[Congressional Record Volume 156, Number 35 (Thursday, March 11, 2010)]
[Senate]
[Pages S1480-S1487]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PREVENT ALL CIGARETTE TRAFFICKING ACT OF 2009
Mr. DURBIN. Mr. President, I ask unanimous consent that the Senate
proceed to the immediate consideration of Calendar No. 216, S. 1147.
The PRESIDING OFFICER. The clerk will report the bill by title.
The assistant legislative clerk read as follows:
A bill (S. 1147) to prevent tobacco smuggling, to ensure
the collection of all tobacco 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 to strike all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE; FINDINGS; PURPOSES.
(a) Short Title.--This Act may be cited as the ``Prevent
All Cigarette Trafficking Act of 2009'' or ``PACT Act''.
(b) Findings.--Congress finds that--
(1) the sale of illegal cigarettes and smokeless tobacco
products significantly reduces Federal, State, and local
government revenues, with Internet sales alone accounting for
billions of dollars of lost Federal, State, and local tobacco
tax revenue each year;
(2) Hezbollah, Hamas, al Qaeda, and other terrorist
organizations have profited from trafficking in illegal
cigarettes or counterfeit cigarette tax stamps;
(3) terrorist involvement in illicit cigarette trafficking
will continue to grow because of the large profits such
organizations can earn;
(4) the sale of illegal cigarettes and smokeless tobacco
over the Internet, and through mail, fax, or phone orders,
makes it cheaper and easier for children to obtain tobacco
products;
(5) the majority of Internet and other remote sales of
cigarettes and smokeless tobacco are being made without
adequate precautions to protect against sales to children,
without the payment of applicable taxes, and without
complying with the nominal registration and reporting
requirements in existing Federal law;
(6) unfair competition from illegal sales of cigarettes and
smokeless tobacco is taking billions of dollars of sales away
from law-abiding retailers throughout the United States;
(7) with rising State and local tobacco tax rates, the
incentives for the illegal sale of cigarettes and smokeless
tobacco have increased;
(8) the number of active tobacco investigations being
conducted by the Bureau of Alcohol, Tobacco, Firearms, and
Explosives rose to 452 in 2005;
(9) the number of Internet vendors in the United States and
in foreign countries that sell cigarettes and smokeless
tobacco to buyers in the United States increased from only
about 40 in 2000 to more than 500 in 2005; and
(10) the intrastate sale of illegal cigarettes and
smokeless tobacco over the Internet has a substantial effect
on interstate commerce.
(c) Purposes.--It is the purpose of this Act to--
(1) require Internet and other remote sellers of cigarettes
and smokeless tobacco to comply with the same laws that apply
to law-abiding tobacco retailers;
(2) create strong disincentives to illegal smuggling of
tobacco products;
(3) provide government enforcement officials with more
effective enforcement tools to combat tobacco smuggling;
(4) make it more difficult for cigarette and smokeless
tobacco traffickers to engage in and profit from their
illegal activities;
(5) increase collections of Federal, State, and local
excise taxes on cigarettes and smokeless tobacco; and
(6) prevent and reduce youth access to inexpensive
cigarettes and smokeless tobacco through illegal Internet or
contraband sales.
SEC. 2. COLLECTION OF STATE CIGARETTE AND SMOKELESS TOBACCO
TAXES.
(a) Definitions.--The Act of October 19, 1949 (15 U.S.C.
375 et seq.; commonly referred to as the ``Jenkins Act'')
(referred to in this Act as the ``Jenkins Act''), is amended
by striking the first section and inserting the following:
``SECTION 1. DEFINITIONS.
``As used in this Act, the following definitions apply:
``(1) Attorney general.--The term `attorney general', with
respect to a State, means the attorney general or other chief
law enforcement officer of the State.
``(2) Cigarette.--
``(A) In general.--The term `cigarette'--
``(i) has the meaning given that term in section 2341 of
title 18, United States Code; and
``(ii) includes roll-your-own tobacco (as defined in
section 5702 of the Internal Revenue Code of 1986).
``(B) Exception.--The term `cigarette' does not include a
cigar (as defined in section 5702 of the Internal Revenue
Code of 1986).
``(3) Common carrier.--The term `common carrier' means any
person (other than a local messenger service or the United
States Postal Service) that holds itself out to the general
public as a provider for hire of the transportation by water,
land, or air of merchandise (regardless of whether 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.
``(4) Consumer.--The term `consumer'--
``(A) means any person that purchases cigarettes or
smokeless tobacco; and
``(B) does not include any person lawfully operating as a
manufacturer, distributor, wholesaler, or retailer of
cigarettes or smokeless tobacco.
``(5) Delivery sale.--The term `delivery sale' means any
sale of cigarettes or smokeless tobacco to a consumer if--
``(A) the consumer submits the order for the 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 to
the buyer by common carrier, private delivery service, or
other method of remote delivery, or the seller is not in the
physical presence of the buyer when the buyer obtains
possession of the cigarettes or smokeless tobacco.
``(6) Delivery seller.--The term `delivery seller' means a
person who makes a delivery sale.
``(7) Indian country.--The term `Indian country'--
``(A) 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
``(B) includes any other land held by the United States in
trust or restricted status for one or more Indian tribes.
``(8) Indian tribe.--The term `Indian tribe', `tribe', or
`tribal' refers to an Indian tribe as defined in section 4(e)
of 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 (25
U.S.C. 479a-1).
``(9) Interstate commerce.--
``(A) In general.--The term `interstate commerce' means
commerce between a State and any place outside the State,
commerce between a State and any Indian country in the State,
or commerce between points in the same State but through any
place outside the State or through any Indian country.
``(B) Into a state, place, or locality.--A sale, shipment,
or transfer of cigarettes or smokeless tobacco that is made
in interstate commerce, as defined in this paragraph, shall
be deemed to have been made into the State, place, or
locality in which such cigarettes or smokeless tobacco are
delivered.
``(10) Person.--The term `person' means an individual,
corporation, company, association, firm, partnership,
society, State government, local government, Indian tribal
government, governmental organization of such a government,
or joint stock company.
``(11) State.--The term `State' means each of the several
States of the United States, the District of Columbia, the
Commonwealth of Puerto Rico, or any territory or possession
of the United States.
``(12) Smokeless tobacco.--The term `smokeless tobacco'
means any finely cut, ground,
[[Page S1481]]
powdered, or leaf tobacco, or other product containing
tobacco, that is intended to be placed in the oral or nasal
cavity or otherwise consumed without being combusted.
``(13) Tobacco tax administrator.--The term `tobacco tax
administrator' means the State, local, or tribal official
duly authorized to collect the tobacco tax or administer the
tax law of a State, locality, or tribe, respectively.
``(14) Use.--The term `use' includes the consumption,
storage, handling, or disposal of cigarettes or smokeless
tobacco.''.
