[Congressional Record (Bound Edition), Volume 152 (2006), Part 12]
[Senate]
[Pages 16605-16626]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           TEXT OF AMENDMENTS

  SA 4742. Mr. DORGAN (for himself and Ms. Snowe) submitted an 
amendment intended to be proposed by him to the bill S. 3711, to 
enhance the energy independence and security of the United States by 
providing for exploration, development, and production activities for 
mineral resources in the Gulf of Mexico, and for other purposes; which 
was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

              TITLE __--IMPORTATION OF PRESCRIPTION DRUGS

     SEC. __1. SHORT TITLE.

       This title may be cited as the ``Pharmaceutical Market 
     Access and Drug Safety Act of 2006''.

     SEC. __2. FINDINGS.

       Congress finds that--
       (1) Americans unjustly pay up to 5 times more to fill their 
     prescriptions than consumers in other countries;
       (2) the United States is the largest market for 
     pharmaceuticals in the world, yet American consumers pay the 
     highest prices for brand pharmaceuticals in the world;
       (3) a prescription drug is neither safe nor effective to an 
     individual who cannot afford it;
       (4) allowing and structuring the importation of 
     prescription drugs to ensure access to safe and affordable 
     drugs approved by the Food and Drug Administration will 
     provide a level of safety to American consumers that they do 
     not currently enjoy;
       (5) American spend more than $200,000,000,000 on 
     prescription drugs every year;
       (6) the Congressional Budget Office has found that the cost 
     of prescription drugs are

[[Page 16606]]

     between 35 to 55 percent less in other highly-developed 
     countries than in the United States; and
       (7) promoting competitive market pricing would both 
     contribute to health care savings and allow greater access to 
     therapy, improving health and saving lives.

     SEC. __3. REPEAL OF CERTAIN SECTION REGARDING IMPORTATION OF 
                   PRESCRIPTION DRUGS.

       Chapter VIII of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 381 et seq.) is amended by striking section 804.

     SEC. __4. IMPORTATION OF PRESCRIPTION DRUGS; WAIVER OF 
                   CERTAIN IMPORT RESTRICTIONS.

       (a) In General.--Chapter VIII of the Federal Food, Drug, 
     and Cosmetic Act (21 U.S.C. 381 et seq.), as amended by 
     section __3, is further amended by inserting after section 
     803 the following:

     ``SEC. 804. COMMERCIAL AND PERSONAL IMPORTATION OF 
                   PRESCRIPTION DRUGS.

       ``(a) Importation of Prescription Drugs.--
       ``(1) In general.--In the case of qualifying drugs imported 
     or offered for import into the United States from registered 
     exporters or by registered importers--
       ``(A) the limitation on importation that is established in 
     section 801(d)(1) is waived; and
       ``(B) the standards referred to in section 801(a) regarding 
     admission of the drugs are subject to subsection (g) of this 
     section (including with respect to qualifying drugs to which 
     section 801(d)(1) does not apply).
       ``(2) Importers.--A qualifying drug may not be imported 
     under paragraph (1) unless--
       ``(A) the drug is imported by a pharmacy, group of 
     pharmacies, or a wholesaler that is a registered importer; or
       ``(B) the drug is imported by an individual for personal 
     use or for the use of a family member of the individual (not 
     for resale) from a registered exporter.
       ``(3) Rule of construction.--This section shall apply only 
     with respect to a drug that is imported or offered for import 
     into the United States--
       ``(A) by a registered importer; or
       ``(B) from a registered exporter to an individual.
       ``(4) Definitions.--
       ``(A) Registered exporter; registered importer.--For 
     purposes of this section:
       ``(i) The term `registered exporter' means an exporter for 
     which a registration under subsection (b) has been approved 
     and is in effect.
       ``(ii) The term `registered importer' means a pharmacy, 
     group of pharmacies, or a wholesaler for which a registration 
     under subsection (b) has been approved and is in effect.
       ``(iii) The term `registration condition' means a condition 
     that must exist for a registration under subsection (b) to be 
     approved.
       ``(B) Qualifying drug.--For purposes of this section, the 
     term `qualifying drug' means a drug for which there is a 
     corresponding U.S. label drug.
       ``(C) U.S. label drug.--For purposes of this section, the 
     term `U.S. label drug' means a prescription drug that--
       ``(i) with respect to a qualifying drug, has the same 
     active ingredient or ingredients, route of administration, 
     dosage form, and strength as the qualifying drug;
       ``(ii) with respect to the qualifying drug, is manufactured 
     by or for the person that manufactures the qualifying drug;
       ``(iii) is approved under section 505(c); and
       ``(iv) is not--

       ``(I) a controlled substance, as defined in section 102 of 
     the Controlled Substances Act (21 U.S.C. 802);
       ``(II) a biological product, as defined in section 351 of 
     the Public Health Service Act (42 U.S.C. 262), including--

       ``(aa) a therapeutic DNA plasmid product;
       ``(bb) a therapeutic synthetic peptide product;
       ``(cc) a monoclonal antibody product for in vivo use; and
       ``(dd) a therapeutic recombinant DNA-derived product;

       ``(III) an infused drug, including a peritoneal dialysis 
     solution;
       ``(IV) an injected drug;
       ``(V) a drug that is inhaled during surgery;
       ``(VI) a drug that is the listed drug referred to in 2 or 
     more abbreviated new drug applications under which the drug 
     is commercially marketed; or
       ``(VII) a sterile opthlamic drug intended for topical use 
     on or in the eye.

       ``(D) Other definitions.--For purposes of this section:
       ``(i)(I) The term `exporter' means a person that is in the 
     business of exporting a drug to individuals in the United 
     States from Canada or from a permitted country designated by 
     the Secretary under subclause (II), or that, pursuant to 
     submitting a registration under subsection (b), seeks to be 
     in such business.
       ``(II) The Secretary shall designate a permitted country 
     under subparagraph (E) (other than Canada) as a country from 
     which an exporter may export a drug to individuals in the 
     United States if the Secretary determines that--

       ``(aa) the country has statutory or regulatory standards 
     that are equivalent to the standards in the United States and 
     Canada with respect to--

       ``(AA) the training of pharmacists;
       ``(BB) the practice of pharmacy; and
       ``(CC) the protection of the privacy of personal medical 
     information; and

       ``(bb) the importation of drugs to individuals in the 
     United States from the country will not adversely affect 
     public health.

       ``(ii) The term `importer' means a pharmacy, a group of 
     pharmacies, or a wholesaler that is in the business of 
     importing a drug into the United States or that, pursuant to 
     submitting a registration under subsection (b), seeks to be 
     in such business.
       ``(iii) The term `pharmacist' means a person licensed by a 
     State to practice pharmacy, including the dispensing and 
     selling of prescription drugs.
       ``(iv) The term `pharmacy' means a person that--

       ``(I) is licensed by a State to engage in the business of 
     selling prescription drugs at retail; and
       ``(II) employs 1 or more pharmacists.

       ``(v) The term `prescription drug' means a drug that is 
     described in section 503(b)(1).
       ``(vi) The term `wholesaler'--

       ``(I) means a person licensed as a wholesaler or 
     distributor of prescription drugs in the United States under 
     section 503(e)(2)(A); and
       ``(II) does not include a person authorized to import drugs 
     under section 801(d)(1).

       ``(E) Permitted country.--The term `permitted country' 
     means--
       ``(i) Australia;
       ``(ii) Canada;
       ``(iii) a member country of the European Union, but does 
     not include a member country with respect to which--

       ``(I) the country's Annex to the Treaty of Accession to the 
     European Union 2003 includes a transitional measure for the 
     regulation of human pharmaceutical products that has not 
     expired; or
       ``(II) the Secretary determines that the requirements 
     described in subclauses (I) and (II) of clause (vii) will not 
     be met by the date on which such transitional measure for the 
     regulation of human pharmaceutical products expires;

       ``(iv) Japan;
       ``(v) New Zealand;
       ``(vi) Switzerland; and
       ``(vii) a country in which the Secretary determines the 
     following requirements are met:

       ``(I) The country has statutory or regulatory 
     requirements--

       ``(aa) that require the review of drugs for safety and 
     effectiveness by an entity of the government of the country;
       ``(bb) that authorize the approval of only those drugs that 
     have been determined to be safe and effective by experts 
     employed by or acting on behalf of such entity and qualified 
     by scientific training and experience to evaluate the safety 
     and effectiveness of drugs on the basis of adequate and well-
     controlled investigations, including clinical investigations, 
     conducted by experts qualified by scientific training and 
     experience to evaluate the safety and effectiveness of drugs;
       ``(cc) that require the methods used in, and the facilities 
     and controls used for the manufacture, processing, and 
     packing of drugs in the country to be adequate to preserve 
     their identity, quality, purity, and strength;
       ``(dd) for the reporting of adverse reactions to drugs and 
     procedures to withdraw approval and remove drugs found not to 
     be safe or effective; and
       ``(ee) that require the labeling and promotion of drugs to 
     be in accordance with the approval of the drug.

       ``(II) The valid marketing authorization system in the 
     country is equivalent to the systems in the countries 
     described in clauses (i) through (vi).
       ``(III) The importation of drugs to the United States from 
     the country will not adversely affect public health.

       ``(b) Registration of Importers and Exporters.--
       ``(1) Registration of importers and exporters.--A 
     registration condition is that the importer or exporter 
     involved (referred to in this subsection as a `registrant') 
     submits to the Secretary a registration containing the 
     following:
       ``(A)(i) In the case of an exporter, the name of the 
     exporter and an identification of all places of business of 
     the exporter that relate to qualifying drugs, including each 
     warehouse or other facility owned or controlled by, or 
     operated for, the exporter.
       ``(ii) In the case of an importer, the name of the importer 
     and an identification of the places of business of the 
     importer at which the importer initially receives a 
     qualifying drug after importation (which shall not exceed 3 
     places of business except by permission of the Secretary).
       ``(B) Such information as the Secretary determines to be 
     necessary to demonstrate that the registrant is in compliance 
     with registration conditions under--
       ``(i) in the case of an importer, subsections (c), (d), 
     (e), (g), and (j) (relating to the sources of imported 
     qualifying drugs; the inspection of facilities of the 
     importer; the payment of fees; compliance with the standards 
     referred to in section 801(a); and maintenance of records and 
     samples); or
       ``(ii) in the case of an exporter, subsections (c), (d), 
     (f), (g), (h), (i), and (j) (relating to the

[[Page 16607]]

     sources of exported qualifying drugs; the inspection of 
     facilities of the exporter and the marking of compliant 
     shipments; the payment of fees; and compliance with the 
     standards referred to in section 801(a); being licensed as a 
     pharmacist; conditions for individual importation; and 
     maintenance of records and samples).
       ``(C) An agreement by the registrant that the registrant 
     will not under subsection (a) import or export any drug that 
     is not a qualifying drug.
       ``(D) An agreement by the registrant to--
       ``(i) notify the Secretary of a recall or withdrawal of a 
     qualifying drug distributed in a permitted country that the 
     registrant has exported or imported, or intends to export or 
     import, to the United States under subsection (a);
       ``(ii) provide for the return to the registrant of such 
     drug; and
       ``(iii) cease, or not begin, the exportation or importation 
     of such drug unless the Secretary has notified the registrant 
     that exportation or importation of such drug may proceed.
       ``(E) An agreement by the registrant to ensure and monitor 
     compliance with each registration condition, to promptly 
     correct any noncompliance with such a condition, and to 
     promptly report to the Secretary any such noncompliance.
       ``(F) A plan describing the manner in which the registrant 
     will comply with the agreement under subparagraph (E).
       ``(G) An agreement by the registrant to enforce a contract 
     under subsection (c)(3)(B) against a party in the chain of 
     custody of a qualifying drug with respect to the authority of 
     the Secretary under clauses (ii) and (iii) of that 
     subsection.
       ``(H) An agreement by the registrant to notify the 
     Secretary not more than 30 days before the registrant intends 
     to make the change, of--
       ``(i) any change that the registrant intends to make 
     regarding information provided under subparagraph (A) or (B); 
     and
       ``(ii) any change that the registrant intends to make in 
     the compliance plan under subparagraph (F).
       ``(I) In the case of an exporter--
       ``(i) An agreement by the exporter that a qualifying drug 
     will not under subsection (a) be exported to any individual 
     not authorized pursuant to subsection (a)(2)(B) to be an 
     importer of such drug.
       ``(ii) An agreement to post a bond, payable to the Treasury 
     of the United States that is equal in value to the lesser 
     of--

       ``(I) the value of drugs exported by the exporter to the 
     United States in a typical 4-week period over the course of a 
     year under this section; or
       ``(II) $1,000,000;

       ``(iii) An agreement by the exporter to comply with 
     applicable provisions of Canadian law, or the law of the 
     permitted country designated under subsection 
     (a)(4)(D)(i)(II) in which the exporter is located, that 
     protect the privacy of personal information with respect to 
     each individual importing a prescription drug from the 
     exporter under subsection (a)(2)(B).
       ``(iv) An agreement by the exporter to report to the 
     Secretary--

       ``(I) not later than August 1 of each fiscal year, the 
     total price and the total volume of drugs exported to the 
     United States by the exporter during the 6-month period from 
     January 1 through June 30 of that year; and
       ``(II) not later than January 1 of each fiscal year, the 
     total price and the total volume of drugs exported to the 
     United States by the exporter during the previous fiscal 
     year.

       ``(J) In the case of an importer, an agreement by the 
     importer to report to the Secretary--
       ``(i) not later than August 1 of each fiscal year, the 
     total price and the total volume of drugs imported to the 
     United States by the importer during the 6-month period from 
     January 1 through June 30 of that fiscal year; and
       ``(ii) not later than January 1 of each fiscal year, the 
     total price and the total volume of drugs imported to the 
     United States by the importer during the previous fiscal 
     year.
       ``(K) Such other provisions as the Secretary may require by 
     regulation to protect the public health while permitting--
       ``(i) the importation by pharmacies, groups of pharmacies, 
     and wholesalers as registered importers of qualifying drugs 
     under subsection (a); and
       ``(ii) importation by individuals of qualifying drugs under 
     subsection (a).
       ``(2) Approval or disapproval of registration.--
       ``(A) In general.--Not later than 90 days after the date on 
     which a registrant submits to the Secretary a registration 
     under paragraph (1), the Secretary shall notify the 
     registrant whether the registration is approved or is 
     disapproved. The Secretary shall disapprove a registration if 
     there is reason to believe that the registrant is not in 
     compliance with one or more registration conditions, and 
     shall notify the registrant of such reason. In the case of a 
     disapproved registration, the Secretary shall subsequently 
     notify the registrant that the registration is approved if 
     the Secretary determines that the registrant is in compliance 
     with such conditions.
       ``(B) Changes in registration information.--Not later than 
     30 days after receiving a notice under paragraph (1)(H) from 
     a registrant, the Secretary shall determine whether the 
     change involved affects the approval of the registration of 
     the registrant under paragraph (1), and shall inform the 
     registrant of the determination.
       ``(3) Publication of contact information for registered 
     exporters.--Through the Internet website of the Food and Drug 
     Administration and a toll-free telephone number, the 
     Secretary shall make readily available to the public a list 
     of registered exporters, including contact information for 
     the exporters. Promptly after the approval of a registration 
     submitted under paragraph (1), the Secretary shall update the 
     Internet website and the information provided through the 
     toll-free telephone number accordingly.
       ``(4) Suspension and termination.--
       ``(A) Suspension.--With respect to the effectiveness of a 
     registration submitted under paragraph (1):
       ``(i) Subject to clause (ii), the Secretary may suspend the 
     registration if the Secretary determines, after notice and 
     opportunity for a hearing, that the registrant has failed to 
     maintain substantial compliance with a registration 
     condition.
       ``(ii) If the Secretary determines that, under color of the 
     registration, the exporter has exported a drug or the 
     importer has imported a drug that is not a qualifying drug, 
     or a drug that does not comply with subsection (g)(2)(A) or 
     (g)(4), or has exported a qualifying drug to an individual in 
     violation of subsection (i)(2)(F), the Secretary shall 
     immediately suspend the registration. A suspension under the 
     preceding sentence is not subject to the provision by the 
     Secretary of prior notice, and the Secretary shall provide to 
     the registrant an opportunity for a hearing not later than 10 
     days after the date on which the registration is suspended.
       ``(iii) The Secretary may reinstate the registration, 
     whether suspended under clause (i) or (ii), if the Secretary 
     determines that the registrant has demonstrated that further 
     violations of registration conditions will not occur.
       ``(B) Termination.--The Secretary, after notice and 
     opportunity for a hearing, may terminate the registration 
     under paragraph (1) of a registrant if the Secretary 
     determines that the registrant has engaged in a pattern or 
     practice of violating 1 or more registration conditions, or 
     if on 1 or more occasions the Secretary has under 
     subparagraph (A)(ii) suspended the registration of the 
     registrant. The Secretary may make the termination permanent, 
     or for a fixed period of not less than 1 year. During the 
     period in which the registration is terminated, any 
     registration submitted under paragraph (1) by the registrant, 
     or a person that is a partner in the export or import 
     enterprise, or a principal officer in such enterprise, and 
     any registration prepared with the assistance of the 
     registrant or such a person, has no legal effect under this 
     section.
       ``(5) Default of bond.--A bond required to be posted by an 
     exporter under paragraph (1)(I)(ii) shall be defaulted and 
     paid to the Treasury of the United States if, after 
     opportunity for an informal hearing, the Secretary determines 
     that the exporter has--
       ``(A) exported a drug to the United States that is not a 
     qualifying drug or that is not in compliance with subsection 
     (g)(2)(A), (g)(4), or (i); or
       ``(B) failed to permit the Secretary to conduct an 
     inspection described under subsection (d).
       ``(c) Sources of Qualifying Drugs.--A registration 
     condition is that the exporter or importer involved agrees 
     that a qualifying drug will under subsection (a) be exported 
     or imported into the United States only if there is 
     compliance with the following:
       ``(1) The drug was manufactured in an establishment--
       ``(A) required to register under subsection (h) or (i) of 
     section 510; and
       ``(B)(i) inspected by the Secretary; or
       ``(ii) for which the Secretary has elected to rely on a 
     satisfactory report of a good manufacturing practice 
     inspection of the establishment from a permitted country 
     whose regulatory system the Secretary recognizes as 
     equivalent under a mutual recognition agreement, as provided 
     for under section 510(i)(3), section 803, or part 26 of title 
     21, Code of Federal Regulations (or any corresponding 
     successor rule or regulation).
       ``(2) The establishment is located in any country, and the 
     establishment manufactured the drug for distribution in the 
     United States or for distribution in 1 or more of the 
     permitted countries (without regard to whether in addition 
     the drug is manufactured for distribution in a foreign 
     country that is not a permitted country).
       ``(3) The exporter or importer obtained the drug--
       ``(A) directly from the establishment; or
       ``(B) directly from an entity that, by contract with the 
     exporter or importer--
       ``(i) provides to the exporter or importer a statement (in 
     such form and containing such information as the Secretary 
     may require) that, for the chain of custody from the 
     establishment, identifies each prior sale, purchase, or trade 
     of the drug (including the date of the transaction and the 
     names and addresses of all parties to the transaction);

[[Page 16608]]

       ``(ii) agrees to permit the Secretary to inspect such 
     statements and related records to determine their accuracy;
       ``(iii) agrees, with respect to the qualifying drugs 
     involved, to permit the Secretary to inspect warehouses and 
     other facilities, including records, of the entity for 
     purposes of determining whether the facilities are in 
     compliance with any standards under this Act that are 
     applicable to facilities of that type in the United States; 
     and
       ``(iv) has ensured, through such contractual relationships 
     as may be necessary, that the Secretary has the same 
     authority regarding other parties in the chain of custody 
     from the establishment that the Secretary has under clauses 
     (ii) and (iii) regarding such entity.
       ``(4)(A) The foreign country from which the importer will 
     import the drug is a permitted country; or
       ``(B) The foreign country from which the exporter will 
     export the drug is the permitted country in which the 
     exporter is located.
       ``(5) During any period in which the drug was not in the 
     control of the manufacturer of the drug, the drug did not 
     enter any country that is not a permitted country.
       ``(6) The exporter or importer retains a sample of each lot 
     of the drug sufficient for testing by the Secretary.
       ``(d) Inspection of Facilities; Marking of Shipments.--
       ``(1) Inspection of facilities.--A registration condition 
     is that, for the purpose of assisting the Secretary in 
     determining whether the exporter involved is in compliance 
     with all other registration conditions--
       ``(A) the exporter agrees to permit the Secretary--
       ``(i) to conduct onsite inspections, including monitoring 
     on a day-to-day basis, of places of business of the exporter 
     that relate to qualifying drugs, including each warehouse or 
     other facility owned or controlled by, or operated for, the 
     exporter;
       ``(ii) to have access, including on a day-to-day basis, 
     to--

       ``(I) records of the exporter that relate to the export of 
     such drugs, including financial records; and
       ``(II) samples of such drugs;

