[Congressional Record (Bound Edition), Volume 154 (2008), Part 13]
[House]
[Pages 18221-18232]
[From the U.S. Government Publishing Office, www.gpo.gov]




             PREVENT ALL CIGARETTE TRAFFICKING ACT OF 2008

  Mr. SCOTT of Virginia. Mr. Speaker, I move to suspend the rules and 
pass the bill (H.R. 4081) to prevent tobacco smuggling, to ensure the 
collection of all tobacco taxes, and for other purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 4081

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

[[Page 18222]]



     SECTION 1. SHORT TITLE; FINDINGS; PURPOSES.

       (a) Short Title.--This Act may be cited as the ``Prevent 
     All Cigarette Trafficking Act of 2008'' or ``PACT Act''.
       (b) Findings.--Congress finds that--
       (1) the sale of illegal cigarettes and smokeless tobacco 
     products significantly reduces Federal, State, and local 
     government revenues, with Internet sales alone accounting for 
     billions of dollars of lost Federal, State, and local tobacco 
     tax revenue each year;
       (2) Hezbollah, Hamas, al Qaeda, and other terrorist 
     organizations have profited from trafficking in illegal 
     cigarettes or counterfeit cigarette tax stamps;
       (3) terrorist involvement in illicit cigarette trafficking 
     will continue to grow because of the large profits such 
     organizations can earn;
       (4) the sale of illegal cigarettes and smokeless tobacco 
     over the Internet, and through mail, fax, or phone orders, 
     make it cheaper and easier for children to obtain tobacco 
     products;
       (5) the majority of Internet and other remote sales of 
     cigarettes and smokeless tobacco are being made without 
     adequate precautions to protect against sales to children, 
     without the payment of applicable taxes, and without 
     complying with the nominal registration and reporting 
     requirements in existing Federal law;
       (6) unfair competition from illegal sales of cigarettes and 
     smokeless tobacco is taking billions of dollars of sales away 
     from law-abiding retailers throughout the United States;
       (7) with rising State and local tobacco tax rates, the 
     incentives for the illegal sale of cigarettes and smokeless 
     tobacco have increased;
       (8) the number of active tobacco investigations being 
     conducted by the Bureau of Alcohol, Tobacco, Firearms, and 
     Explosives rose to 452 in 2005;
       (9) the number of Internet vendors in the United States and 
     in foreign countries that sell cigarettes and smokeless 
     tobacco to buyers in the United States increased from only 
     about 40 in 2000 to more than 500 in 2005; and
       (10) the intrastate sale of illegal cigarettes and 
     smokeless tobacco over the Internet has a substantial effect 
     on interstate commerce.
       (c) Purposes.--It is the purpose of this Act to--
       (1) require Internet and other remote sellers of cigarettes 
     and smokeless tobacco to comply with the same laws that apply 
     to law-abiding tobacco retailers;
       (2) create strong disincentives to illegal smuggling of 
     tobacco products;
       (3) provide government enforcement officials with more 
     effective enforcement tools to combat tobacco smuggling;
       (4) make it more difficult for cigarette and smokeless 
     tobacco traffickers to engage in and profit from their 
     illegal activities;
       (5) increase collections of Federal, State, and local 
     excise taxes on cigarettes and smokeless tobacco; and
       (6) prevent and reduce youth access to inexpensive 
     cigarettes and smokeless tobacco through illegal Internet or 
     contraband sales.

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

       (a) Definitions.--The Act of October 19, 1949 (15 U.S.C. 
     375 et seq.; commonly referred to as the ``Jenkins Act'') 
     (referred to in this Act as the ``Jenkins Act''), is amended 
     by striking the first section and inserting the following:

     ``SECTION 1. DEFINITIONS.

       ``As used in this Act, the following definitions apply:
       ``(1) Attorney general.--The term `attorney general', with 
     respect to a State, means the attorney general or other chief 
     law enforcement officer of the State, or the designee of that 
     officer.
       ``(2) Cigarette.--
       ``(A) In general.--For purposes of this Act, the term 
     `cigarette' shall--
       ``(i) have the same meaning given that term in section 2341 
     of title 18, United States Code; and
       ``(ii) include `roll-your-own tobacco' (as that term is 
     defined in section 5702 of the Internal Revenue Code of 
     1986).
       ``(B) Exception.--For purposes of this Act, the term 
     `cigarette' does not include a `cigar', as that term is 
     defined in section 5702 of the Internal Revenue Code of 1986.
       ``(3) Common carrier.--The term `common carrier' means any 
     person (other than a local messenger service or the United 
     States Postal Service) that holds itself out to the general 
     public as a provider for hire of the transportation by water, 
     land, or air of merchandise, whether or not the person 
     actually operates the vessel, vehicle, or aircraft by which 
     the transportation is provided, between a port or place and a 
     port or place in the United States.
       ``(4) Consumer.--The term `consumer' means any person that 
     purchases cigarettes or smokeless tobacco, but does not 
     include any person lawfully operating as a manufacturer, 
     distributor, wholesaler, or retailer of cigarettes or 
     smokeless tobacco.
       ``(5) Delivery sale.--The term `delivery sale' means any 
     sale of cigarettes or smokeless tobacco to a consumer if--
       ``(A) the consumer submits the order for such sale by means 
     of a telephone or other method of voice transmission, the 
     mails, or the Internet or other online service, or the seller 
     is otherwise not in the physical presence of the buyer when 
     the request for purchase or order is made; or
       ``(B) the cigarettes or smokeless tobacco are delivered to 
     the buyer by common carrier, private delivery service, or  
     other method of  remote delivery, or the seller is not in the 
     physical presence of the buyer when the buyer obtains 
     possession of the cigarettes or smokeless tobacco.
       ``(6) Delivery seller.--The term `delivery seller' means a 
     person who makes a delivery sale.
       ``(7) Indian country.--The term `Indian country' means--
       ``(A) Indian country as defined in section 1151of title 18, 
     United States Code, except that within the State of Alaska 
     that term applies only to the Metlakatla Indian Community, 
     Annette Island Reserve; and
       ``(B) any other land held by the United States in trust or 
     restricted status for one or more Indian tribes.
       ``(8) Indian tribe.--The term `Indian tribe', `tribe', or 
     `tribal' refers to an Indian tribe as defined in section 4(e) 
     of the Indian Self-Determination and Education Assistance Act 
     (25 U.S.C. 450b(e)) or as listed pursuant to section 104 of 
     the Federally Recognized Indian Tribe List Act of 1994 (25 
     U.S.C. 479a-1).
       ``(9) Interstate commerce.--The term `interstate commerce' 
     means commerce between a State and any place outside the 
     State, commerce between a State and any Indian country in the 
     State, or commerce between points in the same State but 
     through any place outside the State or through any Indian 
     country.
       ``(10) Person.--The term `person' means an individual, 
     corporation, company, association, firm, partnership, 
     society, State government, local government, Indian tribal 
     government, governmental organization of such government, or 
     joint stock company.
       ``(11) State.--The term `State' means each of the several 
     States of the United States, the District of Columbia, the 
     Commonwealth of Puerto Rico, or any territory or possession 
     of the United States.
       ``(12) Smokeless tobacco.--The term `smokeless tobacco' 
     means any finely cut, ground, powdered, or leaf tobacco, or 
     other product containing tobacco, that is intended to be 
     placed in the oral or nasal cavity or otherwise consumed 
     without being combusted.
       ``(13) Tobacco tax administrator.--The term `tobacco tax 
     administrator' means the State, local, or tribal official 
     duly authorized to collect the tobacco tax or administer the 
     tax law of a State, locality, or tribe, respectively.
       ``(14) Tribal enterprise.--The term `tribal enterprise' 
     means any business enterprise, incorporated or unincorporated 
     under federal or tribal law, of an Indian tribe or group of 
     Indian tribe.
       ``(15) Use.--The term `use', in addition to its ordinary 
     meaning, means the consumption, storage, handling, or 
     disposal of cigarettes or smokeless tobacco.''.
       (b) Reports to State Tobacco Tax Administrators.--Section 2 
     of the Jenkins Act (15 U.S.C. 376) is amended--
       (1) by striking ``cigarettes'' each place it appears and 
     inserting ``cigarettes or smokeless tobacco'';
       (2) in subsection (a)--
       (A) in the matter preceding paragraph (1)--
       (i) by inserting ``Contents.--'' after ``(a)''
       (ii) by striking ``or transfers'' and inserting ``, 
     transfers, or ships'';
       (iii) by inserting ``, locality, or Indian country of an 
     Indian tribe'' after ``a State'';
       (iv) by striking ``to other than a distributor licensed by 
     or located in such State,''; and
       (v) by striking ``or transfer and shipment'' and inserting 
     ``, transfer, or shipment'';
       (B) in paragraph (1)--
       (i) by striking ``with the tobacco tax administrator of the 
     State'' and inserting ``with the Attorney General of the 
     United States and with the tobacco tax administrators of the 
     State and place''; and
       (ii) by striking ``; and'' and inserting the following: ``, 
     as well as telephone numbers for each place of business, a 
     principal electronic mail address, any website addresses, and 
     the name, address, and telephone number of an agent in the 
     State authorized to accept service on behalf of such 
     person;'';
       (C) in paragraph (2), by striking ``and the quantity 
     thereof.'' and inserting ``the quantity thereof, and the 
     name, address, and phone number of the person delivering the 
     shipment to the recipient on behalf of the delivery seller, 
     with all invoice or memoranda information relating to 
     specific customers to be organized by city or town and by zip 
     code; and''; and
       (D) by adding at the end the following:
       ``(3) with respect to each memorandum or invoice filed with 
     a State under paragraph (2), also file copies of such 
     memorandum or invoice with the tobacco tax administrators and 
     chief law enforcement officers of the local governments and 
     Indian tribes operating within the borders of the State that 
     apply their own local or tribal taxes on cigarettes or 
     smokeless tobacco.'';
       (3) in subsection (b)--
       (A) by inserting ``Presumptive Evidence.--'' after ``(b)'';
       (B) by striking ``(1) that'' and inserting ``that''; and

[[Page 18223]]

       (C) by striking ``, and (2)'' and all that follows and 
     inserting a period; and
       (4) by adding at the end the following:
       ``(c) Use of Information.--A tobacco tax administrator or 
     chief law enforcement officer who receives a memorandum or 
     invoice under paragraph (2) or (3) of subsection (a) shall 
     use such memorandum or invoice solely for the purposes of the 
     enforcement of this Act and the collection of any taxes owed 
     on related sales of cigarettes and smokeless tobacco, and 
     shall keep confidential any personal information in such 
     memorandum or invoice not otherwise required for such 
     purposes.''.
       (c) Requirements for Delivery Sales.--The Jenkins Act is 
     amended by inserting after section 2 the following:

     ``SEC. 2A. DELIVERY SALES.