(b) Reports to State Tobacco Tax Administrators.--Section 2
of the Jenkins 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 inserting ``Contents.--'' after ``(a)'';
(ii) by striking ``or transfers'' and inserting ``,
transfers, or ships'';
(iii) by inserting ``, locality, or Indian country of an
Indian tribe'' after ``a State'';
(iv) by striking ``to other than a distributor licensed by
or located in such State,''; and
(v) by striking ``or transfer and shipment'' and inserting
``, transfer, or shipment'';
(B) in paragraph (1)--
(i) by striking ``with the tobacco tax administrator of the
State'' and inserting ``with the Attorney General of the
United States and with the tobacco tax 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 the
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:
``(3) with respect to each memorandum or invoice filed with
a State under paragraph (2), also file copies of the
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.'';
(3) in subsection (b)--
(A) by inserting ``Presumptive Evidence.--'' after ``(b)'';
(B) by striking ``(1) that'' and inserting ``that''; and
(C) by striking ``, and (2)'' and all that follows and
inserting a period; and
(4) by adding at the end the following:
``(c) Use of Information.--A tobacco tax administrator or
chief law enforcement officer who receives a memorandum or
invoice under paragraph (2) or (3) of subsection (a) shall
use the memorandum or invoice solely for the purposes of the
enforcement of this Act and the collection of any taxes owed
on related sales of cigarettes and smokeless tobacco, and
shall keep confidential any personal information in the
memorandum or invoice except as required for such
purposes.''.
(c) Requirements for Delivery Sales.--The Jenkins Act is
amended by inserting after section 2 the following:
``SEC. 2A. DELIVERY SALES.
``(a) In General.--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
the delivery sales occurred entirely within the specific
State and place, including laws imposing--
``(A) excise taxes;
``(B) licensing and tax-stamping requirements;
``(C) restrictions on sales to minors; 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) Shipping and Packaging.--
``(1) Required statement.--For any shipping package
containing cigarettes or smokeless tobacco, the delivery
seller shall include on the bill of lading, if any, and on
the outside of the shipping package, on the same surface as
the delivery address, 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) Failure to label.--Any shipping package described in
paragraph (1) that is not labeled in accordance with that
paragraph shall be treated as nondeliverable matter by a
common carrier or other delivery service, if the common
carrier or other delivery service knows or should know the
package contains cigarettes or smokeless tobacco. If a common
carrier or other delivery service believes a package is being
submitted for delivery in violation of paragraph (1), it may
require the person submitting the package for delivery to
establish that it is not being sent in violation of paragraph
(1) before accepting the package for delivery. Nothing in
this paragraph shall require the common carrier or other
delivery service to open any package to determine its
contents.
``(3) Weight restriction.--A delivery seller shall not
sell, offer for sale, deliver, or cause to be delivered in
any single sale or single delivery any cigarettes or
smokeless tobacco weighing more than 10 pounds.
``(4) Age verification.--
``(A) In general.--A delivery seller who mails or ships
tobacco products--
``(i) shall not sell, deliver, or cause to be delivered any
tobacco products to a person under the minimum age required
for the legal sale or purchase of tobacco products, as
determined by the applicable law at the place of delivery;
``(ii) shall use a method of mailing or shipping that
requires--
``(I) the purchaser placing the delivery sale order, or an
adult who is at least the minimum age required for the legal
sale or purchase of tobacco products, as determined by the
applicable law at the place of delivery, to sign to accept
delivery of the shipping container at the delivery address;
and
``(II) the person who signs to accept delivery of the
shipping container to provide proof, in the form of a valid,
government-issued identification bearing a photograph of the
individual, that the person is at least the minimum age
required for the legal sale or purchase of tobacco products,
as determined by the applicable law at the place of delivery;
and
``(iii) shall not accept a delivery sale order from a
person without--
``(I) obtaining the full name, birth date, and residential
address of that person; and
``(II) verifying the information provided in subclause (I),
through the use of a commercially available database or
aggregate of databases, consisting primarily of data from
government sources, that are regularly used by government and
businesses for the purpose of age and identity verification
and authentication, to ensure that the purchaser is at least
the minimum age required for the legal sale or purchase of
tobacco products, as determined by the applicable law at the
place of delivery.
``(B) Limitation.--No database being used for age and
identity verification under subparagraph (A)(iii) shall be in
the possession or under the control of the delivery seller,
or be subject to any changes or supplementation by the
delivery seller.
``(c) Records.--
``(1) In general.--Each delivery seller shall keep a record
of any delivery sale, including all of the information
described in section 2(a)(2), organized by the State, and
within the State, by the city or town and by zip code, into
which the delivery sale is so made.
``(2) Record retention.--Records of a delivery sale shall
be kept as described in paragraph (1) until the end of the
4th full calendar year that begins after the date of the
delivery sale.
``(3) Access for officials.--Records kept under paragraph
(1) shall be made available to tobacco tax administrators of
the States, to local governments and Indian tribes that apply
local or tribal taxes on cigarettes or smokeless tobacco, to
the attorneys general of the States, to the chief law
enforcement officers of the 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) Delivery.--
``(1) In general.--Except as provided in paragraph (2), no
delivery seller may sell or deliver to any consumer, or
tender to any common carrier or other delivery service, any
cigarettes or smokeless tobacco pursuant to a delivery sale
unless, in advance of the sale, delivery, or tender--
``(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
cigarettes or smokeless tobacco are to be delivered has been
paid to the local government; and
``(C) any required stamps or other indicia that the excise
tax has been paid are properly affixed or applied to the
cigarettes or smokeless tobacco.
``(2) Exception.--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) List of Unregistered or Noncompliant Delivery
Sellers.--
``(1) In general.--
``(A) Initial list.--Not later than 90 days after this
subsection goes into effect under the Prevent All Cigarette
Trafficking Act of 2009, the Attorney General of the United
States shall compile a list of delivery sellers of cigarettes
or smokeless tobacco that have not registered with the
Attorney General of the United States pursuant to section
2(a), or that are otherwise not in compliance with this Act,
and--
``(i) distribute the list to--
``(I) the attorney general and tax administrator of every
State;
``(II) common carriers and other persons that deliver small
packages to consumers in interstate commerce, including the
United States Postal Service; and
``(III) any other person that the Attorney General of the
United States determines can promote the effective
enforcement of this Act; and
``(ii) publicize and make the list available to any other
person engaged in the business of interstate deliveries or
who delivers cigarettes or smokeless tobacco in or into any
State.
``(B) List contents.--To the extent known, the Attorney
General of the United States shall
[[Page S1482]]
include, for each delivery seller on the list described in
subparagraph (A)--
``(i) all names the delivery seller uses or has used in the
transaction of its business or on packages delivered to
customers;
``(ii) all addresses from which the delivery seller does or
has done business, or ships or has shipped cigarettes or
smokeless tobacco;
``(iii) the website addresses, primary e-mail address, and
phone number of the delivery seller; and
``(iv) any other information that the Attorney General of
the United States determines would facilitate compliance with
this subsection by recipients of the list.
``(C) Updating.--The Attorney General of the United States
shall update and distribute the list described in
subparagraph (A) at least once every 4 months, and may
distribute the list and any updates by regular mail,
electronic mail, or any other reasonable means, or by
providing recipients with access to the list through a
nonpublic website that the Attorney General of the United
States regularly updates.