       ``(iii) to carry out the duties described in paragraph (3); 
     and
       ``(iv) to carry out any other functions determined by the 
     Secretary to be necessary regarding the compliance of the 
     exporter; and
       ``(B) the Secretary has assigned 1 or more employees of the 
     Secretary to carry out the functions described in this 
     subsection for the Secretary randomly, but not less than 12 
     times annually, on the premises of places of businesses 
     referred to in subparagraph (A)(i), and such an assignment 
     remains in effect on a continuous basis.
       ``(2) Marking of compliant shipments.--A registration 
     condition is that the exporter involved agrees to affix to 
     each shipping container of qualifying drugs exported under 
     subsection (a) such markings as the Secretary determines to 
     be necessary to identify the shipment as being in compliance 
     with all registration conditions. Markings under the 
     preceding sentence shall--
       ``(A) be designed to prevent affixation of the markings to 
     any shipping container that is not authorized to bear the 
     markings; and
       ``(B) include anticounterfeiting or track-and-trace 
     technologies, taking into account the economic and technical 
     feasibility of those technologies.
       ``(3) Certain duties relating to exporters.--Duties of the 
     Secretary with respect to an exporter include the following:
       ``(A) Inspecting, randomly, but not less than 12 times 
     annually, the places of business of the exporter at which 
     qualifying drugs are stored and from which qualifying drugs 
     are shipped.
       ``(B) During the inspections under subparagraph (A), 
     verifying the chain of custody of a statistically significant 
     sample of qualifying drugs from the establishment in which 
     the drug was manufactured to the exporter, which shall be 
     accomplished or supplemented by the use of anticounterfeiting 
     or track-and-trace technologies, taking into account the 
     economic and technical feasibility of those technologies, 
     except that a drug that lacks such technologies from the 
     point of manufacture shall not for that reason be excluded 
     from importation by an exporter.
       ``(C) Randomly reviewing records of exports to individuals 
     for the purpose of determining whether the drugs are being 
     imported by the individuals in accordance with the conditions 
     under subsection (i). Such reviews shall be conducted in a 
     manner that will result in a statistically significant 
     determination of compliance with all such conditions.
       ``(D) Monitoring the affixing of markings under paragraph 
     (2).
       ``(E) Inspecting as the Secretary determines is necessary 
     the warehouses and other facilities, including records, of 
     other parties in the chain of custody of qualifying drugs.
       ``(F) Determining whether the exporter is in compliance 
     with all other registration conditions.
       ``(4) Prior notice of shipments.--A registration condition 
     is that, not less than 8 hours and not more than 5 days in 
     advance of the time of the importation of a shipment of 
     qualifying drugs, the importer involved agrees to submit to 
     the Secretary a notice with respect to the shipment of drugs 
     to be imported or offered for import into the United States 
     under subsection (a). A notice under the preceding sentence 
     shall include--
       ``(A) the name and complete contact information of the 
     person submitting the notice;
       ``(B) the name and complete contact information of the 
     importer involved;
       ``(C) the identity of the drug, including the established 
     name of the drug, the quantity of the drug, and the lot 
     number assigned by the manufacturer;
       ``(D) the identity of the manufacturer of the drug, 
     including the identity of the establishment at which the drug 
     was manufactured;
       ``(E) the country from which the drug is shipped;
       ``(F) the name and complete contact information for the 
     shipper of the drug;
       ``(G) anticipated arrival information, including the port 
     of arrival and crossing location within that port, and the 
     date and time;
       ``(H) a summary of the chain of custody of the drug from 
     the establishment in which the drug was manufactured to the 
     importer;
       ``(I) a declaration as to whether the Secretary has ordered 
     that importation of the drug from the permitted country cease 
     under subsection (g)(2)(C) or (D); and
       ``(J) such other information as the Secretary may require 
     by regulation.
       ``(5) Marking of compliant shipments.--A registration 
     condition is that the importer involved agrees, before 
     wholesale distribution (as defined in section 503(e)) of a 
     qualifying drug that has been imported under subsection (a), 
     to affix to each container of such drug such markings or 
     other technology as the Secretary determines necessary to 
     identify the shipment as being in compliance with all 
     registration conditions, except that the markings or other 
     technology shall not be required on a drug that bears 
     comparable, compatible markings or technology from the 
     manufacturer of the drug. Markings or other technology under 
     the preceding sentence shall--
       ``(A) be designed to prevent affixation of the markings or 
     other technology to any container that is not authorized to 
     bear the markings; and
       ``(B) shall include anticounterfeiting or track-and-trace 
     technologies, taking into account the economic and technical 
     feasibility of such technologies.
       ``(6) Certain duties relating to importers.--Duties of the 
     Secretary with respect to an importer include the following:
       ``(A) Inspecting, randomly, but not less than 12 times 
     annually, the places of business of the importer at which a 
     qualifying drug is initially received after importation.
       ``(B) During the inspections under subparagraph (A), 
     verifying the chain of custody of a statistically significant 
     sample of qualifying drugs from the establishment in which 
     the drug was manufactured to the importer, which shall be 
     accomplished or supplemented by the use of anticounterfeiting 
     or track-and-trace technologies, taking into account the 
     economic and technical feasibility of those technologies, 
     except that a drug that lacks such technologies from the 
     point of manufacture shall not for that reason be excluded 
     from importation by an importer.
       ``(C) Reviewing notices under paragraph (4).
       ``(D) Inspecting as the Secretary determines is necessary 
     the warehouses and other facilities, including records of 
     other parties in the chain of custody of qualifying drugs.
       ``(E) Determining whether the importer is in compliance 
     with all other registration conditions.
       ``(e) Importer Fees.--
       ``(1) Registration fee.--A registration condition is that 
     the importer involved pays to the Secretary a fee of $10,000 
     due on the date on which the importer first submits the 
     registration to the Secretary under subsection (b).
       ``(2) Inspection fee.--A registration condition is that the 
     importer involved pays a fee to the Secretary in accordance 
     with this subsection. Such fee shall be paid not later than 
     October 1 and April 1 of each fiscal year in the amount 
     provided for under paragraph (3).
       ``(3) Amount of inspection fee.--
       ``(A) Aggregate total of fees.--Not later than 30 days 
     before the start of each fiscal year, the Secretary, in 
     consultation with the Secretary of Homeland Security and the 
     Secretary of the Treasury, shall establish an aggregate total 
     of fees to be collected under paragraph (2) for importers for 
     that fiscal year that is sufficient, and not more than 
     necessary, to pay the costs for that fiscal year of 
     administering this section with respect to registered 
     importers, including the costs associated with--
       ``(i) inspecting the facilities of registered importers, 
     and of other entities in the chain of custody of a qualifying 
     drug as necessary, under subsection (d)(6);
       ``(ii) developing, implementing, and operating under such 
     subsection an electronic system for submission and review of 
     the notices required under subsection (d)(4) with respect to 
     shipments of qualifying drugs under subsection (a) to assess 
     compliance with all registration conditions when such 
     shipments are offered for import into the United States; and

[[Page 16609]]

       ``(iii) inspecting such shipments as necessary, when 
     offered for import into the United States to determine if 
     such a shipment should be refused admission under subsection 
     (g)(5).
       ``(B) Limitation.--Subject to subparagraph (C), the 
     aggregate total of fees collected under paragraph (2) for a 
     fiscal year shall not exceed 2.5 percent of the total price 
     of qualifying drugs imported during that fiscal year into the 
     United States by registered importers under subsection (a).
       ``(C) Total price of drugs.--
       ``(i) Estimate.--For the purposes of complying with the 
     limitation described in subparagraph (B) when establishing 
     under subparagraph (A) the aggregate total of fees to be 
     collected under paragraph (2) for a fiscal year, the 
     Secretary shall estimate the total price of qualifying drugs 
     imported into the United States by registered importers 
     during that fiscal year by adding the total price of 
     qualifying drugs imported by each registered importer during 
     the 6-month period from January 1 through June 30 of the 
     previous fiscal year, as reported to the Secretary by each 
     registered importer under subsection (b)(1)(J).
       ``(ii) Calculation.--Not later than March 1 of the fiscal 
     year that follows the fiscal year for which the estimate 
     under clause (i) is made, the Secretary shall calculate the 
     total price of qualifying drugs imported into the United 
     States by registered importers during that fiscal year by 
     adding the total price of qualifying drugs imported by each 
     registered importer during that fiscal year, as reported to 
     the Secretary by each registered importer under subsection 
     (b)(1)(J).
       ``(iii) Adjustment.--If the total price of qualifying drugs 
     imported into the United States by registered importers 
     during a fiscal year as calculated under clause (ii) is less 
     than the aggregate total of fees collected under paragraph 
     (2) for that fiscal year, the Secretary shall provide for a 
     pro-rata reduction in the fee due from each registered 
     importer on April 1 of the subsequent fiscal year so that the 
     limitation described in subparagraph (B) is observed.
       ``(D) Individual importer fee.--Subject to the limitation 
     described in subparagraph (B), the fee under paragraph (2) to 
     be paid on October 1 and April 1 by an importer shall be an 
     amount that is proportional to a reasonable estimate by the 
     Secretary of the semiannual share of the importer of the 
     volume of qualifying drugs imported by importers under 
     subsection (a).
       ``(4) Use of fees.--
       ``(A) In general.--Subject to appropriations Acts, fees 
     collected by the Secretary under paragraphs (1) and (2) shall 
     be credited to the appropriation account for salaries and 
     expenses of the Food and Drug Administration until expended 
     (without fiscal year limitation), and the Secretary may, in 
     consultation with the Secretary of Homeland Security and the 
     Secretary of the Treasury, transfer some proportion of such 
     fees to the appropriation account for salaries and expenses 
     of the Bureau of Customs and Border Protection until expended 
     (without fiscal year limitation).
       ``(B) Sole purpose.--Fees collected by the Secretary under 
     paragraphs (1) and (2) are only available to the Secretary 
     and, if transferred, to the Secretary of Homeland Security, 
     and are for the sole purpose of paying the costs referred to 
     in paragraph (3)(A).
       ``(5) Collection of fees.--In any case where the Secretary 
     does not receive payment of a fee assessed under paragraph 
     (1) or (2) within 30 days after it is due, such fee shall be 
     treated as a claim of the United States Government subject to 
     subchapter II of chapter 37 of title 31, United States Code.
       ``(f) Exporter Fees.--
       ``(1) Registration fee.--A registration condition is that 
     the exporter involved pays to the Secretary a fee of $10,000 
     due on the date on which the exporter first submits that 
     registration to the Secretary under subsection (b).
       ``(2) Inspection fee.--A registration condition is that the 
     exporter involved pays a fee to the Secretary in accordance 
     with this subsection. Such fee shall be paid not later than 
     October 1 and April 1 of each fiscal year in the amount 
     provided for under paragraph (3).
       ``(3) Amount of inspection fee.--
       ``(A) Aggregate total of fees.--Not later than 30 days 
     before the start of each fiscal year, the Secretary, in 
     consultation with the Secretary of Homeland Security and the 
     Secretary of the Treasury, shall establish an aggregate total 
     of fees to be collected under paragraph (2) for exporters for 
     that fiscal year that is sufficient, and not more than 
     necessary, to pay the costs for that fiscal year of 
     administering this section with respect to registered 
     exporters, including the costs associated with--
       ``(i) inspecting the facilities of registered exporters, 
     and of other entities in the chain of custody of a qualifying 
     drug as necessary, under subsection (d)(3);
       ``(ii) developing, implementing, and operating under such 
     subsection a system to screen marks on shipments of 
     qualifying drugs under subsection (a) that indicate 
     compliance with all registration conditions, when such 
     shipments are offered for import into the United States; and
       ``(iii) screening such markings, and inspecting such 
     shipments as necessary, when offered for import into the 
     United States to determine if such a shipment should be 
     refused admission under subsection (g)(5).
       ``(B) Limitation.--Subject to subparagraph (C), the 
     aggregate total of fees collected under paragraph (2) for a 
     fiscal year shall not exceed 2.5 percent of the total price 
     of qualifying drugs imported during that fiscal year into the 
     United States by registered exporters under subsection (a).
       ``(C) Total price of drugs.--
       ``(i) Estimate.--For the purposes of complying with the 
     limitation described in subparagraph (B) when establishing 
     under subparagraph (A) the aggregate total of fees to be 
     collected under paragraph (2) for a fiscal year, the 
     Secretary shall estimate the total price of qualifying drugs 
     imported into the United States by registered exporters 
     during that fiscal year by adding the total price of 
     qualifying drugs exported by each registered exporter during 
     the 6-month period from January 1 through June 30 of the 
     previous fiscal year, as reported to the Secretary by each 
     registered exporter under subsection (b)(1)(I)(iv).
       ``(ii) Calculation.--Not later than March 1 of the fiscal 
     year that follows the fiscal year for which the estimate 
     under clause (i) is made, the Secretary shall calculate the 
     total price of qualifying drugs imported into the United 
     States by registered exporters during that fiscal year by 
     adding the total price of qualifying drugs exported by each 
     registered exporter during that fiscal year, as reported to 
     the Secretary by each registered exporter under subsection 
     (b)(1)(I)(iv).
       ``(iii) Adjustment.--If the total price of qualifying drugs 
     imported into the United States by registered exporters 
     during a fiscal year as calculated under clause (ii) is less 
     than the aggregate total of fees collected under paragraph 
     (2) for that fiscal year, the Secretary shall provide for a 
     pro-rata reduction in the fee due from each registered 
     exporter on April 1 of the subsequent fiscal year so that the 
     limitation described in subparagraph (B) is observed.
       ``(D) Individual exporter fee.--Subject to the limitation 
     described in subparagraph (B), the fee under paragraph (2) to 
     be paid on October 1 and April 1 by an exporter shall be an 
     amount that is proportional to a reasonable estimate by the 
     Secretary of the semiannual share of the exporter of the 
     volume of qualifying drugs exported by exporters under 
     subsection (a).
       ``(4) Use of fees.--
       ``(A) In general.--Subject to appropriations Acts, fees 
     collected by the Secretary under paragraphs (1) and (2) shall 
     be credited to the appropriation account for salaries and 
     expenses of the Food and Drug Administration until expended 
     (without fiscal year limitation), and the Secretary may, in 
     consultation with the Secretary of Homeland Security and the 
     Secretary of the Treasury, transfer some proportion of such 
     fees to the appropriation account for salaries and expenses 
     of the Bureau of Customs and Border Protection until expended 
     (without fiscal year limitation).
       ``(B) Sole purpose.--Fees collected by the Secretary under 
     paragraphs (1) and (2) are only available to the Secretary 
     and, if transferred, to the Secretary of Homeland Security, 
     and are for the sole purpose of paying the costs referred to 
     in paragraph (3)(A).
       ``(5) Collection of fees.--In any case where the Secretary 
     does not receive payment of a fee assessed under paragraph 
     (1) or (2) within 30 days after it is due, such fee shall be 
     treated as a claim of the United States Government subject to 
     subchapter II of chapter 37 of title 31, United States Code.
       ``(g) Compliance With Section 801(a).--
       ``(1) In general.--A registration condition is that each 
     qualifying drug exported under subsection (a) by the 
     registered exporter involved or imported under subsection (a) 
     by the registered importer involved is in compliance with the 
     standards referred to in section 801(a) regarding admission 
     of the drug into the United States, subject to paragraphs 
     (2), (3), and (4).
       ``(2) Section 505; approval status.--
       ``(A) In general.--A qualifying drug that is imported or 
     offered for import under subsection (a) shall comply with the 
     conditions established in the approved application under 
     section 505(b) for the U.S. label drug as described under 
     this subsection.
       ``(B) Notice by manufacturer; general provisions.--
       ``(i) In general.--The person that manufactures a 
     qualifying drug that is, or will be, introduced for 
     commercial distribution in a permitted country shall in 
     accordance with this paragraph submit to the Secretary a 
     notice that--

       ``(I) includes each difference in the qualifying drug from 
     a condition established in the approved application for the 
     U.S. label drug beyond--

       ``(aa) the variations provided for in the application; and
       ``(bb) any difference in labeling (except ingredient 
     labeling); or

       ``(II) states that there is no difference in the qualifying 
     drug from a condition established in the approved application 
     for the U.S. label drug beyond--

       ``(aa) the variations provided for in the application; and
       ``(bb) any difference in labeling (except ingredient 
     labeling).

[[Page 16610]]

       ``(ii) Information in notice.--A notice under clause (i)(I) 
     shall include the information that the Secretary may require 
     under section 506A, any additional information the Secretary 
     may require (which may include data on bioequivalence if such 
     data are not required under section 506A), and, with respect 
     to the permitted country that approved the qualifying drug 
     for commercial distribution, or with respect to which such 
     approval is sought, include the following:

       ``(I) The date on which the qualifying drug with such 
     difference was, or will be, introduced for commercial 
     distribution in the permitted country.
       ``(II) Information demonstrating that the person submitting 
     the notice has also notified the government of the permitted 
     country in writing that the person is submitting to the 
     Secretary a notice under clause (i)(I), which notice 
     describes the difference in the qualifying drug from a 
     condition established in the approved application for the 
     U.S. label drug.
       ``(III) The information that the person submitted or will 
     submit to the government of the permitted country for 
     purposes of obtaining approval for commercial distribution of 
     the drug in the country which, if in a language other than 
     English, shall be accompanied by an English translation 
     verified to be complete and accurate, with the name, address, 
     and a brief statement of the qualifications of the person 
     that made the translation.

       ``(iii) Certifications.--The chief executive officer and 
     the chief medical officer of the manufacturer involved shall 
     each certify in the notice under clause (i) that--

       ``(I) the information provided in the notice is complete 
     and true; and
       ``(II) a copy of the notice has been provided to the 
     Federal Trade Commission and to the State attorneys general.

       ``(iv) Fee.--If a notice submitted under clause (i) 
     includes a difference that would, under section 506A, require 
     the submission of a supplemental application if made as a 
     change to the U.S. label drug, the person that submits the 
     notice shall pay to the Secretary a fee in the same amount as 
     would apply if the person were paying a fee pursuant to 
     section 736(a)(1)(A)(ii). Subject to appropriations Acts, 
     fees collected by the Secretary under the preceding sentence 
     are available only to the Secretary and are for the sole 
     purpose of paying the costs of reviewing notices submitted 
     under clause (i).
       ``(v) Timing of submission of notices.--

       ``(I) Prior approval notices.--A notice under clause (i) to 
     which subparagraph (C) applies shall be submitted to the 
     Secretary not later than 120 days before the qualifying drug 
     with the difference is introduced for commercial distribution 
     in a permitted country, unless the country requires that 
     distribution of the qualifying drug with the difference begin 
     less than 120 days after the country requires the difference.
       ``(II) Other approval notices.--A notice under clause (i) 
     to which subparagraph (D) applies shall be submitted to the 
     Secretary not later than the day on which the qualifying drug 
     with the difference is introduced for commercial distribution 
     in a permitted country.
       ``(III) Other notices.--A notice under clause (i) to which 
     subparagraph (E) applies shall be submitted to the Secretary 
     on the date that the qualifying drug is first introduced for 
     commercial distribution in a permitted country and annually 
     thereafter.

       ``(vi) Review by secretary.--

       ``(I) In general.--In this paragraph, the difference in a 
     qualifying drug that is submitted in a notice under clause 
     (i) from the U.S. label drug shall be treated by the 
     Secretary as if it were a manufacturing change to the U.S. 
     label drug under section 506A.
       ``(II) Standard of review.--Except as provided in subclause 
     (III), the Secretary shall review and approve or disapprove 
     the difference in a notice submitted under clause (i), if 
     required under section 506A, using the safe and effective 
     standard for approving or disapproving a manufacturing change 
     under section 506A.
       ``(III) Bioequivalence.--If the Secretary would approve the 
     difference in a notice submitted under clause (i) using the 
     safe and effective standard under section 506A and if the 
     Secretary determines that the qualifying drug is not 
     bioequivalent to the U.S. label drug, the Secretary shall--

       ``(aa) include in the labeling provided under paragraph (3) 
     a prominent advisory that the qualifying drug is safe and 
     effective but is not bioequivalent to the U.S. label drug if 
     the Secretary determines that such an advisory is necessary 
     for health care practitioners and patients to use the 
     qualifying drug safely and effectively; or
       ``(bb) decline to approve the difference if the Secretary 
     determines that the availability of both the qualifying drug 
     and the U.S. label drug would pose a threat to the public 
     health.

       ``(IV) Review by the secretary.--The Secretary shall review 
     and approve or disapprove the difference in a notice 
     submitted under clause (i), if required under section 506A, 
     not later than 120 days after the date on which the notice is 
     submitted.
       ``(V) Establishment inspection.--If review of such 
     difference would require an inspection of the establishment 
     in which the qualifying drug is manufactured--

       ``(aa) such inspection by the Secretary shall be 
     authorized; and
       ``(bb) the Secretary may rely on a satisfactory report of a 
     good manufacturing practice inspection of the establishment 
     from a permitted country whose regulatory system the 
     Secretary recognizes as equivalent under a mutual recognition 
     agreement, as provided under section 510(i)(3), section 803, 
     or part 26 of title 21, Code of Federal Regulations (or any 
     corresponding successor rule or regulation).
       ``(vii) Publication of information on notices.--

       ``(I) In general.--Through the Internet website of the Food 
     and Drug Administration and a toll-free telephone number, the 
     Secretary shall readily make available to the public a list 
     of notices submitted under clause (i).
       ``(II) Contents.--The list under subclause (I) shall 
     include the date on which a notice is submitted and whether--

       ``(aa) a notice is under review;
       ``(bb) the Secretary has ordered that importation of the 
     qualifying drug from a permitted country cease; or
       ``(cc) the importation of the drug is permitted under 
     subsection (a).

       ``(III) Update.--The Secretary shall promptly update the 
     Internet website with any changes to the list.

       ``(C) Notice; drug difference requiring prior approval.--In 
     the case of a notice under subparagraph (B)(i) that includes 
     a difference that would, under section 506A(c) or 
     (d)(3)(B)(i), require the approval of a supplemental 
     application before the difference could be made to the U.S. 
     label drug the following shall occur:
       ``(i) Promptly after the notice is submitted, the Secretary 
     shall notify registered exporters, registered importers, the 
     Federal Trade Commission, and the State attorneys general 
     that the notice has been submitted with respect to the 
     qualifying drug involved.
       ``(ii) If the Secretary has not made a determination 
     whether such a supplemental application regarding the U.S. 
     label drug would be approved or disapproved by the date on 
     which the qualifying drug involved is to be introduced for 
     commercial distribution in a permitted country, the Secretary 
     shall--

       ``(I) order that the importation of the qualifying drug 
     involved from the permitted country not begin until the 
     Secretary completes review of the notice; and
       ``(II) promptly notify registered exporters, registered 
     importers, the Federal Trade Commission, and the State 
     attorneys general of the order.

       ``(iii) If the Secretary determines that such a 
     supplemental application regarding the U.S. label drug would 
     not be approved, the Secretary shall--

       ``(I) order that the importation of the qualifying drug 
     involved from the permitted country cease, or provide that an 
     order under clause (ii), if any, remains in effect;
       ``(II) notify the permitted country that approved the 
     qualifying drug for commercial distribution of the 
     determination; and
       ``(III) promptly notify registered exporters, registered 
     importers, the Federal Trade Commission, and the State 
     attorneys general of the determination.

       ``(iv) If the Secretary determines that such a supplemental 
     application regarding the U.S. label drug would be approved, 
     the Secretary shall--

       ``(I) vacate the order under clause (ii), if any;
       ``(II) consider the difference to be a variation provided 
     for in the approved application for the U.S. label drug;
       ``(III) permit importation of the qualifying drug under 
     subsection (a); and
       ``(IV) promptly notify registered exporters, registered 
     importers, the Federal Trade Commission, and the State 
     attorneys general of the determination.

       ``(D) Notice; drug difference not requiring prior 
     approval.--In the case of a notice under subparagraph (B)(i) 
     that includes a difference that would, under section 
     506A(d)(3)(B)(ii), not require the approval of a supplemental 
     application before the difference could be made to the U.S. 
     label drug the following shall occur:
       ``(i) During the period in which the notice is being 
     reviewed by the Secretary, the authority under this 
     subsection to import the qualifying drug involved continues 
     in effect.
       ``(ii) If the Secretary determines that such a supplemental 
     application regarding the U.S. label drug would not be 
     approved, the Secretary shall--

       ``(I) order that the importation of the qualifying drug 
     involved from the permitted country cease;
       ``(II) notify the permitted country that approved the 
     qualifying drug for commercial distribution of the 
     determination; and
       ``(III) promptly notify registered exporters, registered 
     importers, the Federal Trade Commission, and the State 
     attorneys general of the determination.

