[Senate Report 105-180]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 353
105th Congress                                                   Report
                                 SENATE

 2d Session                                                     105-180
_______________________________________________________________________


 
        NATIONAL TOBACCO POLICY AND YOUTH SMOKING REDUCTION ACT

                               __________

                              R E P O R T

                                 OF THE

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                    on

                                 S. 1415





                  May 1, 1998.--Ordered to be printed


       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       one hundred fifth congress

                             second session

                     JOHN McCAIN, Arizona, Chairman

TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana                DANIEL K. INOUYE, Hawaii
SLADE GORTON, Washington             WENDELL H. FORD, Kentucky
TRENT LOTT, Mississippi              JOHN D. ROCKEFELLER IV, West 
KAY BAILEY HUTCHISON, Texas          Virginia
OLYMPIA SNOWE, Maine                 JOHN F. KERRY, Massachusetts
JOHN ASHCROFT, Missouri              JOHN B. BREAUX, Louisiana
BILL FRIST, Tennessee                RICHARD H. BRYAN, Nevada
SPENCER ABRAHAM, Michigan            BYRON L. DORGAN, North Dakota
SAM BROWNBACK, Kansas                RON WYDEN, Oregon

                       John Raidt, Staff Director

                       Mark Buse, Policy Director

     Ivan A. Schlager, Democratic Chief Counsel and Staff Director

             James S. W. Drewry, Democratic General Counsel



                                                       Calendar No. 353
105th Congress                                                   Report
                                 SENATE

 2d Session                                                     105-180
_______________________________________________________________________


        NATIONAL TOBACCO POLICY AND YOUTH SMOKING REDUCTION ACT

                                _______
                                

                  May --, 1998.--Ordered to be printed

_______________________________________________________________________


       Mr. McCain, from the Committee on Commerce, Science, and 
                Transportation, submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                         [To accompany S. 1415]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 1415) ``A Bill to reform and 
restructure the processes by which tobacco products are 
manufactured, marketed, and distributed, to prevent the use of 
tobacco products by minors, to redress the adverse health 
effects of tobacco use, and for other purposes'', having 
considered the same, reports favorably thereon with an 
amendment (in the nature of a substitute) and recommends that 
the bill (as amended) do pass.

                          purpose of the bill

  The purpose of this bill is (1) to prevent children from 
using tobacco products; (2) to more effectively inform the 
public of the dangers of using tobacco products; (3) to ensure 
that nicotine and tobacco products are appropriately regulated 
by the Food and Drug Administration to better protect public 
health; (4) to settle claims of the various states against the 
tobacco industry; (5) to require payments from the industry to 
provide for the settlement of relevant state suits; (6) to 
increase the price-per-pack of cigarettes to deter youth 
consumption; (7) to provide a stream of revenue to finance 
smoking prevention, cessation and related health research 
initiatives; and (8) to assist tobacco farmers and rural 
communities affected by reductions in the volume of tobacco 
consumption.

                background and need for the legislation

  The use of tobacco products poses a serious threat to public 
health. Health studies show that nicotine is an addictive 
substance and tobacco use is harmful to the human body. In the 
United States, over 400,000 people per year die from smoking 
related disease, including cancer, heart disease and emphysema. 
The human and economic toll of tobacco use is enormous. The 
Surgeon General reports that tobacco use is the number one 
preventable cause of disease and death.
  The Secretary of HHS estimates that smoking related health 
care costs exceed $45 billion per year, including from Medicare 
and Medicaid, and the total economic cost of tobacco use exceed 
$145 billion per year, including the cost of fire damage and 
related injuries; absenteeism and lost productivity.
  The vast majority of tobacco users (90 percent) take up the 
addiction in their teenage years. Four and one-half million 
underage Americans use tobacco. Three thousand youth begin 
smoking every day, one thousand of whom will die early from 
smoking related disease. The American Cancer Society calls 
youth consumption of tobacco a ``pediatric epidemic.''
  According to the Center for Disease Control one out of three 
adolescents in the United States is using tobacco by age 18. 
Seventy-one percent of underage smokers smoke daily. Every 
living Surgeon General has signed a letter urging Congress to 
approve comprehensive legislation to address the public health 
problems associated with tobacco use..
  Tobacco industry documents indicate that tobacco companies 
have long known the adverse health impact and addictiveness of 
tobacco use, and, nevertheless, have actively marketed to 
children and teens.
  Forty-one states have filed suit against the tobacco industry 
to recover damages. On June 20, 1997, the state attorneys 
general, plaintiff attorneys and the industry reached an 
agreement in principle to settle state and other civil suits. 
Under the settlement, the industry would agree to tobacco 
advertising and marketing restrictions; nicotine and tobacco 
products would be submitted to FDA regulation; the industry 
would agree to meet youth tobacco use reduction targets and pay 
assessments for non-attainment of such targets; and the 
industry would pay up to $368 billion over the next 25 years. 
In return, under the June 20th agreement, the industry would 
receive certain limitations on liability.
  The June 20th agreement cannot take effect without enactment 
of implementing legislation, and the execution of a National 
Protocol and state consent decrees. The protocol and consent 
decrees would bind the industry to obligations under the 
agreement that, due to constitutional limitations, may not be 
imposed on the industry without their consent to the waiver of 
certain constitutional rights.
  The National Tobacco Policy and Youth Smoking Reduction Act 
mirrors the structural framework of the June 20th agreement, 
although there are significant differences. In general, the 
bill increases industry payments from $368 billion over 25 
years to $516 billion; approximately doubles the penalties the 
industry would pay for failure to attain targets for the 
reduction of youth tobacco use; and bolsters FDA regulatory 
authority over nicotine and tobacco products. The bill provides 
a yearly civil liability cap; settles only state and local 
government suits and the Castano class action claims based on 
tobacco addiction and dependency, and does not restrict the 
right of groups or individuals to sue and receive compensation 
from the industry.

                          legislative history

  At least five comprehensive tobacco policy bills have been 
introduced in the Senate during the 105th Congress. The omnibus 
nature of these measures, including legislation to implement 
the June 20th Agreement, contained provisions within the 
jurisdiction of various Senate Committees.
  The multi-jurisdictional nature of comprehensive tobacco 
legislation posed procedural and logistical difficulties for 
the Senate in determining how, and in what form, omnibus 
legislation would be reported to the full Senate. Legislation 
to implement the comprehensive tobacco settlement reached 
between state Attorneys General and the tobacco industry 
contained provisions that would customarily fall under the 
legislative jurisdiction of various Senate Committees including 
the Commerce, Science, and Transportation Committee, the Labor 
and Human Resources Committee, the Finance Committee, the 
Judiciary Committee, the Agriculture Committee, the Environment 
and Public Works Committee, and the Indian Affairs Committee. 
In order to ensure that a single comprehensive and bipartisan 
tobacco bill would be reported to the full Senate in a timely 
manner, the Senate Commerce Committee was selected to develop 
and report such a bill. Therefore, the Commerce Committee was 
required to address issues not otherwise within the scope of 
the Committee. The chairmen of the other directly relevant 
committees were subsequently invited to testify about their 
priorities for a tobacco bill before the Commerce Committee, as 
were other interested Senators.
  To fulfill its charge of dealing with this comprehensive 
legislation, the Committee conducted ten hearings concerning 
proposed tobacco legislation. Each of those hearings is 
summarized below

                        Hearing I: July 29, 1997

  The first full committee hearing to begin examination of the 
Global Settlement of Tobacco Litigation was held on July 29, 
1997.

                               witnesses

PANEL I

  Dr. C. Everett Koop, Co-Chair, The Advisory Committee on 
Tobacco Policy and Public Health
  Dr. David A. Kessler, Co-Chair, The Advisory Committee on 
Tobacco Policy and Public Health

PANEL II

  Hon. Hubert H. Humphrey III, Attorney General of Minnesota
  Hon. Grant Woods, Attorney General of Arizona
  Hon. Christine Gregoire, Attorney General of Washington
  Hon. Mike Moore, Attorney General of Mississippi

                                PANEL I

  The Co-Chairs of The Advisory Committee on Tobacco Policy and 
Public Health, Dr. C. Everett Koop and Dr. David A. Kessler, 
asked Congress to act urgently to enact legislation to protect 
the American people from smoking-related illnesses. They 
indicated there are 50 million tobacco ``addicts'' in this 
country, that each day 3,000 new children become addicted, and 
that one-third of them will die prematurely from smoking 
related disease. They also advised that the proposed tobacco 
settlement should be strengthened to meet public health goals, 
and that no special liability protections should be afforded to 
the industry.

                                PANEL II

  Attorney General Hubert Humphrey III urged Congress to pass 
tobacco legislation. He agreed with Dr. Koop's and Dr. 
Kessler's proposals to strengthen the tobacco settlement and 
requested that Congress subpoena key tobacco documents that 
show that the tobacco industry has lied to Congress since the 
1960s.
  Attorney General Grant Woods stated that he believed that the 
negotiated tobacco settlement was an excellent agreement. He 
warned that it may not be possible to strengthen tobacco 
legislation due to constitutional limitations and the need for 
consent to waive constitutional rights.
  Attorney General Christine Gregoire testified that the 
tobacco settlement was based on the need to prevent tobacco 
sales to children, and change the corporate culture of the 
tobacco industry to prevent tobacco advertising aimed at 
children.
  Attorney General Mike Moore gave a background to the 
negotiations and purpose of the tobacco agreement. He also 
discussed the advertising and liability provisions of the 
settlement.

                     Hearing II: September 16, 1997

  The committee held its second hearing on September 16, 1997. 
The hearing examined the effect of advertising and marketing on 
children and explored the advertising restrictions included in 
the tobacco settlement.

                               witnesses

PANEL I

  Ms. Shirley Igo, Vice President For Legislation, National 
Parent Teacher Association
  Mr. Matthew Myers, Executive Vice President & General 
Counsel, National Center for Tobacco Free Kids

PANEL II

  Dr. Joseph DiFranza, University of Massachusetts Medical 
Center
  Dr. Alfred Munzer, Past President of the American Lung 
Association
  Mr. D. Scott Wise, Partner, Davis, Polk & Wardwell

                                PANEL I

  Shirley Igo, Vice President for Legislation, National Parent 
Teacher Association, testified that tobacco advertising is very 
influential in convincing children to start smoking. She also 
stated the National PTA supported only restrictions on 
advertising directed to children and youth to be sensitive to 
the First Amendment considerations.
  Matthew Myers, Executive Vice-President for the Campaign for 
Tobacco-Free Kids, agreed that tobacco marketing and 
advertising is a major cause of increased smoking among youth. 
He also believed that the tobacco settlement between the 
attorneys general and the tobacco industry should be 
strengthened to restrict marketing and advertising to children 
and include a comprehensive program to reduce youth smoking.

                                PANEL II

  Dr. Joseph DiFranza testified on the behalf of the non-profit 
organization Stop Teenage Addiction to Smoking (STAT). He said 
that there has been a reduction in teen smoking where there is 
strong enforcement of community laws that prohibit tobacco 
sales to children. He also alleged that the tobacco industry 
has played a key role in reducing the ability of communities to 
enforce their anti-teen smoking laws.
  Dr. Alfred Munzer, Past President of the American Lung 
Association, testified that he did not support the proposed 
tobacco settlement because it failed to achieve meaningful 
public health protections. He also stated that the provisions 
of the tobacco settlement concerning tobacco advertising will 
not inhibit the tobacco industry's ability to appeal to 
teenagers.
  D. Scott Wise, a partner with Davis, Polk, and Wardwell who 
has represented major tobacco companies, stated that provisions 
of the tobacco settlement concerning youth smoking were based 
on restrictions proposed by the U.S. Food and Drug 
Administration (FDA) in their rule, issued in 1996, concerning 
tobacco. Mr. Wise noted the agreement included every 
restriction the FDA proposed and added even more restrictions. 
He believes that these restrictions are strong enough to 
significantly diminish the allure and access to tobacco 
products by youth.

                      Hearing III: October 9, 1997

  The committee held its third hearing on October 9, 1997. The 
hearing examined the potential impact of the proposed tobacco 
settlement on public health.