       ``(a) In General.--With respect to delivery sales into a 
     specific State and place, each delivery seller shall comply 
     with--
       ``(1) the shipping requirements set forth in subsection 
     (b);
       ``(2) the recordkeeping requirements set forth in 
     subsection (c);
       ``(3) all State, local, tribal, and other laws generally 
     applicable to sales of cigarettes or smokeless tobacco as if 
     such delivery sales occurred entirely within the specific 
     State and place, including laws imposing--
       ``(A) excise taxes;
       ``(B) licensing and tax-stamping requirements;
       ``(C) restrictions on sales to minors; and
       ``(D) other payment obligations or legal requirements 
     relating to the sale, distribution, or delivery of cigarettes 
     or smokeless tobacco; and
       ``(4) the tax collection requirements set forth in 
     subsection (d).
       ``(b) Shipping and Packaging.--
       ``(1) Required statement.--For any shipping package 
     containing cigarettes or smokeless tobacco, the delivery 
     seller shall include on the bill of lading, if any, and on 
     the outside of the shipping package, on the same surface as 
     the delivery address, a clear and conspicuous statement 
     providing as follows: `CIGARETTES/SMOKELESS TOBACCO: FEDERAL 
     LAW REQUIRES THE PAYMENT OF ALL APPLICABLE EXCISE TAXES, AND 
     COMPLIANCE WITH APPLICABLE LICENSING AND TAX-STAMPING 
     OBLIGATIONS'.
       ``(2) Failure to label.--Any shipping package described in 
     paragraph (1) that is not labeled in accordance with that 
     paragraph shall be treated as nondeliverable matter by a 
     common carrier or other delivery service, if the common 
     carrier or other delivery service knows or should know the 
     package contains cigarettes or smokeless tobacco. If a common 
     carrier or other delivery service believes a package is being 
     submitted for delivery in violation of paragraph (1), it may 
     require the person submitting the package for delivery to 
     establish that it is not being sent in violation of paragraph 
     (1) before accepting the package for delivery. Nothing in 
     this paragraph shall require the common carrier or other 
     delivery service to open any package to determine its 
     contents.
       ``(3) Weight restriction.--A delivery seller shall not 
     sell, offer for sale, deliver, or cause to be delivered in 
     any single sale or single delivery any cigarettes or 
     smokeless tobacco weighing more than 10 pounds.
       ``(4) Age verification.--
       ``(A) In general.--Notwithstanding any other provision of 
     law, a delivery seller who mails or ships tobacco products--
       ``(i) shall not sell, deliver, or cause to be delivered any 
     tobacco products to a person under the minimum age required 
     for the legal sale or purchase of tobacco products, as 
     determined by the applicable law at the place of delivery;
       ``(ii) shall use a method of mailing or shipping that 
     requires--

       ``(I) the purchaser placing the delivery sale order, or an 
     adult who is at least the minimum age required for the legal 
     sale or purchase of tobacco products, as determined by the 
     applicable law at the place of delivery, to sign to accept 
     delivery of the shipping container at the delivery address; 
     and
       ``(II) the person who signs to accept delivery of the 
     shipping container to provide proof, in the form of a valid, 
     government-issued identification bearing a photograph of the 
     individual, that the person is at least the minimum age 
     required for the legal sale or purchase of tobacco products, 
     as determined by the applicable law at the place of delivery; 
     and

       ``(iii) shall not accept a delivery sale order from a 
     person without--

       ``(I) obtaining the full name, birth date, and residential 
     address of that person; and
       ``(II) verifying the information provided in subclause (I), 
     through the use of a commercially available database or 
     aggregate of databases, consisting primarily of data from 
     government sources, that are regularly used by government and 
     businesses for the purpose of age and identity verification 
     and authentication, to ensure that the purchaser is at least 
     the minimum age required for the legal sale or purchase of 
     tobacco products, as determined by the applicable law at the 
     place of delivery.

       ``(B) Limitation.--No database being used for age and 
     identity verification under subparagraph (A)(iii) shall be in 
     the possession or under the control of the delivery seller, 
     or be subject to any changes or supplementation by the 
     delivery seller.
       ``(c) Records.--
       ``(1) In general.--Each delivery seller shall keep a record 
     of any delivery sale, including all of the information 
     described in section 2(a)(2), organized by the State, and 
     within such State, by the city or town and by zip code, into 
     which such delivery sale is so made.
       ``(2) Record retention.--Records of a delivery sale shall 
     be kept as described in paragraph (1) in the year in which 
     the delivery sale is made and for the next 4 years.
       ``(3) Access for officials.--Records kept under paragraph 
     (1) shall be made available to tobacco tax administrators of 
     the States, to local governments and Indian tribes that apply 
     their own local or tribal taxes on cigarettes or smokeless 
     tobacco, to the attorneys general of the States, to the chief 
     law enforcement officers of such local governments and Indian 
     tribes, and to the Attorney General of the United States in 
     order to ensure the compliance of persons making delivery 
     sales with the requirements of this Act.
       ``(d) Delivery.--
       ``(1) In general.--Except as provided in paragraph (2), no 
     delivery seller may sell or deliver to any consumer, or 
     tender to any common carrier or other delivery service, any 
     cigarettes or smokeless tobacco pursuant to a delivery sale 
     unless, in advance of the sale, delivery, or tender--
       ``(A) any cigarette or smokeless tobacco excise tax that is 
     imposed by the State in which the cigarettes or smokeless 
     tobacco are to be delivered has been paid to the State;
       ``(B) any cigarette or smokeless tobacco excise tax that is 
     imposed by the local government of the place in which the 
     cigarettes or smokeless tobacco are to be delivered has been 
     paid to the local government; and
       ``(C) any required stamps or other indicia that such excise 
     tax has been paid are properly affixed or applied to the 
     cigarettes or smokeless tobacco.
       ``(2) Exception.--Paragraph (1) does not apply to a 
     delivery sale of smokeless tobacco if the law of the State or 
     local government of the place where the smokeless tobacco is 
     to be delivered requires or otherwise provides that delivery 
     sellers collect the excise tax from the consumer and remit 
     the excise tax to the State or local government, and the 
     delivery seller complies with the requirement.
       ``(e) List of Unregistered or Noncompliant Delivery 
     Sellers.--
       ``(1) In general.--
       ``(A) Initial list.--Not later than 90 days after this 
     subsection goes into effect under the Prevent All Cigarette 
     Trafficking Act of 2008, the Attorney General of the United 
     States shall compile a list of delivery sellers of cigarettes 
     or smokeless tobacco that have not registered with the 
     Attorney General, pursuant to section 2(a) or that are 
     otherwise not in compliance with this Act, and--
       ``(i) distribute the list to--

       ``(I) the attorney general and tax administrator of every 
     State;
       ``(II) common carriers and other persons that deliver small 
     packages to consumers in interstate commerce, including the 
     United States Postal Service; and
       ``(III) at the discretion of the Attorney General of the 
     United States, to any other persons; and

       ``(ii) publicize and make the list available to any other 
     person engaged in the business of interstate deliveries or 
     who delivers cigarettes or smokeless tobacco in or into any 
     State.
       ``(B) List contents.--To the extent known, the Attorney 
     General of the United States shall include, for each delivery 
     seller on the list described in subparagraph (A)--
       ``(i) all names the delivery seller uses in the transaction 
     of its business or on packages delivered to customers;
       ``(ii) all addresses from which the delivery seller does 
     business or ships cigarettes or smokeless tobacco;
       ``(iii) the website addresses, primary e-mail address, and 
     phone number of the delivery seller; and
       ``(iv) any other information that the Attorney General 
     determines would facilitate compliance with this subsection 
     by recipients of the list.
       ``(C) Updating.--The Attorney General of the United States 
     shall update and distribute the list at least once every 4 
     months, and may distribute the list and any updates by 
     regular mail, electronic mail, or any other reasonable means, 
     or by providing recipients with access to the list through a 
     nonpublic website that the Attorney General of the United 
     States regularly updates.
       ``(D) State, local, or tribal additions.--The Attorney 
     General of the United States shall include in the list under 
     subparagraph (A) any noncomplying delivery sellers identified 
     by any State, local, or tribal government under paragraph 
     (5), and shall distribute the list to the attorney general or 
     chief law enforcement official and the tax administrator of 
     any government submitting any such information and to any 
     common carriers or other persons who deliver small packages 
     to consumers identified by any government pursuant to 
     paragraph (5).
       ``(E) Accuracy and completeness of list of noncomplying 
     delivery sellers.--In preparing and revising the list 
     required by subparagraph (A), the Attorney General shall--

[[Page 18224]]

       ``(i) use reasonable procedures to ensure maximum possible 
     accuracy and completeness of the records and information 
     relied on for the purpose of determining that such delivery 
     seller is noncomplying;
       ``(ii) not later than 14 days prior to including any 
     delivery seller on the list under paragraph (1), make a 
     reasonable attempt to send notice to the delivery seller by 
     letter, electronic mail, or other means that the delivery 
     seller is being placed on such list or update, with that 
     notice citing the relevant provisions of this Act and the 
     specific reasons for being placed on such list;
       ``(iii) provide an opportunity to such delivery seller to 
     challenge placement on such list;
       ``(iv) investigate each such challenge by contacting the 
     relevant Federal, State, tribal, and local law enforcement 
     officials, and provide the specific findings and results of 
     such investigation to such delivery seller not later than 30 
     days after the challenge is made; and
       ``(v) upon finding that any placement is inaccurate, 
     incomplete, or cannot be verified, promptly delete such 
     delivery seller from the list as appropriate and notify each 
     appropriate Federal, State, tribal, and local authority of 
     such finding.
       ``(F) Confidentiality.--The list distributed pursuant to 
     subparagraph (A) shall be confidential, and any person 
     receiving the list shall maintain the confidentiality of the 
     list but may deliver the list, for enforcement purposes, to 
     any government official or to any common carrier or other 
     person that delivers tobacco products or small packages to 
     consumers. Nothing in this section shall prohibit a common 
     carrier, the United States Postal Service, or any other 
     person receiving the list from discussing with the listed 
     delivery sellers the delivery sellers' inclusion on the list 
     and the resulting effects on any services requested by such 
     listed delivery seller.
       ``(2) Prohibition on delivery.--
       ``(A) In general.--Commencing on the date that is 60 days 
     after the date of the initial distribution or availability of 
     the list under paragraph (1)(A), no person who receives the 
     list under paragraph (1), and no person who delivers 
     cigarettes or smokeless tobacco to consumers, shall knowingly 
     complete, cause to be completed, or complete its portion of a 
     delivery of any package for any person whose name and address 
     are on the list, unless--
       ``(i) the person making the delivery knows or believes in 
     good faith that the item does not include cigarettes or 
     smokeless tobacco;
       ``(ii) the delivery is made to a person lawfully engaged in 
     the business of manufacturing, distributing, or selling 
     cigarettes or smokeless tobacco; or
       ``(iii) the package being delivered weighs more than 100 
     pounds and the person making the delivery does not know or 
     have reasonable cause to believe that the package contains 
     cigarettes or smokeless tobacco.
       ``(B) Implementation of updates.--Commencing on the date 
     that is 30 days after the date of the distribution or 
     availability of any updates or corrections to the list under 
     paragraph (1), all recipients and all common carriers or 
     other persons that deliver cigarettes or smokeless tobacco to 
     consumers shall be subject to subparagraph (A) in regard to 
     such corrections or updates.
       ``(C) Exemptions.--Subparagraphs (A) and (B), subsection 
     (b)(2), and any other requirements or restrictions placed 
     directly on common carriers elsewhere in this subsection, 
     shall not apply to a common carrier that is subject to a 
     settlement agreement relating to tobacco product deliveries 
     to consumers.   For the purposes of this section, `settlement 
     agreement' shall be defined to include the Assurance of 
     Discontinuance entered into by the Attorney General of New 
     York and DHL Holdings USA, Inc. and DHL Express (USA), Inc. 
     on or about July 1, 2005, the Assurance of Discontinuance 
     entered into by the Attorney General of New York and United 
     Parcel Service, Inc. on or about October 21, 2005,  and the 
     Assurance of Compliance entered into by the Attorney General 
     of New York and Federal Express Corporation and Fed Ex Ground 
     package Systems, Inc. on or about February 3, 2006,  so long 
     as  each is  honored nationwide to block illegal deliveries 
     of cigarettes or smokeless tobacco to consumers, and also 
     includes any other active agreement between a common carrier 
     and the states that operates nationwide to ensure that no 
     deliveries of cigarettes and smokeless tobacco shall be made 
     to consumers  for illegally operating Internet or mail-order 
     sellers and that any such deliveries to consumers  shall not 
     be made to minors or without payment to the states and 
     localities where the consumers are located of all taxes on 
     the tobacco products.
       ``(3) Shipments from persons on list.--
       ``(A) In general.--In the event that a common carrier or 
     other delivery service delays or interrupts the delivery of a 
     package it has in its possession because it determines or has 
     reason to believe that the person ordering the delivery is on 
     a list distributed under paragraph (1)--
       ``(i) the person ordering the delivery shall be obligated 
     to pay--