       ``(iii) If the Secretary determines that such a 
     supplemental application regarding the U.S. label drug would 
     be approved, the difference shall be considered to be a 
     variation provided for in the approved application for the 
     U.S. label drug.
       ``(E) Notice; drug difference not requiring approval; no 
     difference.--In the case of a notice under subparagraph 
     (B)(i) that includes a difference for which, under section

[[Page 16611]]

     506A(d)(1)(A), a supplemental application would not be 
     required for the difference to be made to the U.S. label 
     drug, or that states that there is no difference, the 
     Secretary--
       ``(i) shall consider such difference to be a variation 
     provided for in the approved application for the U.S. label 
     drug;
       ``(ii) may not order that the importation of the qualifying 
     drug involved cease; and
       ``(iii) shall promptly notify registered exporters and 
     registered importers.
       ``(F) Differences in active ingredient, route of 
     administration, dosage form, or strength.--
       ``(i) In general.--A person who manufactures a drug 
     approved under section 505(b) shall submit an application 
     under section 505(b) for approval of another drug that is 
     manufactured for distribution in a permitted country by or 
     for the person that manufactures the drug approved under 
     section 505(b) if--

       ``(I) there is no qualifying drug in commercial 
     distribution in permitted countries whose combined population 
     represents at least 50 percent of the total population of all 
     permitted countries with the same active ingredient or 
     ingredients, route of administration, dosage form, and 
     strength as the drug approved under section 505(b); and
       ``(II) each active ingredient of the other drug is related 
     to an active ingredient of the drug approved under section 
     505(b), as defined in clause (v).

       ``(ii) Application under section 505(b).--The application 
     under section 505(b) required under clause (i) shall--

       ``(I) request approval of the other drug for the indication 
     or indications for which the drug approved under section 
     505(b) is labeled;
       ``(II) include the information that the person submitted to 
     the government of the permitted country for purposes of 
     obtaining approval for commercial distribution of the other 
     drug in that country, which if in a language other than 
     English, shall be accompanied by an English translation 
     verified to be complete and accurate, with the name, address, 
     and a brief statement of the qualifications of the person 
     that made the translation;
       ``(III) include a right of reference to the application for 
     the drug approved under section 505(b); and
       ``(IV) include such additional information as the Secretary 
     may require.

       ``(iii) Timing of submission of application.--An 
     application under section 505(b) required under clause (i) 
     shall be submitted to the Secretary not later than the day on 
     which the information referred to in clause (ii)(II) is 
     submitted to the government of the permitted country.
       ``(iv) Notice of decision on application.--The Secretary 
     shall promptly notify registered exporters, registered 
     importers, the Federal Trade Commission, and the State 
     attorneys general of a determination to approve or to 
     disapprove an application under section 505(b) required under 
     clause (i).
       ``(v) Related active ingredients.--For purposes of clause 
     (i)(II), 2 active ingredients are related if they are--

       ``(I) the same; or
       ``(II) different salts, esters, or complexes of the same 
     moiety.

       ``(3) Section 502; labeling.--
       ``(A) Importation by registered importer.--
       ``(i) In general.--In the case of a qualifying drug that is 
     imported or offered for import by a registered importer, such 
     drug shall be considered to be in compliance with section 502 
     and the labeling requirements under the approved application 
     for the U.S. label drug if the qualifying drug bears--

       ``(I) a copy of the labeling approved for the U.S. label 
     drug under section 505, without regard to whether the copy 
     bears any trademark involved;
       ``(II) the name of the manufacturer and location of the 
     manufacturer;
       ``(III) the lot number assigned by the manufacturer;
       ``(IV) the name, location, and registration number of the 
     importer; and
       ``(V) the National Drug Code number assigned to the 
     qualifying drug by the Secretary.

       ``(ii) Request for copy of the labeling.--The Secretary 
     shall provide such copy to the registered importer involved, 
     upon request of the importer.
       ``(iii) Requested labeling.--The labeling provided by the 
     Secretary under clause (ii) shall--

       ``(I) include the established name, as defined in section 
     502(e)(3), for each active ingredient in the qualifying drug;
       ``(II) not include the proprietary name of the U.S. label 
     drug or any active ingredient thereof;
       ``(III) if required under paragraph (2)(B)(vi)(III), a 
     prominent advisory that the qualifying drug is safe and 
     effective but not bioequivalent to the U.S. label drug; and
       ``(IV) if the inactive ingredients of the qualifying drug 
     are different from the inactive ingredients for the U.S. 
     label drug, include--

       ``(aa) a prominent notice that the ingredients of the 
     qualifying drug differ from the ingredients of the U.S. label 
     drug and that the qualifying drug must be dispensed with an 
     advisory to people with allergies about this difference and a 
     list of ingredients; and
       ``(bb) a list of the ingredients of the qualifying drug as 
     would be required under section 502(e).
       ``(B) Importation by individual.--
       ``(i) In general.--In the case of a qualifying drug that is 
     imported or offered for import by a registered exporter to an 
     individual, such drug shall be considered to be in compliance 
     with section 502 and the labeling requirements under the 
     approved application for the U.S. label drug if the packaging 
     and labeling of the qualifying drug complies with all 
     applicable regulations promulgated under sections 3 and 4 of 
     the Poison Prevention Packaging Act of 1970 (15 U.S.C. 1471 
     et seq.) and the labeling of the qualifying drug includes--

       ``(I) directions for use by the consumer;
       ``(II) the lot number assigned by the manufacturer;
       ``(III) the name and registration number of the exporter;
       ``(IV) if required under paragraph (2)(B)(vi)(III), a 
     prominent advisory that the drug is safe and effective but 
     not bioequivalent to the U.S. label drug;
       ``(V) if the inactive ingredients of the drug are different 
     from the inactive ingredients for the U.S. label drug--

       ``(aa) a prominent advisory that persons with an allergy 
     should check the ingredient list of the drug because the 
     ingredients of the drug differ from the ingredients of the 
     U.S. label drug; and
       ``(bb) a list of the ingredients of the drug as would be 
     required under section 502(e); and

       ``(VI) a copy of any special labeling that would be 
     required by the Secretary had the U.S. label drug been 
     dispensed by a pharmacist in the United States, without 
     regard to whether the special labeling bears any trademark 
     involved.

       ``(ii) Packaging.--A qualifying drug offered for import to 
     an individual by an exporter under this section that is 
     packaged in a unit-of-use container (as those items are 
     defined in the United States Pharmacopeia and National 
     Formulary) shall not be repackaged, provided that--

       ``(I) the packaging complies with all applicable 
     regulations under sections 3 and 4 of the Poison Prevention 
     Packaging Act of 1970 (15 U.S.C. 1471 et seq.); or
       ``(II) the consumer consents to waive the requirements of 
     such Act, after being informed that the packaging does not 
     comply with such Act and that the exporter will provide the 
     drug in packaging that is compliant at no additional cost.

       ``(iii) Request for copy of special labeling and ingredient 
     list.--The Secretary shall provide to the registered exporter 
     involved a copy of the special labeling, the advisory, and 
     the ingredient list described under clause (i), upon request 
     of the exporter.
       ``(iv) Requested labeling and ingredient list.--The 
     labeling and ingredient list provided by the Secretary under 
     clause (iii) shall--

       ``(I) include the established name, as defined in section 
     502(e)(3), for each active ingredient in the drug; and
       ``(II) not include the proprietary name of the U.S. label 
     drug or any active ingredient thereof.

       ``(4) Section 501; adulteration.--A qualifying drug that is 
     imported or offered for import under subsection (a) shall be 
     considered to be in compliance with section 501 if the drug 
     is in compliance with subsection (c).
       ``(5) Standards for refusing admission.--A drug exported 
     under subsection (a) from a registered exporter or imported 
     by a registered importer may be refused admission into the 
     United States if 1 or more of the following applies:
       ``(A) The drug is not a qualifying drug.
       ``(B) A notice for the drug required under paragraph (2)(B) 
     has not been submitted to the Secretary.
       ``(C) The Secretary has ordered that importation of the 
     drug from the permitted country cease under paragraph (2) (C) 
     or (D).
       ``(D) The drug does not comply with paragraph (3) or (4).
       ``(E) The shipping container appears damaged in a way that 
     may affect the strength, quality, or purity of the drug.
       ``(F) The Secretary becomes aware that--
       ``(i) the drug may be counterfeit;
       ``(ii) the drug may have been prepared, packed, or held 
     under insanitary conditions; or
       ``(iii) the methods used in, or the facilities or controls 
     used for, the manufacturing, processing, packing, or holding 
     of the drug do not conform to good manufacturing practice.
       ``(G) The Secretary has obtained an injunction under 
     section 302 that prohibits the distribution of the drug in 
     interstate commerce.
       ``(H) The Secretary has under section 505(e) withdrawn 
     approval of the drug.
       ``(I) The manufacturer of the drug has instituted a recall 
     of the drug.
       ``(J) If the drug is imported or offered for import by a 
     registered importer without submission of a notice in 
     accordance with subsection (d)(4).
       ``(K) If the drug is imported or offered for import from a 
     registered exporter to an individual and 1 or more of the 
     following applies:
       ``(i) The shipping container for such drug does not bear 
     the markings required under subsection (d)(2).

[[Page 16612]]

       ``(ii) The markings on the shipping container appear to be 
     counterfeit.
       ``(iii) The shipping container or markings appear to have 
     been tampered with.
       ``(h) Licensing as Pharmacist.--A registration condition is 
     that the exporter involved agrees that a qualifying drug will 
     be exported to an individual only if the Secretary has 
     verified that--
       ``(1) the exporter is authorized under the law of the 
     permitted country in which the exporter is located to 
     dispense prescription drugs; and
       ``(2) the exporter employs persons that are licensed under 
     the law of the permitted country in which the exporter is 
     located to dispense prescription drugs in sufficient number 
     to dispense safely the drugs exported by the exporter to 
     individuals, and the exporter assigns to those persons 
     responsibility for dispensing such drugs to individuals.
       ``(i) Individuals; Conditions for Importation.--
       ``(1) In general.--For purposes of subsection (a)(2)(B), 
     the importation of a qualifying drug by an individual is in 
     accordance with this subsection if the following conditions 
     are met:
       ``(A) The drug is accompanied by a copy of a prescription 
     for the drug, which prescription--
       ``(i) is valid under applicable Federal and State laws; and
       ``(ii) was issued by a practitioner who, under the law of a 
     State of which the individual is a resident, or in which the 
     individual receives care from the practitioner who issues the 
     prescription, is authorized to administer prescription drugs.
       ``(B) The drug is accompanied by a copy of the 
     documentation that was required under the law or regulations 
     of the permitted country in which the exporter is located, as 
     a condition of dispensing the drug to the individual.
       ``(C) The copies referred to in subparagraphs (A)(i) and 
     (B) are marked in a manner sufficient--
       ``(i) to indicate that the prescription, and the equivalent 
     document in the permitted country in which the exporter is 
     located, have been filled; and
       ``(ii) to prevent a duplicative filling by another 
     pharmacist.
       ``(D) The individual has provided to the registered 
     exporter a complete list of all drugs used by the individual 
     for review by the individuals who dispense the drug.
       ``(E) The quantity of the drug does not exceed a 90-day 
     supply.
       ``(F) The drug is not an ineligible subpart H drug. For 
     purposes of this section, a prescription drug is an 
     `ineligible subpart H drug' if the drug was approved by the 
     Secretary under subpart H of part 314 of title 21, Code of 
     Federal Regulations (relating to accelerated approval), with 
     restrictions under section 520 of such part to assure safe 
     use, and the Secretary has published in the Federal Register 
     a notice that the Secretary has determined that good cause 
     exists to prohibit the drug from being imported pursuant to 
     this subsection.
       ``(2) Notice regarding drug refused admission.--If a 
     registered exporter ships a drug to an individual pursuant to 
     subsection (a)(2)(B) and the drug is refused admission to the 
     United States, a written notice shall be sent to the 
     individual and to the exporter that informs the individual 
     and the exporter of such refusal and the reason for the 
     refusal.
       ``(j) Maintenance of Records and Samples.--
       ``(1) In general.--A registration condition is that the 
     importer or exporter involved shall--
       ``(A) maintain records required under this section for not 
     less than 2 years; and
       ``(B) maintain samples of each lot of a qualifying drug 
     required under this section for not less than 2 years.
       ``(2) Place of record maintenance.--The records described 
     under paragraph (1) shall be maintained--
       ``(A) in the case of an importer, at the place of business 
     of the importer at which the importer initially receives the 
     qualifying drug after importation; or
       ``(B) in the case of an exporter, at the facility from 
     which the exporter ships the qualifying drug to the United 
     States.
       ``(k) Drug Recalls.--
       ``(1) Manufacturers.--A person that manufactures a 
     qualifying drug imported from a permitted country under this 
     section shall promptly inform the Secretary--
       ``(A) if the drug is recalled or withdrawn from the market 
     in a permitted country;
       ``(B) how the drug may be identified, including lot number; 
     and
       ``(C) the reason for the recall or withdrawal.
       ``(2) Secretary.--With respect to each permitted country, 
     the Secretary shall--
       ``(A) enter into an agreement with the government of the 
     country to receive information about recalls and withdrawals 
     of qualifying drugs in the country; or
       ``(B) monitor recalls and withdrawals of qualifying drugs 
     in the country using any information that is available to the 
     public in any media.
       ``(3) Notice.--The Secretary may notify, as appropriate, 
     registered exporters, registered importers, wholesalers, 
     pharmacies, or the public of a recall or withdrawal of a 
     qualifying drug in a permitted country.
       ``(l) Drug Labeling and Packaging.--
       ``(1) In general.--When a qualifying drug that is imported 
     into the United States by an importer under subsection (a) is 
     dispensed by a pharmacist to an individual, the pharmacist 
     shall provide that the packaging and labeling of the drug 
     complies with all applicable regulations promulgated under 
     sections 3 and 4 of the Poison Prevention Packaging Act of 
     1970 (15 U.S.C. 1471 et seq.) and shall include with any 
     other labeling provided to the individual the following:
       ``(A) The lot number assigned by the manufacturer.
       ``(B) The name and registration number of the importer.
       ``(C) If required under paragraph (2)(B)(vi)(III) of 
     subsection (g), a prominent advisory that the drug is safe 
     and effective but not bioequivalent to the U.S. label drug.
       ``(D) If the inactive ingredients of the drug are different 
     from the inactive ingredients for the U.S. label drug--
       ``(i) a prominent advisory that persons with allergies 
     should check the ingredient list of the drug because the 
     ingredients of the drug differ from the ingredients of the 
     U.S. label drug; and
       ``(ii) a list of the ingredients of the drug as would be 
     required under section 502(e).
       ``(2) Packaging.--A qualifying drug that is packaged in a 
     unit-of-use container (as those terms are defined in the 
     United States Pharmacopeia and National Formulary) shall not 
     be repackaged, provided that--
       ``(A) the packaging complies with all applicable 
     regulations under sections 3 and 4 of the Poison Prevention 
     Packaging Act of 1970 (15 U.S.C. 1471 et seq.); or
       ``(B) the consumer consents to waive the requirements of 
     such Act, after being informed that the packaging does not 
     comply with such Act and that the pharmacist will provide the 
     drug in packaging that is compliant at no additional cost.
       ``(m) Charitable Contributions.--Notwithstanding any other 
     provision of this section, this section does not authorize 
     the importation into the United States of a qualifying drug 
     donated or otherwise supplied for free or at nominal cost by 
     the manufacturer of the drug to a charitable or humanitarian 
     organization, including the United Nations and affiliates, or 
     to a government of a foreign country.
       ``(n) Unfair and Discriminatory Acts and Practices.--
       ``(1) In general.--It is unlawful for a manufacturer, 
     directly or indirectly (including by being a party to a 
     licensing agreement or other agreement), to--
       ``(A) discriminate by charging a higher price for a 
     prescription drug sold to a registered exporter or other 
     person in a permitted country that exports a qualifying drug 
     to the United States under this section than the price that 
     is charged, inclusive of rebates or other incentives to the 
     permitted country or other person, to another person that is 
     in the same country and that does not export a qualifying 
     drug into the United States under this section;
       ``(B) discriminate by charging a higher price for a 
     prescription drug sold to a registered importer or other 
     person that distributes, sells, or uses a qualifying drug 
     imported into the United States under this section than the 
     price that is charged to another person in the United States 
     that does not import a qualifying drug under this section, or 
     that does not distribute, sell, or use such a drug;
       ``(C) discriminate by denying, restricting, or delaying 
     supplies of a prescription drug to a registered exporter or 
     other person in a permitted country that exports a qualifying 
     drug to the United States under this section or to a 
     registered importer or other person that distributes, sells, 
     or uses a qualifying drug imported into the United States 
     under this section;
       ``(D) discriminate by publicly, privately, or otherwise 
     refusing to do business with a registered exporter or other 
     person in a permitted country that exports a qualifying drug 
     to the United States under this section or with a registered 
     importer or other person that distributes, sells, or uses a 
     qualifying drug imported into the United States under this 
     section;
       ``(E) knowingly fail to submit a notice under subsection 
     (g)(2)(B)(i), knowingly fail to submit such a notice on or 
     before the date specified in subsection (g)(2)(B)(v) or as 
     otherwise required under subsection (e) (3), (4), and (5) of 
     section __4 of the Pharmaceutical Market Access and Drug 
     Safety Act of 2006, knowingly submit such a notice that makes 
     a materially false, fictitious, or fraudulent statement, or 
     knowingly fail to provide promptly any information requested 
     by the Secretary to review such a notice;
       ``(F) knowingly fail to submit an application required 
     under subsection (g)(2)(F), knowingly fail to submit such an 
     application on or before the date specified in subsection 
     (g)(2)(F)(ii), knowingly submit such an application that 
     makes a materially false, fictitious, or fraudulent 
     statement, or knowingly fail to provide promptly any 
     information requested by the Secretary to review such an 
     application;
       ``(G) cause there to be a difference (including a 
     difference in active ingredient, route of administration, 
     dosage form, strength, formulation, manufacturing 
     establishment,

[[Page 16613]]

     manufacturing process, or person that manufactures the drug) 
     between a prescription drug for distribution in the United 
     States and the drug for distribution in a permitted country;
       ``(H) refuse to allow an inspection authorized under this 
     section of an establishment that manufactures a qualifying 
     drug that is, or will be, introduced for commercial 
     distribution in a permitted country;
       ``(I) fail to conform to the methods used in, or the 
     facilities used for, the manufacturing, processing, packing, 
     or holding of a qualifying drug that is, or will be, 
     introduced for commercial distribution in a permitted country 
     to good manufacturing practice under this Act;
       ``(J) become a party to a licensing agreement or other 
     agreement related to a qualifying drug that fails to provide 
     for compliance with all requirements of this section with 
     respect to such drug;
       ``(K) enter into a contract that restricts, prohibits, or 
     delays the importation of a qualifying drug under this 
     section;
       ``(L) engage in any other action to restrict, prohibit, or 
     delay the importation of a qualifying drug under this 
     section; or
       ``(M) engage in any other action that the Federal Trade 
     Commission determines to discriminate against a person that 
     engages or attempts to engage in the importation of a 
     qualifying drug under this section.
       ``(2) Referral of potential violations.--The Secretary 
     shall promptly refer to the Federal Trade Commission each 
     potential violation of subparagraph (E), (F), (G), (H), or 
     (I) of paragraph (1) that becomes known to the Secretary.
       ``(3) Affirmative defense.--
       ``(A) Discrimination.--It shall be an affirmative defense 
     to a charge that a manufacturer has discriminated under 
     subparagraph (A), (B), (C), (D), or (M) of paragraph (1) that 
     the higher price charged for a prescription drug sold to a 
     person, the denial, restriction, or delay of supplies of a 
     prescription drug to a person, the refusal to do business 
     with a person, or other discriminatory activity against a 
     person, is not based, in whole or in part, on--
       ``(i) the person exporting or importing a qualifying drug 
     into the United States under this section; or
       ``(ii) the person distributing, selling, or using a 
     qualifying drug imported into the United States under this 
     section.
       ``(B) Drug differences.--It shall be an affirmative defense 
     to a charge that a manufacturer has caused there to be a 
     difference described in subparagraph (G) of paragraph (1) 
     that--
       ``(i) the difference was required by the country in which 
     the drug is distributed;
       ``(ii) the Secretary has determined that the difference was 
     necessary to improve the safety or effectiveness of the drug;
       ``(iii) the person manufacturing the drug for distribution 
     in the United States has given notice to the Secretary under 
     subsection (g)(2)(B)(i) that the drug for distribution in the 
     United States is not different from a drug for distribution 
     in permitted countries whose combined population represents 
     at least 50 percent of the total population of all permitted 
     countries; or
       ``(iv) the difference was not caused, in whole or in part, 
     for the purpose of restricting importation of the drug into 
     the United States under this section.
       ``(4) Effect of subsection.--
       ``(A) Sales in other countries.--This subsection applies 
     only to the sale or distribution of a prescription drug in a 
     country if the manufacturer of the drug chooses to sell or 
     distribute the drug in the country. Nothing in this 
     subsection shall be construed to compel the manufacturer of a 
     drug to distribute or sell the drug in a country.
       ``(B) Discounts to insurers, health plans, pharmacy benefit 
     managers, and covered entities.--Nothing in this subsection 
     shall be construed to--
       ``(i) prevent or restrict a manufacturer of a prescription 
     drug from providing discounts to an insurer, health plan, 
     pharmacy benefit manager in the United States, or covered 
     entity in the drug discount program under section 340B of the 
     Public Health Service Act (42 U.S.C. 256b) in return for 
     inclusion of the drug on a formulary;
       ``(ii) require that such discounts be made available to 
     other purchasers of the prescription drug; or
       ``(iii) prevent or restrict any other measures taken by an 
     insurer, health plan, or pharmacy benefit manager to 
     encourage consumption of such prescription drug.
       ``(C) Charitable contributions.--Nothing in this subsection 
     shall be construed to--
       ``(i) prevent a manufacturer from donating a prescription 
     drug, or supplying a prescription drug at nominal cost, to a 
     charitable or humanitarian organization, including the United 
     Nations and affiliates, or to a government of a foreign 
     country; or
       ``(ii) apply to such donations or supplying of a 
     prescription drug.
       ``(5) Enforcement.--
       ``(A) Unfair or deceptive act or practice.--A violation of 
     this subsection shall be treated as a violation of a rule 
     defining an unfair or deceptive act or practice prescribed 
     under section 18(a)(1)(B) of the Federal Trade Commission Act 
     (15 U.S.C. 57a(a)(1)(B)).
       ``(B) Actions by the commission.--The Federal Trade 
     Commission--
       ``(i) shall enforce this subsection in the same manner, by 
     the same means, and with the same jurisdiction, powers, and 
     duties as though all applicable terms and provisions of the 
     Federal Trade Commission Act (15 U.S.C. 41 et seq.) were 
     incorporated into and made a part of this section; and
       ``(ii) may seek monetary relief threefold the damages 
     sustained, in addition to any other remedy available to the 
     Federal Trade Commission under the Federal Trade Commission 
     Act (15 U.S.C. 41 et seq.).
       ``(6) Actions by states.--
       ``(A) In general.--
       ``(i) Civil actions.--In any case in which the attorney 
     general of a State has reason to believe that an interest of 
     the residents of that State have been adversely affected by 
     any manufacturer that violates paragraph (1), the attorney 
     general of a State may bring a civil action on behalf of the 
     residents of the State, and persons doing business in the 
     State, in a district court of the United States of 
     appropriate jurisdiction to--

       ``(I) enjoin that practice;
       ``(II) enforce compliance with this subsection;
       ``(III) obtain damages, restitution, or other compensation 
     on behalf of residents of the State and persons doing 
     business in the State, including threefold the damages; or
       ``(IV) obtain such other relief as the court may consider 
     to be appropriate.

