[Congressional Record Volume 158, Number 145 (Wednesday, November 14, 2012)]
[House]
[Pages H6355-H6357]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         STOP TOBACCO SMUGGLING IN THE TERRITORIES ACT OF 2012

  Mr. COBLE. Mr. Speaker, I move to suspend the rules and pass the bill 
(H.R. 5934) to amend title 18, United States Code, to include certain 
territories and possessions of the United States in the definition of 
State for the purposes of chapter 114, relating to trafficking in 
contraband cigarettes and smokeless tobacco.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 5934

       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 ``Stop Tobacco Smuggling in 
     the Territories Act of 2012''.

     SEC. 2. TERRITORIES AND POSSESSIONS OF THE UNITED STATES 
                   INCLUDED IN THE DEFINITION OF STATE FOR THE 
                   PURPOSES OF THE PROHIBITION AGAINST TRAFFICKING 
                   IN CONTRABAND CIGARETTES AND SMOKELESS TOBACCO.

       Paragraph (4) of section 2341 of title 18, United States 
     Code, is amended by striking ``or the Virgin Islands'' and 
     inserting ``the Virgin Islands, American Samoa, the 
     Commonwealth of the Northern Mariana Islands, or Guam''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
North Carolina (Mr. Coble) and the gentleman from Virginia (Mr. Scott) 
each will control 20 minutes.
  The Chair recognizes the gentleman from North Carolina.


                             General Leave

  Mr. COBLE. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days within which to revise and extend their remarks 
and include extraneous materials on H.R. 5934 currently under 
consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from North Carolina?
  There was no objection.
  Mr. COBLE. Mr. Speaker, I yield myself such time as I may consume.
  H.R. 5934, the Stop Tobacco Smuggling in the Territories Act of 2012, 
was introduced by Mr. Faleomavaega, my good friend from American 
Samoa--and I apologize if I did damage to that. I thank him for his 
work on this issue.
  Cigarette trafficking is one of the most lucrative smuggling 
operations in the United States and around the world. It is estimated 
that illicit cigarettes account for over 10 percent of the more than 
5.7 trillion cigarettes sold globally each year.
  Here in the United States, approximately 4 billion cigarettes sold 
each year are illicit. Cigarette smuggling is typically carried out by 
sophisticated,

[[Page H6356]]

large-scale criminal organizations that take advantage of the 
significant disparity between the taxes levied on cigarettes across the 
States. For example, Mr. Speaker, a pack of cigarettes that costs $13 
in a high-tax State like New York will cost only about $5 in a low-tax 
State such as Virginia.
  These differences create a highly lucrative market for individuals to 
evade the local sales tax and purchase cigarettes in one locality and 
transport them to another for resale below the market value. Criminal 
organizations are able to make a profit of as much as $1 million on 
just a single truckload of illicit cigarettes.
  State cigarette taxes in the United States have been on the rise 
since 1992 and have increased more than 65 percent over this period; 
however, the States' gross tax revenues have increased by only 35 
percent due in significant part to the illicit tobacco trade.
  Exploiting the price disparity for a single pack of cigarettes 
between individual States has proved profitable for criminal networks. 
According to the Justice Department, this illicit activity costs the 
States and the Federal Government approximately $5 billion each year. 
This is money that could--and should--be put to better use.
  Congress took steps to curb the sale of contraband cigarettes with 
the Prevent All Cigarette Trafficking (PACT) Act of 2009. The PACT Act 
prohibits the sale of cigarettes and smokeless tobacco products over 
the Internet, and it made changes to the criminal anti-cigarette 
smuggling statutes.
  H.R. 5934, Mr. Speaker, provides a technical correction to ensure 
that the criminal prohibitions against cigarette smuggling apply to the 
U.S. territories of American Samoa, Guam, and the Northern Mariana 
Islands in the same way that they do for the rest of the country. This 
is a modest but important change that will help to promote safety and 
tax revenues in these territories.
  I again thank my friend from American Samoa for his work on this 
issue, and I urge my colleagues to join me and Mr. Scott in support of 
this bill.
  I reserve the balance of my time.
  Mr. SCOTT of Virginia. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in support of H.R. 5934, the Stop Tobacco 
Smuggling in the Territories Act of 2012.
  When enacted, H.R. 5934 will amend the Contraband Cigarette 
Trafficking Act by including American Samoa, the Commonwealth of the 
Northern Mariana Islands, and Guam in existing legislation which makes 
it illegal to knowingly ship, transport, receive, possess, sell, 
distribute, or purchase 10,000 or more contraband cigarettes that do 
not have a State or territorial stamp.
  Under the Contraband Cigarette Trafficking Act, violators face 
criminal penalties and fines. Currently, there are no such sanctions in 
effect for violations that occur in the territories, thus prohibiting 
the Bureau of Alcohol, Tobacco, Firearms and Explosives from 
investigating cigarette smuggling and Trafficking Act violations. H.R. 
5934 will fix this.