       ``(I) the common carrier or other delivery service as if 
     the delivery of the package had been timely completed; and
       ``(II) if the package is not deliverable, any reasonable 
     additional fee or charge levied by the common carrier or 
     other delivery service to cover its extra costs and 
     inconvenience and to serve as a disincentive against such 
     noncomplying delivery orders; and

       ``(ii) if the package is determined not to be deliverable, 
     the common carrier or other delivery service shall, in its 
     discretion, either provide the package and its contents to a 
     Federal, State, or local law enforcement agency or destroy 
     the package and its contents.
       ``(B) Records.--A common carrier or other delivery service 
     shall maintain, for a period of 5 years, any records kept in 
     the ordinary course of business relating to any deliveries 
     interrupted pursuant to this paragraph and provide that 
     information, upon request, to the Attorney General of the 
     United States or to the attorney general or chief law 
     enforcement official or tax administrator of any State, 
     local, or tribal government.
       ``(C) Confidentiality.--Any person receiving records under 
     subparagraph (B) shall use such records solely for the 
     purposes of the enforcement of this Act and the collection of 
     any taxes owed on related sales of cigarettes and smokeless 
     tobacco, and the person receiving records under subparagraph 
     (B) shall keep confidential any personal information in such 
     records not otherwise required for such purposes.
       ``(4) Preemption.--
       ``(A) In general.--No State, local, or tribal government, 
     nor any political authority of 2 or more State, local, or 
     tribal governments, may enact or enforce any law or 
     regulation relating to delivery sales that restricts 
     deliveries of cigarettes or smokeless tobacco to consumers by 
     common carriers or other delivery services on behalf of 
     delivery sellers by--
       ``(i) requiring that the common carrier or other delivery 
     service verify the age or identity of the consumer accepting 
     the delivery by requiring the person who signs to accept 
     delivery of the shipping container to provide proof, in the 
     form of a valid, government-issued identification bearing a 
     photograph of the individual, that such person is at least 
     the minimum age required for the legal sale or purchase of 
     tobacco products, as determined by either State or local law 
     at the place of delivery;
       ``(ii) requiring that the common carrier or other delivery 
     service obtain a signature from the consumer accepting the 
     delivery;
       ``(iii) requiring that the common carrier or other delivery 
     service verify that all applicable taxes have been paid;
       ``(iv) requiring that packages delivered by the common 
     carrier or other delivery service contain any particular 
     labels, notice, or markings; or
       ``(v) prohibiting common carriers or other delivery 
     services from making deliveries on the basis of whether the 
     delivery seller is or is not identified on any list of 
     delivery sellers maintained and distributed by any entity 
     other than the Federal Government.
       ``(B) Relationship to other laws.--Except as provided in 
     subparagraph (C), nothing in this paragraph shall be 
     construed to prohibit, expand, restrict, or otherwise amend 
     or modify--
       ``(i) section 14501(c)(1) or 41713(b)(4) of title 49, 
     United States Code;
       ``(ii) any other restrictions in Federal law on the ability 
     of State, local, or tribal governments to regulate common 
     carriers; or
       ``(iii) any provision of State, local, or tribal law 
     regulating common carriers that falls within the provisions 
     of sections 14501(c)(2) or 41713(b)(4)(B) of title 49 of the 
     United States Code.
       ``(C) State laws prohibiting delivery sales.--Nothing in 
     the Prevent All Cigarette Trafficking Act of 2008, the 
     amendments made by that Act, or in any other Federal statute 
     shall be construed to preempt, supersede, or otherwise limit 
     or restrict State laws prohibiting the delivery sale, or the 
     shipment or delivery pursuant to a delivery sale, of 
     cigarettes or other tobacco products to individual consumers 
     or personal residences.
       ``(5) State, local, and tribal additions.--
       ``(A) In general.--Any State, local, or tribal government 
     shall provide the Attorney General of the United States 
     with--
       ``(i) all known names, addresses, website addresses, and 
     other primary contact information of any delivery seller that 
     offers for sale or makes sales of cigarettes or smokeless 
     tobacco in or into the State, locality, or tribal land but 
     has failed to register with or make reports to the respective 
     tax administrator, as required by this Act, or that has been 
     found in a legal proceeding to have otherwise failed to 
     comply with this Act; and
       ``(ii) a list of common carriers and other persons who make 
     deliveries of cigarettes or smokeless tobacco in or into the 
     State, locality, or tribal lands.
       ``(B) Updates.--Any government providing a list to the 
     Attorney General of the United States under subparagraph (A) 
     shall also provide updates and corrections every 4 months 
     until such time as such government notifies the Attorney 
     General of the United States in writing that such government 
     no longer desires to submit such information to supplement 
     the list maintained and distributed by the Attorney General 
     of the United States under paragraph (1).
       ``(C) Removal after withdrawal.--Upon receiving written 
     notice that a government

[[Page 18225]]

     no longer desires to submit information under subparagraph 
     (A), the Attorney General of the United States shall remove 
     from the list under paragraph (1) any persons that are on the 
     list solely because of such government's prior submissions of 
     its list of noncomplying delivery sellers of cigarettes or 
     smokeless tobacco or its subsequent updates and corrections.
       ``(6) Deadline to incorporate additions.--The Attorney 
     General of the United States shall--
       ``(A) include any delivery seller identified and submitted 
     by a State, local, or tribal government under paragraph (5) 
     in any list or update that is distributed or made available 
     under paragraph (1) on or after the date that is 30 days 
     after the date on which the information is received by the 
     Attorney General of the United States; and
       ``(B) distribute any such list or update to any common 
     carrier or other person who makes deliveries of cigarettes or 
     smokeless tobacco that has been identified and submitted by 
     another government, pursuant to paragraph (5).
       ``(7) Notice to delivery sellers.--Not later than 14 days 
     prior to including any delivery seller on the initial list 
     distributed or made available under paragraph (1), or on any 
     subsequent list or update for the first time, the Attorney 
     General of the United States shall make a reasonable attempt 
     to send notice to the delivery seller by letter, electronic 
     mail, or other means that the delivery seller is being placed 
     on such list or update, with that notice citing the relevant 
     provisions of this Act.
       ``(8) Limitations.--
       ``(A) In general.--Any common carrier or other person 
     making a delivery subject to this subsection shall not be 
     required or otherwise obligated to--
       ``(i) determine whether any list distributed or made 
     available under paragraph (1) is complete, accurate, or up-
     to-date;
       ``(ii) determine whether a person ordering a delivery is in 
     compliance with this Act; or
       ``(iii) open or inspect, pursuant to this Act, any package 
     being delivered to determine its contents.
       ``(B) Alternate names.--Any common carrier or other person 
     making a delivery subject to this subsection shall not be 
     required or otherwise obligated to make any inquiries or 
     otherwise determine whether a person ordering a delivery is a 
     delivery seller on the list under paragraph (1) who is using 
     a different name or address in order to evade the related 
     delivery restrictions, but shall not knowingly deliver any 
     packages to consumers for any such delivery seller who the 
     common carrier or other delivery service knows is a delivery 
     seller who is on the list under paragraph (1) but is using a 
     different name or address to evade the delivery restrictions 
     of paragraph (2).
       ``(C) Penalties.--Any common carrier or person in the 
     business of delivering packages on behalf of other persons 
     shall not be subject to any penalty under section 14101(a) of 
     title 49, United States Code, or any other provision of law 
     for--
       ``(i) not making any specific delivery, or any deliveries 
     at all, on behalf of any person on the list under paragraph 
     (1);
       ``(ii) not, as a matter of regular practice and procedure, 
     making any deliveries, or any deliveries in certain States, 
     of any cigarettes or smokeless tobacco for any person or for 
     any person not in the business of manufacturing, 
     distributing, or selling cigarettes or smokeless tobacco; or
       ``(iii) delaying or not making a delivery for any person 
     because of reasonable efforts to comply with this Act.
       ``(D) Other limits.--Section 2 and subsections (a), (b), 
     (c), and (d) of this section shall not be interpreted to 
     impose any responsibilities, requirements, or liability on 
     common carriers.
       ``(f) Presumption.--For purposes of this Act, a delivery 
     sale shall be deemed to have occurred in the State and place 
     where the buyer obtains personal possession of the cigarettes 
     or smokeless tobacco, and a delivery pursuant to a delivery 
     sale is deemed to have been initiated or ordered by the 
     delivery seller.''.
       (d) Penalties.--The Jenkins Act is amended by striking 
     section 3 and inserting the following:

     ``SEC. 3. PENALTIES.