       ``(ii) Notice.--

       ``(I) In general.--Before filing an action under clause 
     (i), the attorney general of the State involved shall provide 
     to the Federal Trade Commission--

       ``(aa) written notice of that action; and
       ``(bb) a copy of the complaint for that action.

       ``(II) Exemption.--Subclause (I) shall not apply with 
     respect to the filing of an action by an attorney general of 
     a State under this paragraph, if the attorney general 
     determines that it is not feasible to provide the notice 
     described in that subclause before filing of the action. In 
     such case, the attorney general of a State shall provide 
     notice and a copy of the complaint to the Federal Trade 
     Commission at the same time as the attorney general files the 
     action.

       ``(B) Intervention.--
       ``(i) In general.--On receiving notice under subparagraph 
     (A)(ii), the Federal Trade Commission shall have the right to 
     intervene in the action that is the subject of the notice.
       ``(ii) Effect of intervention.--If the Federal Trade 
     Commission intervenes in an action under subparagraph (A), it 
     shall have the right--

       ``(I) to be heard with respect to any matter that arises in 
     that action; and
       ``(II) to file a petition for appeal.

       ``(C) Construction.--For purposes of bringing any civil 
     action under subparagraph (A), nothing in this subsection 
     shall be construed to prevent an attorney general of a State 
     from exercising the powers conferred on the attorney general 
     by the laws of that State to--
       ``(i) conduct investigations;
       ``(ii) administer oaths or affirmations; or
       ``(iii) compel the attendance of witnesses or the 
     production of documentary and other evidence.
       ``(D) Actions by the commission.--In any case in which an 
     action is instituted by or on behalf of the Federal Trade 
     Commission for a violation of paragraph (1), a State may not, 
     during the pendency of that action, institute an action under 
     subparagraph (A) for the same violation against any defendant 
     named in the complaint in that action.
       ``(E) Venue.--Any action brought under subparagraph (A) may 
     be brought in the district court of the United States that 
     meets applicable requirements relating to venue under section 
     1391 of title 28, United States Code.
       ``(F) Service of process.--In an action brought under 
     subparagraph (A), process may be served in any district in 
     which the defendant--
       ``(i) is an inhabitant; or
       ``(ii) may be found.
       ``(G) Measurement of damages.--In any action under this 
     paragraph to enforce a cause of action under this subsection 
     in which there has been a determination that a defendant has 
     violated a provision of this subsection, damages may be 
     proved and assessed in the aggregate by statistical or 
     sampling methods, by the computation of illegal overcharges 
     or by such other reasonable system of estimating aggregate 
     damages as the court in its discretion may permit without the 
     necessity of separately proving the individual claim of, or 
     amount of damage to, persons on whose behalf the suit was 
     brought.
       ``(H) Exclusion on duplicative relief.--The district court 
     shall exclude from the amount of monetary relief awarded in 
     an action under this paragraph brought by the attorney 
     general of a State any amount of monetary relief which 
     duplicates amounts which have been awarded for the same 
     injury.
       ``(7) Effect on antitrust laws.--Nothing in this subsection 
     shall be construed to modify, impair, or supersede the 
     operation of the antitrust laws. For the purpose of this 
     subsection, the term `antitrust laws' has the meaning given 
     it in the first section of the

[[Page 16614]]

     Clayton Act, except that it includes section 5 of the Federal 
     Trade Commission Act to the extent that such section 5 
     applies to unfair methods of competition.
       ``(8) Manufacturer.--In this subsection, the term 
     `manufacturer' means any entity, including any affiliate or 
     licensee of that entity, that is engaged in--
       ``(A) the production, preparation, propagation, 
     compounding, conversion, or processing of a prescription 
     drug, either directly or indirectly by extraction from 
     substances of natural origin, or independently by means of 
     chemical synthesis, or by a combination of extraction and 
     chemical synthesis; or
       ``(B) the packaging, repackaging, labeling, relabeling, or 
     distribution of a prescription drug.''.
       (b) Prohibited Acts.--The Federal Food, Drug, and Cosmetic 
     Act is amended--
       (1) in section 301 (21 U.S.C. 331), by striking paragraph 
     (aa) and inserting the following:
       ``(aa)(1) The sale or trade by a pharmacist, or by a 
     business organization of which the pharmacist is a part, of a 
     qualifying drug that under section 804(a)(2)(A) was imported 
     by the pharmacist, other than--
       ``(A) a sale at retail made pursuant to dispensing the drug 
     to a customer of the pharmacist or organization; or
       ``(B) a sale or trade of the drug to a pharmacy or a 
     wholesaler registered to import drugs under section 804.
       ``(2) The sale or trade by an individual of a qualifying 
     drug that under section 804(a)(2)(B) was imported by the 
     individual.
       ``(3) The making of a materially false, fictitious, or 
     fraudulent statement or representation, or a material 
     omission, in a notice under clause (i) of section 
     804(g)(2)(B) or in an application required under section 
     804(g)(2)(F), or the failure to submit such a notice or 
     application.
       ``(4) The importation of a drug in violation of a 
     registration condition or other requirement under section 
     804, the falsification of any record required to be 
     maintained, or provided to the Secretary, under such section, 
     or the violation of any registration condition or other 
     requirement under such section.''; and
       (2) in section 303(a) (21 U.S.C. 333(a)), by striking 
     paragraph (6) and inserting the following:
       ``(6) Notwithstanding subsection (a), any person that 
     knowingly violates section 301(i) (2) or (3) or section 
     301(aa)(4) shall be imprisoned not more than 10 years, or 
     fined in accordance with title 18, United States Code, or 
     both.''.
       (c) Amendment of Certain Provisions.--
       (1) In general.--Section 801 of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 381) is amended by striking 
     subsection (g) and inserting the following:
       ``(g) With respect to a prescription drug that is imported 
     or offered for import into the United States by an individual 
     who is not in the business of such importation, that is not 
     shipped by a registered exporter under section 804, and that 
     is refused admission under subsection (a), the Secretary 
     shall notify the individual that--
       ``(1) the drug has been refused admission because the drug 
     was not a lawful import under section 804;
       ``(2) the drug is not otherwise subject to a waiver of the 
     requirements of subsection (a);
       ``(3) the individual may under section 804 lawfully import 
     certain prescription drugs from exporters registered with the 
     Secretary under section 804; and
       ``(4) the individual can find information about such 
     importation, including a list of registered exporters, on the 
     Internet website of the Food and Drug Administration or 
     through a toll-free telephone number required under section 
     804.''.
       (2) Establishment registration.--Section 510(i) of the 
     Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360(i)) is 
     amended in paragraph (1) by inserting after ``import into the 
     United States'' the following: ``, including a drug that is, 
     or may be, imported or offered for import into the United 
     States under section 804,''.
       (3) Effective date.--The amendments made by this subsection 
     shall take effect on the date that is 90 days after the date 
     of enactment of this title.
       (d) Exhaustion.--
       (1) In general.--Section 271 of title 35, United States 
     Code, is amended--
       (A) by redesignating subsections (h) and (i) as (i) and 
     (j), respectively; and
       (B) by inserting after subsection (g) the following:
       ``(h) It shall not be an act of infringement to use, offer 
     to sell, or sell within the United States or to import into 
     the United States any patented invention under section 804 of 
     the Federal Food, Drug, and Cosmetic Act that was first sold 
     abroad by or under authority of the owner or licensee of such 
     patent.''.
       (2) Rule of construction.--Nothing in the amendment made by 
     paragraph (1) shall be construed to affect the ability of a 
     patent owner or licensee to enforce their patent, subject to 
     such amendment.
       (e) Effect of Section 804.--
       (1) In general.--Section 804 of the Federal Food, Drug, and 
     Cosmetic Act, as added by subsection (a), shall permit the 
     importation of qualifying drugs (as defined in such section 
     804) into the United States without regard to the status of 
     the issuance of implementing regulations--
       (A) from exporters registered under such section 804 on the 
     date that is 90 days after the date of enactment of this 
     title; and
       (B) from permitted countries, as defined in such section 
     804, by importers registered under such section 804 on the 
     date that is 1 year after the date of enactment of this 
     title.
       (2) Review of registration by certain exporters.--
       (A) Review priority.--In the review of registrations 
     submitted under subsection (b) of such section 804, 
     registrations submitted by entities in Canada that are 
     significant exporters of prescription drugs to individuals in 
     the United States as of the date of enactment of this title 
     will have priority during the 90 day period that begins on 
     such date of enactment.
       (B) Period for review.--During such 90-day period, the 
     reference in subsection (b)(2)(A) of such section 804 to 90 
     days (relating to approval or disapproval of registrations) 
     is, as applied to such entities, deemed to be 30 days.
       (C) Limitation.--That an exporter in Canada exports, or has 
     exported, prescription drugs to individuals in the United 
     States on or before the date that is 90 days after the date 
     of enactment of this title shall not serve as a basis, in 
     whole or in part, for disapproving a registration under such 
     section 804 from the exporter.
       (D) First year limit on number of exporters.--During the 1-
     year period beginning on the date of enactment of this title, 
     the Secretary of Health and Human Services (referred to in 
     this section as the ``Secretary'') may limit the number of 
     registered exporters under such section 804 to not less than 
     50, so long as the Secretary gives priority to those 
     exporters with demonstrated ability to process a high volume 
     of shipments of drugs to individuals in the United States.
       (E) Second year limit on number of exporters.--During the 
     1-year period beginning on the date that is 1 year after the 
     date of enactment of this title, the Secretary may limit the 
     number of registered exporters under such section 804 to not 
     less than 100, so long as the Secretary gives priority to 
     those exporters with demonstrated ability to process a high 
     volume of shipments of drugs to individuals in the United 
     States.
       (F) Further limit on number of exporters.--During any 1-
     year period beginning on a date that is 2 or more years after 
     the date of enactment of this title, the Secretary may limit 
     the number of registered exporters under such section 804 to 
     not less than 25 more than the number of such exporters 
     during the previous 1-year period, so long as the Secretary 
     gives priority to those exporters with demonstrated ability 
     to process a high volume of shipments of drugs to individuals 
     in the United States.
       (3) Limits on number of importers.--
       (A) First year limit on number of importers.--During the 1-
     year period beginning on the date that is 1 year after the 
     date of enactment of this title, the Secretary may limit the 
     number of registered importers under such section 804 to not 
     less than 100 (of which at least a significant number shall 
     be groups of pharmacies, to the extent feasible given the 
     applications submitted by such groups), so long as the 
     Secretary gives priority to those importers with demonstrated 
     ability to process a high volume of shipments of drugs 
     imported into the United States.
       (B) Second year limit on number of importers.--During the 
     1-year period beginning on the date that is 2 years after the 
     date of enactment of this title, the Secretary may limit the 
     number of registered importers under such section 804 to not 
     less than 200 (of which at least a significant number shall 
     be groups of pharmacies, to the extent feasible given the 
     applications submitted by such groups), so long as the 
     Secretary gives priority to those importers with demonstrated 
     ability to process a high volume of shipments of drugs into 
     the United States.
       (C) Further limit on number of importers.--During any 1-
     year period beginning on a date that is 3 or more years after 
     the date of enactment of this title, the Secretary may limit 
     the number of registered importers under such section 804 to 
     not less than 50 more (of which at least a significant number 
     shall be groups of pharmacies, to the extent feasible given 
     the applications submitted by such groups) than the number of 
     such importers during the previous 1-year period, so long as 
     the Secretary gives priority to those importers with 
     demonstrated ability to process a high volume of shipments of 
     drugs to the United States.
       (4) Notices for drugs for import from canada.--The notice 
     with respect to a qualifying drug introduced for commercial 
     distribution in Canada as of the date of enactment of this 
     title that is required under subsection (g)(2)(B)(i) of such 
     section 804 shall be submitted to the Secretary not later 
     than 30 days after the date of enactment of this title if--
       (A) the U.S. label drug (as defined in such section 804) 
     for the qualifying drug is 1 of the 100 prescription drugs 
     with the highest dollar volume of sales in the United States 
     based on the 12 calendar month period most recently completed 
     before the date of enactment of this title; or

[[Page 16615]]

       (B) the notice is a notice under subsection 
     (g)(2)(B)(i)(II) of such section 804.
       (5) Notice for drugs for import from other countries.--The 
     notice with respect to a qualifying drug introduced for 
     commercial distribution in a permitted country other than 
     Canada as of the date of enactment of this title that is 
     required under subsection (g)(2)(B)(i) of such section 804 
     shall be submitted to the Secretary not later than 180 days 
     after the date of enactment of this title if--
       (A) the U.S. label drug for the qualifying drug is 1 of the 
     100 prescription drugs with the highest dollar volume of 
     sales in the United States based on the 12 calendar month 
     period that is first completed on the date that is 120 days 
     after the date of enactment of this title; or
       (B) the notice is a notice under subsection 
     (g)(2)(B)(i)(II) of such section 804.
       (6) Notice for other drugs for import.--
       (A) Guidance on submission dates.--The Secretary shall by 
     guidance establish a series of submission dates for the 
     notices under subsection (g)(2)(B)(i) of such section 804 
     with respect to qualifying drugs introduced for commercial 
     distribution as of the date of enactment of this title and 
     that are not required to be submitted under paragraph (4) or 
     (5).
       (B) Consistent and efficient use of resources.--The 
     Secretary shall establish the dates described under 
     subparagraph (A) so that such notices described under 
     subparagraph (A) are submitted and reviewed at a rate that 
     allows consistent and efficient use of the resources and 
     staff available to the Secretary for such reviews. The 
     Secretary may condition the requirement to submit such a 
     notice, and the review of such a notice, on the submission by 
     a registered exporter or a registered importer to the 
     Secretary of a notice that such exporter or importer intends 
     to import such qualifying drug to the United States under 
     such section 804.
       (C) Priority for drugs with higher sales.--The Secretary 
     shall establish the dates described under subparagraph (A) so 
     that the Secretary reviews the notices described under such 
     subparagraph with respect to qualifying drugs with higher 
     dollar volume of sales in the United States before the 
     notices with respect to drugs with lower sales in the United 
     States.
       (7) Notices for drugs approved after effective date.--The 
     notice required under subsection (g)(2)(B)(i) of such section 
     804 for a qualifying drug first introduced for commercial 
     distribution in a permitted country (as defined in such 
     section 804) after the date of enactment of this title shall 
     be submitted to and reviewed by the Secretary as provided 
     under subsection (g)(2)(B) of such section 804, without 
     regard to paragraph (4), (5), or (6).
       (8) Report.--Beginning with the first full fiscal year 
     after the date of enactment of this title, not later than 90 
     days after the end of each fiscal year during which the 
     Secretary reviews a notice referred to in paragraph (4), (5), 
     or (6), the Secretary shall submit a report to Congress 
     concerning the progress of the Food and Drug Administration 
     in reviewing the notices referred to in paragraphs (4), (5), 
     and (6).
       (9) User fees.--
       (A) Exporters.--When establishing an aggregate total of 
     fees to be collected from exporters under subsection (f)(2) 
     of such section 804, the Secretary shall, under subsection 
     (f)(3)(C)(i) of such section 804, estimate the total price of 
     drugs imported under subsection (a) of such section 804 into 
     the United States by registered exporters during the first 
     fiscal year in which this title takes effect to be an amount 
     equal to the amount which bears the same ratio to 
     $1,000,000,000 as the number of days in such fiscal year 
     during which this title is effective bears to 365.
       (B) Importers.--When establishing an aggregate total of 
     fees to be collected from importers under subsection (e)(2) 
     of such section 804, the Secretary shall, under subsection 
     (e)(3)(C)(i) of such section 804, estimate the total price of 
     drugs imported under subsection (a) of such section 804 into 
     the United States by registered importers during--
       (i) the first fiscal year in which this title takes effect 
     to be an amount equal to the amount which bears the same 
     ratio to $1,000,000,000 as the number of days in such fiscal 
     year during which this title is effective bears to 365; and
       (ii) the second fiscal year in which this title is in 
     effect to be $3,000,000,000.
       (C) Second year adjustment.--
       (i) Reports.--Not later than February 20 of the second 
     fiscal year in which this title is in effect, registered 
     importers shall report to the Secretary the total price and 
     the total volume of drugs imported to the United States by 
     the importer during the 4-month period from October 1 through 
     January 31 of such fiscal year.
       (ii) Reestimate.--Notwithstanding subsection (e)(3)(C)(ii) 
     of such section 804 or subparagraph (B), the Secretary shall 
     reestimate the total price of qualifying drugs imported under 
     subsection (a) of such section 804 into the United States by 
     registered importers during the second fiscal year in which 
     this title is in effect. Such reestimate shall be equal to--

       (I) the total price of qualifying drugs imported by each 
     importer as reported under clause (i); multiplied by
       (II) 3.

       (iii) Adjustment.--The Secretary shall adjust the fee due 
     on April 1 of the second fiscal year in which this title is 
     in effect, from each importer so that the aggregate total of 
     fees collected under subsection (e)(2) for such fiscal year 
     does not exceed the total price of qualifying drugs imported 
     under subsection (a) of such section 804 into the United 
     States by registered importers during such fiscal year as 
     reestimated under clause (ii).
       (D) Failure to pay fees.--Notwithstanding any other 
     provision of this section, the Secretary may prohibit a 
     registered importer or exporter that is required to pay user 
     fees under subsection (e) or (f) of such section 804 and that 
     fails to pay such fees within 30 days after the date on which 
     it is due, from importing or offering for importation a 
     qualifying drug under such section 804 until such fee is 
     paid.
       (E) Annual report.--
       (i) Food and drug administration.--Not later than 180 days 
     after the end of each fiscal year during which fees are 
     collected under subsection (e), (f), or (g)(2)(B)(iv) of such 
     section 804, the Secretary shall prepare and submit to the 
     House of Representatives and the Senate a report on the 
     implementation of the authority for such fees during such 
     fiscal year and the use, by the Food and Drug Administration, 
     of the fees collected for the fiscal year for which the 
     report is made and credited to the Food and Drug 
     Administration.
       (ii) Customs and border control.--Not later than 180 days 
     after the end of each fiscal year during which fees are 
     collected under subsection (e) or (f) of such section 804, 
     the Secretary of Homeland Security, in consultation with the 
     Secretary of the Treasury, shall prepare and submit to the 
     House of Representatives and the Senate a report on the use, 
     by the Bureau of Customs and Border Protection, of the fees, 
     if any, transferred by the Secretary to the Bureau of Customs 
     and Border Protection for the fiscal year for which the 
     report is made.
       (10) Special rule regarding importation by individuals.--
       (A) In general.--Notwithstanding any provision of this 
     title (or an amendment made by this title), the Secretary 
     shall expedite the designation of any additional countries 
     from which an individual may import a qualifying drug into 
     the United States under such section 804 if any action 
     implemented by the Government of Canada has the effect of 
     limiting or prohibiting the importation of qualifying drugs 
     into the United States from Canada.
       (B) Timing and criteria.--The Secretary shall designate 
     such additional countries under subparagraph (A)--
       (i) not later than 6 months after the date of the action by 
     the Government of Canada described under such subparagraph; 
     and
       (ii) using the criteria described under subsection 
     (a)(4)(D)(i)(II) of such section 804.
       (f) Implementation of Section 804.--
       (1) Interim rule.--The Secretary may promulgate an interim 
     rule for implementing section 804 of the Federal Food, Drug, 
     and Cosmetic Act, as added by subsection (a) of this section.
       (2) No notice of proposed rulemaking.--The interim rule 
     described under paragraph (1) may be developed and 
     promulgated by the Secretary without providing general notice 
     of proposed rulemaking.
       (3) Final rule.--Not later than 1 year after the date on 
     which the Secretary promulgates an interim rule under 
     paragraph (1), the Secretary shall, in accordance with 
     procedures under section 553 of title 5, United States Code, 
     promulgate a final rule for implementing such section 804, 
     which may incorporate by reference provisions of the interim 
     rule provided for under paragraph (1), to the extent that 
     such provisions are not modified.
       (g) Consumer Education.--The Secretary shall carry out 
     activities that educate consumers--
       (1) with regard to the availability of qualifying drugs for 
     import for personal use from an exporter registered with and 
     approved by the Food and Drug Administration under section 
     804 of the Federal Food, Drug, and Cosmetic Act, as added by 
     this section, including information on how to verify whether 
     an exporter is registered and approved by use of the Internet 
     website of the Food and Drug Administration and the toll-free 
     telephone number required by this title;
       (2) that drugs that consumers attempt to import from an 
     exporter that is not registered with and approved by the Food 
     and Drug Administration can be seized by the United States 
     Customs Service and destroyed, and that such drugs may be 
     counterfeit, unapproved, unsafe, or ineffective;
       (3) with regard to the suspension and termination of any 
     registration of a registered importer or exporter under such 
     section 804; and
       (4) with regard to the availability at domestic retail 
     pharmacies of qualifying drugs imported under such section 
     804 by domestic wholesalers and pharmacies registered with 
     and approved by the Food and Drug Administration.
       (h) Effect on Administration Practices.--Notwithstanding 
     any provision of this title (and the amendments made by this

[[Page 16616]]

     title), nothing in this title (or the amendments made by this 
     title) shall be construed to change, limit, or restrict the 
     practices of the Food and Drug Administration or the Bureau 
     of Customs and Border Protection in effect on January 1, 
     2004, with respect to the importation of prescription drugs 
     into the United States by an individual, on the person of 
     such individual, for personal use.
       (i) Report to Congress.--The Federal Trade Commission 
     shall, on an annual basis, submit to Congress a report that 
     describes any action taken during the period for which the 
     report is being prepared to enforce the provisions of section 
     804(n) of the Federal Food, Drug, and Cosmetic Act (as added 
     by this title), including any pending investigations or civil 
     actions under such section.

     SEC. __5. DISPOSITION OF CERTAIN DRUGS DENIED ADMISSION INTO 
                   UNITED STATES.

       (a) In General.--Chapter VIII of the Federal Food, Drug, 
     and Cosmetic Act (21 U.S.C. 381 et seq.), as amended by 
     section __3, is further amended by adding at the end the 
     following section:

     ``SEC. 805. DISPOSITION OF CERTAIN DRUGS DENIED ADMISSION.

