[Congressional Record (Bound Edition), Volume 156 (2010), Part 3]
[Senate]
[Pages 3248-3255]
[From the U.S. Government Publishing Office, www.gpo.gov]




             PREVENT ALL CIGARETTE TRAFFICKING ACT OF 2009

  Mr. DURBIN. Mr. President, I ask unanimous consent that the Senate 
proceed to the immediate consideration of Calendar No. 216, S. 1147.
  The PRESIDING OFFICER. The clerk will report the bill by title.
  The assistant legislative clerk read as follows:

       A bill (S. 1147) to prevent tobacco smuggling, to ensure 
     the collection of all tobacco taxes, and for other purposes.

  There being no objection, the Senate proceeded to consider the bill 
which had been reported from the Committee on the Judiciary with an 
amendment to strike all after the enacting clause and insert in lieu 
thereof the following:

     SECTION 1. SHORT TITLE; FINDINGS; PURPOSES.

       (a) Short Title.--This Act may be cited as the ``Prevent 
     All Cigarette Trafficking Act of 2009'' or ``PACT Act''.
       (b) Findings.--Congress finds that--
       (1) the sale of illegal cigarettes and smokeless tobacco 
     products significantly reduces Federal, State, and local 
     government revenues, with Internet sales alone accounting for 
     billions of dollars of lost Federal, State, and local tobacco 
     tax revenue each year;
       (2) Hezbollah, Hamas, al Qaeda, and other terrorist 
     organizations have profited from trafficking in illegal 
     cigarettes or counterfeit cigarette tax stamps;
       (3) terrorist involvement in illicit cigarette trafficking 
     will continue to grow because of the large profits such 
     organizations can earn;
       (4) the sale of illegal cigarettes and smokeless tobacco 
     over the Internet, and through mail, fax, or phone orders, 
     makes it cheaper and easier for children to obtain tobacco 
     products;
       (5) the majority of Internet and other remote sales of 
     cigarettes and smokeless tobacco are being made without 
     adequate precautions to protect against sales to children, 
     without the payment of applicable taxes, and without 
     complying with the nominal registration and reporting 
     requirements in existing Federal law;
       (6) unfair competition from illegal sales of cigarettes and 
     smokeless tobacco is taking billions of dollars of sales away 
     from law-abiding retailers throughout the United States;
       (7) with rising State and local tobacco tax rates, the 
     incentives for the illegal sale of cigarettes and smokeless 
     tobacco have increased;
       (8) the number of active tobacco investigations being 
     conducted by the Bureau of Alcohol, Tobacco, Firearms, and 
     Explosives rose to 452 in 2005;
       (9) the number of Internet vendors in the United States and 
     in foreign countries that sell cigarettes and smokeless 
     tobacco to buyers in the United States increased from only 
     about 40 in 2000 to more than 500 in 2005; and
       (10) the intrastate sale of illegal cigarettes and 
     smokeless tobacco over the Internet has a substantial effect 
     on interstate commerce.
       (c) Purposes.--It is the purpose of this Act to--
       (1) require Internet and other remote sellers of cigarettes 
     and smokeless tobacco to comply with the same laws that apply 
     to law-abiding tobacco retailers;
       (2) create strong disincentives to illegal smuggling of 
     tobacco products;
       (3) provide government enforcement officials with more 
     effective enforcement tools to combat tobacco smuggling;
       (4) make it more difficult for cigarette and smokeless 
     tobacco traffickers to engage in and profit from their 
     illegal activities;
       (5) increase collections of Federal, State, and local 
     excise taxes on cigarettes and smokeless tobacco; and
       (6) prevent and reduce youth access to inexpensive 
     cigarettes and smokeless tobacco through illegal Internet or 
     contraband sales.

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

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

     ``SECTION 1. DEFINITIONS.

       ``As used in this Act, the following definitions apply:
       ``(1) Attorney general.--The term `attorney general', with 
     respect to a State, means the attorney general or other chief 
     law enforcement officer of the State.
       ``(2) Cigarette.--
       ``(A) In general.--The term `cigarette'--

[[Page 3249]]

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

     ``SEC. 2A. DELIVERY SALES.

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

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

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

       ``(I) obtaining the full name, birth date, and residential 
     address of that person; and

[[Page 3250]]

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

       ``(B) Limitation.--No database being used for age and 
     identity verification under subparagraph (A)(iii) shall be in 
     the possession or under the control of the delivery seller, 
     or be subject to any changes or supplementation by the 
     delivery seller.
       ``(c) Records.--
       ``(1) In general.--Each delivery seller shall keep a record 
     of any delivery sale, including all of the information 
     described in section 2(a)(2), organized by the State, and 
     within the State, by the city or town and by zip code, into 
     which the delivery sale is so made.
       ``(2) Record retention.--Records of a delivery sale shall 
     be kept as described in paragraph (1) until the end of the 
     4th full calendar year that begins after the date of the 
     delivery sale.
       ``(3) Access for officials.--Records kept under paragraph 
     (1) shall be made available to tobacco tax administrators of 
     the States, to local governments and Indian tribes that apply 
     local or tribal taxes on cigarettes or smokeless tobacco, to 
     the attorneys general of the States, to the chief law 
     enforcement officers of the local governments and Indian 
     tribes, and to the Attorney General of the United States in 
     order to ensure the compliance of persons making delivery 
     sales with the requirements of this Act.
       ``(d) Delivery.--
       ``(1) In general.--Except as provided in paragraph (2), no 
     delivery seller may sell or deliver to any consumer, or 
     tender to any common carrier or other delivery service, any 
     cigarettes or smokeless tobacco pursuant to a delivery sale 
     unless, in advance of the sale, delivery, or tender--
       ``(A) any cigarette or smokeless tobacco excise tax that is 
     imposed by the State in which the cigarettes or smokeless 
     tobacco are to be delivered has been paid to the State;
       ``(B) any cigarette or smokeless tobacco excise tax that is 
     imposed by the local government of the place in which the 
     cigarettes or smokeless tobacco are to be delivered has been 
     paid to the local government; and
       ``(C) any required stamps or other indicia that the excise 
     tax has been paid are properly affixed or applied to the 
     cigarettes or smokeless tobacco.
       ``(2) Exception.--Paragraph (1) does not apply to a 
     delivery sale of smokeless tobacco if the law of the State or 
     local government of the place where the smokeless tobacco is 
     to be delivered requires or otherwise provides that delivery 
     sellers collect the excise tax from the consumer and remit 
     the excise tax to the State or local government, and the 
     delivery seller complies with the requirement.
       ``(e) List of Unregistered or Noncompliant Delivery 
     Sellers.--
       ``(1) In general.--
       ``(A) Initial list.--Not later than 90 days after this 
     subsection goes into effect under the Prevent All Cigarette 
     Trafficking Act of 2009, the Attorney General of the United 
     States shall compile a list of delivery sellers of cigarettes 
     or smokeless tobacco that have not registered with the 
     Attorney General of the United States pursuant to section 
     2(a), or that are otherwise not in compliance with this Act, 
     and--
       ``(i) distribute the list to--