``(D) State, local, or tribal additions.--The Attorney
General of the United States shall include in the list
described in subparagraph (A) any noncomplying delivery
sellers identified by any State, local, or tribal government
under paragraph (6), and shall distribute the list to the
attorney general or chief law enforcement official and the
tax administrator of any government submitting any such
information, and to any common carriers or other persons who
deliver small packages to consumers identified by any
government pursuant to paragraph (6).
``(E) Accuracy and completeness of list of noncomplying
delivery sellers.--In preparing and revising the list
described in subparagraph (A), the Attorney General of the
United States shall--
``(i) use reasonable procedures to ensure maximum possible
accuracy and completeness of the records and information
relied on for the purpose of determining that a delivery
seller is not in compliance with this Act;
``(ii) not later than 14 days before including a delivery
seller on the list, make a reasonable attempt to send notice
to the delivery seller by letter, electronic mail, or other
means that the delivery seller is being placed on the list,
which shall cite the relevant provisions of this Act and the
specific reasons for which the delivery seller is being
placed on the list;
``(iii) provide an opportunity to the delivery seller to
challenge placement on the list;
``(iv) investigate each challenge described in clause (iii)
by contacting the relevant Federal, State, tribal, and local
law enforcement officials, and provide the specific findings
and results of the investigation to the delivery seller not
later than 30 days after the date on which the challenge is
made; and
``(v) if the Attorney General of the United States
determines that the basis for including a delivery seller on
the list is inaccurate, based on incomplete information, or
cannot be verified, promptly remove the delivery seller from
the list as appropriate and notify each appropriate Federal,
State, tribal, and local authority of the determination.
``(F) Confidentiality.--The list described in subparagraph
(A) shall be confidential, and any person receiving the list
shall maintain the confidentiality of the list and may
deliver the list, for enforcement purposes, to any government
official or to any common carrier or other person that
delivers tobacco products or small packages to consumers.
Nothing in this section shall prohibit a common carrier, the
United States Postal Service, or any other person receiving
the list from discussing with a listed delivery seller the
inclusion of the delivery seller on the list and the
resulting effects on any services requested by the listed
delivery seller.
``(2) Prohibition on delivery.--
``(A) In general.--Commencing on the date that is 60 days
after the date of the initial distribution or availability of
the list described in paragraph (1)(A), no person who
receives the list under paragraph (1), and no person who
delivers cigarettes or smokeless tobacco to consumers, shall
knowingly complete, cause to be completed, or complete its
portion of a delivery of any package for any person whose
name and address are on the list, unless--
``(i) the person making the delivery knows or believes in
good faith that the item does not include cigarettes or
smokeless tobacco;
``(ii) the delivery is made to a person lawfully engaged in
the business of manufacturing, distributing, or selling
cigarettes or smokeless tobacco; or
``(iii) the package being delivered weighs more than 100
pounds and the person making the delivery does not know or
have reasonable cause to believe that the package contains
cigarettes or smokeless tobacco.
``(B) Implementation of updates.--Commencing on the date
that is 30 days after the date of the distribution or
availability of any updates or corrections to the list
described in paragraph (1)(A), all recipients and all common
carriers or other persons that deliver cigarettes or
smokeless tobacco to consumers shall be subject to
subparagraph (A) in regard to the corrections or updates.
``(3) Exemptions.--
``(A) In general.--Subsection (b)(2) and any requirements
or restrictions placed directly on common carriers under this
subsection, including subparagraphs (A) and (B) of paragraph
(2), shall not apply to a common carrier that--
``(i) is subject to a settlement agreement described in
subparagraph (B); or
``(ii) if a settlement agreement described in subparagraph
(B) to which the common carrier is a party is terminated or
otherwise becomes inactive, is administering and enforcing
policies and practices throughout the United States that are
at least as stringent as the agreement.
``(B) Settlement agreement.--A settlement agreement
described in this subparagraph--
``(i) is a settlement agreement relating to tobacco product
deliveries to consumers; and
``(ii) includes--
``(I) the Assurance of Discontinuance entered into by the
Attorney General of New York and DHL Holdings USA, Inc. and
DHL Express (USA), Inc. on or about July 1, 2005, the
Assurance of Discontinuance entered into by the Attorney
General of New York and United Parcel Service, Inc. on or
about October 21, 2005, and the Assurance of Compliance
entered into by the Attorney General of New York and Federal
Express Corporation and FedEx Ground Package Systems, Inc. on
or about February 3, 2006, if each of those agreements is
honored throughout the United States to block illegal
deliveries of cigarettes or smokeless tobacco to consumers;
and
``(II) any other active agreement between a common carrier
and a State that operates throughout the United States to
ensure that no deliveries of cigarettes or smokeless tobacco
shall be made to consumers or illegally operating Internet or
mail-order sellers and that any such deliveries to consumers
shall not be made to minors or without payment to the States
and localities where the consumers are located of all taxes
on the tobacco products.
``(4) Shipments from persons on list.--
``(A) In general.--If a common carrier or other delivery
service delays or interrupts the delivery of a package in the
possession of the common carrier or delivery service because
the common carrier or delivery service determines or has
reason to believe that the person ordering the delivery is on
a list described in paragraph (1)(A) and that clauses (i),
(ii), and (iii) of paragraph (2)(A) do not apply--
``(i) the person ordering the delivery shall be obligated
to pay--
``(I) the common carrier or other delivery service as if
the delivery of the package had been timely completed; and
``(II) if the package is not deliverable, any reasonable
additional fee or charge levied by the common carrier or
other delivery service to cover any extra costs and
inconvenience and to serve as a disincentive against such
noncomplying delivery orders; and
``(ii) if the package is determined not to be deliverable,
the common carrier or other delivery service shall offer to
provide the package and its contents to a Federal, State, or
local law enforcement agency.
``(B) Records.--A common carrier or other delivery service
shall maintain, for a period of 5 years, any records kept in
the ordinary course of business relating to any delivery
interrupted under this paragraph and provide that
information, upon request, to the Attorney General of the
United States or to the attorney general or chief law
enforcement official or tax administrator of any State,
local, or tribal government.
``(C) Confidentiality.--Any person receiving records under
subparagraph (B) shall--
``(i) use the records solely for the purposes of the
enforcement of this Act and the collection of any taxes owed
on related sales of cigarettes and smokeless tobacco; and
``(ii) keep confidential any personal information in the
records not otherwise required for such purposes.
``(5) Preemption.--
``(A) In general.--No State, local, or tribal government,
nor any political authority of 2 or more State, local, or
tribal governments, may enact or enforce any law or
regulation relating to delivery sales that restricts
deliveries of cigarettes or smokeless tobacco to consumers by
common carriers or other delivery services on behalf of
delivery sellers by--
``(i) requiring that the common carrier or other delivery
service verify the age or identity of the consumer accepting
the delivery by requiring the person who signs to accept
delivery of the shipping container to provide proof, in the
form of a valid, government-issued identification bearing a
photograph of the individual, that the person is at least the
minimum age required for the legal sale or purchase of
tobacco products, as determined by either State or local law
at the place of delivery;
``(ii) requiring that the common carrier or other delivery
service obtain a signature from the consumer accepting the
delivery;
``(iii) requiring that the common carrier or other delivery
service verify that all applicable taxes have been paid;
``(iv) requiring that packages delivered by the common
carrier or other delivery service contain any particular
labels, notice, or markings; or
``(v) prohibiting common carriers or other delivery
services from making deliveries on the basis of whether the
delivery seller is or is not identified on any list of
delivery sellers maintained and distributed by any entity
other than the Federal Government.