                               witnesses

  Dr. John Seffrin, CEO, American Cancer Society
  Dr. Ronald M. Davis, Chair, Council on Scientific Affairs, 
American Medical Association
  Mr. Cass Wheeler, CEO, American Heart Association
  Dr. John Seffrin, the Chief Executive Officer of the American 
Cancer Society, stated that tobacco causes the largest number 
of preventable deaths in our country. It also annually costs 
the U.S. economy $100 billion of which $22 billion comes from 
taxpayers to pay for treating smokers through Medicare, 
Medicaid, and VA programs. He also said that tobacco should be 
considered a ``pediatric'' disease, because ninety percent of 
all smokers start by age 18. He urged strong legislation to 
reduce the incidence of smoking and tobacco use.
  Dr. Ronald M. Davis, Chair of the American Medical 
Association's Council on Scientific Affairs, testified that the 
proposed tobacco settlement is a promising beginning to meeting 
public health goals of reduced smoking. However, he suggested 
that the FDA should have more authority over tobacco products 
and the Look Back program (assessments on the industry for non-
attainment of youth smoking reduction targets) should be 
redesigned to provide further incentives for the tobacco 
companies to reduce underage tobacco use.
  M. Cass Wheeler, Chief Staff Executive Officer of the 
American Heart Association, agreed with earlier testimony that 
tobacco advertising played an important role in the increase in 
youth smoking. He supported measures to encourage the tobacco 
industry to stop marketing and promoting tobacco to children.

                     Hearing IV: February 24, 1998

  At the Committee's fourth hearing, the chairmen of the five 
major tobacco companies testified.

                               WITNESSES

  Mr. Geoffrey C. Bible, Chairman and CEO, Philip Morris 
Companies, Inc.
  Mr. Nicholas G. Brooks, Chairman and CEO, Brown and 
Williamson Tobacco Corporation
  Mr. Steven F. Goldstone, Chairman and CEO, RJR Nabisco, Inc.
  Mr. Laurence A. Tisch, Co-Chairman of the Board and Co-CEO, 
Loews Corporation
  Mr. Vincent A. Gierer, Jr., Chairman and CEO, UST Inc.
  Geoffrey C. Bible, Chairman and Chief Executive Officer of 
the Philip Morris Companies, testified that the proposed 
tobacco settlement offered an opportunity for cooperation and 
progress in the debate over tobacco policy, and that a new era 
of responsible management was at the helm.
  N.G. Brookes, Chairman and Chief Executive Officer of Brown 
and Williamson Tobacco Corporation agreed with Mr. Bible that 
the legislation offered an opportunity to achieve public health 
goals, and asked that the Committee to pursue legislation that 
will benefit the American people, rather than enacting 
legislation that would seek to punish the tobacco companies.
  Steven F. Goldstone, Chairman and Chief Executive Officer of 
RJR Nabisco, Inc., stated that he believed the proposed 
settlement was an appropriate balance between the ability of 
the tobacco companies to sell a legal product and the country 
to establish a public health policy that educates people about 
health issues concerning tobacco products.
  Laurence A. Tisch, Co-Chairman of the Board and Co-CEO, Loews 
Corporation, said that the tobacco settlement was a realistic 
plan to deal with cigarette smoking and other forms of tobacco 
use.
  Vincent A. Gierer, Jr., Chairman and Chief Executive Officer 
of UST Inc., also agreed that the tobacco settlement was a 
comprehensive approach to resolving the different concerns 
about tobacco products. He warned that if the settlement was 
addressed in a piecemeal fashion, it might not achieve the 
shared goals of reducing youth access to tobacco products and 
achieving other public health objectives.

                      Hearing V: February 26, 1998

  The committee held a fifth hearing on February 26, 1998. The 
hearing addressed the issue of civil liability for tobacco 
related harm.

                               WITNESSES

PANEL I

  Hon. Orrin Hatch, U.S. Senator, Utah

PANEL II

  Hon. Mike Moore, Attorney General of Mississippi
  Hon. Carla Stovall, Attorney General of Kansas
  Hon. Gale Norton, Attorney General of Colorado

PANEL III

  Mr. Stanley Chesley, Esq., Waite, Schneider, Bayless & 
Chesley Co., L.P.A.
  Mr. Eugene Pavalon, Past President, Association of Trial 
Lawyers of America
  Professor Kris Kobach, University of Missouri at Kansas City 
School of Law
  Mr. Richard Scruggs, Scruggs, Millette, Lawson, Bozeman & 
Dent

                                PANEL I

  Senator Orrin G. Hatch, Chairman of the Senate Committee on 
the Judiciary, stated his support for comprehensive tobacco 
legislation largely based on the proposed tobacco settlement. 
He warned that the advertising restrictions would violate the 
First Amendment unless they are based on consent. He urged the 
committee to find a constitutional way to obtain that consent 
and thus to achieve these restrictions.

                                PANEL II

  Attorney General Mike Moore testified that the civil 
liability provisions play an important part in the proposed 
agreement as they are needed to get the tobacco companies to 
agree to waive their constitutional rights, among them, 
restrictions on their rights to advertise.
  Attorney General Carla Stovall said that she felt that the 
benefits of the tobacco settlement outweighed the concerns 
about it and urged Congress to support legislation to enact the 
agreement.
  Attorney General Gale Norton explained the provisions of the 
tobacco settlement concerning civil liability and related 
issues.

                               PANEL III

  Stanley M. Chesley, of Waite, Schneider, Bayless & Chesley 
Co., L.P.A., explained that the tobacco settlement only settled 
state and local cases and the Castano class action. Although 
existing class actions would be decertified, individuals could 
still pursue their individual claims for smoking related 
injuries.
  Eugene I. Pavalon, former President of the Association of 
Trial lawyers of America, said that the liability provisions 
are inadequate for those injured by tobacco companies, and 
urged that any legislation should include direct compensation 
to victims and meaningful penalties on the industry.
  Professor Kris Kobach, Professor of Constitutional Law at the 
University of Missouri in Kansas City stated that congressional 
interference with the contracts between the States and their 
attorneys, concerning attorney's fees, would be 
unconstitutional and likely would be invalidated in the court 
if challenged.
  Richard F. Scruggs, the Senior Partner in the law firm 
Scruggs, Millette, Lawson, Bozeman & Dent, P.A., testified that 
restricting class actions against the tobacco industry is a 
protection for individual plaintiffs because the restriction 
prevents the industry from collusively settling a class action 
and thereby evade liability to individual victims.

                       Hearing VI: March 3, 1998

  The committee held its sixth hearing on March 3, 1998. The 
hearing examined the advertising, marketing and labeling 
restrictions in the proposed tobacco settlement.

                               WITNESSES

PANEL I

  Honorable Connie Mack, U.S. Senator, Florida

PANEL II

  Mr. Robert Pitofsky, Chairman, Federal Trade Commission
  Dr. Michael Eriksen, Director, Office on Smoking and Health, 
Centers for Disease Control and Prevention

PANEL III

  Mr. Matthew Myers, Executive V.P. & General Counsel, National 
Center for Tobacco Free Kids
  Professor Richard Daynard, Northeastern University School of 
Law
  Mr. David Versfelt, Esq., Donovan, Leisure, Newton & Irvine, 
LLP
  Professor Martin Redish, Louis and Harriet Ancel Professor of 
Law and Public Policy, Northwestern University School of Law

                                PANEL I

  Senator Connie Mack testified that the most effective way to 
improve the health of American citizens is for the Congress to 
pass bipartisan legislation based on a consensual agreement 
between the tobacco companies and the American people.

                                PANEL II

  FTC Chairman Robert Pitofsky addressed proposed restrictions 
on the advertising, marketing and sale of tobacco products, as 
well as possible areas for FTC involvement. He also indicated 
an antitrust exemption was not necessary to implement proposed 
settlement.
  Michael Eriksen, an official with the Centers for Disease 
Control and Prevention, discussed the problem of tobacco use by 
youth and ways to address it. According to Dr. Eriksen, tobacco 
use is the number one preventable cause of death and disease in 
our society. Each person who dies of tobacco-related lung 
cancer loses an average of 14 years from their predicted life 
expectancy.

                               PANEL III

  Matthew Myers, from the Campaign for Tobacco-Free Kids, 
argued that congressional action is needed to insure that at 
least one federal agency has the authority to eliminate those 
forms of tobacco advertising that have the greatest impact on 
children. Specifically, Mr. Myers argued that it would not be 
difficult to amend Section 520(e) of the Food, Drug and 
Cosmetic Act to clarify that this section enables the Food and 
Drug Administration to regulate tobacco advertising.
  Northeastern University School of Law Professor Richard 
Daynard testified that the contemplated advertising 
restrictions for tobacco products could be constitutionally 
imposed without the consent of the tobacco industry. Professor 
Daynard argued that Congress has the power to directly regulate 
the tobacco industry's commercial advertising.
  The general counsel to the American Association of 
Advertising Agencies, David Versfelt, expressed concern that 
Congress might statutorily enact the unprecedented, sweeping 
advertising restrictions in the Proposed Settlement. Mr. 
Versfelt testified that such restrictions were not 
Constitutional and that Congressional imposition of content and 
format based commercial speech restrictions would also 
establish unfortunate precedents that go far beyond the subject 
of tobacco advertising.
  Mr. Martin Redish, the Louis and Harriet Ancel Professor of 
Law and Public Policy at Northwestern University, evaluated the 
constitutionality of the suppression or restriction of tobacco 
advertising. Dr. Redish testified that, in his view, 
governmental restriction of tobacco advertising violates 
fundamental precepts underlying the First Amendment guarantee 
of free speech, as well as established Supreme Court doctrine 
concerning the protection of commercial speech.

                      Hearing VII: March 11, 1998

  The committee held its seventh hearing on March 11, 1998. At 
the hearing the Committee heard testimony from Senators 
concerning the various bills introduced concerning the tobacco 
settlement.

                               WITNESSES

  Hon. Richard Lugar, U.S. Senator, Indiana
  Hon. Max Baucus, U.S. Senator, Montana
  Hon. Orrin G. Hatch, U.S. Senator, Utah
  Hon. John H. Chaffee, U.S. Senator, Rhode Island
  Hon. Kent Conrad, U.S. Senator, North Dakota
  Senator Dick Lugar, Chairman of the Senate Committee on 
Agriculture, Nutrition and Forestry, testified that his support 
for tobacco legislation will be guided by three basic 
principles: (1) increasing the price per pack of cigarettes by 
at least $1.50; (2) opposing any limitation on the right of any 
individual or group to seek legal redress; and (3) his belief 
that it is simply wrong for the federal government to support 
tobacco farming, marketing, and warehousing.
  Senator Max Baucus testified that the ultimate goals of 
Congress for national tobacco policy should be to: (1) protect 
kids from a product that is harmful to them; (2) make tobacco 
less available to kids; and (3) dedicate payments from the 
tobacco industry toward children including child care, child 
healthcare, education and programs to stop children from 
smoking).
  Senator Orrin G. Hatch, Chairman of the Senate Committee on 
the Judiciary, testified in support of S. 1530, the Placing 
Restraints on Tobacco's Endangerment of Children and Teens Act 
(PROTECT) Act. Senator Hatch said his legislation is 
comprehensive and has worked through many of the tough 
questions associated with devising a national anti-tobacco 
program that would work well. He urged the Committee to use S. 
1530 as a starting point in drafting legislation.
  Senator John H. Chaffee, Chairman of the Senate Committee on 
Environment and Public Works, testified on Environmental 
Tobacco Smoke (ETS). According to the Senator, the ETS 
exposures of most concern are beyond the reach of the federal 
government. Those most vulnerable to ETS are children and non-
smoking adults that live with smokers. ETS, better known as 
second-hand smoke, creates public health and policy dilemmas of 
its own because one cannot address ETS exposure in private 
homes but this is where the most significant exposures occur.
  Senator Kent Conrad explained that the purpose of the bill he 
introduced, S. 1638, the Healthy Kids Act, is to protect 
children, promote the public health, help tobacco farmers, 
resolve Federal, State and local legal claims, invest in 
children and health care, and provide savings for Social 
Security and Medicare.