       ``(I) the attorney general and tax administrator of every 
     State;
       ``(II) common carriers and other persons that deliver small 
     packages to consumers in interstate commerce, including the 
     United States Postal Service; and
       ``(III) any other person that the Attorney General of the 
     United States determines can promote the effective 
     enforcement of this Act; and

       ``(ii) publicize and make the list available to any other 
     person engaged in the business of interstate deliveries or 
     who delivers cigarettes or smokeless tobacco in or into any 
     State.
       ``(B) List contents.--To the extent known, the Attorney 
     General of the United States shall include, for each delivery 
     seller on the list described in subparagraph (A)--
       ``(i) all names the delivery seller uses or has used in the 
     transaction of its business or on packages delivered to 
     customers;
       ``(ii) all addresses from which the delivery seller does or 
     has done business, or ships or has shipped cigarettes or 
     smokeless tobacco;
       ``(iii) the website addresses, primary e-mail address, and 
     phone number of the delivery seller; and
       ``(iv) any other information that the Attorney General of 
     the United States determines would facilitate compliance with 
     this subsection by recipients of the list.
       ``(C) Updating.--The Attorney General of the United States 
     shall update and distribute the list described in 
     subparagraph (A) at least once every 4 months, and may 
     distribute the list and any updates by regular mail, 
     electronic mail, or any other reasonable means, or by 
     providing recipients with access to the list through a 
     nonpublic website that the Attorney General of the United 
     States regularly updates.
       ``(D) State, local, or tribal additions.--The Attorney 
     General of the United States shall include in the list 
     described in subparagraph (A) any noncomplying delivery 
     sellers identified by any State, local, or tribal government 
     under paragraph (6), and shall distribute the list to the 
     attorney general or chief law enforcement official and the 
     tax administrator of any government submitting any such 
     information, and to any common carriers or other persons who 
     deliver small packages to consumers identified by any 
     government pursuant to paragraph (6).
       ``(E) Accuracy and completeness of list of noncomplying 
     delivery sellers.--In preparing and revising the list 
     described in subparagraph (A), the Attorney General of the 
     United States shall--
       ``(i) use reasonable procedures to ensure maximum possible 
     accuracy and completeness of the records and information 
     relied on for the purpose of determining that a delivery 
     seller is not in compliance with this Act;
       ``(ii) not later than 14 days before including a delivery 
     seller on the list, make a reasonable attempt to send notice 
     to the delivery seller by letter, electronic mail, or other 
     means that the delivery seller is being placed on the list, 
     which shall cite the relevant provisions of this Act and the 
     specific reasons for which the delivery seller is being 
     placed on the list;
       ``(iii) provide an opportunity to the delivery seller to 
     challenge placement on the list;
       ``(iv) investigate each challenge described in clause (iii) 
     by contacting the relevant Federal, State, tribal, and local 
     law enforcement officials, and provide the specific findings 
     and results of the investigation to the delivery seller not 
     later than 30 days after the date on which the challenge is 
     made; and
       ``(v) if the Attorney General of the United States 
     determines that the basis for including a delivery seller on 
     the list is inaccurate, based on incomplete information, or 
     cannot be verified, promptly remove the delivery seller from 
     the list as appropriate and notify each appropriate Federal, 
     State, tribal, and local authority of the determination.
       ``(F) Confidentiality.--The list described in subparagraph 
     (A) shall be confidential, and any person receiving the list 
     shall maintain the confidentiality of the list and may 
     deliver the list, for enforcement purposes, to any government 
     official or to any common carrier or other person that 
     delivers tobacco products or small packages to consumers. 
     Nothing in this section shall prohibit a common carrier, the 
     United States Postal Service, or any other person receiving 
     the list from discussing with a listed delivery seller the 
     inclusion of the delivery seller on the list and the 
     resulting effects on any services requested by the listed 
     delivery seller.
       ``(2) Prohibition on delivery.--
       ``(A) In general.--Commencing on the date that is 60 days 
     after the date of the initial distribution or availability of 
     the list described in paragraph (1)(A), no person who 
     receives the list under paragraph (1), and no person who 
     delivers cigarettes or smokeless tobacco to consumers, shall 
     knowingly complete, cause to be completed, or complete its 
     portion of a delivery of any package for any person whose 
     name and address are on the list, unless--
       ``(i) the person making the delivery knows or believes in 
     good faith that the item does not include cigarettes or 
     smokeless tobacco;
       ``(ii) the delivery is made to a person lawfully engaged in 
     the business of manufacturing, distributing, or selling 
     cigarettes or smokeless tobacco; or
       ``(iii) the package being delivered weighs more than 100 
     pounds and the person making the delivery does not know or 
     have reasonable cause to believe that the package contains 
     cigarettes or smokeless tobacco.
       ``(B) Implementation of updates.--Commencing on the date 
     that is 30 days after the date of the distribution or 
     availability of any updates or corrections to the list 
     described in paragraph (1)(A), all recipients and all common 
     carriers or other persons that deliver cigarettes or 
     smokeless tobacco to consumers shall be subject to 
     subparagraph (A) in regard to the corrections or updates.
       ``(3) Exemptions.--
       ``(A) In general.--Subsection (b)(2) and any requirements 
     or restrictions placed directly on common carriers under this 
     subsection, including subparagraphs (A) and (B) of paragraph 
     (2), shall not apply to a common carrier that--
       ``(i) is subject to a settlement agreement described in 
     subparagraph (B); or
       ``(ii) if a settlement agreement described in subparagraph 
     (B) to which the common carrier is a party is terminated or 
     otherwise becomes inactive, is administering and enforcing 
     policies and practices throughout the United States that are 
     at least as stringent as the agreement.
       ``(B) Settlement agreement.--A settlement agreement 
     described in this subparagraph--
       ``(i) is a settlement agreement relating to tobacco product 
     deliveries to consumers; and
       ``(ii) includes--

       ``(I) the Assurance of Discontinuance entered into by the 
     Attorney General of New York and DHL Holdings USA, Inc. and 
     DHL Express (USA), Inc. on or about July 1, 2005, the 
     Assurance of Discontinuance entered into by the Attorney 
     General of New York and United Parcel Service, Inc. on or 
     about October 21, 2005, and the Assurance of Compliance 
     entered into by the Attorney General of New York and Federal 
     Express Corporation and FedEx Ground Package Systems, Inc. on 
     or about February 3, 2006, if each of those agreements is 
     honored throughout the United States to block illegal 
     deliveries of cigarettes or smokeless tobacco to consumers; 
     and
       ``(II) any other active agreement between a common carrier 
     and a State that operates throughout the United States to 
     ensure that no deliveries of cigarettes or smokeless tobacco 
     shall be made to consumers or illegally operating Internet or 
     mail-order sellers and that any such

[[Page 3251]]

     deliveries to consumers shall not be made to minors or 
     without payment to the States and localities where the 
     consumers are located of all taxes on the tobacco products.