                              {time}  1310

  Mr. Speaker, each year hundreds of millions of cigarettes are 
diverted from legal trade channels into the underworld. Cigarette 
counterfeiting is growing steadily. Cigarettes are believed to be the 
most illegally trafficked product in the world.
  Cigarette smuggling results in significant economic impact in terms 
of depriving governments of excise tax revenue and depriving legitimate 
businesses from income due to unfair competition. Smuggling of genuine 
cigarettes steals as much as an estimated $40- to $50 billion from 
governments in tax revenue, with trafficking in counterfeit cigarettes 
stealing even billions more.
  In May 2011, a report from the Territorial Audit Office on collection 
of cigarette tax by the American Samoa Government found that cigarettes 
are likely being smuggled into American Samoa and that, as a result, 
their government is losing a significant amount of cigarette excise tax 
revenue.
  A subsequent study estimated that as many as close to 6 million 
cigarettes had been smuggled into the territory in 2010, resulting in 
an estimated loss of revenue to the American Samoa Government of over 
$700,000.
  In addition to the economic impact, there are public health and 
public safety concerns. Smuggling delivers cigarettes that are cheaper 
to buy. Because cheaper cigarettes lure youth and other new customers, 
they boost sales and consumption, making it harder for smokers to quit.
  It's also been reported that some import imitation cigarettes have 
been found to contain toxins. As a result, illegal trade adds steadily 
to healthcare costs, worker productivity losses, and the growing death 
toll from tobacco use, already almost over 5 million lives per year, 
projected to rise to 8 million by 2030.
  From a public health standpoint, it is well documented that, as with 
other contraband, proceeds from cigarette trafficking support organized 
crime and even terrorist networks.
  For these reasons, I support the bill. I encourage my colleagues to 
support the bill as well.
  If the gentleman has no other speakers, I'd like to yield to the 
gentleman from American Samoa (Mr. Faleomavaega) for such time as he 
may consume.
  Mr. COBLE. I have no additional speakers. I reserve the balance of my 
time.
  (Mr. FALEOMAVAEGA asked and was given permission to revise and extend 
his remarks.)
  Mr. FALEOMAVAEGA. Mr. Speaker, again I cannot express enough my 
deepest appreciation to the gentleman from Virginia (Mr. Scott) and my 
good friend, the gentleman from North Carolina (Mr. Coble) for their 
management of this bill.
  Mr. Speaker, I rise today in strong support of H.R. 5934, a bill that 
I authored to stop tobacco smuggling in the territories.
  First, I want to thank the chairman of the House Judiciary Committee, 
Mr. Smith, and my dear friend, the ranking member, Mr. Conyers, and all 
the members of the committee for their strong support of this 
legislation.
  I also want to acknowledge Speaker John Boehner and House Majority 
Leader Cantor, and our Democratic leader, Nancy Pelosi, for their 
support of this bill.
  I thank my colleagues, the gentlelady from Guam, and also, the 
gentleman from the Northern Mariana Islands, Ms. Bordallo and Mr. 
Sablan, respectively, for their cosponsorship of this bill.
  Mr. Speaker, today American Samoa faces a serious problem of tobacco 
smuggling, as I'm sure it's the same with the other territories. 
According to a recent study, 2 years ago, as many as 5,792,924 
cigarettes were smuggled into the territory. The study found that 
tobacco smuggling resulted in the loss of about $724,116 in revenues to 
the American Samoa Government.
  If continued undeterred, tobacco smuggling in the territory will lead 
to heavier losses in local tax revenues, especially if cigarette excise 
tax rates were to be increased.
  Mr. Speaker, in this age of government fiscal responsibility, 
securing and sustaining stable resources of local revenue stream is 
essential and must be encouraged for the territories. It was for this 
reason I began to look into this important issue. And I was 
disappointed, however, to find that, under current law prohibiting 
cigarette smuggling, not all the territories were included.
  Under the Contraband Cigarette Trafficking Act that Congress passed 
in 1978, it is illegal to ship, sell, transport, or possess more than 
10,000 cigarettes, or 500 packs per month, not bearing the tax stamp of 
the jurisdiction in which they are found. Violation is a felony 
punishable by up to 5 years in prison and seizure of the contraband 
cigarettes.
  The Contraband Cigarette Trafficking Act currently, however, does not 
apply to American Samoa, Guam, and the Northern Mariana Islands. 
Historically, when Congress considered the bill in 1978 the Senate 
version defined State to include the 50 States, the District of 
Columbia, Puerto Rico, or a territory or a possession of the United 
States, while the House provision excluded the smaller territories. For 
some reason unbeknown to me, the conference substitute adopted the 
House provision, and according to the conference report, the House 
provision

[[Page H6357]]

is described as ``more accurately delineating the practical scope of 
the legislation.''
  Mr. Speaker, the bill before us today will correct this oversight in 
the current law. This important piece of legislation will amend the 
Contraband Cigarette Trafficking Act to include the territories of 
American Samoa, Guam, and the Northern Mariana Islands. It will amend 
the definition of a State for the purpose of this Act to include all 
U.S. territories.
  Again, I commend my good friends, the gentleman from North Carolina, 
as well as my friend from Virginia, for their extensive understanding 
and knowledge of this issue and the matter now before us. I urge my 
colleagues to support this bill.
  Mr. SCOTT of Virginia. Mr. Speaker, I yield myself such time as I may 
consume to thank the gentleman from American Samoa, the leadership of 
the Judiciary Committee, and my friend from North Carolina (Mr. Coble) 
for bringing this measure to the floor. I urge my colleagues to support 
the bill.
  I yield back the balance of my time.
  Mr. COBLE. In closing, I want to thank Mr. Scott as well, and my good 
friend from American Samoa. Eni, I apologize for my having fractured 
the pronunciation of your name earlier. But folks, this is a good bill 
that addresses a formidable threat, and I urge my colleagues to vote in 
favor of the bill and support it.
  I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from North Carolina (Mr. Coble) that the House suspend the 
rules and pass the bill, H.R. 5934.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

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