                      Hearing VIII: March 17, 1998

  The committee held its eighth hearing on March 17, 1998. The 
hearing addressed issues concerning tobacco and the Food and 
Drug Administration (FDA). The hearing also examined the 
regulatory issues raised by spit tobacco.

                               WITNESSES

PANEL I

  Mr. Bill Schultz, Deputy Commissioner for Policy, Food and 
Drug Administration
  Dr. Gregory N. Connolly, Director, Massachusetts Tobacco 
Control Program, Massachusetts Department of Public Health

PANEL II

  Mr. Joe Garagiola, Former Baseball Player and anti-tobacco 
advocate
  Mr. Richard Verheij, General Counsel, UST

                                PANEL I

  Deputy FDA Commissioner Bill Schultz discussed three tobacco 
issues of concern to the FDA: (1) the Agency's tobacco program 
as formulated through regulation; (2) the Administration's 
position on tobacco legislation; and (3) some of the issues 
relevant to FDA's authority raised by pending bills.. Mr. 
Schultz emphasized that the FDA and the Administration strongly 
support comprehensive tobacco legislation which would 
significantly reduce young people's tobacco use and meet the 
other goals announced by the President.
  Dr. Gregory N. Connolly is the Director of the Massachusetts 
Tobacco Control Program with the Massachusetts Department of 
Public Health. He testified on the health risk to consumers of 
spit tobacco products and efforts to develop spit tobacco 
cessation programs.

                                PANEL II

  Joe Garagiola, a former baseball player and Baseball Hall of 
Fame member, testified on behalf of the National Spit Tobacco 
Education Program. Mr. Garagiola stated that spit tobacco is 
dangerous, addictive and potentially deadly. He discussed the 
use of spit tobacco in professional baseball and his campaign 
to stop it.
  Richard H. Verheij, Executive Vice President and General 
Counsel of UST testified on his company's production and 
marketing of smokeless tobacco products. He discussed his 
support for the Proposed Resolution between the Attorneys 
General and the tobacco industry.

                       Hearing IX: March 19, 1998

  The committee held its ninth hearing on March 19, 1998. The 
hearing examined both how the tobacco settlement would change 
the price of cigarettes and the way tobacco products are sold 
at retail.

                               WITNESSES

PANEL I

  Mr. Raymond Scheppach, Executive Director, National 
Governors' Association
  Mr. R. Timothy Columbus, Counsel, National Association of 
Convenience Stores

PANEL II

  Mr. Martin Feldman, Senior Analyst, Smith Barney, Inc.

                                PANEL I

  Raymond C. Scheppach, Executive Director of the National 
Governors' Association, testified on the commitment of the 
nation's governors to reduce youth smoking and restrict access 
to tobacco products by underage Americans.
  Washington attorney R. Timothy Columbus, testified on behalf 
of the National Association of Convenience Stores. Mr. Columbus 
told the Committee that the Association's primary concern 
regarding the proposed settlement are its proposed restrictions 
on access to, and promotion of, tobacco products in retail 
establishments. The Association seeks workable restrictions on 
tobacco access that reflect practical aspects of retailing. Mr. 
Columbus recommended that any regulations on the sale or 
advertisement of tobacco products at retail stores be equally 
and uniformly applied to all types of retailers that sell 
tobacco products.

                                PANEL II

  Martin Feldman, equity analyst with Salomon Smith Barney, 
testified on the potential impact of various legislative 
proposals on the valuation of cigarette manufacturers. Mr. 
Feldman stated that the retail prices of cigarettes may 
experience a larger increase as a result of the tobacco 
settlement legislation than has been previously forecasted.

                       Hearing X: March 23, 1998

  The Committee held its tenth and final hearing on March 23, 
1998. The hearing addressed issues concerning the 
constitutionality of certain legislative proposals, the 
implications of bankruptcy for creditors and future plaintiffs, 
and issues concerning the price of tobacco products under 
proposed tobacco legislation.

                               WITNESSES

PANEL I

  Hon. Jonathan Gruber, Deputy Assistant Secretary, Office of 
Economic Policy, Department of Treasury
  Hon. Larry Summers, Deputy Secretary, Department of Treasury

PANEL II

  Mr. Floyd Abrams, Constitutional Lawyer, Cahil Gordon & 
Reindel
  Mr. Scott Strand, Deputy Counsel, Office of the Attorney 
General, State of Minnesota

PANEL III

  Mr. Martin Feldman, Senior Analyst, Smith Barney, Inc.
  Mr. Harvey Miller, Bankruptcy Lawyer, Weil Gotshal & Manges 
LLP
  Mr. Harvey Rosen, Economist, Burke, Rosen & Associates

                                PANEL I

  Treasury Deputy Secretary Lawrence Summers and Deputy 
Assistant Secretary Gruber testified on the Administration's 
budget proposal calling for a $1.10 increase in the price per 
pack of cigarettes. Secretary Summers also addressed concerns 
that comprehensive tobacco legislation, in line with the 
President's core principles, would impose unmanageable 
adjustment costs on tobacco suppliers and the tobacco industry 
as a whole. Secretary Summers concluded that the President's 
proposal would not inflict an undue financial burden on the 
tobacco industry and that it would not push the industry into 
bankruptcy.

                                PANEL II

  Floyd Abrams, a partner with Cahill Gordon & Reindel, 
testified on the First Amendment issues concerning limitations 
of tobacco advertising. Mr. Abrams indicated that given 
existing Supreme Court precedent, it is unlikely that the Food 
and Drug Administration's proposed regulations on advertising 
could survive First Amendment scrutiny. Mr. Abrams also 
indicated that the advertising restrictions contained in the 
Proposed Settlement could not be constitutionaly imposed on the 
tobacco companies without their consent.
  Scott R. Strand, Deputy Counsel for the Minnesota State 
Attorney General's office, stated that Congress could impose 
strong restrictions on tobacco advertising without the consent 
of the tobacco industry. Mr. Strand also said that advertising 
restrictions achieved through consent agreements would not 
work; in part, due to the difficulty of enforcing such 
agreements. Mr. Strand also encouraged Congress to adopt strong 
youth smoking reduction standards.

                               PANEL III

  Martin Feldman, equity analyst with Salomon Smith Barney, 
explained the effect of the tobacco settlement on the financial 
status of the tobacco companies and the prices of cigarettes.
  Harvey R. Miller, Senior Partner with Weil, Gotshal & Manges 
LLP, Harvey S. Rosen, of Burke, Rose & Associates of Cleveland, 
Ohio, testified on the considerations a company undertakes when 
contemplating bankruptcy, the protections and procedures found 
in the Bankruptcy Code, and the implications of bankruptcy 
protection for interested parties, including those individuals 
with a legal claim against an entity which seeks bankruptcy 
protection.

                      Section-by-Section Analysis

SECTION L. SHORT TITLE; TABLE OF CONTENTS

  Section 1 provides that the bill may be cited as the 
``National Tobacco Policy and Youth Smoking Reduction Act of 
1998.'' This section also contains the table of contents for 
the bill.

SECTION 2. FINDINGS

  Section 2 includes the findings of Congress with respect to 
tobacco and the need for comprehensive legislation to establish 
national tobacco policies to reduce youth consumption of 
tobacco, and to reduce the adverse public health, economic, and 
social impacts of tobacco use.

SECTION 3. PURPOSE

  Section 3 establishes that the purposes of the Act are to 
confirm the authority of the Food and Drug Administration to 
regulate tobacco products under the Food, Drug and Cosmetic 
Act; to require the tobacco industry to fund tobacco regulation 
and other initiatives to prevent and redress the adverse 
economic and health impacts of tobacco use; to tighten youth 
access restrictions; to establish youth consumption targets and 
subject the industry to financial penalties for failing to meet 
such targets.

SECTION 4. SCOPE AND EFFECT

  Section 4 establishes that Congress does not intend the act 
to establish any precedent with regard to other industries, 
circumstances, situations or legal actions. This section also 
establishes that the act does not affect the authority of the 
Secretary of the Treasury, or state and local government with 
respect to the taxation of tobacco products. The Act also does 
not affect the authority of the Secretary of Agriculture 
concerning the growing, cultivation, or curing of raw tobacco.

SECTION 5 NON-PREEMPTION OF MORE RESTRICTIVE LAWS

  Section 5 establishes that the act does not prohibit federal, 
state, local or tribal governments from adopting and enforcing 
additional measures to restrict youth access to tobacco 
products, nor from adopting and/or enforcing any law, rule, 
regulation or other measure relating to or prohibiting the 
sale, distribution, possession or exposure to or use of tobacco 
products. Unless otherwise provided in the Act, nothing in the 
Act or in rules promulgated under its authority will supersede 
the authority of States, pursuant to State law, to expend funds 
provided under this Act.

SECTION 6 DEFINITIONS

  Section 6 defines terms used in the act; including the 
definition of cigarette, brand, manufacturer, distributor, 
retailer, and tobacco product.

SECTION 7 NOTIFICATION IF YOUTHFUL CIGARETTE SMOKING RESTRICTIONS 
                    INCREASE YOUTHFUL PIPE AND CIGAR SMOKING

  Section requires the Secretary of Health and Human Services 
to notify Congress if underage use of cigars and pipe tobacco 
increase as a result of tightening youth access to cigarettes 
and spit tobacco.

SECTION 8 LIABILITY LIMITATIONS DISAPPEAR IF MANUFACTURERS CHALLENGE 
                    ADVERTISING LIMITS

  This section provides that the benefit of the annual 
liability cap on judgements and settlements will not apply to 
any tobacco manufacture which brings an action to have the 
advertising restrictions in the act ruled unconstitutional.

SECTION 9. FTC JURISDICTION NOT AFFECTED

  Unless expressly provided in this Act, nothing in this Act 
limits or diminishes the authority of the Federal Trade 
Commission. Any advertising that violates this Act or the 
Protocol is an ``unfair or deceptive act or practice'' under 
Section 5(a) of the Federal Trade Commission Act.

SECTION 10. CONGRESSIONAL REVIEW PROVISIONS

  Congress may review and disapprove any rule under this Act 
that is subject to Section 801, with the exception of the FDA's 
initial rule concerning tobacco as issued in 1996.