       ``(a) Criminal Penalties.--
       ``(1) In general.--Except as provided in paragraph (2), 
     whoever violates any provision of this Act shall be guilty of 
     a felony and shall be imprisoned not more than 3 years, fined 
     under title 18, United States Code, or both.
       ``(2) Exceptions.--
       ``(A) Governments.--Paragraph (1) shall not apply to a 
     State, local, or tribal government.
       ``(B) Delivery violations.--A common carrier or independent 
     delivery service, or employee of a common carrier or 
     independent delivery service, shall be subject to criminal 
     penalties under paragraph (1) for a violation of section 
     2A(e) only if the violation is committed intentionally--
       ``(i) as consideration for the receipt of, or as 
     consideration for a promise or agreement to pay, anything of 
     pecuniary value; or
       ``(ii) for the purpose of assisting a delivery seller to 
     violate, or otherwise evading compliance with, section 2A.
       ``(b) Civil Penalties.--
       ``(1) In general.--Except as provided in paragraph (3), 
     whoever violates any provision of this Act shall be subject 
     to a civil penalty in an amount not to exceed--
       ``(A) in the case of a delivery seller, the greater of--
       ``(i) $5,000 in the case of the first violation, or $10,000 
     for any other violation; or
       ``(ii) for any violation, 2 percent of the gross sales of 
     cigarettes or smokeless tobacco of such person during the 1-
     year period ending on the date of the violation.
       ``(B) in the case of a common carrier or other delivery 
     service, $2,500 in the case of a first violation, or $5,000 
     for any violation within 1 year of a prior violation.
       ``(2) Relation to other penalties.--A civil penalty under 
     paragraph (1) for a violation of this Act shall be imposed in 
     addition to any criminal penalty under subsection (a) and any 
     other damages, equitable relief, or injunctive relief awarded 
     by the court, including the payment of any unpaid taxes to 
     the appropriate Federal, State, local, or tribal governments.
       ``(3) Exceptions.--
       ``(A) Delivery violations.--An employee of a common carrier 
     or independent delivery service shall be subject to civil 
     penalties under paragraph (1) for a violation of section 
     2A(e) only if the violation is committed intentionally--
       ``(i) as consideration for the receipt of, or as 
     consideration for a promise or agreement to pay, anything of 
     pecuniary value; or
       ``(ii) for the purpose of assisting a delivery seller to 
     violate, or otherwise evading compliance with, section 2A.
       ``(B) Other limitations.--No common carrier or independent 
     delivery service shall be subject to civil penalties under 
     paragraph (1) for a violation of section 2A(e) if--
       ``(i) the common carrier or independent delivery service 
     has implemented and enforces effective policies and practices 
     for complying with that section; or
       ``(ii) an employee of the common carrier or independent 
     delivery service who physically receives and processes 
     orders, picks up packages, processes packages, or makes 
     deliveries, takes actions that are outside the scope of 
     employment of the employee in the course of the violation, or 
     that violate the implemented and enforced policies of the 
     common carrier or independent delivery service described in 
     clause (i).''.
       (e) Enforcement.--The Jenkins Act is amended by striking 
     section 4 and inserting the following:

     ``SEC. 4. ENFORCEMENT.

       ``(a) In General.--The United States district courts shall 
     have jurisdiction to prevent and restrain violations of this 
     Act and to provide other appropriate injunctive or equitable 
     relief, including money damages, for such violations.
       ``(b) Authority of the Attorney General.--The Attorney 
     General of the United States shall administer and enforce the 
     provisions of this Act.
       ``(c) State, Local, and Tribal Enforcement.--
       ``(1) In general.--
       ``(A) Standing.--A State, through its attorney general (or 
     a designee thereof), or a local government or Indian tribe 
     that levies a tax subject to section 2A(a)(3), through its 
     chief law enforcement officer (or a designee thereof), may 
     bring an action in a United States district court to prevent 
     and restrain violations of this Act by any person (or by any 
     person controlling such person) or to obtain any other 
     appropriate relief from any person (or from any person 
     controlling such person) for violations of this Act, 
     including civil penalties, money damages, and injunctive or 
     other equitable relief.
       ``(B) Sovereign immunity.--Nothing in this Act shall be 
     deemed to abrogate or constitute a waiver of any sovereign 
     immunity of a State or local government or Indian tribe 
     against any unconsented lawsuit under this Act, or otherwise 
     to restrict, expand, or modify any sovereign immunity of a 
     State or local government or Indian tribe.
       ``(2) Provision of information.--A State, through its 
     attorney general, or a local government or Indian tribe that 
     levies a tax subject to section 2A(a)(3), through its chief 
     law enforcement officer (or a designee thereof), may provide 
     evidence of a violation of this Act by any person not subject 
     to State, local, or tribal government enforcement actions for 
     violations of this Act to the Attorney General of the United 
     States or a United States attorney, who shall take 
     appropriate actions to enforce the provisions of this Act.
       ``(3) Use of penalties collected.--
       ``(A) In general.--There is established a separate account 
     in the Treasury known as the `PACT Anti-Trafficking Fund'. 
     Notwithstanding any other provision of law and subject to 
     subparagraph (B), an amount equal to 50 percent of any 
     criminal and civil penalties collected by the United States 
     Government in enforcing the provisions of this Act shall be 
     transferred into the PACT Anti-Trafficking Fund and shall be 
     available to the Attorney General of the United States for 
     purposes of enforcing the provisions of this Act and other 
     laws relating to contraband tobacco products.
       ``(B) Allocation of funds.--Of the amount available to the 
     Attorney General under subparagraph (A), not less than 50 
     percent shall

[[Page 18226]]

     be made available only to the agencies and offices within the 
     Department of Justice that were responsible for the 
     enforcement actions in which the penalties concerned were 
     imposed or for any underlying investigations.
       ``(4) Nonexclusivity of remedy.--
       ``(A) In general.--The remedies available under this 
     section and section 3 are in addition to any other remedies 
     available under Federal, State, local, tribal, or other law.
       ``(B) State court proceedings.--Nothing in this Act shall 
     be construed to expand, restrict, or otherwise modify any 
     right of an authorized State official to proceed in State 
     court, or take other enforcement actions, on the basis of an 
     alleged violation of State or other law.
       ``(C) Tribal court proceedings.--Nothing in this Act shall 
     be construed to expand, restrict, or otherwise modify any 
     right of an authorized Indian tribal government official to 
     proceed in tribal court, or take other enforcement actions, 
     on the basis of an alleged violation of tribal law.
       ``(D) Local government enforcement.--Nothing in this Act 
     shall be construed to expand, restrict, or otherwise modify 
     any right of an authorized local government official to 
     proceed in State court, or take other enforcement actions, on 
     the basis of an alleged violation of local or other law.
       ``(d) Persons Dealing in Tobacco Products.--Any person who 
     holds a permit under section 5712 of the Internal Revenue 
     Code of 1986 (regarding permitting of manufacturers and 
     importers of tobacco products and export warehouse 
     proprietors) may bring an action in a United States district 
     court to prevent and restrain violations of this Act by any 
     person (or by any person controlling such person) other than 
     a State, local, or tribal government.
       ``(e) Notice.--
       ``(1) Persons dealing in tobacco products.--Any person who 
     commences a civil action under subsection (d) shall inform 
     the Attorney General of the United States of the action.
       ``(2) State, local, and tribal actions.--It is the sense of 
     Congress that the attorney general of any State, or chief law 
     enforcement officer of any locality or tribe, that commences 
     a civil action under this section should inform the Attorney 
     General of the United States of the action.
       ``(f) Public Notice.--
       ``(1) In general.--The Attorney General of the United 
     States shall make available to the public, by posting such 
     information on the Internet and by other appropriate means, 
     information regarding all enforcement actions undertaken by 
     the Attorney General or United States attorneys, or reported 
     to the Attorney General, under this section, including 
     information regarding the resolution of such actions and how 
     the Attorney General and the United States attorney have 
     responded to referrals of evidence of violations pursuant to 
     subsection (c)(2).
       ``(2) Reports to congress.--The Attorney General shall 
     submit to Congress each year a report containing the 
     information described in paragraph (1).''.

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

       (a) In General.--Chapter 83 of title 18, United States 
     Code, is amended by inserting after section 1716D the 
     following:

     ``Sec. 1716E. Tobacco products as nonmailable

       ``(a) Prohibition.--All cigarettes (as that term is defined 
     in section 1 of the Act of October 19, 1949, commonly 
     referred to as the Jenkins Act) and smokeless tobacco (as 
     that term is defined in section 1 of the Act of October 19, 
     1949, commonly referred to as the Jenkins Act) are 
     nonmailable and shall not be deposited in or carried through 
     the mails.
       ``(b) Orders.--
       ``(1) If the Postal Service has reasonable cause to believe 
     that any person is engaged in the sending of mail matter 
     which is nonmailable under this section, the Postal Service 
     may issue an order which--
       ``(A) directs any postmaster, to whom any mailing 
     originating with such person or his representative is 
     tendered for transmission through the mails (other than a 
     mailing that consists only of one or more sealed letters), to 
     refuse to accept any such mailing, unless such person or his 
     representative first establishes to the satisfaction of the 
     postmaster that the mailing does not contain any matter which 
     is nonmailable under this section; and
       ``(B) requires the person or his representative to cease 
     and desist from mailing any mail matter which is nonmailable 
     under this section.
       ``(2) For the purposes of paragraph (1) reasonable cause 
     includes--
       ``(A) a statement on a publicly available website, or an 
     advertisement, by any person that such person will mail 
     matter which is nonmailable under this section in return for 
     payment; and
       ``(B) the placement of the person on the list created under 
     section 2A(e) of the Jenkins Act.
       ``(3) Whoever fails to comply with an order issued under 
     this subsection shall be liable to the United States for a 
     civil penalty--
       ``(A) not to exceed $10,000 for each mailing of fewer than 
     10 pieces;
       ``(B) not to exceed $50,000 for each mailing of 10 to 50 
     pieces; and
       ``(C) not to exceed $100,000 for each mailing of more than 
     50 pieces.
       ``(4) An order under this subsection may be enforced in the 
     same manner as an order under section 3005 of title 39.
       ``(c) Exceptions.--This section shall not apply to the 
     following:
       ``(1) Cigars.--Cigars (as that term is defined in section 
     5702(a) of the Internal Revenue Code of 1986).
       ``(2) Geographic exception.--Mailings within the State of 
     Alaska or within the State of Hawaii.
       ``(3) Business purposes.--Tobacco products mailed only for 
     business purposes between legally operating businesses that 
     have all applicable State and Federal government licenses or 
     permits and are engaged in tobacco product manufacturing, 
     distribution, wholesale, export, import, testing, 
     investigation, or research, or for regulatory purposes 
     between any such businesses and State or Federal Government 
     regulatory agencies, if the Postal Service issues a final 
     rule establishing the standards and requirements that apply 
     to all such mailings and which includes the following:
       ``(A) The Postal Service shall verify that any person 
     submitting an otherwise nonmailable tobacco product into the 
     mails as authorized by this paragraph is a business or 
     government agency permitted to make such mailings pursuant to 
     this section and the related final rule.
       ``(B) The Postal Service shall ensure that any recipient of 
     an otherwise nonmailable tobacco product sent through the 
     mails pursuant to this paragraph is a business or government 
     agency that may lawfully receive such product.
       ``(C) The mailings shall be sent through the Postal 
     Service's systems that provide for the tracking and 
     confirmation of the delivery.
       ``(D) The identities of the business or government entity 
     submitting the mailing containing otherwise nonmailable 
     tobacco products for delivery and the business or government 
     entity receiving the mailing shall be clearly set forth on 
     the package and such information shall be kept in Postal 
     Service records and made available to the Postal Service, the 
     Attorney General,  and to persons eligible to bring 
     enforcement actions pursuant to section 3(d) of the Prevent 
     All Cigarette Trafficking Act of 2008 for a period of at 
     least three years.
       ``(E) The mailings shall be marked with a Postal Service 
     label or marking that makes it clear to Postal Service 
     employees that it is a permitted mailing of otherwise 
     nonmailable tobacco products that may be delivered only to a 
     permitted government agency or business and may not be 
     delivered to any residence or individual person.
       ``(F) The mailings shall be delivered only to verified 
     adult employees of the recipient businesses or government 
     agencies who shall be required to sign for the mailing.
       ``(4) Certain individuals.--Tobacco products mailed by 
     individual adult people for noncommercial, nonbusiness and 
     non-money making purposes, including the return of a damaged 
     or unacceptable tobacco product to its manufacturer, if the 
     Postal Service issues a final rule establishing the standards 
     and requirements that applies to all such mailings and which 
     includes the following:
       ``(A) The Postal Service shall verify that any person 
     submitting an otherwise nonmailable tobacco product into the 
     mails as authorized by this section is the individual person 
     identified on the return address label of the package and is 
     an adult.
       ``(B) For mailings to individual persons the Postal Service 
     shall require the person submitting the otherwise nonmailable 
     tobacco product into the mails as authorized by this 
     subsection to affirm that the recipient is an adult.
       ``(C) The package shall not weigh more than 10 ounces.
       ``(D) The mailings shall be sent through the Postal 
     Service's systems that provide for the tracking and 
     confirmation of the delivery.
       ``(E) No package shall be delivered or placed in the 
     possession of any individual person who is not a verified 
     adult. For mailings to individual persons, the Postal Service 
     shall deliver the package only to the verified adult 
     recipient at the recipient address or transfer it for 
     delivery to an Air/Army Postal Office (APO) or Fleet Postal 
     Office (FPO) number designated in the recipient address.
       ``(F) No person shall initiate more than ten such mailings 
     in any thirty-day period.
       ``(5) Definition of adult.--For the purposes of paragraphs 
     (3) and (4), the term `adult' means an individual person of 
     at least the minimum age required for the legal sale or 
     purchase of tobacco products as determined by the applicable 
     law at the place the individual person is located.
       ``(d) Seizure and Forfeiture.--Any cigarettes or smokeless 
     tobacco made nonmailable by this subsection that are 
     deposited in the mails shall be subject to seizure and 
     forfeiture, pursuant to the procedures set forth in chapter 
     46 of this title. Any tobacco products so seized and 
     forfeited shall either be destroyed or retained by Government 
     officials for the detection or prosecution of crimes or 
     related investigations and then destroyed.
       ``(e) Additional Penalties.--In addition to any other fines 
     and penalties imposed by this