``(B) Relationship to other laws.--Except as provided in
subparagraph (C), nothing in this paragraph shall be
construed to nullify, expand, restrict, or otherwise amend or
modify--
``(i) section 14501(c)(1) or 41713(b)(4) of title 49,
United States Code;
``(ii) any other restrictions in Federal law on the ability
of State, local, or tribal governments to regulate common
carriers; or
``(iii) any provision of State, local, or tribal law
regulating common carriers that is described in section
14501(c)(2) or 41713(b)(4)(B) of title 49 of the United
States Code.
``(C) State laws prohibiting delivery sales.--
``(i) In general.--Except as provided in clause (ii),
nothing in the Prevent All Cigarette Trafficking Act of 2009,
the amendments made by that Act, or in any other Federal
statute shall be construed to preempt, supersede, or
otherwise limit or restrict State laws prohibiting the
delivery sale, or the shipment or delivery pursuant to a
delivery sale, of cigarettes or other tobacco products to
individual consumers or personal residences.
[[Page S1483]]
``(ii) Exemptions.--No State may enforce against a common
carrier a law prohibiting the delivery of cigarettes or other
tobacco products to individual consumers or personal
residences without proof that the common carrier is not
exempt under paragraph (3) of this subsection.
``(6) State, local, and tribal additions.--
``(A) In general.--Any State, local, or tribal government
shall provide the Attorney General of the United States
with--
``(i) all known names, addresses, website addresses, and
other primary contact information of any delivery seller
that--
``(I) offers for sale or makes sales of cigarettes or
smokeless tobacco in or into the State, locality, or tribal
land; and
``(II) has failed to register with or make reports to the
respective tax administrator as required by this Act, or that
has been found in a legal proceeding to have otherwise failed
to comply with this Act; and
``(ii) a list of common carriers and other persons who make
deliveries of cigarettes or smokeless tobacco in or into the
State, locality, or tribal land.
``(B) Updates.--Any government providing a list to the
Attorney General of the United States under subparagraph (A)
shall also provide updates and corrections every 4 months
until such time as the government notifies the Attorney
General of the United States in writing that the government
no longer desires to submit information to supplement the
list described in paragraph (1)(A).
``(C) Removal after withdrawal.--Upon receiving written
notice that a government no longer desires to submit
information under subparagraph (A), the Attorney General of
the United States shall remove from the list described in
paragraph (1)(A) any persons that are on the list solely
because of the prior submissions of the government of the
list of the government of noncomplying delivery sellers of
cigarettes or smokeless tobacco or a subsequent update or
correction by the government.
``(7) Deadline to incorporate additions.--The Attorney
General of the United States shall--
``(A) include any delivery seller identified and submitted
by a State, local, or tribal government under paragraph (6)
in any list or update that is distributed or made available
under paragraph (1) on or after the date that is 30 days
after the date on which the information is received by the
Attorney General of the United States; and
``(B) distribute any list or update described in
subparagraph (A) to any common carrier or other person who
makes deliveries of cigarettes or smokeless tobacco that has
been identified and submitted by a government pursuant to
paragraph (6).
``(8) Notice to delivery sellers.--Not later than 14 days
before including any delivery seller on the initial list
described in paragraph (1)(A), or on an update to the list
for the first time, the Attorney General of the United States
shall make a reasonable attempt to send notice to the
delivery seller by letter, electronic mail, or other means
that the delivery seller is being placed on the list or
update, with that notice citing the relevant provisions of
this Act.
``(9) Limitations.--
``(A) In general.--Any common carrier or other person
making a delivery subject to this subsection shall not be
required or otherwise obligated to--
``(i) determine whether any list distributed or made
available under paragraph (1) is complete, accurate, or up-
to-date;
``(ii) determine whether a person ordering a delivery is in
compliance with this Act; or
``(iii) open or inspect, pursuant to this Act, any package
being delivered to determine its contents.
``(B) Alternate names.--Any common carrier or other person
making a delivery subject to this subsection--
``(i) shall not be required to make any inquiries or
otherwise determine whether a person ordering a delivery is a
delivery seller on the list described in paragraph (1)(A) who
is using a different name or address in order to evade the
related delivery restrictions; and
``(ii) shall not knowingly deliver any packages to
consumers for any delivery seller on the list described in
paragraph (1)(A) who the common carrier or other delivery
service knows is a delivery seller who is on the list and is
using a different name or address to evade the delivery
restrictions of paragraph (2).
``(C) Penalties.--Any common carrier or person in the
business of delivering packages on behalf of other persons
shall not be subject to any penalty under section 14101(a) of
title 49, United States Code, or any other provision of law
for--
``(i) not making any specific delivery, or any deliveries
at all, on behalf of any person on the list described in
paragraph (1)(A);
``(ii) refusing, as a matter of regular practice and
procedure, to make any deliveries, or any deliveries in
certain States, of any cigarettes or smokeless tobacco for
any person or for any person not in the business of
manufacturing, distributing, or selling cigarettes or
smokeless tobacco; or
``(iii) delaying or not making a delivery for any person
because of reasonable efforts to comply with this Act.
``(D) Other limits.--Section 2 and subsections (a), (b),
(c), and (d) of this section shall not be interpreted to
impose any responsibilities, requirements, or liability on
common carriers.
``(f) Presumption.--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.--The Jenkins Act is amended by striking
section 3 and inserting the following:
``SEC. 3. PENALTIES.
``(a) Criminal Penalties.--
``(1) In general.--Except as provided in paragraph (2),
whoever knowingly violates this Act shall be imprisoned for
not more than 3 years, fined under title 18, United States
Code, or both.
``(2) Exceptions.--
``(A) Governments.--Paragraph (1) shall not apply to a
State, local, or tribal government.
``(B) Delivery violations.--A common carrier or independent
delivery service, or employee of a common carrier or
independent delivery service, shall be subject to criminal
penalties under paragraph (1) for a violation of section
2A(e) only if the violation is committed knowingly--
``(i) as consideration for the receipt of, or as
consideration for a promise or agreement to pay, anything of
pecuniary value; or
``(ii) for the purpose of assisting a delivery seller to
violate, or otherwise evading compliance with, section 2A.
``(b) Civil Penalties.--
``(1) In general.--Except as provided in paragraph (3),
whoever violates this Act shall be subject to a civil penalty
in an amount not to exceed--
``(A) in the case of a delivery seller, the greater of--
``(i) $5,000 in the case of the first violation, or $10,000
for any other violation; or
``(ii) for any violation, 2 percent of the gross sales of
cigarettes or smokeless tobacco of the delivery seller during
the 1-year period ending on the date of the violation.
``(B) in the case of a common carrier or other delivery
service, $2,500 in the case of a first violation, or $5,000
for any violation within 1 year of a prior violation.