              TITLE I--REGULATION OF THE TOBACCO INDUSTRY

        Subtitle A--Jurisdiction of Food and Drug Administration

                      I. Introduction and Summary

  Title I, Subtitle A of this bill provides explicit authority 
to the Food and Drug Administration (FDA) to regulate tobacco 
products. To ensure that the August 28, 1996 regulations 
restricting the access to and promotion of cigarettes and 
smokeless tobacco to children and adolescents go into effect, 
section 901 deems FDA's regulations lawful and lawfully 
promulgated under this bill. The remainder of Subtitle A 
addresses the Secretary's statutory authority to regulate 
tobacco products. Tobacco products raise different public 
health issues than medical devices regulated under Chapter V of 
the Federal Food, Drug, and Cosmetic Act (FDCA). While 
maintaining to the greatest extent practical the full range of 
authorities that the Secretary and FDA would have exercised 
over these products as devices, the bill modifies and adapts 
certain FDCA device authorities so that they are more 
appropriate to address the unique problems encountered in 
regulating tobacco products. Therefore, the Committee believes 
that it is appropriate to create a separate chapter of the FDCA 
for the regulation of tobacco products.
  New Chapter IX is created to provide for comprehensive 
regulation of tobacco products and incorporates almost all of 
the authorities available to the Secretary in regulating 
devices, including the authority to: (1) address the 
adulteration or misbranding of a product, (2) require 
manufacturers to register and list their products, (3) restrict 
the sale, distribution, and use of a product, (4) require 
manufacturers to comply with ``good manufacturing practice'' 
requirements, (5) require manufacturers to comply with 
performance standards, (6) require manufacturers of novel 
products to obtain premarket approval, (7) require 
manufacturers to notify users of unreasonable risks posed by a 
product, (8) require manufacturers to recall products 
associated with unusually serious risks, (9) require 
manufacturers to maintain records and make reports, and (10) 
require manufacturers to conduct postmarket surveillance, where 
appropriate. Other provisions of the bill extend to tobacco 
products FDA's authority to investigate and prosecute 
violations of the FDCA.
  Some of the medical device authorities have, however, been 
modified to reflect the special concerns raised by the 
regulation of tobacco products. For example, in regulating 
devices under Chapter V, the Secretary must determine whether 
the regulatory actions taken will ``provide reasonable 
assurance of the safety and effectiveness'' of the device. 
Under the provisions of Chapter IX, this standard has been 
replaced with the requirement, to be used only for tobacco 
products, that the Secretary find that regulations and other 
requirements imposed on tobacco products ``are appropriate for 
the protection of the public health.'' This change makes 
explicit FDA's authority to consider, among other things, the 
adverse consequences that could result from removal of a 
product that is dangerous but to which millions of Americans 
are addicted. In addition, section 906(d), which like all of 
Chapter IX does not affect other products regulated under the 
Act, makes explicit the Secretary's authority to restrict the 
advertising and promotion of tobacco products as part of a 
regulation restricting the sale, distribution, and use of such 
a product. That provision also prohibits the Secretary from 
restricting tobacco products to prescription use. In addition, 
a special procedure is established for notifying Congress 
regarding any restriction on the sale of tobacco products in 
retail outlets. Because of the importance of any such decision 
by the Secretary, the committee strongly believes that Congress 
should have adequate opportunity, prior to implementation of 
any such restriction, to review such a decision and to enact 
legislation to override it. Therefore, the President must 
notify Congress that such a restriction has been issued and 
implementation of any such restriction is delayed for at least 
two years.
  Chapter IX also omits a small number of device authorities 
that are unnecessary, duplicative, or not well-suited to the 
regulation of tobacco products. For example, Chapter IX does 
not require the Secretary to classify tobacco products, 
although it preserves the Secretary's authority to use all of 
the authorities available for each class (i.e., general 
controls, special controls, and premarket approval). Chapter IX 
contains no counterpart to section 516 of the FDCA, which 
authorizes FDA to ban devices that present ``a substantial risk 
of illness and injury.'' A special procedure is established 
under section 907 for notifying Congress regarding the issuance 
of any performance standard that eliminates nicotine or 
specific categories of tobacco products. Because of the 
importance of any such decision, the committee strongly 
believes that Congress should have adequate opportunity, prior 
to implementation of any such performance standard, to review 
such a decision and to enact legislation to override it. 
Therefore, the President must notify Congress that such a 
performance standard has been issued and implementation of any 
such performance standard is delayed for at least two years. 
Chapter IX also omits provisions analogous to sections 502(j), 
518(b), (c), 519(b), (c), (e), 520(b), (h), (j), (m), and makes 
small changes in a number of other provisions intended to 
tailor these provisions to the needs of regulating tobacco 
products.
  Chapter IX includes certain new provisions that grant the 
Secretary explicit authority to undertake regulatory measures 
particularly relevant to tobacco regulation. For example, 
section 904 specifically requires manufacturers to submit to 
the Secretary information about (1) the ingredients, 
components, and substances in their products, (2) the content, 
delivery, and form of nicotine in their products, and (3) their 
research on the health, behavioral, or physiologic effects of 
tobacco products and their constituents, on reductions in risk 
associated with available technology, and on the marketing of 
tobacco products. Section 913 imposes certain requirements on 
manufacturers who wish to market ``reduced risk'' tobacco 
products.
  The bill creates a separate chapter for tobacco products, and 
thus, expressly directs the Secretary to maintain a distinct 
regulatory program for tobacco products. However, the Secretary 
may follow precedents involving, decisions under, and 
interpretations of, comparable provisions governing devices 
under Chapter V to the extent the Secretary deems appropriate 
for tobacco products.

                            II. Definitions

  Subtitle A defines ``tobacco product'' for purposes of the 
FDCA as any product made or derived from tobacco that is 
intended for human consumption, including any component, part, 
or accessory of a tobacco product (except for raw materials 
other than tobacco used in manufacturing a component, part, or 
accessory of a tobacco product). This definition potentially 
encompasses the full range of tobacco products marketed in the 
United States. As described below in section III of this 
report, however, the Secretary's authority to regulate tobacco 
products under Chapter IX is limited to those products 
specifically covered by regulations issued by the Secretary. 
Current regulations cover only cigarettes and smokeless tobacco 
products.

                III. FDA Authority over Tobacco Products

  The Committee expects that the Secretary will regulate 
tobacco products exclusively under Chapter IX, and any general 
provisions of the FDCA that encompass tobacco products, except 
where: (1) they are intended for diagnosis, cure, mitigation, 
treatment, or prevention of disease within the meaning of 
section 201(g)(1)(B) or (h)(2) of the FDCA, or (2) a health 
claim is made for them within the meaning of section 
201(g)(1)(C) or (h)(3) of the FDCA. Sections 201(g)(1)(B) and 
are relevant portions of the definition of ``drug'' under the 
FDCA, and sections 201(h)(2) and (3) are corresponding portions 
of the definition of ``device'' under the FDCA. This provision 
would not limit FDA's traditional authority to regulate as a 
drug or device, for example, a cigarette marketed to assist 
smoking cessation, or to treat Parkinson's disease or 
depression. See, e.g., United States v. 354 Bulk Cartons . . . 
Trim Reducing-Aid Cigarettes, 178 F. Supp. 847, 851 (D.N.J. 
1959). The term ``health claim'' as used in this provision is 
not intended to relate to, or to affect in any way, the 
agency's authority to regulate health claims for food.
  Section 901(b) provides that Chapter IX shall apply to all 
tobacco products subject to 21 CFR part 897 (the regulations 
issued on August 28, 1996), and to any other tobacco products 
that the Secretary deems to be subject to Chapter IX by 
regulation. Cigarettes and smokeless tobacco products are 
currently covered by part 897, and are thus immediately subject 
to regulation under Chapter IX. To regulate other categories of 
tobacco product, the Secretary must issue regulations making 
them subject to Chapter IX.
  As stated above, the bill incorporates the provisions of part 
897 of title 21, Code of Federal Regulations, issued by the 
Secretary as a final rule on August 28, 1996, and therefore the 
Committee does not intend the Secretary to repromulgate these 
regulations. The bill therefore includes section 901(c), which 
deems the regulations lawful and lawfully enacted pursuant to 
the new chapter of the FDCA for tobacco products. The Secretary 
may choose to recodify these regulations in a different part of 
title 21, Code of Federal Regulations.
  Section 901(d)(1) clarifies that nothing in chapter IX shall 
be construed to affect the regulation of drugs and devices 
under chapter V that are not tobacco products under the FDCA. 
Section 901(d)(2) provides that chapter IX shall not apply to 
tobacco leaf that is not in the possession of the manufacturer, 
or to producers of tobacco leaf, including tobacco growers, 
tobacco warehouses, and tobacco grower cooperatives, and that 
FDA employees may not enter onto a farm owned by a producer of 
tobacco leaf without the producer's written consent. However, 
if the producer of tobacco leaf is also a tobacco product 
manufacturer or within the control of a manufacturer, then the 
grower will be subject to this chapter as a manufacturer. The 
bill also provides that chapter IX may not be construed to 
grant the Secretary authority to promulgate regulations 
affecting the production of tobacco leaf or a producer, other 
than activities by a manufacturer affecting production. This 
provision does not alter the Secretary's authority under the 
FDCA over tobacco manufacturers, including the Secretary's 
ability, through performance standards and other statutory 
authorities, to require modifications to tobacco products.

 IV. Standard of Review of Certain Regulatory Actions under Chapter IX

  In regulating devices, the Secretary may undertake certain 
regulatory actions only if the Secretary finds that the action 
will ``provide reasonable assurance of the safety and 
effectiveness'' of the device. Meeting these standards for 
tobacco products requires taking into account factors not 
ordinarily considered when regulating devices. For example, FDA 
in developing the tobacco regulations acknowledged that in 
imposing restrictions on the availability of tobacco products, 
it is necessary to consider such factors as the development of 
a black market, or the risk to addicted users of precipitous 
withdrawal. Similarly, in allowing the sale of novel tobacco 
products likely to be perceived as safer than conventional 
tobacco products, it may be appropriate to consider the 
likelihood that such products will encourage more young people 
to use tobacco or discourage current users from quitting. The 
Committee believes that such factors can more readily be taken 
into consideration under the standard adopted in chapter IX.
  In addition, reaching the conclusion that a particular 
regulatory measure will provide a reasonable assurance of the 
safety and effectiveness of a tobacco product may create 
controversy. Therefore, under the provisions of Chapter IX, 
wherever a reasonable assurance of safety and effectiveness was 
required to take action under the device authorities, this 
standard has been replaced with the requirement that the 
Secretary find that regulations imposed on a tobacco product 
``are appropriate for the protection of the public health.'' In 
making this finding, the Secretary is directed to consider the 
risks and benefits to the population as a whole, including 
users and nonusers of the tobacco product, and taking into 
account the increased or decreased likelihood that (1) existing 
users of tobacco products will stop using such products, and 
(2) those who do not use tobacco products will initiate use. 
This change clarifies that the Secretary need not find that a 
regulatory measure provides for the absolute safety of tobacco 
products, and that the Secretary may weigh a variety of 
consequences resulting from possible new regulations on tobacco 
products, including the use of contraband products and the 
development of black markets, and may consider the effects of 
the regulation on both users and nonusers of the products. The 
committee does not intend that this standard be applied to any 
other product regulated under the Act.

                    V. The Provisions of Chapter IX

SECTION 902. ADULTERATION

  The bill incorporates adulteration provisions that track 
adulteration provisions for devices that are relevant to the 
regulation of tobacco products under chapter IX (section 
501(a)(1), (a)(2)(A), (a)(3), (e), (f), (h), and (I)). Minor 
modifications were made to conform the provisions to the 
requirements under the relevant chapter IX provisions. In 
addition, section 902(a)(1) includes products that are 
``otherwise contaminated by any poisonous or deleterious 
substance which may render the product injurious to health'' to 
make clear that a tobacco product that contains contamination 
by something other than a filthy, putrid, or decomposed 
substance is adulterated under this section.

SECTION 903. MISBRANDING

  The bill incorporates misbranding provisions that track 
misbranding provisions for devices that are relevant to the 
regulation of tobacco products under chapter IX (section 
502(a), (b), (c), (e), (f), (o), (q), (r), (s), (t)). Minor 
modifications were made to conform the provisions to the 
requirements under the relevant chapter IX provisions. In 
addition, section 903(a)(4), which authorizes the Secretary to 
specify by regulation the established name of a tobacco product 
and requires the established name to appear on the product's 
label, employs simplified language that is consistent with the 
regulation at part 897 establishing the established names of 
tobacco products subject to the provisions of part 897. Section 
903(a)(5), which authorizes the Secretary to issue regulations 
requiring adequate directions for use and adequate warnings 
against use by children, has also been simplified. Sections 
903(a)(7) and 903(a)(8) apply to all tobacco products, and are 
not limited to tobacco products that are subject to regulations 
promulgated under section 906(d). Section 903(a)(8), which is 
based on section 502(r), deems tobacco product advertising 
misbranded unless it contains, among other items, ``a brief 
statement of the uses of the tobacco product.'' Section 903(b) 
authorizes the Secretary to require by regulation the prior 
approval of statements made on the label of a tobacco product, 
and explicitly states that no regulation issued under this 
subsection may require the prior approval by the Secretary of 
the content of any advertisement. The remainder of section 
903(b) tracks section 502(r).

SECTION 904. SUBMISSION OF HEALTH INFORMATION TO THE SECRETARY

  The bill requires each manufacturer or importer of tobacco 
products, or their agents, to submit to the Secretary, within 6 
months of the date of enactment and annually thereafter, 
information concerning their products and all documents related 
to research conducted on, or involving the use of, those 
products. Similar information must be submitted at least 90 
days before the marketing of a new product not on the market as 
of the date of enactment. A manufacturer must also notify the 
Secretary within 60 days of the time a manufacturer adds a new 
additive, modifies the amount of an existing additive or of the 
nicotine content, delivery, or form, or eliminates an additive. 
The purpose of this provision is to clarify the Secretary's 
authority to obtain information useful in assessing the health 
risks of tobacco products, including their addictiveness, and 
in understanding how these products are being marketed. This 
section is intended to be in addition to, and separate from, 
the requirements for ingredient disclosure under section 7 of 
the Federal Cigarette and Labeling Act (15 U.S.C. 1335a).