       ``(4) Shipments from persons on list.--
       ``(A) In general.--If a common carrier or other delivery 
     service delays or interrupts the delivery of a package in the 
     possession of the common carrier or delivery service because 
     the common carrier or delivery service determines or has 
     reason to believe that the person ordering the delivery is on 
     a list described in paragraph (1)(A) and that clauses (i), 
     (ii), and (iii) of paragraph (2)(A) do not apply--
       ``(i) the person ordering the delivery shall be obligated 
     to pay--

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

       ``(ii) if the package is determined not to be deliverable, 
     the common carrier or other delivery service shall offer to 
     provide the package and its contents to a Federal, State, or 
     local law enforcement agency.
       ``(B) Records.--A common carrier or other delivery service 
     shall maintain, for a period of 5 years, any records kept in 
     the ordinary course of business relating to any delivery 
     interrupted under this paragraph and provide that 
     information, upon request, to the Attorney General of the 
     United States or to the attorney general or chief law 
     enforcement official or tax administrator of any State, 
     local, or tribal government.
       ``(C) Confidentiality.--Any person receiving records under 
     subparagraph (B) shall--
       ``(i) use the records solely for the purposes of the 
     enforcement of this Act and the collection of any taxes owed 
     on related sales of cigarettes and smokeless tobacco; and
       ``(ii) keep confidential any personal information in the 
     records not otherwise required for such purposes.
       ``(5) Preemption.--
       ``(A) In general.--No State, local, or tribal government, 
     nor any political authority of 2 or more State, local, or 
     tribal governments, may enact or enforce any law or 
     regulation relating to delivery sales that restricts 
     deliveries of cigarettes or smokeless tobacco to consumers by 
     common carriers or other delivery services on behalf of 
     delivery sellers by--
       ``(i) requiring that the common carrier or other delivery 
     service verify the age or identity of the consumer accepting 
     the delivery by requiring the person who signs to accept 
     delivery of the shipping container to provide proof, in the 
     form of a valid, government-issued identification bearing a 
     photograph of the individual, that the person is at least the 
     minimum age required for the legal sale or purchase of 
     tobacco products, as determined by either State or local law 
     at the place of delivery;
       ``(ii) requiring that the common carrier or other delivery 
     service obtain a signature from the consumer accepting the 
     delivery;
       ``(iii) requiring that the common carrier or other delivery 
     service verify that all applicable taxes have been paid;
       ``(iv) requiring that packages delivered by the common 
     carrier or other delivery service contain any particular 
     labels, notice, or markings; or
       ``(v) prohibiting common carriers or other delivery 
     services from making deliveries on the basis of whether the 
     delivery seller is or is not identified on any list of 
     delivery sellers maintained and distributed by any entity 
     other than the Federal Government.
       ``(B) Relationship to other laws.--Except as provided in 
     subparagraph (C), nothing in this paragraph shall be 
     construed to nullify, expand, restrict, or otherwise amend or 
     modify--
       ``(i) section 14501(c)(1) or 41713(b)(4) of title 49, 
     United States Code;
       ``(ii) any other restrictions in Federal law on the ability 
     of State, local, or tribal governments to regulate common 
     carriers; or
       ``(iii) any provision of State, local, or tribal law 
     regulating common carriers that is described in section 
     14501(c)(2) or 41713(b)(4)(B) of title 49 of the United 
     States Code.
       ``(C) State laws prohibiting delivery sales.--
       ``(i) In general.--Except as provided in clause (ii), 
     nothing in the Prevent All Cigarette Trafficking Act of 2009, 
     the amendments made by that Act, or in any other Federal 
     statute shall be construed to preempt, supersede, or 
     otherwise limit or restrict State laws prohibiting the 
     delivery sale, or the shipment or delivery pursuant to a 
     delivery sale, of cigarettes or other tobacco products to 
     individual consumers or personal residences.
       ``(ii) Exemptions.--No State may enforce against a common 
     carrier a law prohibiting the delivery of cigarettes or other 
     tobacco products to individual consumers or personal 
     residences without proof that the common carrier is not 
     exempt under paragraph (3) of this subsection.
       ``(6) State, local, and tribal additions.--
       ``(A) In general.--Any State, local, or tribal government 
     shall provide the Attorney General of the United States 
     with--
       ``(i) all known names, addresses, website addresses, and 
     other primary contact information of any delivery seller 
     that--

       ``(I) offers for sale or makes sales of cigarettes or 
     smokeless tobacco in or into the State, locality, or tribal 
     land; and
       ``(II) has failed to register with or make reports to the 
     respective tax administrator as required by this Act, or that 
     has been found in a legal proceeding to have otherwise failed 
     to comply with this Act; and