``(2) Relation to other penalties.--A civil penalty imposed
under paragraph (1) for a violation of this Act shall be
imposed in addition to any criminal penalty under subsection
(a) and any other damages, equitable relief, or injunctive
relief awarded by the court, including the payment of any
unpaid taxes to the appropriate Federal, State, local, or
tribal governments.
``(3) Exceptions.--
``(A) Delivery violations.--An employee of a common carrier
or independent delivery service shall be subject to civil
penalties under paragraph (1) for a violation of section
2A(e) only if the violation is committed intentionally--
``(i) as consideration for the receipt of, or as
consideration for a promise or agreement to pay, anything of
pecuniary value; or
``(ii) for the purpose of assisting a delivery seller to
violate, or otherwise evading compliance with, section 2A.
``(B) Other limitations.--No common carrier or independent
delivery service shall be subject to civil penalties under
paragraph (1) for a violation of section 2A(e) if--
``(i) the common carrier or independent delivery service
has implemented and enforces effective policies and practices
for complying with that section; or
``(ii) the violation consists of an employee of the common
carrier or independent delivery service who physically
receives and processes orders, picks up packages, processes
packages, or makes deliveries, taking actions that are
outside the scope of employment of the employee, or that
violate the implemented and enforced policies of the common
carrier or independent delivery service described in clause
(i).''.
(e) Enforcement.--The Jenkins Act is amended by striking
section 4 and inserting the following:
``SEC. 4. ENFORCEMENT.
``(a) In General.--The United States district courts shall
have jurisdiction to prevent and restrain violations of this
Act and to provide other appropriate injunctive or equitable
relief, including money damages, for the violations.
``(b) Authority of the Attorney General.--The Attorney
General of the United States shall administer and enforce
this Act.
``(c) State, Local, and Tribal Enforcement.--
``(1) In general.--
``(A) Standing.--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, may bring an action in a United States district
court to prevent and restrain violations of this Act by any
person or to obtain any other appropriate relief from any
person for violations of this Act, including civil penalties,
money damages, and injunctive or other equitable relief.
``(B) Sovereign immunity.--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) Provision of information.--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, 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
States attorney, who shall take appropriate actions to
enforce this Act.
``(3) Use of penalties collected.--
``(A) In general.--There is established a separate account
in the Treasury known as the `PACT Anti-Trafficking Fund'.
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 Federal
Government in enforcing this Act shall be transferred into
the PACT Anti-Trafficking Fund and shall be available to the
Attorney General of the United States for purposes
[[Page S1484]]
of enforcing this Act and other laws relating to contraband
tobacco products.
``(B) Allocation of funds.--Of the amount available to the
Attorney General of the United States under subparagraph (A),
not less than 50 percent shall be made available only to the
agencies and offices within the Department of Justice that
were responsible for the enforcement actions in which the
penalties concerned were imposed or for any underlying
investigations.
``(4) Nonexclusivity of remedy.--
``(A) In general.--The remedies available under this
section and section 3 are in addition to any other remedies
available under Federal, State, local, tribal, or other law.
``(B) State court proceedings.--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.
``(C) Tribal court proceedings.--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.
``(D) Local government enforcement.--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) Persons Dealing in Tobacco Products.--Any person who
holds a permit under section 5712 of the Internal Revenue
Code of 1986 (regarding permitting of manufacturers and
importers of tobacco products and export warehouse
proprietors) may bring an action in an appropriate United
States district court to prevent and restrain violations of
this Act by any person other than a State, local, or tribal
government.
``(e) Notice.--
``(1) Persons dealing in tobacco products.--Any person who
commences a civil action under subsection (d) shall inform
the Attorney General of the United States of the action.
``(2) State, local, and tribal actions.--It is the sense of
Congress that the attorney general of any State, or chief law
enforcement officer of any locality or tribe, that commences
a civil action under this section should inform the Attorney
General of the United States of the action.
``(f) Public Notice.--
``(1) In general.--The Attorney General of the United
States shall make available to the public, by posting
information on the Internet and by other appropriate means,
information regarding all enforcement actions brought by the
United States, or reported to the Attorney General of the
United States, under this section, including information
regarding the resolution of the enforcement actions and how
the Attorney General of the United States has responded to
referrals of evidence of violations pursuant to subsection
(c)(2).
``(2) Reports to congress.--Not later than 1 year after the
date of enactment of the Prevent All Cigarette Trafficking
Act of 2009, and every year thereafter until the date that is
5 years after such date of enactment, the Attorney General of
the United States shall submit to Congress a report
containing the information described in paragraph (1).''.
SEC. 3. TREATMENT OF CIGARETTES AND SMOKELESS TOBACCO AS
NONMAILABLE MATTER.
(a) In General.--Chapter 83 of title 18, United States
Code, is amended by inserting after section 1716D the
following:
``Sec. 1716E. Tobacco products as nonmailable
``(a) Prohibition.--
``(1) In general.--All cigarettes and smokeless tobacco (as
those terms are defined in section 1 of the Act of October
19, 1949, commonly referred to as the Jenkins Act) are
nonmailable and shall not be deposited in or carried through
the mails. The United States Postal Service shall not accept
for delivery or transmit through the mails any package that
it knows or has reasonable cause to believe contains any
cigarettes or smokeless tobacco made nonmailable by this
paragraph.
``(2) Reasonable cause.--For the purposes of this
subsection reasonable cause includes--
``(A) a statement on a publicly available website, or an
advertisement, by any person that the person will mail matter
which is nonmailable under this section in return for
payment; or
``(B) the fact that the person is on the list created under
section 2A(e) of the Jenkins Act.
``(b) Exceptions.--
``(1) Cigars.--Subsection (a) shall not apply to cigars (as
defined in section 5702(a) of the Internal Revenue Code of
1986).
``(2) Geographic exception.--Subsection (a) shall not apply
to mailings within the State of Alaska or within the State of
Hawaii.
``(3) Business purposes.--
``(A) In general.--Subsection (a) shall not apply to
tobacco products mailed only--
``(i) for business purposes between legally operating
businesses that have all applicable State and Federal
Government licenses or permits and are engaged in tobacco
product manufacturing, distribution, wholesale, export,
import, testing, investigation, or research; or
``(ii) for regulatory purposes between any business
described in clause (i) and an agency of the Federal
Government or a State government.
``(B) Rules.--
``(i) In general.--Not later than 180 days after the date
of enactment of the Prevent All Cigarette Trafficking Act of
2009, the Postmaster General shall issue a final rule which
shall establish the standards and requirements that apply to
all mailings described in subparagraph (A).