[[Page 18227]]

     chapter for violations of this section, any person violating 
     this section shall be subject to an additional civil penalty 
     in the amount of 10 times the retail value of the nonmailable 
     cigarettes or smokeless tobacco, including all Federal, 
     State, and local taxes.
       ``(f) Criminal Penalty.--Whoever knowingly deposits for 
     mailing or delivery, or knowingly causes to be delivered by 
     mail, according to the direction thereon, or at any place at 
     which it is directed to be delivered by the person to whom it 
     is addressed, anything that this section declares to be 
     nonmailable matter shall be fined under this title, 
     imprisoned not more than 1 year, or both.
       ``(g) Definition.--As used in this section, the term 
     `State' has the meaning given that term in section 
     1716(k).''.
       (b) Use of Penalties.--There is established a separate 
     account in the Treasury of the United States, to be known as 
     the ``PACT Postal Service Fund''. Notwithstanding any other 
     provision of law, an amount equal to 50 percent of any 
     criminal and civil fines or monetary penalties collected by 
     the United States Government in enforcing the provisions of 
     this subsection shall be transferred into the PACT Postal 
     Service Fund and shall be available to the Postmaster General 
     for the purpose of enforcing the provisions of this 
     subsection.
       (c) Coordination of Efforts.--In the enforcement of this 
     section, the Postal Service shall cooperate and coordinate 
     its efforts with related enforcement activities of any other 
     Federal agency or of any State, local, or tribal government, 
     whenever appropriate.
       (d) Actions by State, Local or Tribal Governments Relating 
     to Certain Tobacco Products.--
       (1) A State, through its attorney general (or a designee 
     thereof), or a local government or Indian tribe that levies 
     an excise tax on tobacco products, through its chief law 
     enforcement officer (or a designee thereof), may in a civil 
     action in a United States district court obtain appropriate 
     relief with respect to a violation of section 1716E of title 
     18, United States Code. Appropriate relief includes 
     injunctive and equitable relief and damages equal to the 
     amount of unpaid taxes on tobacco products mailed in 
     violation of that section to addressees in that State.
       (2) The State (or designee) shall serve prior written 
     notice of any action under paragraph (1) upon the Postal 
     Service and provide the Postal Service with a copy of its 
     complaint, except in any case where such prior notice is not 
     feasible, in which case the State (or designee) shall serve 
     such notice immediately upon instituting such action. The 
     Postal Service, in accordance with section 409(g)(2) of title 
     39, United States Code, shall have the right (A) to intervene 
     in the action, (B) upon so intervening, to be heard on all 
     matters arising therein, and (C) to file petitions for 
     appeal.
       (3) Nothing contained in this section shall be construed to 
     prohibit an authorized State official from proceeding in 
     State court on the basis of an alleged violation of any 
     general civil or criminal statute of such State.
       (4) Whenever the Postal Service institutes a civil action 
     for violation of section 1716E of title 18, United States 
     Code, no State may, during the pendency of such action 
     instituted by the Postal Service, subsequently institute a 
     separate civil action for any violation of such section 
     against any defendant named in the Postal Service"s 
     complaint.
       (5) Nothing in this section shall be deemed to abrogate or 
     constitute a waiver of any sovereign immunity of a State or 
     local government or Indian tribe against any unconsented 
     lawsuit under paragraph (1), or otherwise to restrict, 
     expand, or modify any sovereign immunity of a State or local 
     government or Indian tribe.
       (6) A State, through its attorney general, or a local 
     government or Indian tribe that levies an excise tax on 
     tobacco products, through its chief law enforcement officer 
     (or a designee thereof), may provide evidence of a violation 
     of paragraph (1) for commercial, business or money-making 
     purposes by any person not subject to State, local, or tribal 
     government enforcement actions for violations of paragraph 
     (1) to the Attorney General of the United States or a United 
     States attorney, who shall take appropriate actions to 
     enforce the provisions of this subsection.
       (7) The remedies available under this subsection are in 
     addition to any other remedies available under Federal, 
     State, local, tribal, or other law. Nothing in this 
     subsection shall be construed to expand, restrict, or 
     otherwise modify any right of an authorized State, local, or 
     tribal government official to proceed in a State, tribal, or 
     other appropriate court, or take other enforcement actions, 
     on the basis of an alleged violation of State, local, tribal, 
     or other law.
       (e) Clerical Amendment.--The table of sections at the 
     beginning of chapter 83 of title 18 is amended by adding 
     after the item relating to section 1716D the following new 
     item:

``1716E. Tobacco products as nonmailable.''.

     SEC. 4. COMPLIANCE WITH MODEL STATUTE OR QUALIFYING STATUTE.

       (a) In General.--A Tobacco Product Manufacturer or importer 
     may not sell in, deliver to, or place for delivery sale, or 
     cause to be sold in, delivered to, or placed for delivery 
     sale in a State that is a party to the Master Settlement 
     Agreement, any cigarette manufactured by a Tobacco Product 
     Manufacturer that is not in full compliance with the terms of 
     the Model Statute or Qualifying Statute enacted by such State 
     requiring funds to be placed into a qualified escrow account 
     under specified conditions, or any regulations promulgated 
     pursuant to such statute.
       (b) Jurisdiction To Prevent and Restrain Violations.--
       (1) In general.--The United States district courts shall 
     have jurisdiction to prevent and restrain violations of 
     subsection (a) in accordance with this subsection.
       (2) Initiation of action.--A State, through its attorney 
     general, may bring an action in the United States district 
     courts to prevent and restrain violations of subsection (a) 
     by any person (or by any person controlling such person).
       (3) Attorney fees.--In any action under paragraph (2), a 
     State, through its attorney general, shall be entitled to 
     reasonable attorney fees from a person found to have 
     willfully and knowingly violated subsection (a).
       (4) Nonexclusivity of remedies.--The remedy available under 
     paragraph (2) is in addition to any other remedies available 
     under Federal, State, or other law. No provision of this Act 
     or any other Federal law shall be held or construed to 
     prohibit or preempt the Master Settlement Agreement, the 
     Model Statute (as defined in the Master Settlement 
     Agreement), any legislation amending or complementary to the 
     Model Statute in effect as of June 1, 2006, or any 
     legislation substantially similar to such existing, amending, 
     or complementary legislation hereinafter enacted.
       (5) Other enforcement actions.--Nothing in this subsection 
     shall be construed to prohibit an authorized State official 
     from proceeding in State court or taking other enforcement 
     actions on the basis of an alleged violation of State or 
     other law.
       (6) Authority of the attorney general.--The Attorney 
     General of the United States may administer and enforce 
     subsection (a).
       (c) Definitions.--In this section the following definitions 
     apply:
       (1) Delivery sale.--The term ``delivery sale'' means any 
     sale of cigarettes or smokeless tobacco to a consumer if--
       (A) the consumer submits the order for such sale by means 
     of a telephone or other method of voice transmission, the 
     mails, or the Internet or other online service, or the seller 
     is otherwise not in the physical presence of the buyer when 
     the request for purchase or order is made; or
       (B) the cigarettes or smokeless tobacco are delivered to 
     the buyer by common carrier, private delivery service, or  
     other method of  remote delivery, or the seller is not in the 
     physical presence of the buyer when the buyer obtains 
     possession of the cigarettes or smokeless tobacco.
       (2) Importer.--The term ``importer'' means each of the 
     following:
       (A) Shipping or consigning.--Any person in the United 
     States to whom nontaxpaid tobacco products manufactured in a 
     foreign country, Puerto Rico, the Virgin Islands, or a 
     possession of the United States are shipped or consigned.
       (B) Manufacturing warehouses.--Any person who removes 
     cigars or cigarettes for sale or consumption in the United 
     States from a customs-bonded manufacturing warehouse.
       (C) Unlawful importing.--Any person who smuggles or 
     otherwise unlawfully brings tobacco products into the United 
     States.
       (3) Master settlement agreement.--The term ``Master 
     Settlement Agreement'' means the agreement executed November 
     23, 1998, between the attorneys general of 46 States, the 
     District of Columbia, the Commonwealth of Puerto Rico, and 4 
     territories of the United States and certain tobacco 
     manufacturers.
       (4) Model statute; qualifying statute.--The terms ``Model 
     Statute'' and ``Qualifying Statute'' means a statute as 
     defined in section IX(d)(2)(e) of the Master Settlement 
     Agreement.
       (5) Tobacco product manufacturer.--The term ``Tobacco 
     Product Manufacturer'' has the meaning given that term in 
     section II(uu) of the Master Settlement Agreement.

     SEC. 5. INSPECTION BY BUREAU OF ALCOHOL, TOBACCO, FIREARMS, 
                   AND EXPLOSIVES OF RECORDS OF CERTAIN CIGARETTE 
                   AND SMOKELESS TOBACCO SELLERS; CIVIL PENALTY.

       Section 2343(c) of title 18, United States Code, is amended 
     to read as follows:
       ``(c)(1) Any officer of the Bureau of Alcohol, Tobacco, 
     Firearms, and Explosives may, during normal business hours, 
     enter the premises of any person described in subsection (a) 
     or (b) for the purposes of inspecting--
       ``(A) any records or information required to be maintained 
     by such person under the provisions of law referred to in 
     this chapter; or
       ``(B) any cigarettes or smokeless tobacco kept or stored by 
     such person at such premises.
       ``(2) The district courts of the United States shall have 
     the authority in a civil action under this subsection to 
     compel inspections authorized by paragraph (1).''
       ``(3) Whoever violates paragraph (1), or an order issued 
     under paragraph (2), shall be subject to a civil penalty in 
     an amount not to exceed $10,000 for each violation.''.