SECTION 905. REGISTRATION OF PRODUCERS OF TOBACCO PRODUCTS

  Subsections (a) - (g) of section 905 track subsections (a) - 
(f), (h) of section 510. Minor changes were made to conform the 
provisions to the requirements in chapter IX.
  Report preceding introduction into interstate commerce of 
certain tobacco products: Sections 905(j) and 910 adopt the 
substantial equivalence provisions of sections 510(k), 513(I) 
and 515(b), with certain modifications. Section 905(j) is 
analogous to section 510(k), which requires a manufacturer of a 
new device to notify the Secretary at least 90 days before 
beginning to market the new device and to state the basis for 
the manufacturer's determination that the new device is 
substantially equivalent to an already marketed device. Section 
905(j) differs in two respects from section 510(k). First, 
section 905(j) requires that the already-marketed tobacco 
product have been commercially marketed as of August 11, 1995, 
the date of the issuance of FDA's proposed tobacco regulations. 
Test marketing before that date is not sufficient to satisfy 
this requirement. Within six months after enactment of the 
bill, persons who, before enactment of this bill, introduced 
into or delivered for introduction into interstate commerce for 
commercial distribution a tobacco product intended for human 
use that was not commercially marketed (other than for test 
marketing) in the United States as of August 11, 1995, are 
required to submit a report under this subsection to the 
Secretary if that tobacco product continues to be marketed in 
the United States. Second, section 905(j) requires that the 
Secretary issue regulations defining the applicability of that 
section. The Committee is aware that FDA's regulations under 
Part 897 do not appear to contemplate 510(k) submissions, at 
least for minor changes to existing tobacco products. Nothing 
in the bill restricts the Secretary's discretion to determine 
when and for what types of new products a 905(j) submission 
might be appropriate. The Committee expects that the Secretary 
will promptly issue guidance to the industry on when such 
submissions are needed for products introduced between August 
11, 1995, and the date of enactment of this bill. Section 910, 
which governs premarket review and is discussed below, defines 
``substantial equivalence.''

SECTION 906. GENERAL PROVISIONS RESPECTING CONTROL OF TOBACCO PRODUCTS

  Section 906 addresses general issues respecting control of 
tobacco products. These provisions incorporate subsections of 
section 520 that are appropriate for the regulation of tobacco 
products. Subsections (a), (b), (c), and (g) of section 906, 
which relate to (1) the applicability of particular tobacco 
product requirements that are inconsistent with requirements 
imposed under section 906(d), 907, or 910, (2) notices and 
findings, (3) trade secret information, and (4) research and 
development, track the parallel provisions in section 520 
(subsections (a), (b), (c), and (k)).
  Restrictions: Section 906(d) is the authority that parallels 
section 520(e), which is the statutory basis for the 
regulations restricting the sale and distribution of cigarettes 
and smokeless tobacco codified in part 897 of title 21, Code of 
Federal Regulations. Subsection (d) clarifies that the 
Secretary may by regulation require that a tobacco product be 
restricted to sale, distribution, or use upon such conditions, 
including restrictions on the access to, and the advertising 
and promotion of the tobacco product, if the Secretary 
determines that such regulation would be appropriate for the 
protection of the public health. The bill includes factors that 
are to be taken into account in making a finding as to whether 
the restriction is appropriate for the protection of the public 
health. Under the bill, the Secretary may not require that the 
sale or distribution of a tobacco product be limited to the 
written or oral authorization of a practitioner licensed by law 
to prescribe medical products. Because of the importance of any 
decision by the Secretary to restrict the sale of any class of 
tobacco products on the market on the date of enactment of this 
bill to specific categories of retail outlets, it is 
appropriate for Congress to have the opportunity to review such 
a decision and enact legislation to override it. Therefore, any 
such restriction may not take effect before a date that is two 
years after the President notifies Congress that a final 
regulation imposing the restriction has been issued.
  Good manufacturing practice requirements: Section 906(e) 
authorizes the Secretary to promulgate regulations requiring 
that the methods used in, and the facilities and controls used 
for, the manufacture, pre-production design validation 
(including a process to assess the performance of a tobacco 
product packing, storage, and installation of a tobacco product 
conform to current good manufacturing practice, as prescribed 
in such regulations, to assure that the public health is 
protected and that the tobacco product is in compliance with 
this chapter. This provision tracks section 520(f), the device 
provision for good manufacturing practice requirements. The 
bill makes explicit that the Secretary has the authority to 
grant either temporary or permanent exemptions or variances 
from a requirement. As discussed in the context of section 915, 
the bill establishes a single tobacco product advisory 
committee to perform the duties assigned to separate advisory 
committees that are established under various provisions in 
device law, including 520(f). Thus, the advisory committee 
established under section 915 will be afforded an opportunity 
to submit recommendations with respect to regulations proposed 
to be promulgated under this subsection. In addition, the 
Secretary may refer petitions for exemptions or variances to 
the advisory committee for recommendation.
  Investigational use exemption: Section 906(f) provides the 
Secretary with authority to exempt tobacco products intended 
for investigational use from some or all of the provisions of 
chapter IX under such conditions as the Secretary may prescribe 
by regulation. Because of the unique circumstances under which 
a tobacco product would likely be intended for investigational 
use, the bill allows the Secretary broad discretion to develop 
regulations appropriate for the investigational use of tobacco 
products.

SECTION 907. PERFORMANCE STANDARDS

  The bill authorizes the Secretary to promulgate performance 
standards if the Secretary determines that a standard is 
appropriate for protection of the public health. This authority 
is the same as that in section 514, but makes explicit the 
Secretary's existing authority to reduce or eliminate nicotine 
or other harmful components pursuant to a performance standard. 
Because of the importance of any decision by the Secretary to 
eliminate all cigarettes, all smokeless tobacco products, or 
any similar class of tobacco products, or to require the 
reduction of nicotine yields to of a tobacco product to zero, 
it is appropriate for Congress to have the opportunity to 
review such a decision and enact legislation to override it. 
Therefore, any such standard may not take effect before a date 
that is two years after the President notifies Congress that a 
final regulation imposing the restriction has been issued. As 
noted above, the bill establishes a single tobacco product 
advisory committee to perform the duties assigned to separate 
advisory committees that are established under various 
provisions in device law, including section 514. The bill 
authorizes the Secretary to refer proposed regulations 
respecting performance standards to the advisory committee 
established under section 915 for a report and recommendation 
with respect to matters involved in the proposed regulation 
that require the exercise of scientific judgement.

SECTION 908. NOTIFICATION AND OTHER REMEDIES

  The bill contains provisions that adopt the notification 
requirements and certain other remedies of section 518. Section 
908(a), which permits the Secretary to require notification to 
users and other appropriate persons if such notification is 
necessary to eliminate an unreasonable risk of substantial harm 
to the public health, is the same as section 518(a). Likewise, 
section 908(b) parallels section 518(d), which makes clear that 
compliance with a notification order does not relieve persons 
from liability under Federal or State law. The bill does not 
incorporate the repair and reimbursement provisions of 518(b) 
and `` because they are not required for the regulation of 
tobacco products. Section 908'' provides the Secretary with the 
authority to issue cease and desist orders and to order recalls 
of particular tobacco products where the Secretary finds that a 
tobacco product contains a manufacturing or other defect that 
is not ordinarily contained in tobacco products on the market 
and would cause serious, adverse health consequences or death. 
The procedures of subsection (e) are the same as in section 
518(e), the parallel provision for devices.

SECTION 909. RECORDS AND REPORTS

  The bill incorporates subsections (a) and (f) of section 519, 
but adopts a different threshold for requiring reports to be 
submitted under subsection (a). The bill authorizes the 
Secretary to require a report from a manufacturer or importer 
who becomes aware of information that reasonably suggests that 
one of its marketed tobacco products may have caused or 
contributed to a serious unexpected adverse experience 
associated with the use of the product or any significant 
increase in the frequency of a serious, expected, adverse 
product experience. The provisions of 519 dealing with user 
facilities and device tracking have been omitted because they 
are not suited to the needs of regulating tobacco products.

SECTION 910. PREMARKET REVIEW

  Section 910 provides for premarket review of new tobacco 
products that are not substantially equivalent to products on 
the market as of August 11, 1995. This section provides the 
Secretary with authority to obtain needed data on the risks of 
novel tobacco products, and to assure that such products do not 
introduce more risks than conventional tobacco products. The 
provisions of section 910 are similar to those of section 515, 
with the following modifications: (1) full reports must be 
provided on the health risks of the product, rather than on 
safety and effectiveness; (2) the Secretary shall deny approval 
of the application if the Secretary finds that there is a lack 
of a showing that permitting the product to be marketed would 
be appropriate for the public health, rather than a lack of a 
showing of safety and effectiveness; (3) the opportunity for 
administrative review of an approval or denial of an 
application has been eliminated; (4) the standard for the 
evidence needed to support an application has been modified 
slightly to clarify that well-controlled investigations will be 
required only when necessary; and (5) the provisions related to 
product development protocols have been eliminated.
  The bill provides that an approval of an application for 
premarket approval is not required for a tobacco product 
subject to section 910(a)(1) introduced into or delivered for 
introduction into interstate commerce for commercial 
distribution (other than for test marketing) in the United 
States between August 11, 1995, and the date of enactment of 
this bill if a report has been submitted pursuant to section 
905(j) within six months of the enactment of this bill until 
the Secretary issues an order that requires premarket approval.
  Definition of substantial equivalence: Subsection (a)(2) 
includes provisions, analogous to section 513(I) in the device 
provisions, that define ``substantial equivalence'' for 
purposes of this section and section 905(j). The definition in 
910(a)(2) is largely the same as in section 513(I) with a few 
modifications. The principal changes are: (1) the standard for 
a finding by the Secretary that a product with different 
characteristics than an already marketed (predicate) product 
does not require premarket review is whether the information 
submitted by the manufacturer demonstrates that premarket 
review would not be appropriate because the new product does 
not raise different public health questions than the predicate 
product; (2) the term ``characteristics'' means the materials, 
ingredients, design, composition, heating source, or other 
features of a tobacco product; and (3) the summary of 
information required under 910(a)(3)(A) must cover ``any health 
information related to the tobacco product'' rather than safety 
and effectiveness information.

SECTION 911. JUDICIAL REVIEW

  The bill includes procedures for judicial review of certain 
actions under chapter IX that are the same as section 517. The 
bill also incorporates the requirement of section 517 that a 
regulation or order issued under certain sections of chapter IX 
must include a statement of the reasons for its issuance and 
the basis in whatever proceedings that led to its issuance, for 
its issuance.

SECTION 912. POSTMARKET SURVEILLANCE

  The bill grants the Secretary discretion to require a 
manufacturer to conduct postmarket surveillance of a tobacco 
product if the Secretary determines that such surveillance is 
necessary to protect the public health or to provide 
information regarding the health risks and other safety issues 
involving the tobacco product.

SECTION 913. REDUCED RISK TOBACCO PRODUCTS

  The bill contains a section not in device law that permits 
the Secretary to designate a tobacco product as a ``reduced 
risk tobacco product'' if the Secretary finds, based on an 
application by the manufacturer or other responsible person 
that includes data from studies as specified in the bill and as 
required by the Secretary, the product will significantly 
reduce harm to individuals caused by a tobacco product and is 
otherwise appropriate to protect the public health based on an 
application by the manufacturer or other responsible person. A 
tobacco product may be marketed as a ``reduced risk tobacco 
product'' only if the product is so designated by the 
Secretary, bears a label prescribed by the Secretary concerning 
the product's contribution to reducing harm to health, and 
complies with requirements prescribed by the Secretary relating 
to advertising, marketing, and other provisions of chapter IX. 
The Secretary may revoke such designation at any time after 
providing an opportunity for an informal hearing. The bill also 
provides that a manufacturer of a tobacco product shall provide 
written notice to the Secretary upon the development or 
acquisition of any technology that would reduce the risk of 
such products to the health of the user for which the 
manufacturer is not seeking designation as a ``reduced risk 
tobacco product'' under this section.