       ``(a) In General.--The Secretary of Homeland Security shall 
     deliver to the Secretary a shipment of drugs that is imported 
     or offered for import into the United States if--
       ``(1) the shipment has a declared value of less than 
     $10,000; and
       ``(2)(A) the shipping container for such drugs does not 
     bear the markings required under section 804(d)(2); or
       ``(B) the Secretary has requested delivery of such shipment 
     of drugs.
       ``(b) No Bond or Export.--Section 801(b) does not authorize 
     the delivery to the owner or consignee of drugs delivered to 
     the Secretary under subsection (a) pursuant to the execution 
     of a bond, and such drugs may not be exported.
       ``(c) Destruction of Violative Shipment.--The Secretary 
     shall destroy a shipment of drugs delivered by the Secretary 
     of Homeland Security to the Secretary under subsection (a) 
     if--
       ``(1) in the case of drugs that are imported or offered for 
     import from a registered exporter under section 804, the 
     drugs are in violation of any standard described in section 
     804(g)(5); or
       ``(2) in the case of drugs that are not imported or offered 
     for import from a registered exporter under section 804, the 
     drugs are in violation of a standard referred to in section 
     801(a) or 801(d)(1).
       ``(d) Certain Procedures.--
       ``(1) In general.--The delivery and destruction of drugs 
     under this section may be carried out without notice to the 
     importer, owner, or consignee of the drugs except as required 
     by section 801(g) or section 804(i)(2). The issuance of 
     receipts for the drugs, and recordkeeping activities 
     regarding the drugs, may be carried out on a summary basis.
       ``(2) Objective of procedures.--Procedures promulgated 
     under paragraph (1) shall be designed toward the objective of 
     ensuring that, with respect to efficiently utilizing Federal 
     resources available for carrying out this section, a 
     substantial majority of shipments of drugs subject to 
     described in subsection (c) are identified and destroyed.
       ``(e) Evidence Exception.--Drugs may not be destroyed under 
     subsection (c) to the extent that the Attorney General of the 
     United States determines that the drugs should be preserved 
     as evidence or potential evidence with respect to an offense 
     against the United States.
       ``(f) Rule of Construction.--This section may not be 
     construed as having any legal effect on applicable law with 
     respect to a shipment of drugs that is imported or offered 
     for import into the United States and has a declared value 
     equal to or greater than $10,000.''.
       (b) Procedures.--Procedures for carrying out section 805 of 
     the Federal Food, Drug, and Cosmetic Act, as added by 
     subsection (a), shall be established not later than 90 days 
     after the date of the enactment of this title.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date that is 90 days after the date 
     of enactment of this title.

     SEC. __6. WHOLESALE DISTRIBUTION OF DRUGS; STATEMENTS 
                   REGARDING PRIOR SALE, PURCHASE, OR TRADE.

       (a) Striking of Exemptions; Applicability to Registered 
     Exporters.--Section 503(e) of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 353(e)) is amended--
       (1) in paragraph (1)--
       (A) by striking ``and who is not the manufacturer or an 
     authorized distributor of record of such drug'';
       (B) by striking ``to an authorized distributor of record 
     or''; and
       (C) by striking subparagraph (B) and inserting the 
     following:
       ``(B) The fact that a drug subject to subsection (b) is 
     exported from the United States does not with respect to such 
     drug exempt any person that is engaged in the business of the 
     wholesale distribution of the drug from providing the 
     statement described in subparagraph (A) to the person that 
     receives the drug pursuant to the export of the drug.
       ``(C)(i) The Secretary shall by regulation establish 
     requirements that supersede subparagraph (A) (referred to in 
     this subparagraph as `alternative requirements') to identify 
     the chain of custody of a drug subject to subsection (b) from 
     the manufacturer of the drug throughout the wholesale 
     distribution of the drug to a pharmacist who intends to sell 
     the drug at retail if the Secretary determines that the 
     alternative requirements, which may include standardized 
     anti-counterfeiting or track-and-trace technologies, will 
     identify such chain of custody or the identity of the 
     discrete package of the drug from which the drug is dispensed 
     with equal or greater certainty to the requirements of 
     subparagraph (A), and that the alternative requirements are 
     economically and technically feasible.
       ``(ii) When the Secretary promulgates a final rule to 
     establish such alternative requirements, the final rule in 
     addition shall, with respect to the registration condition 
     established in clause (i) of section 804(c)(3)(B), establish 
     a condition equivalent to the alternative requirements, and 
     such equivalent condition may be met in lieu of the 
     registration condition established in such clause (i).'';
       (2) in paragraph (2)(A), by adding at the end the 
     following: ``The preceding sentence may not be construed as 
     having any applicability with respect to a registered 
     exporter under section 804.''; and
       (3) in paragraph (3), by striking ``and subsection (d)--'' 
     in the matter preceding subparagraph (A) and all that follows 
     through ``the term `wholesale distribution' means'' in 
     subparagraph (B) and inserting the following: ``and 
     subsection (d), the term `wholesale distribution' means''.
       (b) Conforming Amendment.--Section 503(d) of the Federal 
     Food, Drug, and Cosmetic Act (21 U.S.C. 353(d)) is amended by 
     adding at the end the following:
       ``(4) Each manufacturer of a drug subject to subsection (b) 
     shall maintain at its corporate offices a current list of the 
     authorized distributors of record of such drug.
       ``(5) For purposes of this subsection, the term `authorized 
     distributors of record' means those distributors with whom a 
     manufacturer has established an ongoing relationship to 
     distribute such manufacturer's products.''.
       (c) Effective Date.--
       (1) In general.--The amendments made by paragraphs (1) and 
     (3) of subsection (a) and by subsection (b) shall take effect 
     on January 1, 2010.
       (2) Drugs imported by registered importers under section 
     804.--Notwithstanding paragraph (1), the amendments made by 
     paragraphs (1) and (3) of subsection (a) and by subsection 
     (b) shall take effect on the date that is 90 days after the 
     date of enactment of this title with respect to qualifying 
     drugs imported under section 804 of the Federal Food, Drug, 
     and Cosmetic Act, as added by section __4.
       (3) High-risk drugs.--
       (A) In general.--Notwithstanding paragraph (1), the 
     Secretary of Health and Human Services (referred to in this 
     section as the ``Secretary'') may apply the amendments made 
     by paragraphs (1) and (3) of subsection (a) and by subsection 
     (b) before January 1, 2010, with respect to a prescription 
     drug if the Secretary--
       (i) determines that the drug is at high risk for being 
     counterfeited; and
       (ii) publishes the determination and the basis for the 
     determination in the Federal Register.
       (B) Pedigree not required.--Notwithstanding a determination 
     under subparagraph (A) with respect to a prescription drug, 
     the amendments described in such subparagraph shall not apply 
     with respect to a wholesale distribution of such drug if the 
     drug is distributed by the manufacturer of the drug to a 
     person that distributes the drug to a retail pharmacy for 
     distribution to the consumer or patient, with no other 
     intervening transactions.
       (C) Limitation.--The Secretary may make the determination 
     under subparagraph (A) with respect to not more than 50 drugs 
     before January 1, 2010.
       (4) Effect with respect to registered exporters.--The 
     amendment made by subsection (a)(2) shall take effect on the 
     date that is 90 days after the date of enactment of this 
     title.
       (5) Alternative requirements.--The Secretary shall issue 
     regulations to establish the alternative requirements, 
     referred to in the amendment made by subsection (a)(1), that 
     take effect not later than--
       (A) January 1, 2008, with respect to a prescription drug 
     determined under paragraph (3)(A) to be at high risk for 
     being counterfeited; and
       (B) January 1, 2010, with respect to all other prescription 
     drugs.
       (6) Intermediate requirements.--With respect to the 
     prescription drugs described under paragraph (5)(B), the 
     Secretary shall by regulation require the use of standardized 
     anti-counterfeiting or track-and-trace technologies on such 
     prescription drugs at the case and pallet level effective not 
     later than January 1, 2008.
       (7) Additional requirements.--
       (A) In general.--Notwithstanding any other provision of 
     this section, the Secretary shall, not later than January 1, 
     2007, require that the packaging of any prescription drug 
     incorporates--

[[Page 16617]]

       (i) overt optically variable counterfeit-resistant 
     technologies that--

       (I) are visible to the naked eye, providing for visual 
     identification of product authenticity without the need for 
     readers, microscopes, lighting devices, or scanners;
       (II) are similar to that used by the Bureau of Engraving 
     and Printing to secure United States currency;
       (III) are manufactured and distributed in a highly secure, 
     tightly controlled environment; and
       (IV) incorporate additional layers of nonvisible convert 
     security features up to and including forensic capability, as 
     described in subparagraph (B); or

       (ii) technologies that have a function of security 
     comparable to that described in clause (i), as determined by 
     the Secretary.
       (B) Standards for packaging.--For the purpose of making it 
     more difficult to counterfeit the packaging of drugs subject 
     to this paragraph, the manufacturers of such drugs shall 
     incorporate the technologies described in subparagraph (A) 
     into at least 1 additional element of the physical packaging 
     of the drugs, including blister packs, shrink wrap, package 
     labels, package seals, bottles, and boxes.

     SEC. __7. INTERNET SALES OF PRESCRIPTION DRUGS.

       (a) In General.--Chapter V of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 351 et seq.) is amended by inserting 
     after section 503A the following:

     ``SEC. 503B. INTERNET SALES OF PRESCRIPTION DRUGS.

       ``(a) Requirements Regarding Information on Internet 
     Site.--
       ``(1) In general.--A person may not dispense a prescription 
     drug pursuant to a sale of the drug by such person if--
       ``(A) the purchaser of the drug submitted the purchase 
     order for the drug, or conducted any other part of the sales 
     transaction for the drug, through an Internet site;
       ``(B) the person dispenses the drug to the purchaser by 
     mailing or shipping the drug to the purchaser; and
       ``(C) such site, or any other Internet site used by such 
     person for purposes of sales of a prescription drug, fails to 
     meet each of the requirements specified in paragraph (2), 
     other than a site or pages on a site that--
       ``(i) are not intended to be accessed by purchasers or 
     prospective purchasers; or
       ``(ii) provide an Internet information location tool within 
     the meaning of section 231(e)(5) of the Communications Act of 
     1934 (47 U.S.C. 231(e)(5)).
       ``(2) Requirements.--With respect to an Internet site, the 
     requirements referred to in subparagraph (C) of paragraph (1) 
     for a person to whom such paragraph applies are as follows:
       ``(A) Each page of the site shall include either the 
     following information or a link to a page that provides the 
     following information:
       ``(i) The name of such person.
       ``(ii) Each State in which the person is authorized by law 
     to dispense prescription drugs.
       ``(iii) The address and telephone number of each place of 
     business of the person with respect to sales of prescription 
     drugs through the Internet, other than a place of business 
     that does not mail or ship prescription drugs to purchasers.
       ``(iv) The name of each individual who serves as a 
     pharmacist for prescription drugs that are mailed or shipped 
     pursuant to the site, and each State in which the individual 
     is authorized by law to dispense prescription drugs.
       ``(v) If the person provides for medical consultations 
     through the site for purposes of providing prescriptions, the 
     name of each individual who provides such consultations; each 
     State in which the individual is licensed or otherwise 
     authorized by law to provide such consultations or practice 
     medicine; and the type or types of health professions for 
     which the individual holds such licenses or other 
     authorizations.
       ``(B) A link to which paragraph (1) applies shall be 
     displayed in a clear and prominent place and manner, and 
     shall include in the caption for the link the words 
     `licensing and contact information'.
       ``(b) Internet Sales Without Appropriate Medical 
     Relationships.--
       ``(1) In general.--Except as provided in paragraph (2), a 
     person may not dispense a prescription drug, or sell such a 
     drug, if--
       ``(A) for purposes of such dispensing or sale, the 
     purchaser communicated with the person through the Internet;
       ``(B) the patient for whom the drug was dispensed or 
     purchased did not, when such communications began, have a 
     prescription for the drug that is valid in the United States;
       ``(C) pursuant to such communications, the person provided 
     for the involvement of a practitioner, or an individual 
     represented by the person as a practitioner, and the 
     practitioner or such individual issued a prescription for the 
     drug that was purchased;
       ``(D) the person knew, or had reason to know, that the 
     practitioner or the individual referred to in subparagraph 
     (C) did not, when issuing the prescription, have a qualifying 
     medical relationship with the patient; and
       ``(E) the person received payment for the dispensing or 
     sale of the drug.
     For purposes of subparagraph (E), payment is received if 
     money or other valuable consideration is received.
       ``(2) Exceptions.--Paragraph (1) does not apply to--
       ``(A) the dispensing or selling of a prescription drug 
     pursuant to telemedicine practices sponsored by--
       ``(i) a hospital that has in effect a provider agreement 
     under title XVIII of the Social Security Act (relating to the 
     Medicare program); or
       ``(ii) a group practice that has not fewer than 100 
     physicians who have in effect provider agreements under such 
     title; or
       ``(B) the dispensing or selling of a prescription drug 
     pursuant to practices that promote the public health, as 
     determined by the Secretary by regulation.
       ``(3) Qualifying medical relationship.--
       ``(A) In general.--With respect to issuing a prescription 
     for a drug for a patient, a practitioner has a qualifying 
     medical relationship with the patient for purposes of this 
     section if--
       ``(i) at least one in-person medical evaluation of the 
     patient has been conducted by the practitioner; or
       ``(ii) the practitioner conducts a medical evaluation of 
     the patient as a covering practitioner.
       ``(B) In-person medical evaluation.--A medical evaluation 
     by a practitioner is an in-person medical evaluation for 
     purposes of this section if the practitioner is in the 
     physical presence of the patient as part of conducting the 
     evaluation, without regard to whether portions of the 
     evaluation are conducted by other health professionals.
       ``(C) Covering practitioner.--With respect to a patient, a 
     practitioner is a covering practitioner for purposes of this 
     section if the practitioner conducts a medical evaluation of 
     the patient at the request of a practitioner who has 
     conducted at least one in-person medical evaluation of the 
     patient and is temporarily unavailable to conduct the 
     evaluation of the patient. A practitioner is a covering 
     practitioner without regard to whether the practitioner has 
     conducted any in-person medical evaluation of the patient 
     involved.
       ``(4) Rules of construction.--
       ``(A) Individuals represented as practitioners.--A person 
     who is not a practitioner (as defined in subsection (e)(1)) 
     lacks legal capacity under this section to have a qualifying 
     medical relationship with any patient.
       ``(B) Standard practice of pharmacy.--Paragraph (1) may not 
     be construed as prohibiting any conduct that is a standard 
     practice in the practice of pharmacy.
       ``(C) Applicability of requirements.--Paragraph (3) may not 
     be construed as having any applicability beyond this section, 
     and does not affect any State law, or interpretation of State 
     law, concerning the practice of medicine.
       ``(c) Actions by States.--
       ``(1) In general.--Whenever an attorney general of any 
     State has reason to believe that the interests of the 
     residents of that State have been or are being threatened or 
     adversely affected because any person has engaged or is 
     engaging in a pattern or practice that violates section 
     301(l), the State may bring a civil action on behalf of its 
     residents in an appropriate district court of the United 
     States to enjoin such practice, to enforce compliance with 
     such section (including a nationwide injunction), to obtain 
     damages, restitution, or other compensation on behalf of 
     residents of such State, to obtain reasonable attorneys fees 
     and costs if the State prevails in the civil action, or to 
     obtain such further and other relief as the court may deem 
     appropriate.
       ``(2) Notice.--The State shall serve prior written notice 
     of any civil action under paragraph (1) or (5)(B) upon the 
     Secretary and provide the Secretary with a copy of its 
     complaint, except that if it is not feasible for the State to 
     provide such prior notice, the State shall serve such notice 
     immediately upon instituting such action. Upon receiving a 
     notice respecting a civil action, the Secretary shall have 
     the right--
       ``(A) to intervene in such action;
       ``(B) upon so intervening, to be heard on all matters 
     arising therein; and
       ``(C) to file petitions for appeal.
       ``(3) Construction.--For purposes of bringing any civil 
     action under paragraph (1), nothing in this chapter shall 
     prevent an attorney general of a State from exercising the 
     powers conferred on the attorney general by the laws of such 
     State to conduct investigations or to administer oaths or 
     affirmations or to compel the attendance of witnesses or the 
     production of documentary and other evidence.
       ``(4) Venue; service of process.--Any civil action brought 
     under paragraph (1) in a district court of the United States 
     may be brought in the district in which the defendant is 
     found, is an inhabitant, or transacts business or wherever 
     venue is proper under section 1391 of title 28, United States 
     Code. Process in such an action may be served in any district 
     in which the defendant is an inhabitant or in which the 
     defendant may be found.
       ``(5) Actions by other state officials.--
       ``(A) Nothing contained in this section shall prohibit an 
     authorized State official from proceeding in State court on 
     the basis of an alleged violation of any civil or criminal 
     statute of such State.

[[Page 16618]]

       ``(B) In addition to actions brought by an attorney general 
     of a State under paragraph (1), such an action may be brought 
     by officers of such State who are authorized by the State to 
     bring actions in such State on behalf of its residents.
       ``(d) Effect of Section.--This section shall not apply to a 
     person that is a registered exporter under section 804.
       ``(e) General Definitions.--For purposes of this section:
       ``(1) The term `practitioner' means a practitioner referred 
     to in section 503(b)(1) with respect to issuing a written or 
     oral prescription.
       ``(2) The term `prescription drug' means a drug that is 
     described in section 503(b)(1).
       ``(3) The term `qualifying medical relationship', with 
     respect to a practitioner and a patient, has the meaning 
     indicated for such term in subsection (b).
       ``(f) Internet-Related Definitions.--
       ``(1) In general.--For purposes of this section:
       ``(A) The term `Internet' means collectively the myriad of 
     computer and telecommunications facilities, including 
     equipment and operating software, which comprise the 
     interconnected world-wide network of networks that employ the 
     transmission control protocol/internet protocol, or any 
     predecessor or successor protocols to such protocol, to 
     communicate information of all kinds by wire or radio.
       ``(B) The term `link', with respect to the Internet, means 
     one or more letters, words, numbers, symbols, or graphic 
     items that appear on a page of an Internet site for the 
     purpose of serving, when activated, as a method for executing 
     an electronic command--
       ``(i) to move from viewing one portion of a page on such 
     site to another portion of the page;
       ``(ii) to move from viewing one page on such site to 
     another page on such site; or
       ``(iii) to move from viewing a page on one Internet site to 
     a page on another Internet site.
       ``(C) The term `page', with respect to the Internet, means 
     a document or other file accessed at an Internet site.
       ``(D)(i) The terms `site' and `address', with respect to 
     the Internet, mean a specific location on the Internet that 
     is determined by Internet Protocol numbers. Such term 
     includes the domain name, if any.
       ``(ii) The term `domain name' means a method of 
     representing an Internet address without direct reference to 
     the Internet Protocol numbers for the address, including 
     methods that use designations such as `.com', `.edu', `.gov', 
     `.net', or `.org'.
       ``(iii) The term `Internet Protocol numbers' includes any 
     successor protocol for determining a specific location on the 
     Internet.
       ``(2) Authority of secretary.--The Secretary may by 
     regulation modify any definition under paragraph (1) to take 
     into account changes in technology.
       ``(g) Interactive Computer Service; Advertising.--No 
     provider of an interactive computer service, as defined in 
     section 230(f)(2) of the Communications Act of 1934 (47 
     U.S.C. 230(f)(2)), or of advertising services shall be liable 
     under this section for dispensing or selling prescription 
     drugs in violation of this section on account of another 
     person's selling or dispensing such drugs, provided that the 
     provider of the interactive computer service or of 
     advertising services does not own or exercise corporate 
     control over such person.''.
       (b) Inclusion as Prohibited Act.--Section 301 of the 
     Federal Food, Drug, and Cosmetic Act (21 U.S.C. 331) is 
     amended by inserting after paragraph (k) the following:
       ``(l) The dispensing or selling of a prescription drug in 
     violation of section 503B.''.
       (c) Internet Sales of Prescription Drugs; Consideration by 
     Secretary of Practices and Procedures for Certification of 
     Legitimate Businesses.--In carrying out section 503B of the 
     Federal Food, Drug, and Cosmetic Act (as added by subsection 
     (a) of this section), the Secretary of Health and Human 
     Services shall take into consideration the practices and 
     procedures of public or private entities that certify that 
     businesses selling prescription drugs through Internet sites 
     are legitimate businesses, including practices and procedures 
     regarding disclosure formats and verification programs.
       (d) Reports Regarding Internet-Related Violations of 
     Federal and State Laws on Dispensing of Drugs.--
       (1) In general.--The Secretary of Health and Human Services 
     (referred to in this subsection as the ``Secretary'') shall, 
     pursuant to the submission of an application meeting the 
     criteria of the Secretary, make an award of a grant or 
     contract to the National Clearinghouse on Internet 
     Prescribing (operated by the Federation of State Medical 
     Boards) for the purpose of--
       (A) identifying Internet sites that appear to be in 
     violation of Federal or State laws concerning the dispensing 
     of drugs;
       (B) reporting such sites to State medical licensing boards 
     and State pharmacy licensing boards, and to the Attorney 
     General and the Secretary, for further investigation; and
       (C) submitting, for each fiscal year for which the award 
     under this subsection is made, a report to the Secretary 
     describing investigations undertaken with respect to 
     violations described in subparagraph (A).
       (2) Authorization of appropriations.--For the purpose of 
     carrying out paragraph (1), there is authorized to be 
     appropriated $100,000 for each of the first 3 fiscal years in 
     which this section is in effect.
       (e) Effective Date.--The amendments made by subsections (a) 
     and (b) take effect 90 days after the date of enactment of 
     this title, without regard to whether a final rule to 
     implement such amendments has been promulgated by the 
     Secretary of Health and Human Services under section 701(a) 
     of the Federal Food, Drug, and Cosmetic Act. The preceding 
     sentence may not be construed as affecting the authority of 
     such Secretary to promulgate such a final rule.

     SEC. __8. PROHIBITING PAYMENTS TO UNREGISTERED FOREIGN 
                   PHARMACIES.