[[Page 18228]]



     SEC. 6. EXCLUSIONS REGARDING INDIAN TRIBES AND TRIBAL 
                   MATTERS.

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

     SEC. 7. SENSE OF CONGRESS CONCERNING THE PRECEDENTIAL EFFECT 
                   OF THIS ACT.

       It is the sense of Congress that unique harms are 
     associated with online cigarette sales, including problems 
     with verifying the ages of consumers in the digital market 
     and the long-term health problems associated with the use of 
     certain tobacco products. This Act was introduced recognizing 
     the longstanding interest of Congress in urging compliance 
     with States' laws regulating remote sales of certain tobacco 
     products to citizens of those States, including the passage 
     of the Jenkins Act over 50 years ago, which established 
     reporting requirements for out-of-State companies that sell 
     certain tobacco products to citizens of the taxing States, 
     and which gave authority to the Department of Justice and the 
     Bureau of Alcohol, Tobacco and Firearms to enforce the 
     Jenkins Act. In light of the unique harms and circumstances 
     surrounding the online sale of certain tobacco products, this 
     Act is intended to help collect cigarette excise taxes, to 
     stop tobacco sales to underage youth, and to help the States 
     enforce their laws that target the online sales of certain 
     tobacco products only. This Act is in no way meant to create 
     a precedent regarding the collection of State sales or use 
     taxes by, or the validity of efforts to impose other types of 
     taxes on, out-of-State entities that do not have a physical 
     presence within the taxing State.

     SEC. 8. EFFECTIVE DATE.

       (a) In General.--Except as provided in subsection (b), this 
     Act shall take effect on the date that is 90 days after the 
     date of enactment of this Act.
       (b) BATFE Authority.--Section 5 shall take effect on the 
     date of enactment of this Act.

     SEC. 9. SEVERABILITY.

       If any provision of this, or an amendment made by this Act 
     or the application thereof to any person or circumstance is 
     held invalid, the remainder of the Act and the application of 
     it to any other person or circumstance shall not be affected 
     thereby.

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


                             General Leave

  Mr. SCOTT of Virginia. Mr. Speaker, I ask unanimous consent that all 
Members have 5 legislative days to revise and extend their remarks and 
include extraneous material on the bill under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Virginia?
  There was no objection.
  Mr. SCOTT of Virginia. I yield myself such time as I may consume.
  Mr. Speaker, the Prevent All Cigarette Trafficking Act, or PACT Act, 
introduced by the gentleman from New York (Mr. Weiner), strengthens our 
law enforcement capabilities against the illegal smuggling of tobacco 
products.
  Every year, billions of cigarettes are illegally smuggled across 
State lines. This fraudulent activity not only harms the public health 
but deprives State and local governments of sorely needed tax revenues.
  In fact, tax evasion is a chief motivator for cigarette smuggling. 
Buying cigarettes in a State where the cigarette tax is low and selling 
them in a State where the cigarette tax is high allows the trafficker 
to sell the cigarettes at a discount and still turn an illicit profit.
  States lose $1 billion in uncollected taxes each year as a result of 
illegal cigarette smuggling. The illicit profit also helps finance 
other criminal activity which creates a revenue stream for organized 
crime.
  Because of the scope and interstate nature of this activity, States 
cannot adequately address it on their own. It has long been recognized 
as a Federal concern.
  With the existing Federal statutes, the Jenkins Act, which requires 
reporting interstate cigarette sales to tax officials in the buyer's 
State, and the Contraband Cigarette Trafficking Act, which prohibits 
knowingly dealing in contraband cigarettes or smokeless tobacco, those 
two statutes are simply not up to the task in the Internet age.
  The Internet, in particular, makes it possible for today's tobacco 
smugglers to be even more mobile and invisible and to operate with near 
impunity. Even when the smugglers can be identified and pursued, they 
can simply shut down operations and quickly reappear under a new name 
and Web site.
  The PACT Act addresses the shortcomings in the current law by 
targeting the delivery systems for illegal Internet tobacco sales: the 
postal system and commercial delivery services.
  With limited exceptions, sending tobacco products through the United 
States mail will be criminally prohibited. And vendors using commercial 
delivery services for retail sales will be required to notify the tax 
authorities in the receiving State, conspicuously label all tobacco 
products, verify the purchaser's age, and keep careful records of all 
sales.
  The bill raises cigarette trafficking from a misdemeanor to a felony. 
And it authorizes the Bureau of Alcohol, Tobacco, Firearms and 
Explosives to inspect the premises and files of sellers of significant 
quantities of cigarettes or smokeless tobacco.

                              {time}  1800

  H.R. 4081 enjoys support from a diverse spectrum of entities, 
including the National Association of Convenience Stores, Altria--the 
parent company of Phillip Morris--the Campaign for Tobacco-Free Kids, 
the American Wholesale Marketers Association, and the National 
Association of Attorneys General, among others.
  I commend my colleague, Mr. Weiner, for his leadership on this 
important legislation. I also commend the chairman of the Judiciary 
Committee, Mr. Conyers, and the ranking member, Mr. Smith, for their 
leadership in making this a bipartisan effort.
  I also want to thank the other committees whose jurisdiction has 
touched on this bill for working with us to bring it to the floor 
today.
  I urge my colleagues to support this important legislation.



[[Page 18229]]


          House of Representatives, Committee on Transportation 
           and Infrastructure,
                                Washington, DC, September 8, 2008.
     Hon. John Conyers, Jr.,
     Chairman, Committee on the Judiciary, House of 
         Representatives, Washington, DC.
       Dear Chairman Conyers: I write to you regarding H.R. 4081, 
     the ``Prevent All Cigarette Trafficking Act of 2008''.
       H.R. 4081 contains provisions that fall within the 
     jurisdiction of the Committee on Transportation and 
     Infrastructure. I recognize and appreciate your desire to 
     bring this legislation before the House in an expeditious 
     manner and, accordingly, I will not seek a sequential 
     referral of the bill. However, I agree to waive consideration 
     of this bill with the mutual understanding that my decision 
     to forego a sequential referral of the bill does not waive, 
     reduce, or otherwise affect the jurisdiction of the Committee 
     on Transportation and Infrastructure over H.R. 4081.
       Further, the Committee on Transportation and Infrastructure 
     reserves the right to seek the appointment of conferees 
     during any House-Senate conference convened on this 
     legislation on provisions of the bill that are within the 
     Committee's jurisdiction. I ask for your commitment to 
     support any request by the Committee on Transportation and 
     Infrastructure for the appointment of conferees on H.R. 4081 
     or similar legislation.
       Please place a copy of this letter and your response 
     acknowledging the Committee on Transportation and 
     Infrastructure's jurisdictional interest in the Congressional 
     Record during consideration of the measure on the House 
     Floor.
       I look forward to working with you as we prepare to pass 
     this important legislation.
           Sincerely,
                                                James L. Oberstar,
     Chairman.
                                  ____

                                         House of Representatives,


                                   Committee on the Judiciary,

                                Washington, DC, September 9, 2008.
     Hon. James L. Oberstar,
     Chairman, Committee on Transportation and Infrastructure, 
         House of Representatives, Washington, DC.
       Dear Mr. Chairman: Thank you for your letter regarding your 
     Committee's jurisdictional interest in H.R. 4081, the Prevent 
     All Cigarette Trafficking Act of 2008.
       I appreciate your willingness to support expediting floor 
     consideration of this important legislation today. I 
     understand and agree that this is without prejudice to your 
     Committee's jurisdictional interests in this or similar 
     legislation in the future. In the event a House-Senate 
     conference on this or similar legislation is convened, I 
     would support your request for an appropriate number of 
     conferees.
       I will include a copy of your letter and this response in 
     the Congressional Record in the debate on the bill. Thank you 
     for your cooperation as we work towards enactment of this 
     legislation.
           Sincerely,
                                                John Conyers, Jr.,
     Chairman.
                                  ____

                                         House of Representatives,


                               Committee on Natural Resources,

                                Washington, DC, September 9, 2008.
     Hon. John Conyers,
     Chairman, Committee on the Judiciary,
     Washington, DC.
       Dear Mr. Chairman: Thank you for the opportunity to work 
     with you on H.R. 4081, the Prevent All Cigarette Trafficking 
     Act, concerning provisions on tribal jurisdiction and 
     enforcement which are within the jurisdiction of the 
     Committee on Natural Resources.
       Because of the continued cooperation and consideration that 
     you have afforded me and my staff in developing these 
     provisions, I will not seek a sequential referral of H.R. 
     4081. Of course, this waiver is not intended to prejudice any 
     future jurisdictional claims over these provisions or similar 
     language. I also reserve the right to seek to have conferees 
     named from the Committee on Natural Resources on these 
     provisions, and request your support if such a request is 
     made.
       Please place this letter into the Congressional Record 
     during consideration of H.R. 4081 on the House floor.
       With warm regards, I am
           Sincerely,
                                               Nick J. Rahall, II,
     Chairman, Committee on Natural Resources.
                                  ____

                                         House of Representatives,


                                   Committee on the Judiciary,

                                Washington, DC, September 9, 2008.
     Hon. Nick J. Rahall II,
     Chairman, Committee on Natural Resources, House of 
         Representatives, Washington, DC.
       Dear Mr. Chairman: Thank you for your letter regarding your 
     Committee's jurisdictional interest in H.R. 4081, the Prevent 
     All Cigarette Trafficking Act of 2008.
       I appreciate your willingness to support expediting floor 
     consideration of this important legislation today. I 
     understand and agree that this is without prejudice to your 
     Committee's jurisdictional interests in this or similar 
     legislation in the future. In the event a House-Senate 
     conference on this or similar legislation is convened, I 
     would support your request for an appropriate number of 
     conferees.
       I will include a copy of your letter and this response in 
     the Congressional Record in the debate on the bill. Thank you 
     for your cooperation as we work towards enactment of this 
     legislation.
       Sincerely,
                                                 John Conyers Jr.,
     Chairman.
                                  ____

                                         House of Representatives,


                             Committee on Energy and Commerce,

                                Washington, DC, September 9, 2008.
     Hon. John Conyers, Jr.,
     Chairman, Committee on the Judiciary, House of 
         Representatives, Washington, DC.
       Dear Chairman Conyers: I write regarding H.R. 4081, the 
     ``Prevent All Cigarette Trafficking Act of 2008'', or the 
     ``PACT'' Act.
       H.R. 4081 amends a law commonly referred to as the Jenkins 
     Act, which primarily concerns the collection by the States of 
     taxes on cigarettes. The bill, however, would amend the 
     Jenkins Act to prohibit ``delivery sales'' of cigarettes and 
     smokeless tobacco to minors. (As you know, these are sales in 
     which the seller is not in the physical presence of the 
     purchaser but rather communicates with the purchaser through 
     electronic means, through the mails, or through other 
     methods.) The bill would further preempt certain State laws 
     that relate to such sales to minors. The regulation of sales 
     of tobacco products to minors is a matter within the 
     jurisdiction of the Committee on Energy and Commerce.
       Another jurisdictional concern is that the bill regulates 
     the labeling of cigarettes and smokeless tobacco. H.R. 4081 
     would require specific wording on the shipping packages of 
     such products.
       I support H.R. 4081 and do not intend to seek a sequential 
     referral of the bill. My understanding is that you agree with 
     me that my decision to forgo a sequential referral does not 
     in any way prejudice the Committee with respect to any of its 
     jurisdictional prerogatives, including the appointment of 
     conferees, on this bill or similar legislation in the future.
       I request that you send a letter to me confirming my 
     understanding regarding the bill, and that you include our 
     letters on this matter in the Congressional Record during 
     consideration of the bill on the House floor. I appreciate 
     your cooperation.
           Sincerely,
                                                  John D. Dingell,
     Chairman.
                                  ____