       ``(ii) a list of common carriers and other persons who make 
     deliveries of cigarettes or smokeless tobacco in or into the 
     State, locality, or tribal land.
       ``(B) Updates.--Any government providing a list to the 
     Attorney General of the United States under subparagraph (A) 
     shall also provide updates and corrections every 4 months 
     until such time as the government notifies the Attorney 
     General of the United States in writing that the government 
     no longer desires to submit information to supplement the 
     list described in paragraph (1)(A).
       ``(C) Removal after withdrawal.--Upon receiving written 
     notice that a government no longer desires to submit 
     information under subparagraph (A), the Attorney General of 
     the United States shall remove from the list described in 
     paragraph (1)(A) any persons that are on the list solely 
     because of the prior submissions of the government of the 
     list of the government of noncomplying delivery sellers of 
     cigarettes or smokeless tobacco or a subsequent update or 
     correction by the government.
       ``(7) Deadline to incorporate additions.--The Attorney 
     General of the United States shall--
       ``(A) include any delivery seller identified and submitted 
     by a State, local, or tribal government under paragraph (6) 
     in any list or update that is distributed or made available 
     under paragraph (1) on or after the date that is 30 days 
     after the date on which the information is received by the 
     Attorney General of the United States; and
       ``(B) distribute any list or update described in 
     subparagraph (A) to any common carrier or other person who 
     makes deliveries of cigarettes or smokeless tobacco that has 
     been identified and submitted by a government pursuant to 
     paragraph (6).
       ``(8) Notice to delivery sellers.--Not later than 14 days 
     before including any delivery seller on the initial list 
     described in paragraph (1)(A), or on an update to the list 
     for the first time, the Attorney General of the United States 
     shall make a reasonable attempt to send notice to the 
     delivery seller by letter, electronic mail, or other means 
     that the delivery seller is being placed on the list or 
     update, with that notice citing the relevant provisions of 
     this Act.
       ``(9) Limitations.--
       ``(A) In general.--Any common carrier or other person 
     making a delivery subject to this subsection shall not be 
     required or otherwise obligated to--
       ``(i) determine whether any list distributed or made 
     available under paragraph (1) is complete, accurate, or up-
     to-date;
       ``(ii) determine whether a person ordering a delivery is in 
     compliance with this Act; or
       ``(iii) open or inspect, pursuant to this Act, any package 
     being delivered to determine its contents.
       ``(B) Alternate names.--Any common carrier or other person 
     making a delivery subject to this subsection--
       ``(i) shall not be required to make any inquiries or 
     otherwise determine whether a person ordering a delivery is a 
     delivery seller on the list described in paragraph (1)(A) who 
     is using a different name or address in order to evade the 
     related delivery restrictions; and
       ``(ii) shall not knowingly deliver any packages to 
     consumers for any delivery seller on the list described in 
     paragraph (1)(A) who the common carrier or other delivery 
     service knows is a delivery seller who is on the list and is 
     using a different name or address to evade the delivery 
     restrictions of paragraph (2).
       ``(C) Penalties.--Any common carrier or person in the 
     business of delivering packages on behalf of other persons 
     shall not be subject to any penalty under section 14101(a) of 
     title 49, United States Code, or any other provision of law 
     for--
       ``(i) not making any specific delivery, or any deliveries 
     at all, on behalf of any person on the list described in 
     paragraph (1)(A);
       ``(ii) refusing, as a matter of regular practice and 
     procedure, to make any deliveries, or any deliveries in 
     certain States, of any cigarettes or smokeless tobacco for 
     any person or for any person not in the business of 
     manufacturing, distributing, or selling cigarettes or 
     smokeless tobacco; or
       ``(iii) delaying or not making a delivery for any person 
     because of reasonable efforts to comply with this Act.
       ``(D) Other limits.--Section 2 and subsections (a), (b), 
     (c), and (d) of this section shall not be interpreted to 
     impose any responsibilities, requirements, or liability on 
     common carriers.
       ``(f) Presumption.--For purposes of this Act, a delivery 
     sale shall be deemed to have occurred in the State and place 
     where the buyer obtains personal possession of the cigarettes 
     or smokeless tobacco, and a delivery pursuant to a delivery 
     sale is deemed to have been initiated or ordered by the 
     delivery seller.''.
       (d) Penalties.--The Jenkins Act is amended by striking 
     section 3 and inserting the following:

     ``SEC. 3. PENALTIES.

       ``(a) Criminal Penalties.--
       ``(1) In general.--Except as provided in paragraph (2), 
     whoever knowingly violates this Act shall be imprisoned for 
     not more than 3 years, fined under title 18, United States 
     Code, or both.
       ``(2) Exceptions.--
       ``(A) Governments.--Paragraph (1) shall not apply to a 
     State, local, or tribal government.
       ``(B) Delivery violations.--A common carrier or independent 
     delivery service, or employee of a common carrier or 
     independent delivery service, shall be subject to criminal 
     penalties under paragraph (1) for a violation of section

[[Page 3252]]

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

     ``SEC. 4. ENFORCEMENT.

       ``(a) In General.--The United States district courts shall 
     have jurisdiction to prevent and restrain violations of this 
     Act and to provide other appropriate injunctive or equitable 
     relief, including money damages, for the violations.
       ``(b) Authority of the Attorney General.--The Attorney 
     General of the United States shall administer and enforce 
     this Act.
       ``(c) State, Local, and Tribal Enforcement.--
       ``(1) In general.--
       ``(A) Standing.--A State, through its attorney general, or 
     a local government or Indian tribe that levies a tax subject 
     to section 2A(a)(3), through its chief law enforcement 
     officer, may bring an action in a United States district 
     court to prevent and restrain violations of this Act by any 
     person or to obtain any other appropriate relief from any 
     person for violations of this Act, including civil penalties, 
     money damages, and injunctive or other equitable relief.
       ``(B) Sovereign immunity.--Nothing in this Act shall be 
     deemed to abrogate or constitute a waiver of any sovereign 
     immunity of a State or local government or Indian tribe 
     against any unconsented lawsuit under this Act, or otherwise 
     to restrict, expand, or modify any sovereign immunity of a 
     State or local government or Indian tribe.
       ``(2) Provision of information.--A State, through its 
     attorney general, or a local government or Indian tribe that 
     levies a tax subject to section 2A(a)(3), through its chief 
     law enforcement officer, may provide evidence of a violation 
     of this Act by any person not subject to State, local, or 
     tribal government enforcement actions for violations of this 
     Act to the Attorney General of the United States or a United 
     States attorney, who shall take appropriate actions to 
     enforce this Act.
       ``(3) Use of penalties collected.--
       ``(A) In general.--There is established a separate account 
     in the Treasury known as the `PACT Anti-Trafficking Fund'. 
     Notwithstanding any other provision of law and subject to 
     subparagraph (B), an amount equal to 50 percent of any 
     criminal and civil penalties collected by the Federal 
     Government in enforcing this Act shall be transferred into 
     the PACT Anti-Trafficking Fund and shall be available to the 
     Attorney General of the United States for purposes of 
     enforcing this Act and other laws relating to contraband 
     tobacco products.
       ``(B) Allocation of funds.--Of the amount available to the 
     Attorney General of the United States under subparagraph (A), 
     not less than 50 percent shall be made available only to the 
     agencies and offices within the Department of Justice that 
     were responsible for the enforcement actions in which the 
     penalties concerned were imposed or for any underlying 
     investigations.
       ``(4) Nonexclusivity of remedy.--
       ``(A) In general.--The remedies available under this 
     section and section 3 are in addition to any other remedies 
     available under Federal, State, local, tribal, or other law.
       ``(B) State court proceedings.--Nothing in this Act shall 
     be construed to expand, restrict, or otherwise modify any 
     right of an authorized State official to proceed in State 
     court, or take other enforcement actions, on the basis of an 
     alleged violation of State or other law.
       ``(C) Tribal court proceedings.--Nothing in this Act shall 
     be construed to expand, restrict, or otherwise modify any 
     right of an authorized Indian tribal government official to 
     proceed in tribal court, or take other enforcement actions, 
     on the basis of an alleged violation of tribal law.
       ``(D) Local government enforcement.--Nothing in this Act 
     shall be construed to expand, restrict, or otherwise modify 
     any right of an authorized local government official to 
     proceed in State court, or take other enforcement actions, on 
     the basis of an alleged violation of local or other law.
       ``(d) Persons Dealing in Tobacco Products.--Any person who 
     holds a permit under section 5712 of the Internal Revenue 
     Code of 1986 (regarding permitting of manufacturers and 
     importers of tobacco products and export warehouse 
     proprietors) may bring an action in an appropriate United 
     States district court to prevent and restrain violations of 
     this Act by any person other than a State, local, or tribal 
     government.
       ``(e) Notice.--
       ``(1) Persons dealing in tobacco products.--Any person who 
     commences a civil action under subsection (d) shall inform 
     the Attorney General of the United States of the action.
       ``(2) State, local, and tribal actions.--It is the sense of 
     Congress that the attorney general of any State, or chief law 
     enforcement officer of any locality or tribe, that commences 
     a civil action under this section should inform the Attorney 
     General of the United States of the action.
       ``(f) Public Notice.--
       ``(1) In general.--The Attorney General of the United 
     States shall make available to the public, by posting 
     information on the Internet and by other appropriate means, 
     information regarding all enforcement actions brought by the 
     United States, or reported to the Attorney General of the 
     United States, under this section, including information 
     regarding the resolution of the enforcement actions and how 
     the Attorney General of the United States has responded to 
     referrals of evidence of violations pursuant to subsection 
     (c)(2).
       ``(2) Reports to congress.--Not later than 1 year after the 
     date of enactment of the Prevent All Cigarette Trafficking 
     Act of 2009, and every year thereafter until the date that is 
     5 years after such date of enactment, the Attorney General of 
     the United States shall submit to Congress a report 
     containing the information described in paragraph (1).''.

