[Congressional Record Volume 159, Number 31 (Tuesday, March 5, 2013)]
[House]
[Pages H965-H966]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         STOP TOBACCO SMUGGLING IN THE TERRITORIES ACT OF 2013

  Mr. GOODLATTE. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 338) 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. 338

       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 2013''.

     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 (Mr. Messer). Pursuant to the rule, the 
gentleman from Virginia (Mr. Goodlatte) and the gentleman from Virginia 
(Mr. Scott) each will control 20 minutes.
  The Chair recognizes the gentleman from Virginia (Mr. Goodlatte).


                             General Leave

  Mr. GOODLATTE. 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. 338, currently under 
consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Virginia?
  There was no objection.

                              {time}  1330

  Mr. GOODLATTE. Mr. Speaker, I yield myself such time as I may 
consume.
  Cigarette trafficking is a very lucrative crime both here in the 
United States and abroad. 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 alone, approximately 
4 billion of the cigarettes sold each year are illicit.
  Cigarette smuggling is generally carried out by large criminal 
organizations that take advantage of the significant disparity between 
the taxes levied on cigarettes across the States. These differences 
create a highly lucrative market for individuals to evade State and 
local sales taxes by purchasing cigarettes in one locality and 
transporting them to another for resale below market value. It is 
estimated that criminals can make a profit of as much as $1 million on 
just a single truckload of illicit cigarettes.
  Cigarette smuggling is not just profitable for criminal networks; 
this crime also harms State and Federal revenues. According to the 
Justice Department, this illicit activity costs the States and the 
Federal Government an estimated $5 billion each year. This is money 
that could and should be put to better use.
  In 2009, Congress took steps to curb contraband cigarettes with the 
Prevent All Cigarette Trafficking, or PACT, Act. The PACT Act prohibits 
the sale of cigarettes and other tobacco products over the Internet and 
made changes to the criminal anticigarette smuggling statutes.
  H.R. 338, the Stop Tobacco Smuggling in the Territories Act of 2013, 
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 just as they 
do in the rest of the country. Without this fix, cigarettes sold in 
these territories without evidence that taxes were paid do not fall 
within the definition of ``contraband cigarettes.'' This is a modest 
but important change that will help to discourage crime and increase 
tax revenues in these United States territories.
  I want to thank Mr. Faleomavaega for his work on this issue, as well 
as the ranking member on the full committee and the subcommittee for 
their support of this effort, and the chairman of the Crime 
Subcommittee, Mr. Sensenbrenner, as well, and I urge my colleagues to 
join me in support of this bill.
  I reserve the balance of my time.
  Mr. SCOTT of Virginia. I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of H.R. 338, the Stop Tobacco 
Smuggling in the Territories Act of 2013. This bill is simple and 
straightforward. It amends the Contraband Cigarette Trafficking Act by 
including American Samoa, the Commonwealth of the Northern Mariana 
Islands, and Guam in this act.
  Currently, the Contraband Cigarette Trafficking Act 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 tax stamp. The act similarly applies to the sale of 
contraband smokeless tobacco

[[Page H966]]