SECTION 914. PRESERVATION OF STATE AND LOCAL AUTHORITY

  The bill includes provisions regarding state and local 
requirements affecting tobacco products that relate to matters 
under chapter IX. Section 914 incorporates portions of section 
521, which relates to state and local requirements respecting 
devices. Preemption of state and local requirements affecting 
tobacco products under section 914 is more limited than under 
the device section. State or local requirements that are 
different from, or in addition to, any requirement applicable 
under chapter IX relating to performance standards, premarket 
approval, adulteration, misbranding, registration, reporting, 
good manufacturing standards, or reduced risk products, are 
preempted. As is the case in section 521, state or political 
subdivisions may apply for a waiver of preemption from the 
Secretary. The procedures are the same as in section 521. State 
and local requirements relating to the sale, use, or 
distribution of a tobacco product, including requirements 
related to the access to, and the advertising and promotion of 
a tobacco product, that are in addition to, or more stringent 
than, requirements under chapter IX are not preempted by the 
FDCA.
  The bill makes clear that except as expressly provided in 
section 914, nothing shall in the FDCA shall be construed as 
prohibiting a State or political subdivision from adopting or 
enforcing a requirement applicable to a tobacco product that is 
in addition to, or more stringent than requirements established 
under chapter IX. The bill provides that where a requirement of 
a State or political subdivision is more stringent than a 
requirement established under chapter IX, the requirement of 
the State or political subdivision shall apply. The bill also 
clarifies that no provisions of chapter IX relating to tobacco 
products shall be construed to modify or otherwise affect any 
action or the liability of any person under the product 
liability laws of any State.

SECTION 915. TOBACCO PRODUCT SCIENTIFIC ADVISORY COMMITTEE

  Under the bill, the Secretary will establish a tobacco 
product scientific advisory committee. Several device sections 
that are incorporated into chapter IX include provisions that 
require the Secretary to establish an advisory committee for 
purposes of specific duties under each section. The approach 
used in chapter V, had it been adopted in chapter IX for 
tobacco products, would have required at least three separate 
advisory committees. The Committee has instead provided for a 
single tobacco product advisory committee to perform the 
responsibilities specified in sections 906(g), 907, and 910. In 
addition, the advisory committee will provide advice, 
information, and recommendations to the Secretary on the 
effects of the alteration of the nicotine yield from tobacco 
products; on whether there is a threshold level below which 
nicotine yields do not produce dependence on the tobacco 
product involved; and on other safety, dependence, or health 
issues relating to tobacco products as requested by the 
Secretary.

SECTION 916. EQUAL TREATMENT OF RETAIL OUTLETS

  The bill provides that the Secretary shall issue regulations 
to require that retail establishments for which the predominant 
business is the sale of tobacco products comply with any 
advertising restrictions applicable to retail establishments 
accessible to individuals under the age of 18.

    VI. Section 102. Conforming and other Amendments to the general 
                        provisions of the FFDCA

  Chapter III of the FDCA, which contains prohibited acts and 
penalties, provides the mechanisms and remedies for enforcing 
the various requirements in the product-specific chapters. 
Chapter VII includes general administrative provisions for 
regulations and hearings, examinations and investigations, 
records of intestate commerce, inspections, publicity, the 
treatment of confidential information, and a presumption of 
interstate commerce. Chapter VIII pertains to imports and 
exports. Chapter X, as redesignated by this bill, contains 
miscellaneous sections. The basic approach of the bill is to 
expressly include ``tobacco product'' wherever ``device'' 
appeared in these provisions. In a few instances, new 
provisions based on provisions applicable to devices were 
added. The intent is to ensure that the full range of 
compliance, enforcement, and other general authorities 
available to the Secretary for devices continue when tobacco 
products are regulated pursuant to chapter IX.

                                Exports

  The amendments to sections 801(e) and 802, which include the 
addition of a new paragraph (4) to section 801(e) and a new 
paragraph (3) to section 802(a), impose the same requirements 
for the export of tobacco products that do not meet the 
requirements of the FDCA that apply to devices.
  Sections 801(e)(4) and 802 apply to tobacco products that do 
not comply with performance standards promulgated by the 
Secretary under section 907, do not comply with the premarket 
review requirements in section 910, if applicable, or are 
exempt from sections 907 or 910 pursuant to regulations 
promulgated under section 906(f). Tobacco products that comply 
with these requirements, but violate other provisions of the 
FDCA may be exported if they comply with the basic export 
requirements in section 801(e)(1).
  The new section 801(e)(4) tracks the requirements of section 
801(e)(2), which applies to certain device exports. Similarly, 
new paragraph (3) of section 802(a) parallels paragraph (3), 
which lists the statutory categories of devices to which 
section 802 applies.
  Some concerns were raised in the Committee regarding the 
terms ``approval of the country to which it is intended for 
export'' and ``valid marketing authorization'' which appear in 
sections 801(e)(4) and 802, respectively. These terms apply to 
device exports in current law. Many foreign countries do not 
have affirmative approval systems for medical devices and 
others do not have medical device laws. FDA interprets the term 
``approval of the country to which it is intended for export'' 
in section 801(e)(2) to mean that the importing country must 
approve of the importation of the device. This is frequently 
established through a letter to FDA from the relevant authority 
in that country indicating that the country will permit or does 
not object to the importation of the device. With respect to 
the phrase ``valid marketing authorization'' in section 802(b), 
in those countries in which the regulatory systems permit 
marketing of a device without an affirmative act or decision by 
the government, FDA considers the device to have ``marketing 
authorization'' if the country does not object to the product's 
marketing. These workable and effective approaches to the 
language of sections 801(e) and 802(b) are appropriate for 
tobacco product exports as well.
  Thus, under section 802, a tobacco product that violates a 
performance standard promulgated under section 907, such as one 
prohibiting certain ingredients, could be exported to any 
country in which it can be legally marketed if at least one 
country ``listed'' in section 802(b)(1)(A) permits its sale, 
and the requirements of section 802(f) are met. This approach 
is consistent with FDA's application of section 802(b) to 
devices.

                        Subtitle B--Advertising

SECTION 121. ADVERTISING PROVISIONS IN PROTOCOL

  Section 121 indicates the advertising limitations the 
protocol must contain and that the tobacco product 
manufacturers must commit to observe.

SECTION 122. TOBACCO PRODUCT LABELING AND ADVERTISING

  Section 122 identifies the various requirements that would be 
contained in the protocol. Under the protocol no tobacco 
product could be sold or distributed in the United States 
unless the numerous advertising and labeling requirements are 
met. Those limitations are the same as those contained in the 
agreement reached on June 20, 1997 with the addition of animal 
figures and color advertising on the back of all magazines.

SECTION 123. POINT-OF-SALE RESTRICTIONS

  Section 123 would require that the protocol contain various 
limitations on the use of point-of-sale advertising.

              TITLE II--REDUCTIONS IN UNDERAGE TOBACCO USE

SECTION 201. GOALS FOR REDUCING UNDERAGE TOBACCO USE

  Section 201 requires the Secretary, in cooperation with 
state, local and tribal authorities, to take all actions under 
this act necessary to achieve prescribed reductions in youth 
usage of cigarettes and spit tobacco.
  These reductions must be made from a baseline percentage of 
youth tobacco usage established by a comprehensive study 
conducted at the University of Michigan in 1995. This model 
identified the number of youth (age 13-17) who use tobacco 
daily and calculated the percentage of such tobacco users in 
relation to the total population in that age bracket.
  This section requires that in years 3 and 4 after the date of 
enactment of this Act, the incidence of youth cigarette smoking 
among the underage population (age 13 to 17) be reduced by at 
least 15 percent of the baseline percentage; at least a 30 
percent reduction from the 1995 baseline percentage in years 5 
and 6; at least a 50 percent reduction from the baseline 
percentage for years 7, 8, and 9; and for year 10 and beyond a 
60 percent reduction from the baseline percentage is required.
  This section also sets targets for youth consumption 
reductions for smokeless (spit) tobacco. For year 3 and 4, a 
12.5 percent reduction in youth consumption of smokeless or 
spit tobacco from the 1995 baseline percentage is required. For 
years 5 and 6, a 25 percent reduction from the 1995 baseline 
percentage is required. For years 7, 8, and 9 a 35 percent 
reduction from the 1995 baseline percentage is required. For 
year 10 and thereafter a 45 percent reduction from the 1995 
baseline percentage is required.

SECTION 202. LOOK-BACK ASSESSMENT

  Section 202 sets forth: how the baseline of youth tobacco use 
is established, how non-attainment of youth tobacco targets is 
determined and, how financial assessments would be imposed on 
the industry for falling to meet youth tobacco use reduction 
targets.Subsection (a) calls on the Secretary to conduct 
annually a survey using the University of Michigan survey model 
or some other more accurate measurement method at the 
Secretary's discretion. Using the selected survey model, the 
Secretary shall calculate the incidence of underage tobacco use 
and measure the percentage reduction from the 1995 percentage 
baseline established in the University of Michigan study.
  Subsection (b) calls on the Secretary to impose financial 
penalties for each percentage point that youth consumptions 
reductions fall short of the targets established in Section 
201.
  The financial penalties for cigarettes are as follows: from 
one to five percentage points short of the youth tobacco usage 
reduction goal, the industry must pay $80 million per point; 
from six to nine points short, the industry must pay $160 
million per point; from 10 or more points short, the industry 
must pay $240 million per point.
  For instance, if in year five the incidence of youth tobacco 
usage falls by only 25 percent, rather than the required 30 
percent, the industry would be assessed a penalty of $400 
million ($80 million multiplied by each percentage point 
missed, in this case five). If youth tobacco usage falls by 
only 23 percent (or 7 points short of target ), the industry 
would be assessed the $400 million for points 1-5, and an 
additional $320 million ($160 million multiplied by two for 
points six and seven) for a total penalty of $720 million.
  The financial penalties for smokeless tobacco are $8 million 
per point for percentage points one through 5; $16 million per 
point for percentage points 5 through 10; and, $24 million per 
point beyond 10 percentage points.
  The Committee believes that the severity of the penalty 
should increase with the severity of the non-attainment. 
Accordingly, for non-attainment of between 5 and 10 percentage 
points, the penalty is doubled from $80 million to $160 million 
per point; and for non-attainment of more than ten points, the 
penalty is tripled from $80 million to $240 million per point.
  The financial penalties are assessed and calculated in the 
same manner for cigarettes and spit tobacco, although the 
penalties for smokeless are different from those for 
cigarettes.
  Subsection (b)(3) establishes an annual cap on penalties of 
$3.5 billion. Financial penalties assessed under this Title 
shall not be tax deductible. The June 20th agreement capped 
penalties at $2 billion per year and provided that those 
penalties would be tax deductible. Furthermore, when the $3.5 
billion annual cap under S. 1415 is reached, the industry and 
individual tobacco manufacturers may also lose the liability 
cap provided in Title VII.
  Subsection (b)(4) provides that if the industry fails to 
attain the youth smoking reduction target in any year by more 
than 20 points, the Secretary of Health and Human Services 
shall determine which manufacturers are responsible for the 
industry failing to meet the target and shall take action to 
remove the liability limitations provided in Title VII from 
such manufacturer or manufacturers.
  Subsection (c) provides that each manufacturer shall be 
jointly and severally liable for the payment. Under this 
provision, the Secretary may receive payment from any or all of 
the manufacturers. The manufacturers would then have the right 
to seek compensation from each other for equitable payment of 
industry penalties. This provision serves as a major incentive 
for individual companies to achieve reduction targets, and to 
hold non-performing companies individually liable.
  Subsection (c)(4) provides a de-minimis exemption for payment 
of penalties to any manufacturer with less than one percent of 
domestic, unless such manufacturers product is used 
predominantly by underage users.
          Subsection (f) provides that monetary penalty 
        payments are non-tax deductible as ordinary and 
        necessary business expenses.