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

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

     ``Sec. 1716E. Tobacco products as nonmailable

       ``(a) Prohibition.--
       ``(1) In general.--All cigarettes and smokeless tobacco (as 
     those terms are defined in section 1 of the Act of October 
     19, 1949, commonly referred to as the Jenkins Act) are 
     nonmailable and shall not be deposited in or carried through 
     the mails. The United States Postal Service shall not accept 
     for delivery or transmit through the mails any package that 
     it knows or has reasonable cause to believe contains any 
     cigarettes or smokeless tobacco made nonmailable by this 
     paragraph.
       ``(2) Reasonable cause.--For the purposes of this 
     subsection reasonable cause includes--
       ``(A) a statement on a publicly available website, or an 
     advertisement, by any person that the person will mail matter 
     which is nonmailable under this section in return for 
     payment; or
       ``(B) the fact that the person is on the list created under 
     section 2A(e) of the Jenkins Act.
       ``(b) Exceptions.--
       ``(1) Cigars.--Subsection (a) shall not apply to cigars (as 
     defined in section 5702(a) of the Internal Revenue Code of 
     1986).
       ``(2) Geographic exception.--Subsection (a) shall not apply 
     to mailings within the State of Alaska or within the State of 
     Hawaii.
       ``(3) Business purposes.--
       ``(A) In general.--Subsection (a) shall not apply to 
     tobacco products mailed only--
       ``(i) for business purposes between legally operating 
     businesses that have all applicable State and Federal 
     Government licenses or permits and are engaged in tobacco 
     product manufacturing, distribution, wholesale, export, 
     import, testing, investigation, or research; or
       ``(ii) for regulatory purposes between any business 
     described in clause (i) and an agency of the Federal 
     Government or a State government.
       ``(B) Rules.--
       ``(i) In general.--Not later than 180 days after the date 
     of enactment of the Prevent All Cigarette Trafficking Act of 
     2009, the Postmaster General shall issue a final rule which 
     shall establish the standards and requirements that apply to 
     all mailings described in subparagraph (A).
       ``(ii) Contents.--The final rule issued under clause (i) 
     shall require--

       ``(I) the United States Postal Service to verify that any 
     person submitting an otherwise nonmailable tobacco product 
     into the mails as authorized under this paragraph is a 
     business or

[[Page 3253]]

     government agency permitted to make a mailing under this 
     paragraph;
       ``(II) the United States Postal Service to ensure that any 
     recipient of an otherwise nonmailable tobacco product sent 
     through the mails under this paragraph is a business or 
     government agency that may lawfully receive the product;
       ``(III) that any mailing described in subparagraph (A) 
     shall be sent through the systems of the United States Postal 
     Service that provide for the tracking and confirmation of the 
     delivery;
       ``(IV) that the identity of the business or government 
     entity submitting the mailing containing otherwise 
     nonmailable tobacco products for delivery and the identity of 
     the business or government entity receiving the mailing are 
     clearly set forth on the package;
       ``(V) the United States Postal Service to maintain 
     identifying information described in subclause (IV) during 
     the 3-year period beginning on the date of the mailing and 
     make the information available to the Postal Service, the 
     Attorney General of the United States, and to persons 
     eligible to bring enforcement actions under section 3(d) of 
     the Prevent All Cigarette Trafficking Act of 2009;
       ``(VI) that any mailing described in subparagraph (A) be 
     marked with a United States Postal Service label or marking 
     that makes it clear to employees of the United States Postal 
     Service that it is a permitted mailing of otherwise 
     nonmailable tobacco products that may be delivered only to a 
     permitted government agency or business and may not be 
     delivered to any residence or individual person; and
       ``(VII) that any mailing described in subparagraph (A) be 
     delivered only to a verified employee of the recipient 
     business or government agency, who is not a minor and who 
     shall be required to sign for the mailing.

       ``(C) Definition.--In this paragraph, the term `minor' 
     means an individual who is less than the minimum age required 
     for the legal sale or purchase of tobacco products as 
     determined by applicable law at the place the individual is 
     located.
       ``(4) Certain individuals.--
       ``(A) In general.--Subsection (a) shall not apply to 
     tobacco products mailed by individuals who are not minors for 
     noncommercial purposes, including the return of a damaged or 
     unacceptable tobacco product to the manufacturer.
       ``(B) Rules.--
       ``(i) In general.--Not later than 180 days after the date 
     of enactment of the Prevent All Cigarette Trafficking Act of 
     2009, the Postmaster General shall issue a final rule which 
     shall establish the standards and requirements that apply to 
     all mailings described in subparagraph (A).
       ``(ii) Contents.--The final rule issued under clause (i) 
     shall require--

       ``(I) the United States Postal Service to verify that any 
     person submitting an otherwise nonmailable tobacco product 
     into the mails as authorized under this paragraph is the 
     individual identified on the return address label of the 
     package and is not a minor;
       ``(II) for a mailing to an individual, the United States 
     Postal Service to require the person submitting the otherwise 
     nonmailable tobacco product into the mails as authorized by 
     this paragraph to affirm that the recipient is not a minor;
       ``(III) that any package mailed under this paragraph shall 
     weigh not more than 10 ounces;
       ``(IV) that any mailing described in subparagraph (A) shall 
     be sent through the systems of the United States Postal 
     Service that provide for the tracking and confirmation of the 
     delivery;
       ``(V) that a mailing described in subparagraph (A) shall 
     not be delivered or placed in the possession of any 
     individual who has not been verified as not being a minor;
       ``(VI) for a mailing described in subparagraph (A) to an 
     individual, that the United States Postal Service shall 
     deliver the package only to a recipient who is verified not 
     to be a minor at the recipient address or transfer it for 
     delivery to an Air/Army Postal Office or Fleet Postal Office 
     number designated in the recipient address; and
       ``(VII) that no person may initiate more than 10 mailings 
     described in subparagraph (A) during any 30-day period.