       (a) In General.--Section 303 of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 333) is amended by adding at the end 
     the following:
       ``(g) Restricted Transactions.--
       ``(1) In general.--The introduction of restricted 
     transactions into a payment system or the completion of 
     restricted transactions using a payment system is prohibited.
       ``(2) Payment system.--
       ``(A) In general.--The term `payment system' means a system 
     used by a person described in subparagraph (B) to effect a 
     credit transaction, electronic fund transfer, or money 
     transmitting service that may be used in connection with, or 
     to facilitate, a restricted transaction, and includes--
       ``(i) a credit card system;
       ``(ii) an international, national, regional, or local 
     network used to effect a credit transaction, an electronic 
     fund transfer, or a money transmitting service; and
       ``(iii) any other system that is centrally managed and is 
     primarily engaged in the transmission and settlement of 
     credit transactions, electronic fund transfers, or money 
     transmitting services.
       ``(B) Persons described.--A person referred to in 
     subparagraph (A) is--
       ``(i) a creditor;
       ``(ii) a credit card issuer;
       ``(iii) a financial institution;
       ``(iv) an operator of a terminal at which an electronic 
     fund transfer may be initiated;
       ``(v) a money transmitting business; or
       ``(vi) a participant in an international, national, 
     regional, or local network used to effect a credit 
     transaction, electronic fund transfer, or money transmitting 
     service.
       ``(3) Restricted transaction.--The term `restricted 
     transaction' means a transaction or transmittal, on behalf of 
     an individual who places an unlawful drug importation request 
     to any person engaged in the operation of an unregistered 
     foreign pharmacy, of--
       ``(A) credit, or the proceeds of credit, extended to or on 
     behalf of the individual for the purpose of the unlawful drug 
     importation request (including credit extended through the 
     use of a credit card);
       ``(B) an electronic fund transfer or funds transmitted by 
     or through a money transmitting business, or the proceeds of 
     an electronic fund transfer or money transmitting service, 
     from or on behalf of the individual for the purpose of the 
     unlawful drug importation request;
       ``(C) a check, draft, or similar instrument which is drawn 
     by or on behalf of the individual for the purpose of the 
     unlawful drug importation request and is drawn on or payable 
     at or through any financial institution; or
       ``(D) the proceeds of any other form of financial 
     transaction (identified by the Board by regulation) that 
     involves a financial institution as a payor or financial 
     intermediary on behalf of or for the benefit of the 
     individual for the purpose of the unlawful drug importation 
     request.
       ``(4) Unlawful drug importation request.--The term 
     `unlawful drug importation request' means the request, or 
     transmittal of a request, made to an unregistered foreign 
     pharmacy for a prescription drug by mail (including a private 
     carrier), facsimile, phone, or electronic mail, or by a means 
     that involves the use, in whole or in part, of the Internet.
       ``(5) Unregistered foreign pharmacy.--The term 
     `unregistered foreign pharmacy' means a person in a country 
     other than the United States that is not a registered 
     exporter under section 804.
       ``(6) Other definitions.--
       ``(A) Credit; creditor; credit card.--The terms `credit', 
     `creditor', and `credit card' have the meanings given the 
     terms in section 103 of the Truth in Lending Act (15 U.S.C. 
     1602).
       ``(B) Access device; electronic fund transfer.--The terms 
     `access device' and `electronic fund transfer'--
       ``(i) have the meaning given the term in section 903 of the 
     Electronic Fund Transfer Act (15 U.S.C. 1693a); and
       ``(ii) the term `electronic fund transfer' also includes 
     any fund transfer covered under Article 4A of the Uniform 
     Commercial Code, as in effect in any State.
       ``(C) Financial institution.--The term `financial 
     institution'--
       ``(i) has the meaning given the term in section 903 of the 
     Electronic Transfer Fund Act (15 U.S.C. 1693a); and
       ``(ii) includes a financial institution (as defined in 
     section 509 of the Gramm-Leach-Bliley Act (15 U.S.C. 6809)).

[[Page 16619]]

       ``(D) Money transmitting business; money transmitting 
     service.--The terms `money transmitting business' and `money 
     transmitting service' have the meaning given the terms in 
     section 5330(d) of title 31, United States Code.
       ``(E) Board.--The term `Board' means the Board of Governors 
     of the Federal Reserve System.
       ``(7) Policies and procedures required to prevent 
     restricted transactions.--
       ``(A) Regulations.--The Board shall promulgate regulations 
     requiring--
       ``(i) an operator of a credit card system;
       ``(ii) an operator of an international, national, regional, 
     or local network used to effect a credit transaction, an 
     electronic fund transfer, or a money transmitting service;
       ``(iii) an operator of any other payment system that is 
     centrally managed and is primarily engaged in the 
     transmission and settlement of credit transactions, 
     electronic transfers or money transmitting services where at 
     least one party to the transaction or transfer is an 
     individual; and
       ``(iv) any other person described in paragraph (2)(B) and 
     specified by the Board in such regulations,
     to establish policies and procedures that are reasonably 
     designed to prevent the introduction of a restricted 
     transaction into a payment system or the completion of a 
     restricted transaction using a payment system
       ``(B) Requirements for policies and procedures.--In 
     promulgating regulations under subparagraph (A), the Board 
     shall--
       ``(i) identify types of policies and procedures, including 
     nonexclusive examples, that shall be considered to be 
     reasonably designed to prevent the introduction of restricted 
     transactions into a payment system or the completion of 
     restricted transactions using a payment system; and
       ``(ii) to the extent practicable, permit any payment 
     system, or person described in paragraph (2)(B), as 
     applicable, to choose among alternative means of preventing 
     the introduction or completion of restricted transactions.
       ``(C) No liability for blocking or refusing to honor 
     restricted transaction.--
       ``(i) In general.--A payment system, or a person described 
     in paragraph (2)(B) that is subject to a regulation issued 
     under this subsection, and any participant in such payment 
     system that prevents or otherwise refuses to honor 
     transactions in an effort to implement the policies and 
     procedures required under this subsection or to otherwise 
     comply with this subsection shall not be liable to any party 
     for such action.
       ``(ii) Compliance.--A person described in paragraph (2)(B) 
     meets the requirements of this subsection if the person 
     relies on and complies with the policies and procedures of a 
     payment system of which the person is a member or in which 
     the person is a participant, and such policies and procedures 
     of the payment system comply with the requirements of the 
     regulations promulgated under subparagraph (A).
       ``(D) Enforcement.--
       ``(i) In general.--This section shall be enforced by the 
     Federal functional regulators and the Federal Trade 
     Commission under applicable law in the manner provided in 
     section 505(a) of the Gramm-Leach-Bliley Act (15 U.S.C. 
     6805(a)).
       ``(ii) Factors to be considered.--In considering any 
     enforcement action under this subsection against a payment 
     system or person described in paragraph (2)(B), the Federal 
     functional regulators and the Federal Trade Commission shall 
     consider the following factors:

       ``(I) The extent to which the payment system or person 
     knowingly permits restricted transactions.
       ``(II) The history of the payment system or person in 
     connection with permitting restricted transactions.
       ``(III) The extent to which the payment system or person 
     has established and is maintaining policies and procedures in 
     compliance with regulations prescribed under this subsection.

       ``(8) Transactions permitted.--A payment system, or a 
     person described in paragraph (2)(B) that is subject to a 
     regulation issued under this subsection, is authorized to 
     engage in transactions with foreign pharmacies in connection 
     with investigating violations or potential violations of any 
     rule or requirement adopted by the payment system or person 
     in connection with complying with paragraph (7). A payment 
     system, or such a person, and its agents and employees shall 
     not be found to be in violation of, or liable under, any 
     Federal, State or other law by virtue of engaging in any such 
     transaction.
       ``(9) Relation to state laws.--No requirement, prohibition, 
     or liability may be imposed on a payment system, or a person 
     described in paragraph (2)(B) that is subject to a regulation 
     issued under this subsection, under the laws of any state 
     with respect to any payment transaction by an individual 
     because the payment transaction involves a payment to a 
     foreign pharmacy.
       ``(10) Timing of requirements.--A payment system, or a 
     person described in paragraph (2)(B) that is subject to a 
     regulation issued under this subsection, must adopt policies 
     and procedures reasonably designed to comply with any 
     regulations required under paragraph (7) within 60 days after 
     such regulations are issued in final form.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the day that is 90 days after the date 
     of enactment of this title.
       (c) Implementation.--The Board of Governors of the Federal 
     Reserve System shall promulgate regulations as required by 
     subsection (g)(7) of section 303 of the Federal Food, Drug, 
     and Cosmetic Act (21 U.S.C. 333), as added by subsection (a), 
     not later than 90 days after the date of enactment of this 
     title.

     SEC. __9. IMPORTATION EXEMPTION UNDER CONTROLLED SUBSTANCES 
                   IMPORT AND EXPORT ACT.

       Section 1006(a)(2) of the Controlled Substances Import and 
     Export Act (21 U.S.C. 956(a)(2)) is amended by striking ``not 
     import the controlled substance into the United States in an 
     amount that exceeds 50 dosage units of the controlled 
     substance.'' and inserting ``import into the United States 
     not more than 10 dosage units combined of all such controlled 
     substances.''.

                                 ______
                                 
  SA 4743. Mr. KERRY submitted an amendment intended to be proposed by 
him to the bill S. 3711, to enhance the energy independence and 
security of the United States by providing for exploration, 
development, and production activities for mineral resources in the 
Gulf of Mexico, and for other purposes; which was ordered to lie on the 
table; as follows:

       At the end, add the following:

     SEC. 6. ENERGY EMERGENCY DISASTER RELIEF LOANS TO SMALL 
                   BUSINESS AND AGRICULTURAL PRODUCERS.

       (a) Definitions.--In this section:
       (1) Administrator.--The term ``Administrator'' means the 
     Administrator of the Small Business Administration; and
       (2) Small business concern.--The term ``small business 
     concern'' has the meaning given the term in section 3 of the 
     Small Business Act (15 U.S.C. 632).
       (b) Small Business Producer Energy Emergency Disaster Loan 
     Program.--
       (1) Disaster loan authority.--Section 7(b) of the Small 
     Business Act (15 U.S.C. 636(b)) is amended by inserting 
     immediately after paragraph (3) the following:
       ``(4) Energy disaster loans.--
       ``(A) Definitions.--In this paragraph--
       ``(i) the term `base price index' means the moving average 
     of the closing unit price on the New York Mercantile Exchange 
     for heating oil, natural gas, gasoline, or propane for the 10 
     days that correspond to the trading days described in clause 
     (ii) in each of the most recent 2 preceding years;
       ``(ii) the term `current price index' means the moving 
     average of the closing unit price on the New York Mercantile 
     Exchange, for the 10 most recent trading days, for contracts 
     to purchase heating oil, natural gas, gasoline, or propane 
     during the subsequent calendar month, commonly known as the 
     `front month'; and
       ``(iii) the term `significant increase' means--

       ``(I) with respect to the price of heating oil, natural 
     gas, gasoline, or propane, any time the current price index 
     exceeds the base price index by not less than 40 percent; and
       ``(II) with respect to the price of kerosene, any increase 
     which the Administrator, in consultation with the Secretary 
     of Energy, determines to be significant.

       ``(B) Loan authority.--The Administrator may make such 
     loans, either directly or in cooperation with banks or other 
     lending institutions through agreements to participate on an 
     immediate or deferred basis, to assist a small business 
     concern that has suffered or that is likely to suffer 
     substantial economic injury on or after January 1, 2005, as 
     the result of a significant increase in the price of heating 
     oil, natural gas, gasoline, propane, or kerosene occurring on 
     or after January 1, 2005.
       ``(C) Interest rate.--Any loan or guarantee extended 
     pursuant to this paragraph shall be made at the same interest 
     rate as economic injury loans under paragraph (2).
       ``(D) Maximum amount.--No loan may be made under this 
     paragraph, either directly or in cooperation with banks or 
     other lending institutions through agreements to participate 
     on an immediate or deferred basis, if the total amount 
     outstanding and committed to the borrower under this 
     subsection would exceed $1,500,000, unless such borrower 
     constitutes a major source of employment in its surrounding 
     area, as determined by the Administrator, in which case the 
     Administrator, in the discretion of the Administrator, may 
     waive the $1,500,000 limitation.
       ``(E) Disaster declaration.--For purposes of assistance 
     under this paragraph--
       ``(i) a declaration of a disaster area based on conditions 
     specified in this paragraph shall be required, and shall be 
     made by the President or the Administrator; or
       ``(ii) if no declaration has been made pursuant to clause 
     (i), the Governor of a State in which a significant increase 
     in the price of heating oil, natural gas, gasoline, propane, 
     or kerosene has occurred may certify to the Administrator 
     that small business concerns have suffered economic injury as 
     a result of such increase and are in need of financial 
     assistance which is not otherwise available on

[[Page 16620]]

     reasonable terms in that State, and upon receipt of such 
     certification, the Administrator may make such loans as would 
     have been available under this paragraph if a disaster 
     declaration had been issued.
       ``(F) Conversion.--Notwithstanding any other provision of 
     law, loans made under this paragraph may be used by a small 
     business concern described in subparagraph (B) to convert 
     from the use of heating oil, natural gas, gasoline, propane, 
     or kerosene to a renewable or alternative energy source, 
     including agriculture and urban waste, geothermal energy, 
     cogeneration, solar energy, wind energy, or fuel cells.''.
       (2) Conforming amendments.--Section 3(k) of the Small 
     Business Act (15 U.S.C. 632(k)) is amended--
       (A) by inserting ``, a significant increase in the price of 
     heating oil, natural gas, gasoline, propane, or kerosene,'' 
     after ``civil disorders''; and
       (B) by inserting ``other'' before ``economic''.
       (c) Agricultural Producer Emergency Loans.--
       (1) In general.--Section 321(a) of the Consolidated Farm 
     and Rural Development Act (7 U.S.C. 1961(a)) is amended--
       (A) in the first sentence--
       (i) by striking ``aquaculture operations have'' and 
     inserting ``aquaculture operations (i) have''; and
       (ii) by inserting before ``: Provided,'' the following: ``, 
     or (ii)(I) are owned or operated by such an applicant that is 
     also a small business concern (as defined in section 3 of the 
     Small Business Act (15 U.S.C. 632)), and (II) have suffered 
     or are likely to suffer substantial economic injury on or 
     after January 1, 2005, as the result of a significant 
     increase in energy costs or input costs from energy sources 
     occurring on or after January 1, 2005, in connection with an 
     energy emergency declared by the President or the 
     Secretary'';
       (B) in the third sentence, by inserting before the period 
     at the end the following: ``or by an energy emergency 
     declared by the President or the Secretary''; and
       (C) in the fourth sentence--
       (i) by striking ``or natural disaster'' each place that 
     term appears and inserting ``, natural disaster, or energy 
     emergency''; and
       (ii) by inserting ``or declaration'' after ``emergency 
     designation''.
       (2) Funding.--Funds available on the date of enactment of 
     this Act for emergency loans under subtitle C of the 
     Consolidated Farm and Rural Development Act (7 U.S.C. 1961 et 
     seq.) shall be available to carry out the amendments made by 
     paragraph (1) to meet the needs resulting from natural 
     disasters.
       (d) Guidelines and Rulemaking.--
       (1) Guidelines.--Not later than 30 days after the date of 
     enactment of this Act, the Administrator and the Secretary of 
     Agriculture shall each issue guidelines to carry out 
     subsections (b) and (c), respectively, and the amendments 
     made thereby, which guidelines shall become effective on the 
     date of their issuance.
       (2) Rulemaking.--Not later than 30 days after the date of 
     enactment of this Act, the Administrator, after consultation 
     with the Secretary of Energy, shall promulgate regulations 
     specifying the method for determining a significant increase 
     in the price of kerosene under section 7(b)(4)(A)(iii)(II) of 
     the Small Business Act, as added by this section.
       (e) Reports.--
       (1) Small business administration.--Not later than 12 
     months after the date on which the Administrator issues 
     guidelines under subsection (d)(1), and annually thereafter, 
     until the date that is 12 months after the end of the 
     effective period of section 7(b)(4) of the Small Business 
     Act, as added by this section, the Administrator shall submit 
     to the Committee on Small Business and Entrepreneurship of 
     the Senate and the Committee on Small Business of the House 
     of Representatives, a report on the effectiveness of the 
     assistance made available under section 7(b)(4) of the Small 
     Business Act, as added by this section, including--
       (A) the number of small business concerns that applied for 
     a loan under such section 7(b)(4) and the number of those 
     that received such loans;
       (B) the dollar value of those loans;
       (C) the States in which the small business concerns that 
     received such loans are located;
       (D) the type of energy that caused the significant increase 
     in the cost for the participating small business concerns; 
     and
       (E) recommendations for ways to improve the assistance 
     provided under such section 7(b)(4), if any.
       (2) Department of agriculture.--Not later than 12 months 
     after the date on which the Secretary of Agriculture issues 
     guidelines under subsection (d)(1), and annually thereafter, 
     until the date that is 12 months after the end of the 
     effective period of the amendments made to section 321(a) of 
     the Consolidated Farm and Rural Development Act (7 U.S.C. 
     1961(a)) by this section, the Secretary shall submit to the 
     Committee on Small Business and Entrepreneurship and the 
     Committee on Agriculture, Nutrition, and Forestry of the 
     Senate and to the Committee on Small Business and the 
     Committee on Agriculture of the House of Representatives, a 
     report that--
       (A) describes the effectiveness of the assistance made 
     available under section 321(a) of the Consolidated Farm and 
     Rural Development Act (7 U.S.C. 1961(a)), as amended by this 
     section; and
       (B) contains recommendations for ways to improve the 
     assistance provided under such section 321(a).
       (f) Effective Date.--
       (1) Small business.--The amendments made by subsection (b) 
     shall apply during the 4-year period beginning on the earlier 
     of the date on which guidelines are published by the 
     Administrator under subsection (d)(1) or 30 days after the 
     date of enactment of this Act, with respect to assistance 
     under section 7(b)(4) of the Small Business Act, as added by 
     this section.
       (2) Agriculture.--The amendments made by subsection (c) 
     shall apply during the 4-year period beginning on the earlier 
     of the date on which guidelines are published by the 
     Secretary of Agriculture under subsection (d)(1) or 30 days 
     after the date of enactment of this Act, with respect to 
     assistance under section 321(a) of the Consolidated Farm and 
     Rural Development Act (7 U.S.C. 1961(a)), as amended by this 
     section.
                                 ______
                                 
  SA 4744. Mr KERRY (for himself and Mr. Jeffords) submitted an 
amendment intended to be proposed by him to the bill S. 3711, to 
enhance the energy independence and security of the United States by 
providing for exploration, development, and production activities for 
mineral resources in the Gulf of Mexico, and for other purposes; which 
was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. FEDERAL RENEWABLE PORTFOLIO STANDARD.

       Title VI of the Public Utility Regulatory Policies Act of 
     1978 (16 U.S.C. 2601 et seq.) is amended by adding at the end 
     the following:

     ``SEC. 610. FEDERAL RENEWABLE PORTFOLIO STANDARD.

       ``(a) Definitions.--In this section:
       ``(1) Biomass.--
       ``(A) In general.--The term `biomass' means--
       ``(i) organic material from a plant that is planted for the 
     purpose of producing energy;
       ``(ii) nonhazardous, cellulosic, or agricultural waste 
     material that--

       ``(I) is segregated from other waste materials; and
       ``(II) is derived from--

       ``(aa) a forest-related resource, including--
       ``(AA) mill and harvesting residue;
       ``(BB) precommercial thinnings;
       ``(CC) slash; and
       ``(DD) brush;
       ``(bb) agricultural resources, including--
       ``(AA) orchard tree crops;
       ``(BB) vineyards;
       ``(CC) grains;
       ``(DD) legumes;
       ``(EE) sugar; and
       ``(FF) other crop by-products or residues; or
       ``(cc) miscellaneous waste, such as--
       ``(AA) waste pallet;
       ``(BB) crate; and
       ``(CC) landscape or right-of-way tree trimmings; and
       ``(iii) animal waste--

       ``(I) that is converted to a fuel rather than directly 
     combusted; and
       ``(II) the residue of which is converted to--

       ``(aa) a biological fertilizer;
       ``(bb) oil; or
       ``(cc) activated carbon.
       ``(B) Exclusions.--The term `biomass' does not include--
       ``(i) municipal solid waste that is incinerated;
       ``(ii) recyclable post-consumer waste paper;
       ``(iii) painted, treated, or pressurized wood;
       ``(iv) wood contaminated with plastics or metals; or
       ``(v) tires.
       ``(2) Distributed generation.--The term `distributed 
     generation' means reduced electricity consumption on the 
     electric grid due to use by a customer of renewable energy 
     generated at a customer site.
       ``(3) Incremental hydropower.--The term `incremental 
     hydropower' means additional generation achieved after 
     January 1, 2005, as a result of increased efficiency at a 
     hydroelectric dam that was placed in service before that 
     date.
       ``(4) Landfill gas.--The term `landfill gas' means gas 
     generated from the decomposition of household solid waste, 
     commercial solid waste, or industrial solid waste disposed of 
     in a municipal solid waste landfill unit (as those terms are 
     defined in regulations promulgated pursuant to subtitle D of 
     the Solid Waste Disposal Act (42 U.S.C. 6941 et seq.)).
       ``(5) Renewable energy.--The term `renewable energy' means 
     electricity generated from--
       ``(A) a renewable energy source; or
       ``(B) hydrogen that is produced from a renewable energy 
     source.
       ``(6) Renewable energy source.--The term `renewable energy 
     source' means--
       ``(A) wind;
       ``(B) ocean waves;
       ``(C) biomass;

[[Page 16621]]

       ``(D) solar energy;
       ``(E) landfill gas;
       ``(F) incremental hydropower; or
       ``(G) geothermal.
       ``(7) Retail electric supplier.--The term `retail electric 
     supplier' means a person or entity that, with respect to an 
     applicable calendar year under subsection (b)(1)--
       ``(A) sells retail electricity to consumers; and
       ``(B) sold not less than 500,000 megawatt-hours of electric 
     energy to consumers for purposes other than resale during the 
     preceding calendar year.
       ``(b) Renewable Energy Requirements.--
       ``(1) Submission of credits.--
       ``(A) In general.--Not later than April 30, 2007, and 
     annually thereafter, each retail electric supplier shall 
     submit to the Secretary renewable energy credits in a 
     quantity equal to the product obtained by multiplying--
       ``(i) the total kilowatt-hours of nonhydropower (excluding 
     incremental hydropower) electricity sold by the retail 
     electric supplier to retail consumers during the preceding 
     calendar year; and
       ``(ii) the applicable percentage under the table contained 
     in subsection (c).
       ``(B) Form of credits.--A credit submitted under 
     subparagraph (A) shall be--
       ``(i) a renewable energy credit issued to the retail 
     electric supplier under subsection (d)(2);
       ``(ii) a renewable energy credit obtained by purchase or 
     exchange under subsection (d)(3);
       ``(iii) a renewable energy credit purchased from the United 
     States under subsection (d)(4); or
       ``(iv) any combination of credits described in clauses (i) 
     through (iii).
       ``(C) Prohibition on double counting.--A credit may be 
     counted for purposes of compliance with this subsection only 
     once.
       ``(2) Carryover.--A renewable energy credit received by a 
     retail electric supplier during a calendar year that is not 
     used to satisfy the requirement for that year under paragraph 
     (1) may be carried over for use during 1 of the following 2 
     calendar years.
       ``(c) Required Annual Percentage.--Of the total quantity of 
     nonhydropower (excluding incremental hydropower) electricity 
     sold by a retail electric supplier during a calendar year, 
     the quantity generated by renewable energy sources shall be 
     not less than the percentage described in the following 
     table:

``Calendar year                                     Required percentage
2007-2009.............................................................5
2010-2014............................................................10
2015-2019............................................................15
2020 and thereafter..................................................20

       ``(d) Renewable Energy Credit Program.--
       ``(1) Establishment.--Not later than 1 year after the date 
     of enactment of this section, the Secretary shall establish a 
     program under which the Secretary shall issue, monitor the 
     sale and exchange of, sell, and track renewable energy 
     credits.
       ``(2) Issuance of credits.--
       ``(A) Issuance.--
       ``(i) In general.--Except as provided in clauses (ii) and 
     (iii), the Secretary shall issue to an entity that submits an 
     application under subparagraph (B) 1 renewable energy credit 
     for each kilowatt-hour of renewable energy generated by the 
     entity in any State during the preceding calendar year for--

       ``(I) sale for retail consumption; or
       ``(II) use by the generator.