``(ii) Contents.--The final rule issued under clause (i)
shall require--
``(I) the United States Postal Service to verify that any
person submitting an otherwise nonmailable tobacco product
into the mails as authorized under this paragraph is a
business or government agency permitted to make a mailing
under this paragraph;
``(II) the United States Postal Service to ensure that any
recipient of an otherwise nonmailable tobacco product sent
through the mails under this paragraph is a business or
government agency that may lawfully receive the product;
``(III) that any mailing described in subparagraph (A)
shall be sent through the systems of the United States Postal
Service that provide for the tracking and confirmation of the
delivery;
``(IV) that the identity of the business or government
entity submitting the mailing containing otherwise
nonmailable tobacco products for delivery and the identity of
the business or government entity receiving the mailing are
clearly set forth on the package;
``(V) the United States Postal Service to maintain
identifying information described in subclause (IV) during
the 3-year period beginning on the date of the mailing and
make the information available to the Postal Service, the
Attorney General of the United States, and to persons
eligible to bring enforcement actions under section 3(d) of
the Prevent All Cigarette Trafficking Act of 2009;
``(VI) that any mailing described in subparagraph (A) be
marked with a United States Postal Service label or marking
that makes it clear to employees of the United States Postal
Service that it is a permitted mailing of otherwise
nonmailable tobacco products that may be delivered only to a
permitted government agency or business and may not be
delivered to any residence or individual person; and
``(VII) that any mailing described in subparagraph (A) be
delivered only to a verified employee of the recipient
business or government agency, who is not a minor and who
shall be required to sign for the mailing.
``(C) Definition.--In this paragraph, the term `minor'
means an individual who is less than the minimum age required
for the legal sale or purchase of tobacco products as
determined by applicable law at the place the individual is
located.
``(4) Certain individuals.--
``(A) In general.--Subsection (a) shall not apply to
tobacco products mailed by individuals who are not minors for
noncommercial purposes, including the return of a damaged or
unacceptable tobacco product to the manufacturer.
``(B) Rules.--
``(i) In general.--Not later than 180 days after the date
of enactment of the Prevent All Cigarette Trafficking Act of
2009, the Postmaster General shall issue a final rule which
shall establish the standards and requirements that apply to
all mailings described in subparagraph (A).
``(ii) Contents.--The final rule issued under clause (i)
shall require--
``(I) the United States Postal Service to verify that any
person submitting an otherwise nonmailable tobacco product
into the mails as authorized under this paragraph is the
individual identified on the return address label of the
package and is not a minor;
``(II) for a mailing to an individual, the United States
Postal Service to require the person submitting the otherwise
nonmailable tobacco product into the mails as authorized by
this paragraph to affirm that the recipient is not a minor;
``(III) that any package mailed under this paragraph shall
weigh not more than 10 ounces;
``(IV) that any mailing described in subparagraph (A) shall
be sent through the systems of the United States Postal
Service that provide for the tracking and confirmation of the
delivery;
``(V) that a mailing described in subparagraph (A) shall
not be delivered or placed in the possession of any
individual who has not been verified as not being a minor;
``(VI) for a mailing described in subparagraph (A) to an
individual, that the United States Postal Service shall
deliver the package only to a recipient who is verified not
to be a minor at the recipient address or transfer it for
delivery to an Air/Army Postal Office or Fleet Postal Office
number designated in the recipient address; and
``(VII) that no person may initiate more than 10 mailings
described in subparagraph (A) during any 30-day period.
``(C) Definition.--In this paragraph, the term `minor'
means an individual who is less than the minimum age required
for the legal sale or purchase of tobacco products as
determined by applicable law at the place the individual is
located.
``(5) Exception for mailings for consumer testing by
manufacturers.--
``(A) In general.--Subject to subparagraph (B), subsection
(a) shall not preclude a legally operating cigarette
manufacturer or a legally authorized agent of a legally
operating cigarette manufacturer from using the United States
Postal Service to mail cigarettes to verified adult smoker
solely for consumer testing purposes, if--
``(i) the cigarette manufacturer has a permit, in good
standing, issued under section 5713 of the Internal Revenue
Code of 1986;
``(ii) the package of cigarettes mailed under this
paragraph contains not more than 12 packs of cigarettes (240
cigarettes);
``(iii) the recipient does not receive more than 1 package
of cigarettes from any 1 cigarette manufacturer under this
paragraph during any 30-day period;
``(iv) all taxes on the cigarettes mailed under this
paragraph levied by the State and locality of delivery are
paid to the State and locality before delivery, and tax
stamps or other tax-payment indicia are affixed to the
cigarettes as required by law; and
[[Page S1485]]
``(v)(I) the recipient has not made any payments of any
kind in exchange for receiving the cigarettes;
``(II) the recipient is paid a fee by the manufacturer or
agent of the manufacturer for participation in consumer
product tests; and
``(III) the recipient, in connection with the tests,
evaluates the cigarettes and provides feedback to the
manufacturer or agent.
``(B) Limitations.--Subparagraph (A) shall not--
``(i) permit a mailing of cigarettes to an individual
located in any State that prohibits the delivery or shipment
of cigarettes to individuals in the State, or preempt, limit,
or otherwise affect any related State laws; or
``(ii) permit a manufacturer, directly or through a legally
authorized agent, to mail cigarettes in any calendar year in
a total amount greater than 1 percent of the total cigarette
sales of the manufacturer in the United States during the
calendar year before the date of the mailing.
``(C) Rules.--
``(i) In general.--Not later than 180 days after the date
of enactment of the Prevent All Cigarette Trafficking Act of
2009, the Postmaster General shall issue a final rule which
shall establish the standards and requirements that apply to
all mailings described in subparagraph (A).
``(ii) Contents.--The final rule issued under clause (i)
shall require--
``(I) the United States Postal Service to verify that any
person submitting a tobacco product into the mails under this
paragraph is a legally operating cigarette manufacturer
permitted to make a mailing under this paragraph, or an agent
legally authorized by the legally operating cigarette
manufacturer to submit the tobacco product into the mails on
behalf of the manufacturer;
``(II) the legally operating cigarette manufacturer
submitting the cigarettes into the mails under this paragraph
to affirm that--
``(aa) the manufacturer or the legally authorized agent of
the manufacturer has verified that the recipient is an adult
established smoker;
``(bb) the recipient has not made any payment for the
cigarettes;
``(cc) the recipient has signed a written statement that is
in effect indicating that the recipient wishes to receive the
mailings; and
``(dd) the manufacturer or the legally authorized agent of
the manufacturer has offered the opportunity for the
recipient to withdraw the written statement described in item
(cc) not less frequently than once in every 3-month period;
``(III) the legally operating cigarette manufacturer or the
legally authorized agent of the manufacturer submitting the
cigarettes into the mails under this paragraph to affirm that
any package mailed under this paragraph contains not more
than 12 packs of cigarettes (240 cigarettes) on which all
taxes levied on the cigarettes by the State and locality of
delivery have been paid and all related State tax stamps or
other tax-payment indicia have been applied;
``(IV) that any mailing described in subparagraph (A) shall
be sent through the systems of the United States Postal
Service that provide for the tracking and confirmation of the
delivery;
``(V) the United States Postal Service to maintain records
relating to a mailing described in subparagraph (A) during
the 3-year period beginning on the date of the mailing and
make the information available to persons enforcing this
section;
``(VI) that any mailing described in subparagraph (A) be
marked with a United States Postal Service label or marking
that makes it clear to employees of the United States Postal
Service that it is a permitted mailing of otherwise
nonmailable tobacco products that may be delivered only to
the named recipient after verifying that the recipient is an
adult; and
``(VII) the United States Postal Service shall deliver a
mailing described in subparagraph (A) only to the named
recipient and only after verifying that the recipient is an
adult.