       ``(C) Definition.--In this paragraph, the term `minor' 
     means an individual who is less than the minimum age required 
     for the legal sale or purchase of tobacco products as 
     determined by applicable law at the place the individual is 
     located.
       ``(5) Exception for mailings for consumer testing by 
     manufacturers.--
       ``(A) In general.--Subject to subparagraph (B), subsection 
     (a) shall not preclude a legally operating cigarette 
     manufacturer or a legally authorized agent of a legally 
     operating cigarette manufacturer from using the United States 
     Postal Service to mail cigarettes to verified adult smoker 
     solely for consumer testing purposes, if--
       ``(i) the cigarette manufacturer has a permit, in good 
     standing, issued under section 5713 of the Internal Revenue 
     Code of 1986;
       ``(ii) the package of cigarettes mailed under this 
     paragraph contains not more than 12 packs of cigarettes (240 
     cigarettes);
       ``(iii) the recipient does not receive more than 1 package 
     of cigarettes from any 1 cigarette manufacturer under this 
     paragraph during any 30-day period;
       ``(iv) all taxes on the cigarettes mailed under this 
     paragraph levied by the State and locality of delivery are 
     paid to the State and locality before delivery, and tax 
     stamps or other tax-payment indicia are affixed to the 
     cigarettes as required by law; and
       ``(v)(I) the recipient has not made any payments of any 
     kind in exchange for receiving the cigarettes;
       ``(II) the recipient is paid a fee by the manufacturer or 
     agent of the manufacturer for participation in consumer 
     product tests; and
       ``(III) the recipient, in connection with the tests, 
     evaluates the cigarettes and provides feedback to the 
     manufacturer or agent.
       ``(B) Limitations.--Subparagraph (A) shall not--
       ``(i) permit a mailing of cigarettes to an individual 
     located in any State that prohibits the delivery or shipment 
     of cigarettes to individuals in the State, or preempt, limit, 
     or otherwise affect any related State laws; or
       ``(ii) permit a manufacturer, directly or through a legally 
     authorized agent, to mail cigarettes in any calendar year in 
     a total amount greater than 1 percent of the total cigarette 
     sales of the manufacturer in the United States during the 
     calendar year before the date of the mailing.
       ``(C) Rules.--
       ``(i) In general.--Not later than 180 days after the date 
     of enactment of the Prevent All Cigarette Trafficking Act of 
     2009, the Postmaster General shall issue a final rule which 
     shall establish the standards and requirements that apply to 
     all mailings described in subparagraph (A).
       ``(ii) Contents.--The final rule issued under clause (i) 
     shall require--

       ``(I) the United States Postal Service to verify that any 
     person submitting a tobacco product into the mails under this 
     paragraph is a legally operating cigarette manufacturer 
     permitted to make a mailing under this paragraph, or an agent 
     legally authorized by the legally operating cigarette 
     manufacturer to submit the tobacco product into the mails on 
     behalf of the manufacturer;
       ``(II) the legally operating cigarette manufacturer 
     submitting the cigarettes into the mails under this paragraph 
     to affirm that--

       ``(aa) the manufacturer or the legally authorized agent of 
     the manufacturer has verified that the recipient is an adult 
     established smoker;
       ``(bb) the recipient has not made any payment for the 
     cigarettes;
       ``(cc) the recipient has signed a written statement that is 
     in effect indicating that the recipient wishes to receive the 
     mailings; and
       ``(dd) the manufacturer or the legally authorized agent of 
     the manufacturer has offered the opportunity for the 
     recipient to withdraw the written statement described in item 
     (cc) not less frequently than once in every 3-month period;

       ``(III) the legally operating cigarette manufacturer or the 
     legally authorized agent of the manufacturer submitting the 
     cigarettes into the mails under this paragraph to affirm that 
     any package mailed under this paragraph contains not more 
     than 12 packs of cigarettes (240 cigarettes) on which all 
     taxes levied on the cigarettes by the State and locality of 
     delivery have been paid and all related State tax stamps or 
     other tax-payment indicia have been applied;
       ``(IV) that any mailing described in subparagraph (A) shall 
     be sent through the systems of the United States Postal 
     Service that provide for the tracking and confirmation of the 
     delivery;
       ``(V) the United States Postal Service to maintain records 
     relating to a mailing described in subparagraph (A) during 
     the 3-year period beginning on the date of the mailing and 
     make the information available to persons enforcing this 
     section;
       ``(VI) that any mailing described in subparagraph (A) be 
     marked with a United States Postal Service label or marking 
     that makes it clear to employees of the United States Postal 
     Service that it is a permitted mailing of otherwise 
     nonmailable tobacco products that may be delivered only to 
     the named recipient after verifying that the recipient is an 
     adult; and
       ``(VII) the United States Postal Service shall deliver a 
     mailing described in subparagraph (A) only to the named 
     recipient and only after verifying that the recipient is an 
     adult.

       ``(D) Definitions.--In this paragraph--
       ``(i) the term `adult' means an individual who is not less 
     than 21 years of age; and
       ``(ii) the term `consumer testing' means testing limited to 
     formal data collection and analysis for the specific purpose 
     of evaluating the product for quality assurance and 
     benchmarking purposes of cigarette brands or sub-brands among 
     existing adult smokers.
       ``(6) Federal government agencies.--An agency of the 
     Federal Government involved in the consumer testing of 
     tobacco products solely for public health purposes may mail 
     cigarettes under the same requirements, restrictions, and 
     rules and procedures that apply to consumer testing mailings 
     of cigarettes by manufacturers under paragraph (5), except 
     that the agency shall not be required to pay the recipients 
     for participating in the consumer testing.
       ``(c) Seizure and Forfeiture.--Any cigarettes or smokeless 
     tobacco made nonmailable by this subsection that are 
     deposited in the mails shall be subject to seizure and 
     forfeiture, pursuant to the procedures set forth in chapter 
     46 of this title. Any tobacco products seized and forfeited 
     under this subsection shall be destroyed or retained by the 
     Federal Government for the detection or prosecution of crimes 
     or related investigations and then destroyed.
       ``(d) Additional Penalties.--In addition to any other fines 
     and penalties under this title for violations of this 
     section, any person violating this section shall be subject 
     to an additional civil penalty in the amount equal to 10 
     times the retail value of the nonmailable cigarettes or 
     smokeless tobacco, including all Federal, State, and local 
     taxes.