       ``(ii) Distributed generation.--Notwithstanding clause (i), 
     the Secretary shall issue to an entity that submits an 
     application under subparagraph (B) 3 renewable energy credits 
     for each kilowatt-hour of distributed generation as a result 
     of actions of the entity.
       ``(iii) Combination of sources.--If a kilowatt-hour of 
     renewable energy is generated through the use of a renewable 
     energy resource and a nonrenewable energy resource, the 
     Secretary shall issue an applicable renewable energy credit 
     based on the ratio that--

       ``(I) the quantity of renewable energy resource used to 
     generate the kilowatt-hour of renewable energy; bears to
       ``(II) the total quantity of resources used to generate the 
     kilowatt-hour of renewable energy.

       ``(B) Application.--
       ``(i) In general.--An entity that generates renewable 
     energy may submit to the Secretary an application for the 
     issuance of renewable energy credits.
       ``(ii) Inclusions.--An application under clause (i) shall 
     include a description of--

       ``(I) the type of renewable energy resource used by the 
     entity to produce the renewable energy;
       ``(II) the State in which the renewable energy was 
     produced; and
       ``(III) any other information the Secretary determines to 
     be appropriate.

       ``(C) Vesting.--A renewable energy credit shall vest with 
     the owner of the system or facility that generates the 
     renewable energy, unless the owner explicitly transfers the 
     credit.
       ``(D) Identification.--For purposes of issuing, selling, 
     and tracking renewable energy credits, the Secretary shall 
     identify the credits based on the type and date of generation 
     of the renewable energy for which the credit is provided.
       ``(E) Contract sales.--For purposes of this section, a 
     retail electric supplier that purchases renewable energy from 
     a generator pursuant to a contract under section 210 shall be 
     considered to be the generator of the renewable energy.
       ``(F) Voluntary participation.--The Secretary may issue a 
     renewable energy credit under this paragraph to an entity 
     that is not subject to the requirements of this Act only if 
     the entity--
       ``(i) meets the terms and conditions of this Act to the 
     same extent as an entity subject to the requirements of this 
     Act; and
       ``(ii) submits an application under subparagraph (B).
       ``(3) Sale and exchange of credits.--
       ``(A) In general.--A renewable energy credit may be sold or 
     exchanged by--
       ``(i) the entity that is issued the renewable energy credit 
     under paragraph (2); or
       ``(ii) any other entity that acquires the renewable energy 
     credit.
       ``(B) Requirement.--A sale or exchange of a credit under 
     subparagraph (A) shall be carried out in accordance with 
     applicable contracts and laws, including laws relating to the 
     spot market.
       ``(4) Purchase from united states.--
       ``(A) In general.--The Secretary shall offer for sale 
     renewable energy credits at a price equal to the lesser of, 
     as adjusted for inflation under subparagraph (B)--
       ``(i) 3 cents per kilowatt-hour covered by the credit; and
       ``(ii) an amount equal to 110 percent of the average market 
     value of the credits for the applicable compliance period.
       ``(B) Adjustment for inflation.--On January 1, 2007, and 
     annually thereafter, the Secretary shall adjust for inflation 
     the price to be charged for a renewable energy credit for the 
     appropriate calendar year.
       ``(e) Enforcement.--
       ``(1) In general.--A retail electric supplier that does not 
     submit renewable energy credits in accordance with subsection 
     (b) shall be subject to a civil penalty in an amount equal to 
     the product obtained by multiplying--
       ``(A) the difference between--
       ``(i) the number of renewable energy credits submitted by 
     the retail electric supplier; and
       ``(ii) the number of credits required to be submitted by 
     the retail electric supplier under subsection (b); and
       ``(B) the lesser of--
       ``(i) 4.5 cents; and
       ``(ii) an amount equal to 300 percent of the average market 
     value of credits for the applicable compliance period.
       ``(2) Collection of information.--The Secretary may collect 
     such information as the Secretary determines to be necessary 
     to verify and audit--
       ``(A) the annual electric energy generation and renewable 
     energy generation of any entity that applies for renewable 
     energy credits under this section;
       ``(B) the validity of renewable energy credits submitted by 
     a retail electric supplier to the Secretary; and
       ``(C) the total amount of electricity sales of all retail 
     electric suppliers.
       ``(f) Consumer Allocation.--
       ``(1) In general.--A retail electric supplier shall charge 
     each class of consumers of the retail electric supplier a 
     rate that proportionally reflects the percentage of the cost 
     to the retail electric supplier of generating or acquiring 
     the annual percentage of renewable energy required under 
     subsection (b).
       ``(2) Prohibition of misrepresentation.--A retail electric 
     supplier shall not make any representation to a customer or 
     prospective customer of the retail electric supplier 
     regarding product content or description if the content or 
     description has been or will be modified by the retail 
     electric supplier solely for purposes of complying with this 
     section.
       ``(g) State Renewable Energy Grant Program.--
       ``(1) Establishment.--Not later than 1 year after the date 
     of enactment of this section, the Secretary shall establish a 
     program under which the Secretary shall distribute amounts 
     received from sales under subsection (d)(4), and from 
     penalties under subsection (e)(1), to State energy agencies 
     for use in accordance with this section.
       ``(2) Use of funds.--A State energy agency shall use 
     amounts received under this subsection to carry out a grant 
     program to provide for--
       ``(A) renewable energy research and development;
       ``(B) loan guarantees to encourage construction of 
     renewable energy facilities;
       ``(C) consumer rebate or other programs to offset the costs 
     of small residential or small commercial renewable energy 
     systems, including solar hot water; or
       ``(D) promotion of distributed generation.
       ``(3) Priority.--In allocating amounts under this 
     subsection, the Secretary shall give priority to, as 
     determined by the Secretary--
       ``(A) States in regions with a disproportionately small 
     share of economically-sustainable renewable energy generation 
     capacity; and
       ``(B) States the grant programs of which are most likely to 
     stimulate or enhance innovative renewable energy 
     technologies.
       ``(h) Effect on Other State Programs.--Nothing in this 
     section precludes any State

[[Page 16622]]

     from requiring additional renewable energy generation 
     capacity in the State pursuant to a renewable energy program 
     conducted by the State.''.
                                 ______
                                 
  SA 4745. Mr. KERRY submitted an amendment intended to be proposed by 
him to the bill S. 3711, to enhance the energy independence and 
security of the United States by providing for exploration, 
development, and production activities for mineral resources in the 
Gulf of Mexico, and for other purposes; which was ordered to lie on the 
table; as follows:

       At the appropriate place, insert the following:

     SEC. __. FUNDING FOR ALTERNATIVE INFRASTRUCTURE FOR THE 
                   DISTRIBUTION OF TRANSPORTATION FUELS.

       (a) In General.--There is established in the Treasury of 
     the United States a trust fund, to be known as the 
     ``Alternative Fueling Infrastructure Trust Fund'' (referred 
     to in this section as the ``Trust Fund''), consisting of such 
     amounts as are deposited into the Trust Fund under subsection 
     (b) and any interest earned on investment of amounts in the 
     Trust Fund.
       (b) Penalties.--The Secretary of Transportation shall remit 
     90 percent of the amount collected in civil penalties under 
     section 32912 of title 49, United States Code, to the Trust 
     Fund.
       (c) Grant Program.--
       (1) In general.--The Secretary of Energy shall obligate 
     such sums as are available in the Trust Fund to establish a 
     grant program to increase the number of locations at which 
     consumers may purchase alternative transportation fuels.
       (2) Administration.--
       (A) In general.--The Secretary of Energy may award grants 
     under this subsection to--
       (i) individual fueling stations; and
       (ii) corporations (including nonprofit corporations) with 
     demonstrated experience in the administration of grant 
     funding for the purpose of alternative fueling 
     infrastructure.
       (B) Maximum amount of grants.--A grant provided under this 
     subsection may not exceed--
       (i) $150,000 for each site of an individual fueling 
     station; and
       (ii) $500,000 for each corporation (including a nonprofit 
     corporation).
       (C) Prioritization.--The Secretary of Energy shall 
     prioritize the provision of grants under this subsection to 
     recognized nonprofit corporations that have proven experience 
     and demonstrated technical expertise in the establishment of 
     alternative fueling infrastructure, as determined by the 
     Secretary of Energy.
       (D) Administrative expenses.--Not more than 10 percent of 
     the funds provided in any grant may be used by the recipient 
     of the grant to pay administrative expenses.
       (E) Number of vehicles.--In providing grants under this 
     subsection, the Secretary of Energy shall consider the number 
     of vehicles in service capable of using a specific type of 
     alternative fuel.
       (F) Match.--Grant recipients shall provide a non-Federal 
     match of not less than $1 for every $3 of grant funds 
     received under this subsection.
       (G) Locations.--Each grant recipient shall select the 
     locations for each alternative fuel station to be constructed 
     with grant funds received under this subsection on a formal, 
     open, and competitive basis.
       (H) Use of information in selection of recipients.--In 
     selecting grant recipients under this subsection, the 
     Secretary of Energy may consider--
       (i) public demand for each alternative fuel in a particular 
     county based on State registration records indicating the 
     number of vehicles that may be operated using alternative 
     fuel; and
       (ii) the opportunity to create or expand corridors of 
     alternative fuel stations along interstates or highways.
       (3) Use of grant funds.--Grant funds received under this 
     subsection may be used to--
       (A) construct new facilities to dispense alternative fuels;
       (B) purchase equipment to upgrade, expand, or otherwise 
     improve existing alternative fuel facilities; or
       (C) purchase equipment or pay for specific turnkey fueling 
     services by alternative fuel providers.
       (4) Facilities.--Facilities constructed or upgraded with 
     grant funds under this subsection shall--
       (A) provide alternative fuel available to the public for a 
     period not less than 4 years;
       (B) establish a marketing plan to advance the sale and use 
     of alternative fuels;
       (C) prominently display the price of alternative fuel on 
     the marquee and in the station;
       (D) provide point of sale materials on alternative fuel;
       (E) clearly label the dispenser with consistent materials;
       (F) price the alternative fuel at the same margin that is 
     received for unleaded gasoline; and
       (G) support and use all available tax incentives to reduce 
     the cost of the alternative fuel to the lowest practicable 
     retail price.
       (5) Opening of stations.--
       (A) In general.--Not later than the date on which each 
     alternative fuel station begins to offer alternative fuel to 
     the public, the grant recipient that used grant funds to 
     construct the station shall notify the Secretary of Energy of 
     the opening.
       (B) Website.--The Secretary of Energy shall add each new 
     alternative fuel station to the alternative fuel station 
     locator on the website of the Department of Energy when the 
     Secretary of Energy receives notification under this 
     subsection.
       (6) Reports.--Not later than 180 days after the receipt of 
     a grant award under this subsection, and every 180 days 
     thereafter, each grant recipient shall submit a report to the 
     Secretary of Energy that describes--
       (A) the status of each alternative fuel station constructed 
     with grant funds received under this subsection;
       (B) the quantity of alternative fuel dispensed at each 
     station during the preceding 180-day period; and
       (C) the average price per gallon of the alternative fuel 
     sold at each station during the preceding 180-day period.

                                 ______
                                 
  SA 4746. Mr. SMITH (for himself, Mr. Menendez, Ms. Snowe, Mr. Kerry, 
Mr. Salazar, Ms. Cantwell, Mr. Lieberman, Mr. Kennedy, Mr. Allard, Mr. 
Wyden, Mrs. Clinton, and Mr. Dodd) submitted an amendment intended to 
be proposed by him to the bill S. 3711, to enhance the energy 
independence and security of the United States by providing for 
exploration, development, and production activities for mineral 
resources in the Gulf of Mexico, and for other purposes; which was 
ordered to lie on the table; as follows:

       At the end, add the following:

     SEC. 6. INVESTMENT TAX CREDITS.

       (a) Extension and Modification of Investment Tax Credit 
     With Respect to Solar Energy Property and Qualified Fuel Cell 
     Property.--
       (1) Solar energy property.--Paragraphs (2)(A)(i)(II) and 
     (3)(A)(ii) of section 48(a) of the Internal Revenue Code of 
     1986 are each amended by striking ``2008'' and inserting 
     ``2016''.
       (2) Eligible fuel cell property.--Paragraph (1)(E) of 
     section 48(c) of the Internal Revenue Code of 1986 is amended 
     by striking ``2007'' and inserting ``2015''.
       (3) Credits allowed against the alternative minimum tax.--
     Section 38(c)(4)(B) of the Internal Revenue Code of 1986 
     (defining specified credits) is amended by striking the 
     period at the end of clause (ii)(II) and inserting ``, and'', 
     and by adding at the end the following new clause:
       ``(iii) the portion of the investment credit under section 
     46(2) as determined under section 48(a)(2)(A)(i).''.
       (b) Extension and Modification of Credit for Residential 
     Energy Efficient Property.--
       (1) Extension.--Section 25D of the Internal Revenue Code of 
     1986 (relating to termination) is amended by striking 
     ``2007'' and inserting ``2015''.
       (2) Modification of maximum credit.--Paragraph (1) of 
     section 25D(b) of the Internal Revenue Code of 1986 (relating 
     to limitations) is amended to read as follows:
       ``(1) Maximum credit.--The credit allowed under subsection 
     (a) for any taxable year shall not exceed--
       ``(A) $1,000 with respect to each half kilowatt of capacity 
     of qualified photovoltaic property for which qualified 
     photovoltaic property expenditures are made,
       ``(B) $2,000 with respect to any qualified solar water 
     heating property expenditures, and
       ``(C) $500 with respect to each half kilowatt of capacity 
     of qualified fuel cell property (as defined in section 
     48(c)(1)) for which qualified fuel cell property expenditures 
     are made.''.
       (3) Credit allowed against alternative minimum tax.--
       (A) In general.--Section 25D(b) of the Internal Revenue 
     Code of 1986 (as amended by subsection (b)) is amended by 
     adding at the end the following new paragraph:
       ``(3) Credit allowed against alternative minimum tax.--The 
     credit allowed under subsection (a) for the taxable year 
     shall not exceed the excess of--
       ``(A) the sum of the regular tax liability (as defined in 
     section 26(b)) plus the tax imposed by section 55, over
       ``(B) the sum of the credits allowable under subpart A of 
     part IV of subchapter A and section 27 for the taxable 
     year.''.
       (B) Conforming amendment.--Subsection (c) of section 25D of 
     such Code is amended to read as follows:
       ``(c) Carryforward of Unused Credit.--If the credit 
     allowable under subsection (a) for any taxable year exceeds 
     the limitation imposed by subsection (b)(3) for such taxable 
     year, such excess shall be carried to the succeeding taxable 
     year and added to the credit allowable under subsection (a) 
     for such succeeding taxable year.''.
       (4) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2006.

[[Page 16623]]


                                 ______
                                 
  SA 4747. Mr. WARNER submitted an amendment intended to be proposed by 
him to the bill S. 3711, to enhance the energy independence and 
security of the United States by providing for exploration, 
development, and production activities for mineral resources in the 
Gulf of Mexico, and for other purposes; which was ordered to lie on the 
table; as follows:

       Beginning on page 17, strike line 19 and all that follows 
     through page 18, line 17 and insert the following:
       (f) Limitations on Amount of Distributed Qualified Outer 
     Continental Shelf Revenues and Covered Revenues.--
       (1) In general.--Subject to paragraph (2), the total amount 
     of qualified outer Continental Shelf revenues and covered 
     revenues made available under subsection (a)(2) and section 
     6(j)(1)(B) shall not exceed $500,000,000 for each of fiscal 
     years 2016 through 2055.
       (2) Expenditures.--For the purpose of paragraph (1), for 
     each of fiscal years 2016 through 2055, expenditures under 
     subsection (a)(2) and section 6(j)(1)(B) shall be net of 
     receipts from that fiscal year from any area in the 181 Area 
     in the Eastern Planning Area, the 181 South Area, or any area 
     off the coastline of a covered State.
       (3) Pro rata reductions.--If paragraph (1) limits the 
     amount of qualified outer Continental Shelf revenue or 
     covered revenues that would be paid under subparagraphs (A) 
     and (B) of subsection (a)(2) or clauses (i) and (ii) of 
     section 6(j)(1)(B)--
       (A) the Secretary shall reduce the amount of qualified 
     outer Continental Shelf revenue and covered revenue provided 
     to each recipient on a pro rata basis; and
       (B) any remainder of the qualified outer Continental Shelf 
     revenues and covered revenues shall revert to the general 
     fund of the Treasury.

     SEC. 6. OFFSHORE OIL AND GAS LEASING IN AREAS OUTSIDE THE 
                   GULF OF MEXICO.

       (a) Definitions.--In this section:
       (1) Adjacent zone.--The term ``Adjacent Zone'' means the 
     Adjacent Zone of each State, as defined by the lines 
     extending seaward and defining the adjacent Zone of each 
     State indicated on the maps for each outer Continental Shelf 
     region entitled--
       (A) ``Alaska OCS Region State Adjacent Zone and OCS 
     Planning Areas'';
       (B) ``Pacific OCS Region State Adjacent Zones and OCS 
     Planning Areas''; and
       (C) ``Atlantic OCS Region State Adjacent Zones and OCS 
     Planning Areas'';
     all of which are dated September 2005 and on file in the 
     Office of the Director, Minerals Management Service.
       (2) Covered revenues.--
       (A) In general.--The term ``covered revenues'' means all 
     rentals, royalties, bonus bids, and other sums due and 
     payable to the United States from leases entered into on or 
     after the date of enactment of this Act in a moratorium area.
       (B) Exclusions.--The term ``covered revenues'' does not 
     include--
       (i) revenues from the forfeiture of a bond or other surety 
     securing obligations other than royalties, civil penalties, 
     or royalties taken by the Secretary in-kind and not sold; or
       (ii) revenues generated from leases subject to section 8(g) 
     of the Outer Continental Shelf Lands Act (43 U.S.C. 1337(g)).
       (3) Covered state.--The term ``covered State'' means--
       (A) a State for which--
       (i) the Governor of the State requests the Secretary to 
     allow natural gas or oil or natural gas leasing in a 
     moratorium area; and
       (ii) the Secretary allows the leasing; and
       (B) effective for fiscal year 2017 and each fiscal year 
     thereafter, a State--
       (i) off which oil and gas activities on the outer 
     Continental Shelf are conducted under a lease entered into on 
     or after the date of enactment of this Act;
       (ii) that is offshore of any State that is not a Gulf 
     producing State; and
       (iii) that does not have an area described in section 
     2(6)(B)(i) off the coast of the State, as determined on the 
     basis of the administrative lines established by the 
     Secretary under the notice published on January 3, 2006 (71 
     Fed. Reg. 127).
       (4) Lease.--The term ``lease'' includes a natural gas lease 
     under section 8(q) of the Outer Continental Shelf Lands Act 
     (43 U.S.C. 1337(q)).
       (5) Moratorium area.--The term ``moratorium area'' means--
       (A) any area withdrawn from disposition by leasing in the 
     Atlantic OCS Region or the Pacific OCS Region Planning Area 
     under the ``Memorandum on Withdrawal of Certain Areas of the 
     United States Outer Continental Shelf from Leasing 
     Disposition'', from 34 Weekly Comp. Pres. Doc. 1111, dated 
     June 12, 1998; and
       (B) any area of the outer Continental Shelf (other than an 
     area in the Gulf of Mexico) as to which Congress has denied 
     the use of appropriated funds or other means for preleasing, 
     leasing, or related activities.
       (b) Prohibition Against Leasing.--Except as otherwise 
     provided in this section, prior to June 30, 2012, the 
     Secretary shall not offer a lease for oil and gas, or natural 
     gas, in a moratorium area.
       (c) Option to Petition for Extension of Withdrawal From 
     Leasing.--
       (1) Option to petition.--
       (A) In general.--The Governor of a State may submit to the 
     Secretary a petition requesting that the Secretary extend for 
     a period of time described in subparagraph (B) the withdrawal 
     from leasing in a moratorium area for all or part of any area 
     within the Adjacent Zone of the State within 125 miles of the 
     coastline of the State.
       (B) Length of extension.--
       (i) In general.--The period of time requested in a petition 
     submitted under subparagraph (A) shall not exceed 5 years for 
     each petition.
       (ii) Limitation.--The Secretary shall not grant a petition 
     submitted under subparagraph (A) that extends the remaining 
     period of a withdrawal of an area from leasing for a total of 
     more than 10 years.
       (C) Multiple petitions.--A State may petition multiple 
     times for a particular area, but not more than once per 
     calendar year for any particular area.
       (D) Contents of petition.--A petition submitted under 
     subparagraph (A) may--
       (i) apply to either oil and gas leasing or natural gas 
     leasing, or both; and
       (ii) request some areas to be withdrawn from all leasing 
     and some areas only withdrawn from 1 type of leasing.
       (2) Action by secretary.--Not later than 90 days after 
     receipt of a petition submitted according to the guidelines 
     described in paragraph (1), the Secretary shall approve the 
     petition.
       (3) Failure to act.--If the Secretary fails to approve a 
     petition in accordance with paragraph (2), the petition shall 
     be considered to be approved 90 days after the date on which 
     the Secretary received the petition.
       (d) Resource Estimates.--
       (1) Requests.--At any time, the Governor of an affected 
     State (acting on behalf of the State) may request the 
     Secretary to provide a current estimate of proven and 
     potential gas, or oil and gas, resources that may result, and 
     resulting State revenues, in any moratorium area (or any part 
     of the moratorium area the Governor identifies) adjacent to, 
     or lying seaward of the coastline of, that State.
       (2) Response of secretary.--Not later than 45 days after 
     the date on which the Governor of a State requests an 
     estimate under paragraph (1), the Secretary shall provide--
       (A) a current estimate of proven and potential gas, or oil 
     and gas, resources in any moratorium areas off the shore of a 
     State;
       (B) an estimate of potential revenues that could be shared 
     under this Act if resources were developed and produced; and
       (C) an explanation of the planning processes that could 
     lead to the leasing, exploration, development, and production 
     of the gas, or oil and gas, resources within the area 
     identified.
       (e) Availability of Certain Areas for Leasing.--
       (1) Petition.--
       (A) In general.--On consideration of the information 
     received from the Secretary, the Governor (acting on behalf 
     of the State of the Governor) may submit to the Secretary a 
     petition requesting that the Secretary make available for 
     leasing any portion of a moratorium area in the Adjacent Zone 
     of the State.
       (B) Contents.--In a petition under subparagraph (A), a 
     Governor may request that an area described in subparagraph 
     (A) be made available for leasing under subsection (b) or 
     (q), or both, of section 8 of the Outer Continental Shelf 
     Lands Act (43 U.S.C. 1337).
       (2) Action by secretary.--Not later than 90 days after the 
     date of receipt of a petition under paragraph (1), the 
     Secretary shall approve the petition unless the Secretary 
     determines that leasing in the affected area presents a 
     significant likelihood of incidents associated with the 
     development of resources that would cause serious harm or 
     damage to the marine resources of the area or of an adjacent 
     State.
       (3) Failure to act.--If the Secretary fails to approve or 
     deny a petition in accordance with paragraph (2), the 
     petition shall be considered to be approved as of the date 
     that is 90 days after the date of receipt of the petition.
       (4) Treatment.--Notwithstanding any other provision of law, 
     not later than 180 days after the date on which a petition is 
     approved, or considered to be approved, under paragraph (2) 
     or (3), the Secretary shall--
       (A) treat the petition of the Governor under paragraph (1) 
     as a proposed revision to a leasing program under section 18 
     of the Outer Continental Shelf Lands Act (43 U.S.C. 1344); 
     and
       (B) except as provided in paragraph (5), expedite the 
     revision of the 5-year outer Continental Shelf oil and gas 
     leasing program in effect as of that date to include any 
     lease sale for any area covered by the petition.
       (5) Inclusion in subsequent plans.--
       (A) In general.--If there are less than 18 months remaining 
     in the 5-year outer Continental Shelf oil and gas leasing 
     program described in paragraph (4)(B), the Secretary, without 
     consultation with any State, shall include the areas covered 
     by the petition in lease sales under the subsequent 5-year 
     outer Continental Shelf oil and gas leasing program.