in excess of certain specified quantities. With respect to both 
activities, the act authorizes the imposition of criminal penalties and 
fines.
  As drafted, however, the bill does not apply to American Samoa, the 
Commonwealth of the Northern Mariana Islands, and Guam. Thus, the 
Bureau of Alcohol, Tobacco, Firearms, and Explosives is prohibited from 
investigating Contraband Cigarette Trafficking Act violations in those 
territories. H.R. 338 will cure this obvious oversight.
  Mr. Speaker, cigarettes are believed to be the most illegally 
trafficked product in the world. In 2006 alone, more than 10 percent of 
worldwide sales, or 600 billion cigarettes, were counterfeited.
  Contraband cigarettes actually present numerous issues. Legally 
manufactured cigarettes are diverted from legal trade channels in the 
underworld for resale, evading the imposition of appropriate taxes, 
costing territorial governments a significant amount of cigarette 
excess tax revenue each year. They also facilitate unfair competition 
that hurts the bottom line of legitimate businesses.
  Counterfeit cigarettes are also not subjected to any manufacturing 
safeguards, therefore presenting the potential for products containing 
toxic ingredients that can seriously jeopardize the health and safety 
of the smoker.
  The lower price also facilitates easier affordability for our youth, 
resulting in addiction at earlier ages. The illicit trade therefore 
adds steadily to the health care costs of worker productivity losses 
and the growing death from tobacco use. Currently, the use of tobacco 
claims 5.4 million lives a year. This number is projected to rise to 8 
million by 2013.
  For these reasons, I strongly support H.R. 338 and thank our 
colleague from American Samoa, Delegate Faleomavaega, for his 
leadership in spearheading this issue.
  Accordingly, Mr. Speaker, I urge my colleagues to support the 
legislation, and I reserve the balance of my time.
  Mr. GOODLATTE. I continue to reserve the balance of my time.
  Mr. SCOTT of Virginia. Mr. Speaker, I yield such time as he may 
consume to the delegate from American Samoa (Mr. Faleomavaega).
  Mr. FALEOMAVAEGA. I thank the gentleman for yielding, Mr. Speaker, 
and I especially want to thank my good friend, the chairman of the 
House Judiciary committee, Mr. Goodlatte, and Mr. John Conyers, the 
senior ranking member, for their support of this proposed bill. I would 
especially also like to thank Jim Sensenbrenner, the chairman of the 
subcommittee, and the gentleman from Virginia, my good friend, for 
their support in the subcommittee. I also want to acknowledge Speaker 
John Boehner, Majority Leader Cantor, and our Democratic leader, Nancy 
Pelosi, for their support.
  Mr. Speaker, my district faces a serious problem with tobacco 
smuggling. According to a recent study, in 2010 alone, as many as 5.8 
million cigarettes were smuggled into the territory. The study found 
that tobacco smuggling resulted in the loss of about $725,000 in 
revenues to the territory. If continued undeterred, tobacco smuggling 
in the territory will lead to heavier losses in local tax revenues, 
especially if the cigarette excise tax rate were to be increased. Mr. 
Speaker, securing and sustaining stable sources of local revenue stream 
is essential and must be encouraged for the territories, as it has 
already done for the States.
  It was for this reason I began to look into this important issue. I 
was disappointed, however, to find that under the 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 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 
and/or both.
  The Contraband Cigarette Trafficking Act currently, however, does not 
apply to American Samoa, the territory of 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 possession of 
the United States; however, the House provision excluded the smaller 
territories. For some reason unbeknownst to me, the conference 
substitute adopted the House provision. The conference report describes 
the House provision as ``more accurately delineating the practical 
scope of the legislation.''
  Mr. Speaker, the bill before us today will correct this oversight 
under the current law. This important piece of legislation will amend 
the Contraband Cigarette Trafficking Act to include these territories.
  I urge my colleagues to support this bill.
  Mr. SCOTT of Virginia. Mr. Speaker, I yield back the balance of my 
time.
  Mr. GOODLATTE. I will close simply by saying cigarette smuggling is a 
serious problem and revenues lost to the territories that Mr. 
Faleomavaega and others represent are lost revenues that they can use 
to meet legitimate obligations, and we want to help them combat that. 
So I strongly support the legislation and urge my colleagues to do the 
same, and I yield back the balance of my time.
  Ms. JACKSON LEE. Mr. Speaker, I rise today to support H.R. 338, the 
``Stop Tobacco Smuggling in the Territories Act of 2013,'' which adds 
previously uncovered American territories to the Contraband Cigarette 
Trafficking Act.
  Specifically, H.R. 338 provides that American Samoa, the Commonwealth 
of the Northern Marianas and Guam will be covered by the current 
Contraband Cigarette Trafficking Act, 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 tax stamp.
  Currently, only the 50 states, Washington, DC, Puerto Rico, and the 
Virgin Islands are covered by the Contraband Cigarette Trafficking Act.
  We all understand the dangers associated with cigarette smoking and 
its prevalence in the United States. This bill seeks to treat the 
aforementioned territories like any other state when it comes to 
trafficking.
  Roughly 23 percent of American adults and 30 percent of adolescents 
are current smokers. Every day, 3,500 minors try smoking for the first 
time, one thousand of whom go on to become regular, daily smokers. 
Moreover, more than 15.5 million children are exposed to secondhand 
smoke at home.
  Smoking kills more people than alcohol, AIDS, car accidents, illegal 
drugs, murders, and suicides combined, with thousands more dying from 
spit tobacco use.
  About one of every five American deaths is related to smoking, or 
about 400,000 Americans each year. Tragically, about 50,000 adult 
nonsmokers in the nation die each year from exposure to secondhand 
smoke.
  More deaths are caused each year by tobacco use than by all deaths 
from HIV, illegal drug use, alcohol use, car accidents, suicides, and 
murders combined.
  More than 8.6 million Americans currently suffer from smoking-caused 
illness, and over six million Americans under the age of 18 who are 
alive today are estimated to ultimately die from smoking. In addition, 
smokers lose an average of 13 to 14 years of life because of their 
smoking.
  We must do more to dissuade people from smoking.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Virginia (Mr. Goodlatte) that the House suspend the 
rules and pass the bill, H.R. 338.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds 
being in the affirmative, the ayes have it.
  Mr. GOODLATTE. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further 
proceedings on this motion will be postponed.

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