SECTION 203. SUBSTANTIAL NON-ATTAINMENT OF REQUIRED REDUCTIONS

  This section provides for the procedures by which the 
Secretary of Health and Human Services would seek to remove the 
civil liability apportionment cap of any company that exceeds 
its non-attainment of the youth reduction target by greater 
than 20 points. The court of jurisdiction shall determine 
whether the preponderance of evidence shows that the 
manufacturer failed to comply with this act, or took any 
material action to undermine achievement of the youth tobacco 
use reduction goal.
  The subsection provides that any loss of liability limitation 
under Title VII of this act shall be in effect the later of 
either two years, or until the manufacturer is in compliance 
with the Act; has ceased taking material actions to undermine 
achievement of the reduction target; and has pursued reasonable 
additional measures to achieve youth tobacco use targets.

SECTION 204. DEFINITIONS

  Section 204 sets forth definitions of terms used in subtitle 
A of title II.

                Subtitle B--State Emforcement Incentives

SECTION 211. COMPLIANCE BONUS FUND

  Section 211 establishes within the National Tobacco 
Settlement Trust Fund a separate account called the Compliance 
Bonus Account for States and Retailers.

SECTION 212. BLOCK GRANTS

  The Secretary would award block grants each year to states 
where ``fewer than 5 percent of all individuals under 18 years 
of age who attempt to purchase tobacco products in the State'' 
are successful such purchase.

SECTION 213. STATE ENFORCEMENT INCENTIVES

  This section sets out requirements for State eligibility for 
grants authorized under Section 212, including state 
enforcement of state law requiring a minimum age of 18 years 
for the legal purchase of tobacco products, and the conduct of 
random testing of retail outlets to enforce compliance with 
youth access requirements. The FDA's youth access requirements 
require retailers to check the photo ID of customers under the 
age of 27 who are seeking to buy cigarettes or smokeless 
tobacco. States are required to send the results of their 
tobacco compliance checks to the FDA.
  A state is deemed in non-compliance with this section if such 
state has not complied with the minimum number of random, 
unannounced inspections and other minimum guidelines 
established in this title. Likewise a state is deemed in non-
compliance if the state inspections find that the retail 
outlets in such state do not achieve the following compliance 
targets with the applicable youth access restriction: 75 
percent compliance in years 5 and 6 after enactment; at least 
85 percent compliance in years 8, 9, and 10; at least 90 
percent compliance in year 11 and every year thereafter.
  The Secretary shall establish a reduction in the Section 1921 
amount for non-compliance with this Section.

                       Subtitle C--Other Programs

SECTION 221. NATIONAL SMOKING CESSATION PROGRAM

  This section authorizes the Secretary to award grants to 
public and nonprofit entities, and individuals for smoking 
cessation purposes. The creation of a national smoking 
cessation program is called for under the June 20th agreement. 
Funds to these entities shall be used to establish and 
administer approved tobacco product use cessation programs. The 
funds or vouchers received by individuals are intended to help 
citizens enroll in a program to permanently help them stop 
using cigarettes or other tobacco product. The Secretary will 
issue regulations for approved tobacco product cessation 
programs and products, based on the best scientific information 
available.
  Approximately 48 million Americans currently smoke 
cigarettes, and most smokers are either actively trying to quit 
or want to quit. While prevention programs can prevent many 
young people from ever becoming addicted to nicotine, some will 
succumb and ten to twenty million current smokers will die from 
tobacco-related diseases unless they have access to treatment 
for tobacco addiction.
  Although it is difficult to quit tobacco use because of the 
addictive nature of the product, quitting results in 
significant and immediate health benefits both for healthy 
people as well as for those suffering from tobacco-related 
diseases. For those who quit smoking fifteen years ago, for 
example, the risk of death today is similar to the risk for 
people who have never smoked at all. In addition, the health 
benefits of quitting tobacco are significant for the unborn 
children of pregnant women and for children and adults exposed 
to environmental tobacco smoke.
  The Committee finds that tobacco use treatment will reduce 
the human toll of tobacco and is cost effective. Compared to 
the estimated $60 billion in direct medical care spent annually 
on smoking-related illnesses and another $47 billion accounted 
for lost productivity and forfeited earnings caused by smoking- 
related disabilities, the average estimated per smoker cost for 
smoking cessation is $165. The cost of each intervention varies 
according to the amount of counseling, whether and which 
pharmaceutical adjuncts are offered, and effectiveness of the 
intervention. For every dollar invested in a smoking cessation 
program for pregnant women, an estimated $6 is saved in 
neonatal intensive care costs and the long-term care associated 
with low birth weight.
  However, a number of barriers impede the delivery of 
effective tobacco use cessation services.
  Clinicians do not consistently assess whether their patients 
use tobacco, nor do they offer smoking cessation treatment to 
every smoker at every office visit. Evidence shows that 70 
percent of U.S. smokers see their physician each year, and 60 
percent of the U.S. population five years of age and older is 
seen by a dentist, giving physicians and dentists considerable 
access to smokers. If only half of all the U.S. physicians and 
dentists gave brief advice to their patients and 10 percent of 
them were successful in quitting, there would be nearly 2 
million new nonsmokers in the U.S. each year.
  Inadequate training, lack of time and lack of reimbursement 
for services have made it difficult for physicians and other 
health care professionals to provide adequate tobacco cessation 
counseling and treatment.
  Surveys indicate that tobacco cessation therapy is not 
consistently provided as paid services for subscribers of 
health insurance packages despite the fact that tobacco use 
cessation is considered a highly cost effective service. One 
survey demonstrated that as few as 11 percent of health 
insurance carriers provide coverage for treatment of nicotine 
addiction; another survey of 105 health maintenance 
organizations found that few knew about the prevalence of 
smoking within their membership. In addition, a 1994 study of 
California health insurance plans found that only two percent 
of the 48 insurance companies sold any policies that covered 
smoking cessation treatment. Even Medicare and Medicaid do not 
routinely cover smoking cessation services.
  Tobacco users of low socioeconomic status tend to be under 
served by tobacco use cessation programs. They may be less 
likely to have health insurance; they may be unable to afford 
over-the-counter cessation products; or they may live in areas 
where these products are less easily obtainable and cessation 
services less accessible.
  When financial barriers are removed, participation increases. 
For example, when Group Health Cooperative of Puget Sound 
included smoking cessation as a covered benefit, its program 
participation jumped ten-fold, from 175 participants to over 
2,000 in the first year. In groups with a $42 co-payment, about 
30 percent of registered participants did not participate. By 
contrast, only one percent of those with no co-payment do not 
participate after registering.
  The Committee intends its bill to establish a national 
comprehensive tobacco use treatment program which includes: 
grants to states and localities; support of federal programs 
providing health services to low-income Americans, training of 
health care professionals, and other appropriate initiatives to 
fulfill the purposes of this section.
  Finally, the Committee recognizes the tobacco use treatment 
methods as outlined in the 1996 Agency for Health Care Policy 
and Research (AHCPR) Clinical Practice Guideline on Smoking 
Cessation, and recommends that grant recipients who develop and 
administer such programs mirror these and/or other similar 
evidence based guidelines. AHCPR's cessation guidelines 
recommend that clinicians record the tobacco-use status of 
every patient and offer smoking cessation treatment to every 
smoker at every office visit. Any national cessation effort 
must ensure that health care systems are doing everything they 
can to identify and intervene with tobacco users. The Committee 
expects AHCPR to periodically update its guidelines as new 
research becomes available regarding tobacco use treatment 
methods. Furthermore, the Committee believes that dissemination 
of the guidelines to clinicians and other health professionals 
is essential.

SECTION 222. NATIONAL TOBACCO-FREE PUBLIC EDUCATION PROGRAM

  Section 222 of the bill reported by the Committee would 
establish an independent board to enter into contracts with or 
award grants to both private and public entities to carry out 
public informational and educational activities designed to 
reduce the use of tobacco. The creation of the National Tobacco 
Free Public Education Program is called for under the June 20th 
agreement. The Committee intends for this program to be 
multifaceted, but the primary focus should be on counter-
advertising, and the programs should serve as a complement to 
the community based education programs outlined above.
  The Committee has directed that the programs in this section 
be established because it believes they are necessary to offset 
the extensive marketing efforts of the industry. The tobacco 
industry spends over five billion dollars a year marketing and 
advertising its products. A 1998 study in the Journal of the 
American Medical Association provided evidence that tobacco 
industry advertising and promotional activities are causally 
related to the onset of smoking. In addition, a 1995 article in 
the Journal of the National Cancer Institute found that tobacco 
marketing has a greater influence than exposure to parents or 
peers who smoke in prompting children to take up smoking, and 
other studies have shown the vast majority of young smokers, 
unlike adults, prefer one of the most heavily advertised brands 
of cigarettes. In addition, recently released internal tobacco 
industry documents indicate a deliberate strategy by the 
tobacco industry to attract children. Research also shows that 
anti-tobacco advertisements are effective in reducing tobacco 
consumption. The 1994 Surgeon General's Report indicates that 
mass media are particularly appropriate channels for tobacco 
education among young people who are heavily exposed to and 
often greatly interested in the media. A coordinated national 
campaign can be quite effective, the Committee believes, in 
discouraging the use of tobacco products and inducing smokers 
to quit using tobacco products. The Committee intends for this 
section to provide for a national media campaign but to also 
provide for assistance to state and local efforts to discourage 
smoking and tobacco use. The Committee believes that while it 
is critical to have a national effort, local priorities and 
unique circumstances such as high rates of smokeless tobacco 
product use or particularly high rates among specific 
population groups must also be addressed.
  At present, there is no national anti-tobacco public 
education campaign to counter the pro-tobacco imagery presented 
to both adults and children by tobacco industry marketing 
efforts. Several states (e.g., California, Arizona, and 
Massachusetts) have developed programs that have been shown to 
be effective, and several more have recently received funds for 
short term programs through settlements of lawsuits 
(Mississippi, Florida, Texas), but relatively few states have 
the resources to undertake the type of sustained, long term 
extensive public education and counter-advertising efforts that 
are necessary. In part this is due to the high cost of 
developing these programs and purchasing media. The federal 
approach outlined in this section will address this critical 
need.
  These programs are to be media- and nonmedia-based. Paid mass 
media is an essential component of any effective public 
education effort. According to various studies, paid media is 
most effective when it is utilized in conjunction with other 
approaches. This section requires a multidisciplinary effort. 
Mass media prevention efforts should be coordinated with 
community and school-based prevention programs as well as 
clinical interventions. In addition, the programs must address 
in a culturally appropriate way high-risk and special 
populations, especially because these groups have often been 
the target of marketing and advertising efforts directed 
specifically to them.
  The Committee notes that it is essential that the advertising 
provided under this section be undertaken free from any 
connection to or influence by the tobacco industry, and so 
directs the Secretary to ensure that any resources and decision 
making utilized to carry out this section are unencumbered by 
any such connections or influence. The Committee believes that 
the independent board established in this section will allow 
for the creation of the most effective programs and will 
provide for the necessary flexibility to ensure that the needs 
of local communities are met. In addition, an independent board 
that includes experts in advertising, marketing, public health, 
adolescent psychology and education that are not in any 
affiliated with the tobacco industry will ensure that the 
programs provided for under this section are effective.