[[Page 16624]]

       (B) Environmental assessment.--Before modifying a 5-Year 
     outer Continental Shelf oil and gas leasing program under 
     subparagraph (A), the Secretary shall complete an 
     environmental assessment that describes any anticipated 
     environmental effect of leasing in the area covered by the 
     petition.
       (6) Spending limitations.--Any Federal spending limitation 
     with respect to preleasing, leasing, or a related activity in 
     an area made available for leasing under this subsection 
     shall terminate as of the date on which the petition of the 
     Governor relating to the area is approved, or considered to 
     be approved, under paragraph (2) or (3).
       (7) Application.--This subsection shall not apply to--
       (A) any area designated as a national marine sanctuary or a 
     national wildlife refuge;
       (B) any area not included in the outer Continental Shelf; 
     or
       (C) the Great Lakes (as defined in section 118(a)(3) of the 
     Federal Water Pollution Control Act (33 U.S.C. 1268(a)(3)).
       (8) Great lakes.--The Great Lakes (as defined in section 
     118(a)(3) of the Federal Water Pollution Control Act (33 
     U.S.C. 1268(a)(3)))--
       (A) shall not be considered part of the outer Continental 
     Shelf under the Outer Continental Shelf Lands Act (43 U.S.C. 
     1331 et seq.); and
       (B) shall not be subject to production.
       (f) Neighboring State Concurrence.--
       (1) Notice.--The Secretary shall provide notice to a 
     neighboring State of any proposed lease of oil or natural gas 
     in a moratorium area if the lease would be located within 20 
     miles of the nearest point on the coastline of the State.
       (2) Objection.--Not later than 30 days after receiving the 
     notice, the Governor of the State may object to the issuance 
     of the lease on grounds that the lease presents a significant 
     risk to environmental and economic resources of the State.
       (3) Secretary review.--If the Secretary, after review of 
     the objection and consultation with the adjacent State, 
     concurs that the lease presents a significant risk described 
     in paragraph (2), and that the risk cannot be reasonably 
     mitigated, the Secretary shall not approve an exploration 
     plan for the lease.
       (4) Nonapplicability.--This subsection does not apply to a 
     State covered by subsection (h).
       (g) Natural Gas Leases.--
       (1) In general.--Beginning with the 5-year outer 
     Continental Shelf oil and gas leasing program for 2007 
     through 2012, the Secretary may issue a lease under this 
     section that authorizes development and production of gas and 
     associated condensate and other hydrocarbon liquids in a 
     moratorium area in accordance with regulations issued under 
     paragraph (2).
       (2) Regulations.--Not later than October 1, 2006, the 
     Secretary shall issue regulations that, for purposes of this 
     subsection--
       (A) define the term ``natural gas'' in a manner that 
     includes--
       (i) hydrocarbons and other substances in a gaseous state at 
     atmospheric pressure and a temperature of 60 degrees 
     Fahrenheit;
       (ii) liquids that condense (gas liquids) from natural gas 
     in the process of treatment, dehydration, decompression, or 
     compression prior to the point for measuring volume and 
     quality of the production established by the Secretary, 
     acting through the Minerals Management Service;
       (iii) other associated hydrocarbon liquids if the 
     predominant component is natural gas and gas liquids; and
       (iv) natural gas liquefied for transportation;
       (B) provide that natural gas leases shall contain the same 
     rights and obligations as oil and gas leases;
       (C) provide that, in reviewing the adequacy of bids for 
     natural gas leases, the Secretary, acting through the 
     Minerals Management Service, shall exclude the value of any 
     crude oil estimated to be discovered within the boundaries of 
     the leasing area;
       (D) provide for cancellation of a natural gas lease, with 
     payment of the fair value of the lease rights canceled, if 
     the Secretary determines that hydrocarbons other than natural 
     gas and natural gas liquids will be the predominant 
     production from the lease; and
       (E) provide that, at the request and with the consent of 
     the Governor of the State adjacent to the lease area, and 
     with the consent of the lessee, an existing natural gas lease 
     may be converted, without an increase in the rental royalty 
     rate and without further payment in the nature of a lease 
     bonus, to a lease under section 8(b) of the Outer Continental 
     Shelf Lands Act (43 U.S.C. 1337(b)), in accordance with a 
     process, to be established by the Secretary, that requires--
       (i) consultation by the Secretary with the Governor of the 
     State and the lessee with respect to the operating conditions 
     of the lease, taking into consideration environmental 
     resource conservation and recovery, economic factors, and 
     other factors, as the Secretary determines to be relevant; 
     and
       (ii) compliance with the National Environmental Policy Act 
     of 1969 (42 U.S.C. 4321 et seq.).
       (3) Effect of other laws.--Any Federal law (including 
     regulations) that applies to an oil and gas lease on the 
     outer Continental Shelf shall apply to a natural gas lease 
     issued under this subsection.
       (h) Exchange of Leases for Areas Located Within 100 Miles 
     of States Imposing a Moratorium.--
       (1) In general.--Effective beginning on the date that is 
     180 days after the date of enactment of this Act, the lessee 
     of an oil and gas lease in existence on the date of enactment 
     of this Act for an area located completely within 100 miles 
     of the coastline and within the Adjacent Zones of States that 
     have extended a moratorium under subsection (c) shall have 
     the option, without compensation, of exchanging the lease for 
     a new oil and gas lease having a primary term of 5 years.
       (2) Tracts.--For the area subject to the new lease, the 
     lessee may select any unleased tract--
       (A) at least part of which is located within the area 
     between 100 and 125 miles from the coastline; and
       (B) that is located--
       (i) completely beyond 125 miles from the coastline; and
       (ii) within the same Adjacent Zone of the adjacent State as 
     the lease being exchanged.
       (3) Administrative process.--
       (A) In general.--The Secretary shall establish a reasonable 
     administrative process through which a lessee may exercise 
     the option of the lessee to exchange an oil and gas lease for 
     a new oil and gas lease in accordance with this subsection.
       (B) Relationship to other laws.--An exchange of leases 
     conducted in accordance with this subsection (including the 
     issuance of a new lease)--
       (i) shall not be considered to be a major Federal action 
     for purposes of the National Environmental Policy Act of 1969 
     (42 U.S.C. 4321 et seq.); and
       (ii) shall be considered in compliance with the Outer 
     Continental Shelf Lands Act (43 U.S.C. 1331 et seq.).
       (C) Withdrawal.--The Secretary shall issue a new lease in 
     exchange for the lease being exchanged notwithstanding that 
     the area that will be subject to the lease may be withdrawn 
     from leasing under the Outer Continental Shelf Lands Act (43 
     U.S.C. 1331 et seq.) or otherwise unavailable for leasing 
     under any other law.
       (4) Priority.--
       (A) Bonus bid.--The Secretary shall give priority in the 
     lease exchange process under this subsection based on the 
     amount of the original bonus bid paid for the issuance of 
     each lease to be exchanged.
       (B) Exchange of partial tracts for full tracts.--The 
     Secretary shall allow leases covering partial tracts to be 
     exchanged for leases covering full tracts under this 
     subsection conditioned on payment of additional bonus bids on 
     a per-acre basis, as determined based on the average per acre 
     of the original bonus bid per acre for the partial tract 
     being exchanged.
       (5) Cancellation of lease.--As part of the lease exchange 
     process under this subsection, the Secretary shall cancel a 
     lease that is exchanged under this subsection.
       (6) Conditions for lease exchange.--For a lease to be 
     cancelled and exchanged under this subsection--
       (A) each lessee holding an interest in the lease must 
     consent to cancellation of the leasehold interest of the 
     lessee;
       (B) each lessee must waive any rights to bring any 
     litigation against the United States related to the 
     transaction; and
       (C) the plugging and abandonment requirements for any well 
     located on any lease to be cancelled and exchanged under this 
     subsection must be complied with by the lessees prior to the 
     cancellation and exchange.
       (i) Operating Restrictions.--A new lease issued under this 
     section shall be subject to such national defense operating 
     restrictions on the outer Continental Shelf tract covered by 
     the new lease as apply on the date of issuance of the new 
     lease.
       (j) Disposition of Covered Revenues From Moratorium 
     Areas.--
       (1) In general.--Notwithstanding section 9 of the Outer 
     Continental Shelf Lands Act (43 U.S.C. 1338) and subject to 
     the other provisions of this subsection, for each applicable 
     fiscal year, the Secretary of the Treasury shall deposit--
       (A) 50 percent of covered revenues in the general fund of 
     the Treasury; and
       (B) 50 percent of covered revenues in a special account in 
     the Treasury from which the Secretary shall disburse--
       (i) 75 percent to covered States in accordance with 
     paragraph (2); and
       (ii) 25 percent to provide financial assistance to States 
     in accordance with section 6 of the Land and Water 
     Conservation Fund Act of 1965 (16 U.S.C. 460l-8), which shall 
     be considered income to the Land and Water Conservation Fund 
     for purposes of section 2 of that Act (16 U.S.C. 460l-5).
       (2) Allocation among covered states and coastal political 
     subdivisions.--
       (A) Allocation among covered states for fiscal year 2007 
     and thereafter.--
       (i) In general.--Subject to clause (ii), effective for 
     fiscal year 2007 and each fiscal year thereafter, the amount 
     made available under paragraph (1)(B)(i) shall be allocated 
     to each covered State in amounts (based on a formula 
     established by the Secretary by regulation) that are 
     inversely proportional to the respective distances between 
     the point

[[Page 16625]]

     on the coastline of each covered State that is closest to the 
     geographic center of the applicable leased tract and the 
     geographic center of the leased tract.
       (ii) Minimum allocation.--The amount allocated to a covered 
     State each fiscal year under clause (i) shall be at least 10 
     percent of the amounts available under paragraph (1)(B)(i).
       (B) Payments to coastal political subdivisions.--
       (i) In general.--The Secretary shall pay 20 percent of the 
     allocable share of each covered State, as determined under 
     subparagraph (A), to the coastal political subdivisions of 
     the covered State.
       (ii) Allocation.--The amount paid by the Secretary to 
     coastal political subdivisions shall be allocated to each 
     coastal political subdivision in accordance with 
     subparagraphs (B), (C), (D), and (E) of section 31(b)(4) of 
     the Outer Continental Shelf Lands Act (43 U.S.C. 
     1356a(b)(4)).
       (3) Timing.--The amounts required to be deposited under 
     paragraph (1)(B) for the applicable fiscal year shall be made 
     available in accordance with that paragraph during the fiscal 
     year immediately following the applicable fiscal year.
       (4) Authorized uses.--
       (A) In general.--Subject to subparagraph (B), each covered 
     State and coastal political subdivision shall use all amounts 
     received under paragraph (2) in accordance with all 
     applicable Federal and State laws, only for 1 or more of the 
     following purposes:
       (i) Projects and activities for the purposes of coastal 
     protection, including conservation, coastal restoration, 
     hurricane protection, and infrastructure directly affected by 
     coastal wetland losses.
       (ii) Mitigation of damage to fish, wildlife, or natural 
     resources.
       (iii) Implementation of a federally-approved marine, 
     coastal, or comprehensive conservation management plan.
       (iv) Mitigation of the impact of outer Continental Shelf 
     activities through the funding of onshore infrastructure 
     projects.
       (v) Planning assistance and the administrative costs of 
     complying with this section.
       (B) Limitation.--Not more than 3 percent of amounts 
     received by a covered State or coastal political subdivision 
     under paragraph (1)(B) may be used for the purposes described 
     in subparagraph (A)(v).
       (5) Administration.--Amounts made available under paragraph 
     (1)(B) shall--
       (A) be made available, without further appropriation, in 
     accordance with this subsection;
       (B) remain available until expended; and
       (C) be in addition to any amounts appropriated under--
       (i) the Outer Continental Shelf Lands Act (43 U.S.C. 1331 
     et seq.);
       (ii) the Land and Water Conservation Fund Act of 1965 (16 
     U.S.C. 460l-4 et seq.); or
       (iii) any other provision of law.
       (k) Repeal of Requirement to Conduct Comprehensive 
     Inventory of OCS Oil and Natural Gas Resources.--Section 357 
     of the Energy Policy Act of 2005 (42 U.S.C. 15912) is 
     repealed.
                                 ______
                                 
  SA 4748. Mr. ALLEN submitted an amendment intended to be proposed to 
amendment SA 4713 proposed by Mr. Frist to the bill S. 3711, to enhance 
the energy independence and security of the United States by providing 
for exploration, development, and production activities for mineral 
resources in the Gulf of Mexico, and for other purposes; which was 
ordered to lie on the table; as follows:

       At the end of the amendment, add the following:

     SEC. 6. OFFSHORE OIL AND GAS LEASING IN AREAS OFF THE STATE 
                   OF VIRGINIA.

       (a) Definitions.--In this section:
       (1) Adjacent zone.--The term ``Adjacent Zone'' means the 
     Adjacent Zone of the State, as defined by the lines extending 
     seaward and defining the adjacent Zone of the State indicated 
     on the map entitled ``Atlantic OCS Region State Adjacent 
     Zones and OCS Planning Areas'', dated September 2005 and on 
     file in the Office of the Director of the Minerals Management 
     Service.
       (2) Coastline.--The term ``coastline'' has the meaning 
     given the term ``coast line'' in section 2 of the Submerged 
     Lands Act (43 U.S.C. 1301).
       (3) Covered revenues.--
       (A) In general.--The term ``covered revenues'' means all 
     rentals, royalties, bonus bids, and other sums due and 
     payable to the United States from leases entered into on or 
     after the date of enactment of this Act in the Adjacent Zone.
       (B) Exclusions.--The term ``covered revenues'' does not 
     include revenues--
       (i) from the forfeiture of a bond or other surety securing 
     obligations other than royalties, civil penalties, or 
     royalties taken by the Secretary in-kind and not sold; or
       (ii) generated from leases subject to section 8(g) of the 
     Outer Continental Shelf Lands Act (43 U.S.C. 1337(g)).
       (4) Neighboring state.--The term ``Neighboring State'' 
     means any State that has a common boundary at the coastline 
     with the State.
       (5) State.--The term ``State'' means the Commonwealth of 
     Virginia.
       (b) Prohibition Against Leasing.--
       (1) Unavailable for leasing without state request.--Except 
     as otherwise provided in this section, the Secretary shall 
     not offer for leasing for oil and gas, or natural gas, any 
     area in the Adjacent Zone that is within 50 miles of the 
     coastline of the State and that was withdrawn from 
     disposition by leasing in the Atlantic OCS Region under the 
     ``Memorandum on Withdrawal of Certain Areas of the United 
     States Outer Continental Shelf from Leasing Disposition'', 
     from 34 Weekly Comp. Pres. Doc. 1111, dated June 12, 1998.
       (2) Areas between 50 and 100 miles from the coastline.--
     Unless the State petitions under subsection (c) by the date 
     that is 1 year after the date of enactment of this Act for 
     natural gas leasing or by June 30, 2009, for oil and gas 
     leasing, the Secretary shall offer for leasing any area in 
     the Adjacent Zone that is more than 50 miles, but less than 
     100 miles, from the coastline of the State that was withdrawn 
     from disposition by leasing in the Atlantic OCS Region under 
     the ``Memorandum on Withdrawal of Certain Areas of the United 
     States Outer Continental Shelf from Leasing Disposition'', 
     from 34 Weekly Comp. Pres. Doc. 1111, dated June 12, 1998.
       (c) Petition for Leasing.--
       (1) In general.--The Governor of the State, on the 
     concurrence of the legislature of the State, may submit to 
     the Secretary a petition requesting that the Secretary make 
     available any area that is--
       (A) within the Adjacent Zone, as described in subsection 
     (b); and
       (B) is greater than--
       (i) 25 miles from any point on the coastline of a 
     Neighboring State for the conduct of offshore leasing, pre-
     leasing, and related activities with respect to natural gas 
     leasing; or
       (ii) 50 miles from any point on the coastline of a 
     Neighboring State for the conduct of offshore leasing, pre-
     leasing, and related activities with respect to oil and gas 
     leasing.
       (2) Petition by state.--
       (A) In general.--The State may petition for leasing any 
     other area within the Adjacent Zone if--
       (i) leasing is allowed in the similar area of the Adjacent 
     Zone; or
       (ii) if not allowed, the State, acting through the Governor 
     of the State, expresses the concurrence of the State with the 
     petition.
       (B) Finding.--The Secretary shall only consider a petition 
     under subparagraph (A) on--
       (i) making a finding that leasing is allowed in a similar 
     area of the Adjacent Zone; or
       (ii) receipt of the concurrence of the State.
       (C) Date of receipt.--The date of receipt by the Secretary 
     of the concurrence by the State shall constitute the date of 
     receipt of the petition for the area for which the 
     concurrence applies.
       (D) Limitations on leasing.--If, as of the date of petition 
     by the State, the Adjacent Zone contains leased tracts, the 
     State, in the petition of the State, may condition new 
     leasing for oil and gas, or natural gas, for tracts within 25 
     miles of the coastline of the State, by--
       (i) requiring a net reduction in the number of production 
     platforms;
       (ii) requiring a net increase in the average distance of 
     production platforms from the coastline;
       (iii) limiting permanent surface occupancy on new leases to 
     areas that are more than 10 miles from the coastline;
       (iv) limiting some tracts to being produced from shore or 
     from platforms located on other tracts; or
       (v) including other conditions that the State considers to 
     be appropriate as long as the Secretary does not determine 
     that production is made economically or technically 
     impracticable or otherwise impracticable.
       (3) Action by secretary.--
       (A) In general.--Not later than 90 days after the date of 
     receipt of a petition under paragraph (1), the Secretary 
     shall approve the petition, unless the Secretary determines 
     that leasing the area would be likely to cause serious harm 
     or damage to the marine resources of the Adjacent Zone.
       (B) Environmental assessment.--Before approving the 
     petition, the Secretary shall complete an environmental 
     assessment that documents the anticipated environmental 
     effects of leasing in the area covered by the petition.
       (4) Failure to act.--If the Secretary fails to approve or 
     deny a petition in accordance with paragraph (3), the 
     petition shall be considered to be approved as of the date 
     that is 90 days after the date of receipt of the petition.
       (d) Option to Extend Withdrawal From Leasing Within Certain 
     Areas of the Outer Continental Shelf.--
       (1) In general.--The State, through the Governor of the 
     State and on the concurrence of the legislature of the State, 
     may extend, for a period of time of up to 5 years for each 
     extension, the withdrawal from leasing of all or part of any 
     area within the Adjacent Zone located more than 50 miles, but 
     less than 100 miles, from the coastline of the State that is 
     subject to subsection (b)(2).
       (2) Multiple extensions.--The State may extend a withdrawal 
     described in paragraph (1) for any particular area--

[[Page 16626]]

       (A) multiple times; but
       (B) not more than once per calendar year.
       (3) Separate extensions.--The State shall prepare separate 
     extensions, with separate votes by the legislature of the 
     State, for the withdrawal of areas for oil and gas leasing 
     and for natural gas leasing.
       (4) Areas.--An extension by the State may affect some areas 
     to be withdrawn from all leasing and some areas to be 
     withdrawn only from 1 type of leasing.
       (e) Effect of Other Laws.--
       (1) In general.--Adoption by the State of any 
     constitutional provision, or enactment of any State law, that 
     has the effect, as determined by the Secretary, of 
     restricting the Governor or Legislature from exercising full 
     discretion relating to subsection (g) or (h) shall, for the 
     duration of the restriction, prohibit--
       (A) any sharing of qualified outer Continental Shelf 
     revenues or covered revenues under this Act with the State 
     and the coastal political subdivisions of the State; and
       (B) the State from exercising any authority under 
     subsection (d).
       (2) Deadline.--The Secretary shall make the determination 
     of the existence of a restrictive constitutional provision or 
     State law under paragraph (1) not later than 30 days after 
     the date of receipt of a petition by any outer Continental 
     Shelf lessee or coastal State.
       (f) Disposition of Covered Revenues From State.--
       (1) In general.--Notwithstanding section 9 of the Outer 
     Continental Shelf Lands Act (43 U.S.C. 1338) and subject to 
     the other provisions of this subsection, for each applicable 
     fiscal year, the Secretary of the Treasury shall deposit--
       (A) 50 percent of covered revenues in the general fund of 
     the Treasury; and
       (B) 50 percent of covered revenues in a special account in 
     the Treasury from which the Secretary shall disburse--
       (i) 75 percent to the State in accordance with paragraph 
     (2); and
       (ii) 25 percent to provide financial assistance to States 
     in accordance with section 6 of the Land and Water 
     Conservation Fund Act of 1965 (16 U.S.C. 460l-8), which shall 
     be considered income to the Land and Water Conservation Fund 
     for purposes of section 2 of that Act (16 U.S.C. 460l-5).
       (2) Allocation among state and coastal political 
     subdivisions.--
       (A) Allocation to state for fiscal year 2007 and 
     thereafter.--Effective for fiscal year 2007 and each fiscal 
     year thereafter, the amount made available under paragraph 
     (1)(B)(i) shall be allocated to the State.
       (B) Payments to coastal political subdivisions.--
       (i) In general.--The Secretary shall pay 20 percent of the 
     allocable share of the State, as determined under 
     subparagraph (A), to the coastal political subdivisions of 
     the State.
       (ii) Allocation.--The amount paid by the Secretary to 
     coastal political subdivisions shall be allocated to each 
     coastal political subdivision in accordance with 
     subparagraphs (B) and (E) of section 31(b)(4) of the Outer 
     Continental Shelf Lands Act (43 U.S.C. 1356a(b)(4)).
       (3) Timing.--The amounts required to be deposited under 
     paragraph (1)(B) for the applicable fiscal year shall be made 
     available in accordance with that paragraph during the fiscal 
     year immediately following the applicable fiscal year.
       (4) Authorized uses.--
       (A) In general.--Subject to subparagraph (B), the State and 
     each coastal political subdivision shall use all amounts 
     received under paragraph (2) in accordance with all 
     applicable Federal and State laws, only for 1 or more of the 
     following purposes:
       (i) Projects and activities for the purposes of coastal 
     protection, including conservation, coastal restoration, sand 
     or beach replenishment, or hurricane protection.

                          ____________________