 of the 
     Federal Cigarette Labeling and Advertising Act (15 U.S.C. 
     1335a)'';
       (iii) in paragraph (2)(A), ``or section 3 of the 
     Comprehensive Smokeless Tobacco Health Education Act of 1986 
     (15 U.S.C. 4402), respectively,'' after ``section 4 of the 
     Federal Cigarette Labeling and Advertising Act (15 U.S.C. 
     1333)''; and
       (iv) in paragraph (2)(B), by inserting ``or section 3(c) of 
     the Comprehensive Smokeless Tobacco Health Education Act of 
     1986 (15 U.S.C. 4402(c)), respectively'' after ``section 4(c) 
     of the Federal Cigarette Labeling and Advertising Act (15 
     U.S.C. 1333(c))''.
       (3) Section 803(c) of such Act, as amended by subsection 
     (b)(1) of this section, is further amended by inserting ``, 
     or any smokeless tobacco product,'' after ``or tube'' the 
     first place it appears.
       (4)(A) The heading of title VIII of such Act is amended by 
     inserting ``AND SMOKELESS TOBACCO'' after ``CIGARETTES''.
       (B) The heading of section 802 of such Act is amended by 
     inserting ``AND SMOKELESS TOBACCO'' after ``CIGARETTES''.

     SEC. 9. EXCLUSIONS REGARDING INDIAN TRIBES AND TRIBAL 
                   MATTERS.

       (a) In General.--Nothing in this Act or the amendments made 
     by this Act is intended nor shall be construed to affect, 
     amend, or modify--
       (1) any agreements, compacts, or other intergovernmental 
     arrangements between any State or local government and any 
     government of an Indian tribe (as that term is defined in the 
     Indian Self-Determination and Education Assistance Act (25 
     U.S.C. 450b(e)) relating to the collection of taxes on 
     cigarettes or smokeless tobacco sold in Indian Country (as 
     that term is defined section 1151 of title 18, United States 
     Code);
       (2) any State laws that authorize or otherwise pertain to 
     any such intergovernmental arrangements or create special 
     rules or procedures for the collection of State, local, or 
     tribal taxes on cigarettes or smokeless tobacco sold in 
     Indian Country;
       (3) any limitations under existing Federal law, including 
     Federal common law and treaties, on State, local, and tribal 
     tax and regulatory authority with respect to the sale, use, 
     or distribution of cigarettes and smokeless tobacco by or to 
     Indian Tribes or tribal members or in Indian Country;
       (4) any existing Federal law, including Federal common law 
     and treaties, regarding State jurisdiction, or lack thereof, 
     over any Tribe, tribal members or tribal reservations; and
       (5) any existing State or local government authority to 
     bring enforcement actions against persons located in Indian 
     Country.
       (b) Coordination of Law Enforcement.--Nothing in this Act 
     or the amendments made by this Act shall be construed to 
     inhibit or otherwise affect any coordinated law enforcement 
     effort by 1 or more States or other jurisdictions, including 
     Indian Tribes, through interstate compact or otherwise, 
     that--
       (1) provides for the administration of tobacco product laws 
     or laws pertaining to interstate sales or other sales of 
     tobacco products;
       (2) provides for the seizure of tobacco products or other 
     property related to a violation of such laws; or
       (3) establishes cooperative programs for the administration 
     of such laws.
       (c) Treatment of State and Local Governments.--
     Notwithstanding any other provision of this Act, the 
     provisions of this Act are not intended and shall not be 
     construed to authorize, deputize, or commission States or 
     local governments as instrumentalities of the United States.
       (d) Enforcement Within Indian Country.--Nothing in this Act 
     or the amendments made by this Act is intended to prohibit, 
     limit, or restrict enforcement by the Attorney General of the 
     United States of the provisions herein within Indian Country.
       (e) Ambiguity.--Any ambiguity between the language of this 
     section or its application, and any other provision of this 
     Act shall be resolved in favor of this section.

     SEC. 10. EFFECTIVE DATE.

       (a) In General.--Except as provided in subsection (b), this 
     Act shall take effect 90 days after the date of the enactment 
     of this Act.
       (b) BATFE Authority.--
       (1) In general.--Sections 6 and 7 shall take effect on the 
     date of the enactment of this Act.
       (2) Definition.--For purposes of section 7, the definition 
     of delivery sale in section 2343(e)(1) of title 18, United 
     States Code, as amended by section 4(b)(3) of this Act, shall 
     take effect on the date of the enactment of this Act.
Passed the Senate December 9, 2003.

                          ____________________