                                         House of Representatives,


                                   Committee on the Judiciary,

                                Washington, DC, September 9, 2008.
     Hon. John D. Dingell,
     Chairman, Committee on Energy and Commerce, House of 
         Representatives, Washington, DC.
       Dear Mr. Chairman: Thank you for your letter regarding your 
     Committee's jurisdictional interest in H.R. 4081, the Prevent 
     All Cigarette Trafficking Act of 2008.
       I appreciate your willingness to support expediting floor 
     consideration of this important legislation today. I 
     understand and agree that this is without prejudice to your 
     Committee's jurisdictional interests in this or similar 
     legislation in the future. In the event a House-Senate 
     conference on this or similar legislation is convened, I 
     would support your request for an appropriate number of 
     conferees.
       I will include a copy of your letter and this response in 
     the Congressional Record in the debate on the bill. Thank you 
     for your cooperation as we work towards enactment of this 
     legislation.
           Sincerely,
                                                John Conyers, Jr.,
     Chairman.
                                  ____

         House of Representatives, Committee on Oversight and 
           Government Reform,
                                Washington, DC, September 9, 2008.
     Hon. John Conyers,
     Chairman, Committee on the Judiciary,
     Washington, DC.
       Dear Chairman Conyers: I am writing about H.R. 4081, the 
     Prevent All Cigarette Trafficking Act of 2007. The Judiciary 
     Committee approved this measure, as amended, on July 16, 
     2008.
       I appreciate your effort to consult with the Committee on 
     Oversight and Government Reform regarding those provisions of 
     H.R. 4081 that fall within the Oversight Committee's 
     jurisdiction. Thank you for your willingness to modify 
     certain provisions related to the treatment of cigarettes and 
     smokeless tobacco as nonmailable matter in response to my 
     concerns. Although I still have concerns about provisions in 
     this legislation, I look forward to working with you to 
     resolve these issues.
       In the interest of expediting consideration of H.R. 4081, 
     the Oversight Committee will not separately consider relevant 
     provisions of this bill. I would, however, request your 
     support for the appointment of conferees from the Oversight 
     Committee should H.R. 4081 or a similar Senate bill be 
     considered in conference with the Senate. Moreover, this 
     letter should not be construed as a waiver of the Oversight 
     Committee's legislative jurisdiction over subjects addressed 
     in H.R. 4081 that fall within the jurisdiction of the 
     Oversight Committee.

[[Page 18230]]

       Please include our exchange of letters on this matter in 
     the Congressional Record during consideration of this 
     legislation on the House floor.
       Again, I appreciate your willingness to consult the 
     Committee on these matters.
           Sincerely,
                                                  Henry A. Waxman,
     Chairman.
                                  ____

                                         House of Representatives,


                                   Committee on the Judiciary,

                                Washington, DC, September 9, 2008.
     Hon. Henry A. Waxman,
     Chairman, Committee on Oversight and Government Reform, House 
         of Representatives, Washington, DC.
       Dear Mr. Chairman: Thank you for your letter regarding your 
     committee's jurisdictional interest in H.R. 4081, the Prevent 
     All Cigarette Trafficking Act of 2008.
       I appreciate your willingness to support expediting floor 
     consideration of this important legislation today. I 
     understand and agree that this is without prejudice to your 
     Committee's jurisdictional interests in this or similar 
     legislation in the future. In the event a House-Senate 
     conference on this or similar legislation is convened, I 
     would support your request for an appropriate number of 
     conferees.
       I will include a copy of your letter and this response in 
     the Congressional Record in the debate on the bill. Thank you 
     for your cooperation as we work towards enactment of this 
     legislation.
           Sincerely,
                                                John Conyers, Jr.,
                                                         Chairman.

  Mr. Speaker, I reserve the balance of my time.
  Mr. SMITH of Texas. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I am an original cosponsor of H.R. 4081, the Prevent All 
Cigarette Trafficking (PACT) Act. And I want to thank Congressman 
Weiner from New York for working hard to bring this legislation to the 
floor today.
  This bipartisan bill will help combat cigarette trafficking, which is 
a growing problem in America. Combating cigarette trafficking is an 
issue both Congress and the manufacturers want to address together.
  Taxes on cigarettes vary greatly from State to State. This difference 
in tax rates creates a market for criminals and organized crime 
syndicates to purchase cigarettes from one State and smuggle them to 
another State to resell them below market value and without paying 
local taxes.
  The PACT Act closes loopholes in current tobacco trafficking laws and 
provides law enforcement officials with ways to combat the deceptive 
methods being used by cigarette traffickers to distribute their 
products. First, the legislation strengthens the Jenkins Act, a long-
standing law that requires vendors who sell cigarettes to out-of-State 
buyers to report these sales to the buyer's State tobacco tax 
administrator. The PACT Act makes it a Federal felony for anyone to 
sell cigarettes by telephone, the mail, or the Internet and not comply 
with all relevant State tax laws.
  The PACT Act requires Internet cigarette sellers to verify the 
purchaser's age and identity through easily accessible databases. This 
measure protects children and ensures that they cannot anonymously 
purchase cigarettes from the Internet.
  The PACT Act also empowers the Attorney General to compile a list of 
delivery sellers who fail to comply with State tax laws. Any seller who 
lands on that list will be prohibited from using the U.S. Postal 
Service or common carriers like FedEx or DHL to deliver their products.
  The PACT Act creates reasonable procedures to ensure that the 
Attorney General's list of noncompliant tobacco delivery sellers is 
both accurate and complete.
  In summary, Mr. Speaker, the PACT Act prevents the loss of tax 
revenue, combats cigarette smuggling, and limits children's access to 
cigarettes; all worthy goals.
  I urge my colleagues to support this bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SCOTT of Virginia. Mr. Speaker, I yield such time as he may 
consume to the gentleman from New York (Mr. Weiner), who is a 
distinguished member of the Judiciary Committee and sponsor of the 
legislation.
  Mr. WEINER. I thank the chairman of the subcommittee and the ranking 
member of the full committee for not only his sponsorship of the 
legislation, but the great work of him and his staff to try to bring 
this to the floor. It's kind of a complicated issue.
  You know, we accept it as an article of faith that cigarette smoking 
is down in this country. We believe that because, as you look at the 
taxes paid in the 50 States and the various cities, there has been a 
decline. But a lot of information really leads us to believe that that 
might not be true at all, that all we're really seeing a reduction of 
is a reduction of the amount of taxes that are getting paid to the 
various States. And that is because, as both Mr. Smith and Mr. Scott 
have pointed out, more and more States are levying more and more State 
taxes on cigarettes. It's almost an easy thing to do. You know, some 
have commented that State governments are addicted to tobacco taxes. It 
has gotten to be so much that in New York City, for example, if you are 
a smoker--which I'm not--you pay an additional $4.25 per pack compared 
to South Carolina, where you pay an additional 7 cents a pack in State 
taxes.
  Well, what I just described is, in a nutshell, the incentive for 
smugglers. They can buy cigarettes at a very low tax rate, sell them in 
a higher tax rate locality and be able to make money on the vig. Well, 
you might say to yourself, isn't that against the law? It is. It is 
against the law for anyone to buy cigarettes and not pay the tax of 
their locality. But there is no way for authorities to know that for 
sure. But we have some signs and some statistics that show that it's 
happening in record numbers.
  I will give you an example. In just my State of New York, 280 million 
packs of cigarettes were sold on Native American reservations. In 2006, 
it's 360 million. If you take the number of residents on Native 
American reservations and do the math and assume that those cigarettes 
are being smoked just on the reservation, that would mean 44 cigarettes 
an hour for every Native American in the country over the age of 18, or 
basically a cigarette a minute. So that's not happening.
  What is really happening is that more and more people are buying 
cigarettes on the Internet, they're not reporting that they're buying 
them on these Web sites, which are by and large on Native American 
lands, and they're not paying taxes on it. And that's what's happened. 
Now, not only is this a great source of great revenue loss to States--
my home State of New York estimates anywhere from hundreds of millions 
to as much as a billion dollars of lost revenue--but according to the 
Government Accountability Office, it might be used, as so many other 
smuggling operations are, for things more than just illicit activity, 
but terrorism.
  It was found in a GAO investigation that there was a group that was 
buying cigarettes in North Carolina, smuggling them to Michigan, taking 
the money that they were making by selling them on the streets of 
Michigan, and then using the money to fund Hezbollah operations. That 
was just one investigation, one prosecution.
  Now, as I've said earlier, it's already against the law to do many of 
these things, so why aren't there more prosecutions? Well, right now 
violations of the Jenkins Act, which is the prosecution that this would 
be under that say this type of activity is illegal, are misdemeanors. 
So even if you are a U.S. attorney and you say I really want to crack 
down on this and you wait outside and you try to do a sting, really the 
most you can hope for is a misdemeanor prosecution. One of the things 
this legislation does is makes it a felony.
  A second thing that it does is it closes perhaps the largest truck-
size loophole in the law, it allows people to buy cigarettes on the 
Internet. Now, because of the actions of New York, DHL, FedEx, UPS, 
they all say we no longer are going to allow anyone to transport 
cigarettes.
  The only entity that still transports cigarettes is the United States 
Postal Service. They have come to Congress and said, if you want to ban 
us transporting tobacco, you've got to tell us