[[Page 3254]]

       ``(e) Criminal Penalty.--Whoever knowingly deposits for 
     mailing or delivery, or knowingly causes to be delivered by 
     mail, according to the direction thereon, or at any place at 
     which it is directed to be delivered by the person to whom it 
     is addressed, anything that is nonmailable matter under this 
     section shall be fined under this title, imprisoned not more 
     than 1 year, or both.
       ``(f) Use of Penalties.--There is established a separate 
     account in the Treasury, to be known as the `PACT Postal 
     Service Fund'. Notwithstanding any other provision of law, an 
     amount equal to 50 percent of any criminal fines, civil 
     penalties, or other monetary penalties collected by the 
     Federal Government in enforcing this section shall be 
     transferred into the PACT Postal Service Fund and shall be 
     available to the Postmaster General for the purpose of 
     enforcing this subsection.
       ``(g) Coordination of Efforts.--The Postmaster General 
     shall cooperate and coordinate efforts to enforce this 
     section with related enforcement activities of any other 
     Federal agency or agency of any State, local, or tribal 
     government, whenever appropriate.
       ``(h) Actions by State, Local, or Tribal Governments 
     Relating to Certain Tobacco Products.--
       ``(1) In general.--A State, through its attorney general, 
     or a local government or Indian tribe that levies an excise 
     tax on tobacco products, through its chief law enforcement 
     officer, may in a civil action in a United States district 
     court obtain appropriate relief with respect to a violation 
     of this section. Appropriate relief includes injunctive and 
     equitable relief and damages equal to the amount of unpaid 
     taxes on tobacco products mailed in violation of this section 
     to addressees in that State, locality, or tribal land.
       ``(2) Sovereign immunity.--Nothing in this subsection shall 
     be deemed to abrogate or constitute a waiver of any sovereign 
     immunity of a State or local government or Indian tribe 
     against any unconsented lawsuit under paragraph (1), or 
     otherwise to restrict, expand, or modify any sovereign 
     immunity of a State or local government or Indian tribe.
       ``(3) Attorney general referral.--A State, through its 
     attorney general, or a local government or Indian tribe that 
     levies an excise tax on tobacco products, through its chief 
     law enforcement officer, may provide evidence of a violation 
     of this section for commercial purposes by any person not 
     subject to State, local, or tribal government enforcement 
     actions for violations of this section to the Attorney 
     General of the United States, who shall take appropriate 
     actions to enforce this section.
       ``(4) Nonexclusivity of remedies.--The remedies available 
     under this subsection are in addition to any other remedies 
     available under Federal, State, local, tribal, or other law. 
     Nothing in this subsection shall be construed to expand, 
     restrict, or otherwise modify any right of an authorized 
     State, local, or tribal government official to proceed in a 
     State, tribal, or other appropriate court, or take other 
     enforcement actions, on the basis of an alleged violation of 
     State, local, tribal, or other law.
       ``(5) Other enforcement actions.--Nothing in this 
     subsection shall be construed to prohibit an authorized State 
     official from proceeding in State court on the basis of an 
     alleged violation of any general civil or criminal statute of 
     the State.
       ``(i) Definition.--In this section, the term `State' has 
     the meaning given that term in section 1716(k).''.
       (b) Clerical Amendment.--The table of sections for chapter 
     83 of title 18 is amended by inserting after the item 
     relating to section 1716D the following:

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

     SEC. 4. INSPECTION BY BUREAU OF ALCOHOL, TOBACCO, FIREARMS, 
                   AND EXPLOSIVES OF RECORDS OF CERTAIN CIGARETTE 
                   AND SMOKELESS TOBACCO SELLERS; CIVIL PENALTY.

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

     SEC. 5. EXCLUSIONS REGARDING INDIAN TRIBES AND TRIBAL 
                   MATTERS.

       (a) In General.--Nothing in this Act or the amendments made 
     by this Act shall be construed to amend, modify, or otherwise 
     affect--
       (1) any agreements, compacts, or other intergovernmental 
     arrangements between any State or local government and any 
     government of an Indian tribe (as that term is defined in 
     section 4(e) of the Indian Self-Determination and Education 
     Assistance Act (25 U.S.C. 450b(e)) relating to the collection 
     of taxes on cigarettes or smokeless tobacco sold in Indian 
     country;
       (2) any State laws that authorize or otherwise pertain to 
     any such intergovernmental arrangements or create special 
     rules or procedures for the collection of State, local, or 
     tribal taxes on cigarettes or smokeless tobacco sold in 
     Indian country;
       (3) any limitations under Federal or State law, including 
     Federal common law and treaties, on State, local, and tribal 
     tax and regulatory authority with respect to the sale, use, 
     or distribution of cigarettes and smokeless tobacco by or to 
     Indian tribes, tribal members, tribal enterprises, or in 
     Indian country;
       (4) any Federal law, including Federal common law and 
     treaties, regarding State jurisdiction, or lack thereof, over 
     any tribe, tribal members, tribal enterprises, tribal 
     reservations, or other lands held by the United States in 
     trust for one or more Indian tribes; or
       (5) any State or local government authority to bring 
     enforcement actions against persons located in Indian 
     country.
       (b) Coordination of Law Enforcement.--Nothing in this Act 
     or the amendments made by this Act shall be construed to 
     inhibit or otherwise affect any coordinated law enforcement 
     effort by 1 or more States or other jurisdictions, including 
     Indian tribes, through interstate compact or otherwise, 
     that--
       (1) provides for the administration of tobacco product laws 
     or laws pertaining to interstate sales or other sales of 
     tobacco products;
       (2) provides for the seizure of tobacco products or other 
     property related to a violation of such laws; or
       (3) establishes cooperative programs for the administration 
     of such laws.
       (c) Treatment of State and Local Governments.--Nothing in 
     this Act or the amendments made by this Act shall be 
     construed to authorize, deputize, or commission States or 
     local governments as instrumentalities of the United States.
       (d) Enforcement Within Indian Country.--Nothing in this Act 
     or the amendments made by this Act shall prohibit, limit, or 
     restrict enforcement by the Attorney General of the United 
     States of this Act or an amendment made by this Act within 
     Indian country.
       (e) Ambiguity.--Any ambiguity between the language of this 
     section or its application and any other provision of this 
     Act shall be resolved in favor of this section.
       (f) Definitions.--In this section--
       (1) the term ``Indian country'' has the meaning given that 
     term in section 1 of the Jenkins Act, as amended by this Act; 
     and
       (2) the term ``tribal enterprise'' means any business 
     enterprise, regardless of whether incorporated or 
     unincorporated under Federal or tribal law, of an Indian 
     tribe or group of Indian tribes.

     SEC. 6. EFFECTIVE DATE.

       (a) In General.--Except as provided in subsection (b), this 
     Act shall take effect on the date that is 90 days after the 
     date of enactment of this Act.
       (b) BATFE Authority.--The amendments made by section 4 
     shall take effect on the date of enactment of this Act.

     SEC. 7. SEVERABILITY.

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

     SEC. 8. SENSE OF CONGRESS CONCERNING THE PRECEDENTIAL EFFECT 
                   OF THIS ACT.