``(D) Definitions.--In this paragraph--
``(i) the term `adult' means an individual who is not less
than 21 years of age; and
``(ii) the term `consumer testing' means testing limited to
formal data collection and analysis for the specific purpose
of evaluating the product for quality assurance and
benchmarking purposes of cigarette brands or sub-brands among
existing adult smokers.
``(6) Federal government agencies.--An agency of the
Federal Government involved in the consumer testing of
tobacco products solely for public health purposes may mail
cigarettes under the same requirements, restrictions, and
rules and procedures that apply to consumer testing mailings
of cigarettes by manufacturers under paragraph (5), except
that the agency shall not be required to pay the recipients
for participating in the consumer testing.
``(c) Seizure and Forfeiture.--Any cigarettes or smokeless
tobacco made nonmailable by this subsection that are
deposited in the mails shall be subject to seizure and
forfeiture, pursuant to the procedures set forth in chapter
46 of this title. Any tobacco products seized and forfeited
under this subsection shall be destroyed or retained by the
Federal Government for the detection or prosecution of crimes
or related investigations and then destroyed.
``(d) Additional Penalties.--In addition to any other fines
and penalties under this title for violations of this
section, any person violating this section shall be subject
to an additional civil penalty in the amount equal to 10
times the retail value of the nonmailable cigarettes or
smokeless tobacco, including all Federal, State, and local
taxes.
``(e) Criminal Penalty.--Whoever knowingly deposits for
mailing or delivery, or knowingly causes to be delivered by
mail, according to the direction thereon, or at any place at
which it is directed to be delivered by the person to whom it
is addressed, anything that is nonmailable matter under this
section shall be fined under this title, imprisoned not more
than 1 year, or both.
``(f) Use of Penalties.--There is established a separate
account in the Treasury, to be known as the `PACT Postal
Service Fund'. Notwithstanding any other provision of law, an
amount equal to 50 percent of any criminal fines, civil
penalties, or other monetary penalties collected by the
Federal Government in enforcing this section shall be
transferred into the PACT Postal Service Fund and shall be
available to the Postmaster General for the purpose of
enforcing this subsection.
``(g) Coordination of Efforts.--The Postmaster General
shall cooperate and coordinate efforts to enforce this
section with related enforcement activities of any other
Federal agency or agency of any State, local, or tribal
government, whenever appropriate.
``(h) Actions by State, Local, or Tribal Governments
Relating to Certain Tobacco Products.--
``(1) In general.--A State, through its attorney general,
or a local government or Indian tribe that levies an excise
tax on tobacco products, through its chief law enforcement
officer, may in a civil action in a United States district
court obtain appropriate relief with respect to a violation
of this section. Appropriate relief includes injunctive and
equitable relief and damages equal to the amount of unpaid
taxes on tobacco products mailed in violation of this section
to addressees in that State, locality, or tribal land.
``(2) Sovereign immunity.--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 paragraph (1), or
otherwise to restrict, expand, or modify any sovereign
immunity of a State or local government or Indian tribe.
``(3) Attorney general referral.--A State, through its
attorney general, or a local government or Indian tribe that
levies an excise tax on tobacco products, through its chief
law enforcement officer, may provide evidence of a violation
of this section for commercial purposes by any person not
subject to State, local, or tribal government enforcement
actions for violations of this section to the Attorney
General of the United States, who shall take appropriate
actions to enforce this section.
``(4) Nonexclusivity of remedies.--The remedies available
under this subsection are in addition to any other remedies
available under Federal, State, local, tribal, or other law.
Nothing in this subsection shall be construed to expand,
restrict, or otherwise modify any right of an authorized
State, local, or tribal government official to proceed in a
State, tribal, or other appropriate court, or take other
enforcement actions, on the basis of an alleged violation of
State, local, tribal, or other law.
``(5) Other enforcement actions.--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 any general civil or criminal statute of
the State.
``(i) Definition.--In this section, the term `State' has
the meaning given that term in section 1716(k).''.
(b) Clerical Amendment.--The table of sections for chapter
83 of title 18 is amended by inserting after the item
relating to section 1716D the following:
``1716E. Tobacco products as nonmailable.''.
SEC. 4. INSPECTION BY BUREAU OF ALCOHOL, TOBACCO, FIREARMS,
AND EXPLOSIVES OF RECORDS OF CERTAIN CIGARETTE
AND SMOKELESS TOBACCO SELLERS; CIVIL PENALTY.
Section 2343(c) of title 18, United States Code, is amended
to read as follows:
``(c)(1) 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 (a)
or (b) for the purposes of inspecting--
``(A) any records or information required to be maintained
by the person under this chapter; or
``(B) any cigarettes or smokeless tobacco kept or stored by
the person at the premises.
``(2) The district courts of the United States shall have
the authority in a civil action under this subsection to
compel inspections authorized by paragraph (1).
``(3) Whoever denies access to an officer under paragraph
(1), or who fails to comply with an order issued under
paragraph (2), shall be subject to a civil penalty in an
amount not to exceed $10,000.''.
SEC. 5. EXCLUSIONS REGARDING INDIAN TRIBES AND TRIBAL
MATTERS.
(a) In General.--Nothing in this Act or the amendments made
by this Act shall be construed to amend, modify, or otherwise
affect--
(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
section 4(e) of 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;
(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 Federal or State 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, tribal members, tribal enterprises, or in
Indian country;
[[Page S1486]]
(4) any Federal law, including Federal common law and
treaties, regarding State jurisdiction, or lack thereof, over
any tribe, tribal members, tribal enterprises, tribal
reservations, or other lands held by the United States in
trust for one or more Indian tribes; or
(5) any 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.--Nothing in
this Act or the amendments made by this Act shall 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 shall prohibit, limit, or
restrict enforcement by the Attorney General of the United
States of this Act or an amendment made by this Act 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.
(f) Definitions.--In this section--
(1) the term ``Indian country'' has the meaning given that
term in section 1 of the Jenkins Act, as amended by this Act;
and
(2) the term ``tribal enterprise'' means any business
enterprise, regardless of whether incorporated or
unincorporated under Federal or tribal law, of an Indian
tribe or group of Indian tribes.
SEC. 6. EFFECTIVE DATE.
(a) In General.--Except as provided in subsection (b), this
Act shall take effect on the date that is 90 days after the
date of enactment of this Act.
(b) BATFE Authority.--The amendments made by section 4
shall take effect on the date of enactment of this Act.
SEC. 7. SEVERABILITY.
If any provision of this Act, or any amendment made by this
Act, or the application thereof to any person or
circumstance, is held invalid, the remainder of the Act and
the application of the Act to any other person or
circumstance shall not be affected thereby.
SEC. 8. SENSE OF CONGRESS CONCERNING THE PRECEDENTIAL EFFECT
OF THIS ACT.