[[Page 18231]]

by law. We can't do it. Effectively, that's what this legislation does.
  Now, just to make it very clear, if you want to purchase cigarettes 
online, what is supposed to happen is the Internet carrier is supposed 
to then take a document, mail it to your home State and say that 
Anthony Weiner purchased X number of cases, then you're supposed to pay 
taxes on it. That never happens. States that have done stings know it 
has never happened and the ATF says it doesn't happen. Now that is 
going to be required, otherwise, you're not going to be able to do any 
transporting of tobacco at all. And finally, it requires the same type 
of age verification that we have for other things on the Internet.
  This is a commonsense thing that I think is going to mean that we can 
really make sure States get the revenues, we can make sure that the 
black market in tobacco is eliminated, and frankly, we can make sure 
that the ATF has the tools they need to crack down on this.
  This legislation is a long time in coming. It would not have been 
possible, as I said earlier, if it were not for the help of the ranking 
minority member of the full committee, the Chair of the subcommittee, 
the members and the staff who have done a remarkable job; on the full 
committee side, Perry Apelbaum and Ted Kalo, on the minority side, Sean 
McLaughlin, the chief of staff and general counsel on the minority 
side; Ameer Gopalani, who is the counsel on the subcommittee, Jesselyn 
McCurdy, who is another counsel. And on the minority side, Kimani 
Little and Caroline Lynch. Also, towards the end, to help us deal with 
many of the jurisdictional matters that we had, Congressman Waxman and 
the ranking member of the Government Oversight and Reform Committee, 
his staff director, Phil Barnett, Naomi Seiler, the counsel, Robin 
Appleberry, folks who worked very late into the night last night to 
help to make this happen. Congressman McHugh's staff, who has been very 
active on this, Rob Taub, his Chief of staff; Joe Dunn, Jonathan 
Schleifer and Dori Friedberg of my staff. These are all people who 
helped make this happen.
  Now, I would say, before I yield back, as with so many things, this 
is a relatively easy fix that we were able to work in a bipartisan 
fashion to make happen. None of this is worth anything unless the folks 
on the other side of this building finally start to legislate, finally 
start to take some of these things that passed by overwhelming margins, 
things like the COPS bill we passed in our committee, and others, that 
we've managed to cross the partisan divide and do good government. And 
I would hope that my colleagues in the Senate at some point awaken and 
decide to start passing some of this legislation. If they do that, it 
would be greatly appreciated.
  I also want to point out that, to all of the groups that have been so 
active in trying to make this a reality, and it's a disparate bunch, 
Altria--I guess previously Phillip Morris--Sara and John--I can't read 
their last name--the Campaign for Tobacco-Free Kids, National 
Association of Attorneys General, the American Wholesale Marketers, New 
York State Association of Wholesale Marketers--Artie Katz with them, 
these are disparate groups who don't agree on very much. And we have 
worked out a bill that I think passes not only bipartisan muster, but 
has enlightened elements of the industry involved.
  And I should make one final point. There is a good deal of byplay 
going on in the 50 States about the rights of Native Americans dealing 
with their State governments. We say very clearly in this legislation, 
we are not seeking to litigate that at this time. There are two 
contradictory Supreme Court decisions that are out there, there are 
many different interpretations. We make it very clear here that what 
we're seeking to do is to empower the Federal authorities to operate 
where they're allowed to, the State authorities only to operate where 
they are. But I think that because of the support of the National 
Association of Attorneys General, folks like my State and the active 
advocacy of organizations and journalists like those at the New York 
Post, who have been beating the drum on this, we are going to finally 
get this done.
  Mr. SMITH of Texas. Mr. Speaker, I yield back the balance of my time.
  Mr. SCOTT of Virginia. Mr. Speaker, I thank the gentleman from New 
York for his hard work on this bill. He mentioned many others that have 
been working on this. He has worked so well; he had broad bipartisan 
support. So I hope it will be the pleasure of the House to pass the 
bill.
  Mr. WAXMAN. Mr. Speaker, I rise in support of H.R. 4081 because of 
the important difference it will make in reducing young people's access 
to cigarettes.
  The tobacco industry has long targeted the nation's youth. As this 
Committee learned in 1998 when I released documents from inside the 
board room of RJR, tobacco executives had an explicit strategy of 
hooking our children to create lifelong, addicted consumers.
  Recently, states have begun to fight back with stronger laws to 
prevent teenagers from buying tobacco products. These laws require 
photo IDs to be shown at the point of purchase.
  But these efforts haven't been successful in addressing the traffic 
of cigarettes through our newest, and least controlled, market: the 
internet.
  Today, a young person anywhere in the country can go online and find 
a site that sells cigarettes. He or she can find a site that doesn't 
require any kind of meaningful age verification. And then the teenager 
can order cigarettes and have them delivered right to his or her home.
  Despite the efforts of public health advocates, the flow of 
cigarettes to minors--and the evasion of state and local taxes--
continues.
  The majority of online cigarettes are shipped through the U.S. mails. 
So I am particularly supportive of this bill's inclusion of a provision 
to make cigarettes, smokeless tobacco, and roll-your-own tobacco 
nonmailable products.
  The bill has incorporated important provisions from H.R. 2932, a bill 
on tobacco nonmailability introduced by Congressman McHugh.
  I thank Congressman McHugh and Congressman Weiner for their 
leadership on this important issue, and look forward to ongoing 
collaboration in reducing smoking among America's youth.
  Mr. ROSKAM. Mr. Speaker, I rise today in support of H.R. 4081, the 
Prevent All Cigarette Trafficking, PACT, Act of 2008, and commend Mr. 
Weiner and Mr. Smith for their hard work on this important bill. By 
some accounts, my own State of Illinois has lost $214 million last year 
alone due to smuggling, counterfeit products, and Internet sales.
  The illegal trafficking of cigarettes not only results in the loss of 
Federal, State and local taxes on those products, but it is also of 
very serious consequence because much of these profits is going to fund 
criminal and terrorist activities.
  Currently, there is technology available that can dramatically 
improve the States' tobacco tax security systems. One such system, 
currently in use by the State of California with great success, about 
to be implemented by New Jersey and under consideration by other States 
as well, is manufactured in my district. My hope is we can move forward 
on this issue to ensure these new technologies can be part of a bigger 
solution.
  With that, Mr. Speaker, I look forward to working with my colleagues 
in the future to pursue ways in which the Congress can assist States in 
understanding and implementing such systems to combat smuggling of 
tobacco products.
  Mr. KING of New York. Mr. Speaker, I rise today in support of the 
Prevent All Cigarette Trafficking Act of 2007, referred to as the 
``PACT Act,'' introduced by my colleague from New York, Mr. Weiner.
  As we approach the seventh anniversary of the terrorist attacks of 
September 11, 2001, the threat from radical Islamic terrorist groups 
remains very real. Supporters of Hamas, Hezbollah, and al Qaeda are 
constantly adapting and seeking new means to further and finance their 
cause.
  As law enforcement officials make it more difficult to raise and move 
money through ``traditional'' terror financing avenues, criminal 
enterprise is increasingly the life-blood of terrorist groups. 
Smuggling illicit cigarettes is a perfect example. This illicit 
activity is more than just a matter of health concern and hundreds of 
millions of dollars in lost tax revenue--it is a matter of national 
security.
  An April 2008 Committee on Homeland Security Republican staff report 
based on numerous interviews with Federal, State, and local law 
enforcement officials, estimated that millions of dollars in profits 
generated by tight-knit, Arab-based illicit cigarette smuggling 
operations are being remitted to the Middle East,

[[Page 18232]]

where these funds directly or indirectly finance groups such as 
Hezbollah, Hamas, and al Qaeda. The report outlined how these criminal 
and terrorist organizations purchase tax free cigarettes on Indian 
reservations or in lower tobacco tax States, transport them to New York 
City, affix counterfeit tax stamps, and sell them for full retail 
price. A well-organized network could generate up to $50,000 on an 
average load of 1,500 cartons of contraband cigarettes.
  The report further found that New York State's policy of forbearance, 
despite a U.S. Supreme Court ruling that upheld States' rights to tax 
all cigarettes sold on Indian reservations to nonmembers of the tribe, 
has resulted in an environment where cigarette smuggling rings operate 
with virtual impunity.
  The PACT Act aims to attack part of the problem in States such as New 
York. It strengthens current Federal contraband cigarette laws through 
increased transparency in recordkeeping, enhanced existing penalties, 
and increased compliance standards for Internet sellers. In addition, 
it provides law enforcement more resources to help close critical gaps 
in enforcement that will make it more difficult for criminal and 
terrorist organizations to exploit disparities in tobacco tax rates 
among States.
  Another way to restrict terrorist organizations from obtaining 
revenue by exploiting low-cost cigarettes is for States like New York 
to abandon their policies of forbearance and take action to fully 
enforce their tax laws. By refusing to collect taxes on cigarettes sold 
to nonresidents of Indian reservations, the State of New York is 
fueling a boom in illicit cigarette smuggling and inflating the profit 
margins of criminal and terrorist smuggling networks. Enforcing the tax 
laws will generate up to $800 million in lost tax revenue while cutting 
off a revenue stream to those who wish to do harm to our Nation.
  Mr. Speaker, while H.R. 4081 is a good first step, I look forward to 
working with my colleagues to strengthen this bill as it moves through 
the legislative process to help keep terrorists from exploiting this 
revenue source.
  I urge my colleagues to support passage of this bill.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise today in support of 
this Act. The Prevent All Cigarette Trafficking Act, or PACT Act, 
introduced by Congressman Bob Weiner of New York, strengthens our law 
enforcement capabilities against illegal smuggling of tobacco products. 
I urge my colleagues to support this bill.
  Every year, tens of billions of cigarettes are illegally smuggled 
across State lines and across borders. This fraudulent activity not 
only harms the public health, but deprives State and local governments 
of sorely needed tax revenues.
  In fact, tax evasion is a chief motivator for cigarette smuggling--
buying the cigarettes in a State where the cigarette tax is low, and 
selling them in a State with a higher tax. Because of the tax evasion, 
the trafficker can sell the cigarettes at a discount and still turn an 
illicit profit.
  States lose a billion dollars in uncollected taxes each year as a 
result of cigarette smuggling. The illicit profit also helps finance 
other criminal activity--a revenue stream for organized crime.
  Because of the scope and interstate nature of this activity, States 
cannot adequately address it on their own. It has long been recognized 
as a Federal matter.
  But the existing Federal statutes--the Jenkins Act, which requires 
reporting interstate cigarette sales to tax officials in the buyer's 
State, and the Contraband Cigarette Trafficking Act, which prohibits 
knowingly dealing in contraband cigarettes or smokeless tobacco--are 
simply not up to the task in the Internet Age.
  The Internet, in particular, makes it possible for today's tobacco 
smugglers to be even more mobile and invisible, and to operate with 
near impunity.
  Even when the smugglers can be identified and pursued, they can 
simply shut down operations and quickly reappear under a new name and 
website.
  The PACT Act addresses the shortcomings in current law by targeting 
the delivery systems for illegal Internet tobacco sales--the postal 
system and commercial delivery services.
  With limited exceptions, sending tobacco products through the U.S. 
mail will be criminally prohibited. And vendors using commercial 
delivery services for retail sales will be required to notify the tax 
authorities in the receiving State, conspicuously label all tobacco 
products, verify that the purchasers are of legal age, and keep careful 
records of all sales.
  The bill raises cigarette trafficking from a misdemeanor to a felony. 
And it authorizes the Bureau of Alcohol, Tobacco, Firearms and 
Explosives to inspect the premises and files of sellers of significant 
quantities of cigarettes or smokeless tobacco.
  H.R. 4081 enjoys support from a diverse spectrum of entities, 
including the National Association of Convenience Stores, Altria, the 
Campaign for Tobacco-Free Kids, the American Wholesale Marketers 
Association, and the National Association of Attorneys General, among 
others.
  I commend my colleague, Mr. Weiner, for his leadership on this 
important legislation. I also commend Judiciary Committee Ranking 
Member Lamar Smith for his leadership in making this a bipartisan 
effort.
  Mr. SCOTT of Virginia. Mr. Speaker, I yield back the balance of my 
time.
  The SPEAKER pro tempore (Mr. Cuellar). The question is on the motion 
offered by the gentleman from Virginia (Mr. Scott) that the House 
suspend the rules and pass the bill, H.R. 4081, as amended.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds 
being in the affirmative, the ayes have it.
  Mr. SMITH of Texas. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.

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