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

  Mr. KOHL. Mr. President, I thank my colleagues for supporting S.1147, 
the Prevent All Cigarette Trafficking, PACT, Act. The PACT Act closes 
loopholes in current tobacco trafficking laws, enhances penalties for 
violations, and provides law enforcement with new tools to combat the 
innovative methods being used by cigarette traffickers to distribute 
their products. With its passage, we cut off a source of funding for 
terrorists and criminals raise more money, enhance states' ability to 
collect significant amounts of tax revenue, and further limit kids from 
easy access to tobacco products sold over the internet.
  By passing this bill, we are solving a serious problem that is 
growing every

[[Page 3255]]

day. In 1998, the Bureau of Alcohol, Tobacco, Firearms and Explosives, 
BATFE, had six active tobacco smuggling investigations. Today there are 
more than 400 active tobacco smuggling investigations.
  Last November, BATFE announced that they were charging 14 people with 
paying over $8 million, nearly 40 firearms, and drugs to purchase more 
than 77 million contraband cigarettes to sell in New York. Moreover, 
two of the conspirators were also charged with hiring a hitman to kill 
two people they believed to be stealing contraband cigarettes. The 
problem is significant, and today we are giving law enforcement the 
additional tools they need to root out and end cigarette trafficking 
and related crimes.
  The number of cases alone does not sufficiently put this problem into 
perspective. The amount of money involved is truly astonishing. 
Cigarette trafficking, including the illegal sale of tobacco products 
over the Internet, costs States billions of dollars in lost tax revenue 
each year. It is estimated that we lose $5 billion of tax revenue, at 
the Federal and State level, each year. As lost tobacco tax revenue 
lines the pockets of criminals and terrorist groups, states are being 
forced to squeeze their budgets even tighter by cutting programs and 
increasing college tuition. Tobacco smuggling may provide some with 
cheap access to cigarettes, but those cheap cigarettes are coming at a 
significant cost to the rest of us.
  The cost to Americans is not merely financial. Tobacco smuggling has 
developed into a popular, and highly profitable, means of generating 
revenue for criminal and terrorist organizations. Hezbollah, al-Qaida 
and Hamas have all generated significant revenue from the sale of 
counterfeit cigarettes. That money is often raised right here in the 
United States, and it is then funneled back to these international 
terrorist groups.
  In July 2004, the 9/11 Commission recommended that ``[v]igorous 
efforts to track terrorist financing must remain front and center in 
U.S. counterterrorism efforts.'' And the 9/11 commission stressed that 
it is important to rely, in part, on traditional criminal tools to 
disrupt terrorist fundraising efforts, since they often raise money by 
trafficking in counterfeit goods. Specifically, it said, 
``[c]ounterterrorism investigations often overlap or are cued by other 
criminal investigations, such as money laundering or the smuggling of 
contraband.'' All too often, that contraband is cigarettes.
  By passing this bill today, we are sending a strong message that 
terrorist organizations can no longer exploit the weaknesses in our 
tobacco laws to generate significant amounts of money. Cutting off 
financial support to terrorist groups is an indispensable part of 
protecting the country against future attacks.
  According to the Government Accountability Office, GAO, cigarette 
trafficking investigations are growing more and more complex, and take 
longer to resolve. More people are selling cigarettes illegally, and 
they are getting better at it. As these cases become more difficult to 
crack, we owe it to law enforcement officials to do our part to lend a 
helping hand. The PACT Act does that by enhancing BATFE's authority to 
enter premises to investigate and enforce cigarette trafficking laws. 
It also increases penalties for cigarette trafficking under the Jenkins 
Act from a misdemeanor to a felony. Instead of a slap on the wrist, we 
need to show these people we mean business and make sure the 
investigative efforts of our law enforcement officers pays off. Unless 
these existing laws are strengthened, traffickers will continue to 
operate with near impunity.
  Just as important, though, we must enable our country's law 
enforcement officials to combat the cigarette smugglers of the 21st 
century. The internet represents a new obstacle to enforcement. Illegal 
tobacco vendors around the world evade detection by conducting 
transactions over the internet, and then shipping their illegal 
products around the country to consumers. Just a few years ago, there 
were less than 100 vendors selling cigarettes online. Today, 
approximately 500 vendors sell illegal tobacco products over the 
Internet.
  Without innovative enforcement methods, law enforcement will not be 
able to effectively address the growing challenges facing them today. 
The PACT Act sets out to do just that by empowering states to go after 
out-of-state sellers who are violating their tax laws in Federal court. 
It also cuts off their method of delivery. A significant part of this 
problem involves the shipment of contraband cigarettes through the 
United States Postal Service, USPS. This bill would cut off online 
vendors' access to the USPS. We would treat cigarettes just like we 
treat alcohol, making it illegal to ship them through the U.S. mails 
and cutting off a large portion of the delivery system.
  In addition to cracking down on tobacco smuggling, the bill will keep 
tobacco out of the hands of kids. One of the primary ways children get 
access to cigarettes today is on the Internet and through the mails. 
The PACT Act contains a strong age verification section that will 
prevent online sales of cigarettes by requiring sellers to use a method 
of shipment that includes a signature and photo ID check upon delivery. 
Most States already have similar laws on the books, and this would 
simply make sure that we have a national standard to ensure that the 
Internet is not being used to evade ID checks required at our grocery 
and convenience stores.
  It is important to point out that this bill has been carefully 
drafted, following negotiations with numerous interested parties, 
including the Campaign for Tobacco Free Kids, the National Association 
of Attorneys General, the Department of Justice, and various tribal 
groups, to ensure that it would be strictly neutral in regards to 
tribal sovereignty and tribal immunity rights. The PACT Act would 
neither expand nor contract the current scope of tribal sovereignty and 
immunity, as determined by Federal statute and judicial 
interpretations. Also, the bill makes clear that it cannot be used to 
expand, contract, or otherwise change the scope of tribal sovereignty 
and immunity.
  The commonsense approach of the PACT Act has brought together a 
strong coalition of supporters. Tobacco companies and public health 
advocates; State law enforcement and Federal law enforcement; and 
Republicans and Democrats alike all agree that this is an issue that 
must be addressed. Today, we begin to provide law enforcement 
authorities with the tools they need to combat a very serious threat to 
our States' coffers, national security, and public health.
  Again, I thank leadership, the cosponsors of the bill, and all of my 
colleagues for their support of the PACT Act.
  Mr. DURBIN. I ask unanimous consent that the committee substitute be 
agreed to, the bill, as amended, be read a third time and passed, the 
motion to reconsider be laid upon the table, with no intervening action 
or debate, and any statements relating to the bill be printed in the 
Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The committee amendment in the nature of a substitute was agreed to.
  The bill (S. 1147), as amended, was ordered to be engrossed for a 
third reading, was read the third time, and passed.

                          ____________________