It is the sense of Congress that unique harms are
associated with online cigarette sales, including problems
with verifying the ages of consumers in the digital market
and the long-term health problems associated with the use of
certain tobacco products. This Act was enacted recognizing
the longstanding interest of Congress in urging compliance
with States' laws regulating remote sales of certain tobacco
products to citizens of those States, including the passage
of the Jenkins Act over 50 years ago, which established
reporting requirements for out-of-State companies that sell
certain tobacco products to citizens of the taxing States,
and which gave authority to the Department of Justice and the
Bureau of Alcohol, Tobacco, Firearms, and Explosives to
enforce the Jenkins Act. In light of the unique harms and
circumstances surrounding the online sale of certain tobacco
products, this Act is intended to help collect cigarette
excise taxes, to stop tobacco sales to underage youth, and to
help the States enforce their laws that target the online
sales of certain tobacco products only. This Act is in no way
meant to create a precedent regarding the collection of State
sales or use taxes by, or the validity of efforts to impose
other types of taxes on, out-of-State entities that do not
have a physical presence within the taxing State.
Mr. KOHL. Mr. President, I thank my colleagues for supporting S.1147,
the Prevent All Cigarette Trafficking, PACT, Act. The PACT Act closes
loopholes in current tobacco trafficking laws, enhances penalties for
violations, and provides law enforcement with new tools to combat the
innovative methods being used by cigarette traffickers to distribute
their products. With its passage, we cut off a source of funding for
terrorists and criminals raise more money, enhance states' ability to
collect significant amounts of tax revenue, and further limit kids from
easy access to tobacco products sold over the internet.
By passing this bill, we are solving a serious problem that is
growing every day. In 1998, the Bureau of Alcohol, Tobacco, Firearms
and Explosives, BATFE, had six active tobacco smuggling investigations.
Today there are more than 400 active tobacco smuggling investigations.
Last November, BATFE announced that they were charging 14 people with
paying over $8 million, nearly 40 firearms, and drugs to purchase more
than 77 million contraband cigarettes to sell in New York. Moreover,
two of the conspirators were also charged with hiring a hitman to kill
two people they believed to be stealing contraband cigarettes. The
problem is significant, and today we are giving law enforcement the
additional tools they need to root out and end cigarette trafficking
and related crimes.
The number of cases alone does not sufficiently put this problem into
perspective. The amount of money involved is truly astonishing.
Cigarette trafficking, including the illegal sale of tobacco products
over the Internet, costs States billions of dollars in lost tax revenue
each year. It is estimated that we lose $5 billion of tax revenue, at
the Federal and State level, each year. As lost tobacco tax revenue
lines the pockets of criminals and terrorist groups, states are being
forced to squeeze their budgets even tighter by cutting programs and
increasing college tuition. Tobacco smuggling may provide some with
cheap access to cigarettes, but those cheap cigarettes are coming at a
significant cost to the rest of us.
The cost to Americans is not merely financial. Tobacco smuggling has
developed into a popular, and highly profitable, means of generating
revenue for criminal and terrorist organizations. Hezbollah, al-Qaida
and Hamas have all generated significant revenue from the sale of
counterfeit cigarettes. That money is often raised right here in the
United States, and it is then funneled back to these international
terrorist groups.
In July 2004, the 9/11 Commission recommended that ``[v]igorous
efforts to track terrorist financing must remain front and center in
U.S. counterterrorism efforts.'' And the 9/11 commission stressed that
it is important to rely, in part, on traditional criminal tools to
disrupt terrorist fundraising efforts, since they often raise money by
trafficking in counterfeit goods. Specifically, it said,
``[c]ounterterrorism investigations often overlap or are cued by other
criminal investigations, such as money laundering or the smuggling of
contraband.'' All too often, that contraband is cigarettes.
By passing this bill today, we are sending a strong message that
terrorist organizations can no longer exploit the weaknesses in our
tobacco laws to generate significant amounts of money. Cutting off
financial support to terrorist groups is an indispensable part of
protecting the country against future attacks.
According to the Government Accountability Office, GAO, cigarette
trafficking investigations are growing more and more complex, and take
longer to resolve. More people are selling cigarettes illegally, and
they are getting better at it. As these cases become more difficult to
crack, we owe it to law enforcement officials to do our part to lend a
helping hand. The PACT Act does that by enhancing BATFE's authority to
enter premises to investigate and enforce cigarette trafficking laws.
It also increases penalties for cigarette trafficking under the Jenkins
Act from a misdemeanor to a felony. Instead of a slap on the wrist, we
need to show these people we mean business and make sure the
investigative efforts of our law enforcement officers pays off. Unless
these existing laws are strengthened, traffickers will continue to
operate with near impunity.
Just as important, though, we must enable our country's law
enforcement officials to combat the cigarette smugglers of the 21st
century. The internet represents a new obstacle to enforcement. Illegal
tobacco vendors around the world evade detection by conducting
transactions over the internet, and then shipping their illegal
products around the country to consumers. Just a few years ago, there
were less than 100 vendors selling cigarettes online. Today,
approximately 500 vendors sell illegal tobacco products over the
Internet.
Without innovative enforcement methods, law enforcement will not be
able to effectively address the growing challenges facing them today.
The PACT Act sets out to do just that by empowering states to go after
out-of-state sellers who are violating their tax laws in Federal court.
It also cuts off their method of delivery. A significant part of this
problem involves the shipment of contraband cigarettes through the
United States Postal Service, USPS. This bill would cut off online
vendors' access to the USPS. We would treat cigarettes just like we
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treat alcohol, making it illegal to ship them through the U.S. mails
and cutting off a large portion of the delivery system.
In addition to cracking down on tobacco smuggling, the bill will keep
tobacco out of the hands of kids. One of the primary ways children get
access to cigarettes today is on the Internet and through the mails.
The PACT Act contains a strong age verification section that will
prevent online sales of cigarettes by requiring sellers to use a method
of shipment that includes a signature and photo ID check upon delivery.
Most States already have similar laws on the books, and this would
simply make sure that we have a national standard to ensure that the
Internet is not being used to evade ID checks required at our grocery
and convenience stores.
It is important to point out that this bill has been carefully
drafted, following 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, to ensure that it would be strictly neutral in regards to
tribal sovereignty and tribal immunity rights. The PACT Act would
neither expand nor contract the current scope of tribal sovereignty and
immunity, as determined by Federal statute and judicial
interpretations. Also, the bill makes clear that it cannot be used to
expand, contract, or otherwise change the scope of tribal sovereignty
and immunity.
The commonsense approach of the PACT Act has brought together a
strong coalition of supporters. Tobacco companies and public health
advocates; State law enforcement and Federal law enforcement; and
Republicans and Democrats alike all agree that this is an issue that
must be addressed. Today, we begin to provide law enforcement
authorities with the tools they need to combat a very serious threat to
our States' coffers, national security, and public health.
Again, I thank leadership, the cosponsors of the bill, and all of my
colleagues for their support of the PACT Act.
Mr. DURBIN. I ask unanimous consent that the committee substitute be
agreed to, the bill, as amended, be read a third time and passed, the
motion to reconsider be laid upon the table, with no intervening action
or debate, and any statements relating to the bill be printed in the
Record.
The PRESIDING OFFICER. Without objection, it is so ordered.
The committee amendment in the nature of a substitute was agreed to.
The bill (S. 1147), as amended, was ordered to be engrossed for a
third reading, was read the third time, and passed.
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