SECTION 223. NATIONAL COMMUNITY ACTION PROGRAM

  Section 223 of the bill reported by the Committee authorizes 
the establishment of a grant program to assist local 
communities in their efforts to educate the community and young 
people about the dangers of tobacco and ways to reduce tobacco 
use and to assist in encouraging the reduction of tobacco use. 
The creation of a National Community Action Program is called 
for under the June 20 agreement. The Committee regards 
community based prevention and education programs including 
school based programs to be critical aspects of a national 
tobacco control strategy and essential to discouraging tobacco 
use and reversing the upward trends in youth tobacco use.
  Research demonstrates that well-designed, well-implemented 
school-based programs to prevent tobacco are effective and 
provide education during the years when the risk of becoming 
addicted to tobacco is greatest. The 1994 Surgeon General's 
Report, Preventing Tobacco Use Among Young People, indicates 
that school-based smoking prevention programs that identify 
social influences to smoke and teach skills to resist those 
influences have demonstrated consistent and significant 
reductions in adolescent smoking. In addition to the 
demonstrated reductions in tobacco use, the Centers for Disease 
Control and Prevention (CDC) has indicated that these school-
based programs can also help prevent the use of other drugs.
  Research, including the 1994 Surgeon General's Report, 
indicates that community-based strategies to prevent tobacco 
use are important adjuncts to school-based programs. The 
effectiveness of school-based tobacco prevention programs 
appears to be enhanced and sustained by community wide programs 
that involve parents, mass media, community organizations, and 
other elements of an adolescent's social environment. This 
report indicates that concerted use of multiple school and 
community channels for affecting adolescent tobacco-use 
behavior can produce a synergistic effect on the risk factors 
associated with adolescent tobacco use.
  In the last 15 years, several major community-based 
prevention trials that target youth tobacco use have been 
undertaken and have proven to be effective in driving down 
youth smoking rates. For example, the Minnesota Heart Health 
Program, addressed several cardiovascular risk factors for all 
age groups and used a variety of community strategies. Young 
people in this study received interventions through school and 
home-based programs indirectly through a community wide attempt 
to structure the overall social and physical environment to 
discourage young people from beginning to use tobacco. Young 
people in this study, had significantly lower smoking 
prevalence.
  Several states are undertaking anti-tobacco campaigns. 
Minnesota was the first to use tobacco excise taxes to carry 
out such a program. More recently, California, Massachusetts, 
and Arizona have adopted state-based public education programs, 
and several other states are initiating them. While it is too 
early to evaluate the efforts of many of the programs, the 
available data demonstrate that both the California and 
Massachusetts programs both of which include large scale 
community-based components have been effective in reducing 
tobacco use. For example, three years after Massachusetts began 
its public education and tobacco control campaign, an 
independent evaluation found that tobacco consumption in 
Massachusetts declined at a rate three times that of the rate 
for the rest of the nation, and while smoking among high school 
students increased dramatically on the national level, it did 
not increase significantly in Massachusetts.
  The American Stop Smoking Intervention Study for Cancer 
Prevention (ASSIST), which is funded through the National 
Cancer Institute at the National Institutes of Health, has 
provided further evidence regarding the effectiveness of 
comprehensive coordinated community efforts to reduce tobacco 
use. ASSIST provides funding to 17 states and is designed to 
promote broad social and environmental change. After just 4 
years, tobacco consumption in ASSIST states was 10 percent 
lower than in non-ASSIST states--an estimated 70 million fewer 
packs of cigarettes being consumed each month in these states. 
ASSIST has been used as a model for the development of state-
based tobacco control interventions in California, 
Massachusetts, as well as the Centers for Disease Control and 
Prevention's limited tobacco control program. The Committee 
intends that a significant portion of the funds from this 
section be used to fund the expansion of the ASSIST program or 
programs modeled after ASSIST.
  Research in the United States and abroad has demonstrated 
that education and prevention programs work to both increase 
knowledge and decrease consumption. But, there have been 
insufficient resources and commitment, including from the 
federal government, and the Committee intends its bill to 
greatly increase the resources available to assist state and 
local community efforts to discourage tobacco use.

SECTION 224. STATE RETAIL LICENSING PROGRAM

  This section provides for the establishment of a state retail 
licensing incentive grant program to be administered by the 
Secretary of Health and Human Services. To receive a grant, a 
state must enter into an agreement with the Secretary to assume 
responsibility for implementation and enforcement of a tobacco 
retailer licensing program. An effective licensing program 
which enlists tobacco product retailers and their employees in 
a systematic effort to reduce illegal tobacco purchases by 
minors is vital to this legislation. The Committee intends that 
States be allowed the opportunity to design their own retailer 
licensing programs, in compliance with the basic licensing 
requirements set forth in this Section. If States demonstrate 
to the Secretary of HHS that their retailer licensing program 
meets these requirements, and abides by the Youth Access 
Restrictions promulgated by the FDA, the State shall receive a 
block grant out of settlement funds to pay for the licensing 
program's administration and enforcement. The Secretary will 
promulgate regulations for a retailer licensing system to apply 
in those States that do not seek to design and implement their 
own retailer licensing system.
  Section 235(c) requires States seeking to design and 
implement their own licensing system (and receive settlement 
payments to do so) to demonstrate to the Secretary that their 
program includes the following core components. First, a State 
license is required for all retailers selling tobacco products 
to consumers, and the State provides notice to such businesses 
of their legal requirements pertaining to tobacco sales under 
State and Federal law. Second, criminal penalties will be 
imposed for the sale of tobacco products without a license, and 
civil penalties will be imposed for tobacco sales in violation 
State law by a licensee. The civil penalties enacted by States 
must include a graduated system of fines and suspension or 
revocation of licenses, for repeated violations by licensees. 
The monetary amount of fines are left to the discretion of 
States. Third, each State licensing plan must include some form 
of penalty imposed upon underage youths who possess, purchase, 
or attempt to purchase tobacco products. The penalties could 
include fines, suspension of driving privileges, or community 
service. Each State licensing program must provide procedures 
for judicial review of all State actions regarding license 
applications, suspensions, and revocations.
  Section 235 (b) is the enforcement requirement for States 
establishing a licensing system with a settlement block grant. 
It requires States to enforce its tobacco licensing program in 
a manner reasonably expected to reduce the sale of tobacco 
products to underage youths. To ensure proper State action 
regarding enforcement, the Secretary can reduce the block grant 
of any State found to be not in compliance with this standard.
  Section 235(c) authorizes the Secretary to establish a 
retailer licensing system in those States which did not 
establish their own. It authorizes the Secretary to promulgate 
regulations creating retailer licensing requirements, 
enforcement measures and applicable penalties. As under current 
law, the Secretary is authorized to enter into agreements with 
State officials for enforcement of federal regulations, and 
provide grant funding from tobacco settlement accounts for 
related costs.

  TITLE III--TOBACCO PRODUCT WARNINGS AND SMOKE CONSTITUENT DISCLOSURE

          Subtitle A: Product Warnings, Labeling and Packaging

SECTION 301. CIGARETTE LABEL AND ADVERTISING WARNINGS

  Section 301 provides for new, more emphatic warnings for 
cigarette labels, packaging and advertising. These new warnings 
are achieved by amending Section 4 of the Federal Cigarette 
Labeling and Advertising Act (15 U.S.C. 1333).
  In general, this section would require the warning statement 
to take-up the upper 25 percent of both the front and the back 
of the cigarette package. Cigarette advertising is also 
required to carry these warning statements in compliance with a 
defined format. The Secretary of Health and Human Services has 
the authority to modify the format for the warning statements 
as they appear on cigarette packaging and in cigarette 
advertising.

SECTION 302. AUTHORITY TO REVISE CIGARETTE WARNING LABEL STATEMENTS

  The Secretary may by rulemaking modify the warning label 
statements if it would ``promote greater public understanding 
of the risks associated with the use of tobacco products.''

SECTION 303. SMOKELESS TOBACCO LABELS AND ADVERTISING WARNINGS

  Section 303 provides for new, more emphatic warnings for 
smokeless tobacco labels, packaging and advertising. These new 
warnings are achieved by amending Section 3 of the 
Comprehensive Smokeless Tobacco Health Education Act of 1986 
(15 U.S.C. 4402).As with cigarettes, the warning statements 
required must appear in a defined format.

SECTION 304. AUTHORITY TO REVISE SMOKELESS TOBACCO PRODUCT WARNING 
                    LABEL STATEMENTS

  The Secretary may by rulemaking modify the warning label 
statements if it would ``promote greater public understanding 
of the risks associated with the use of smokeless tobacco 
products.''

SECTION 305. TAR, NICOTINE AND OTHER SMOKE CONSTITUENT DISCLOSURE TO 
                    THE PUBLIC

  Section 305 transfers authority over the disclosure of 
cigarette constituents from the Federal Trade Commission to the 
Secretary of Health and Human Services. The Secretary would be 
given the authority to determine whether cigarette package 
labels and advertising will report tar and nicotine yields. The 
Secretary would have the authority to specify the format for 
such disclosures. The Secretary, by rulemaking, could also 
require the disclosure of any other smoke constituent.

Subtitle B: Testing and Reporting of Tobacco Product Smoke Constituents

SECTION 311. REGULATION REQUIREMENT

  Section 311 would require the Secretary to issue regulations, 
within one year of the Act's effectiveness, which would provide 
for the testing, reporting and disclosure to the public of 
``tobacco product smoke constituents and ingredients that the 
Secretary determine should be disclosed . . . to protect the 
public health.''

            TITLE IV--NATIONAL TOBACCO SETTLEMENT TRUST FUND

SECTION 401. NATIONAL TOBACCO SETTLEMENT TRUST FUND

  This Section establishes a National Tobacco Settlement Trust 
Fund within the United States Treasury. The up-front and annual 
payments received from tobacco manufacturers under Section 403; 
amounts equivalent to the fines or penalties paid by tobacco 
manufacturers for failure to meet youth tobacco use reduction 
targets under Section 202, including interest and penalties 
under shall be credited to the trust fund.
  The Section provides that the receipts and disbursement of 
the Trust Fund shall not be included in the totals of the 
budget or subject to limitations imposed by other statutes.

SECTION 402. STATE LITIGATION SETTLEMENT ACCOUNT

  This section provides for the establishment, within the 
National Tobacco Settlement Trust Fund, of a separate account 
to be known as the State Litigation Settlement Account. From 
the amounts received into the Trust Fund pursuant to this act, 
$196 billion shall be credited to the State Litigation 
Settlement Account over 25 years. Amounts credited to the 
account shall be distributed to eligible states without further 
appropriation.
  Subsection 402(c) provides that as state may use amounts 
received from the State Litigation Settlement Account as the 
state determines is appropriate, and that these funds will not 
be deemed as reimbursement for Medicaid expenditures or as 
Medicaid overpayments for purposes of recoupment.

SECTION 403. PAYMENTS BY INDUSTRY

  This section requires five of the major participating 
manufacturers (those manufacturers that become a signatory of 
the Master Settlement Agreement and enter into state consent 
decrees) to make an up-front payment of $10 billion.
  The up-front payment shall be paid in accordance with the 
following apportionment:
          Phillip Morris Incorporated--65.8 percent
          Brown and Williamson Tobacco Corporation--17.3 
        percent
          Lorillard Tobacco Company--7.1 percent
          R.J. Reynolds Tobacco Company--6.6 percent
          United States Tobacco Company--3.2 percent
  The five major participating manufacturers listed above, and 
other qualified participating manufacturers, shall contribute 
to annual payments beginning the first year after enactment of 
this act, as follows.
          Year 1: $14.4 billion
          Year 2: $15.4 billion
          Year 3: $17.7 billion
          Year 4: $21.4 billion
          Year 5: $23.6 billion
          Year 6 and every year thereafter: $23.6 billion.
  The payments pursuant to this section, made by participating 
manufacturers, shall be deemed payments in settlement of civil 
suits in accordance with the Master Settlement Agreement and 
consent decrees.
  The annual amount required to be paid by participating 
tobacco manufacturers in years one through five after enactment 
of this act, except for the up-front payment, is calculated by 
multiplying the price-per-pack increase designated for that 
year, by the year's anticipated volume of per-pack sales. The 
price-per- pack increase schedule begins with a 65 cents hike 
in year one and graduates to $1.10 in year five, in compliance 
with the Administration's FY `99 budget request. Anticipated 
volumes have been calculated by the U.S. Department of Treasury 
factoring in reductions in demand due to yearly price 
increases. Accordingly the listed payments are pre-volume 
adjusted, and have also been adjusted for inflation.
  The Committee received expert testimony that a substantial 
and immediate price increase in tobacco products is an 
essential component of a comprehensive effort to deter youth 
consumption. This section will achieve that objective.
  In year six and every year thereafter, the participating 
tobacco manufacturers will be required to pay $23.6 billion, 
adjusted to inflation. The yearly payment beginning in year six 
is further volume adjusted. The payment of $23.6 billion each 
year will be increased or decreased by the same percentage 
increase or decrease in volume of sales from the established 
baseline.
  According to the Department of the Treasury, the total sum of 
payments from tobacco manufacturers over 25 years, including 
the $10 billion up-front payment, and assuming no increase in 
sales volumes, would not be greater than $516 billion (not 
including look back assessments provided in Title III).
  Annual payments are due in one-third installments to be paid 
on March 1, June 1, and September 1 of each year. The share of 
the annual payment apportioned to a participating manufacturer 
shall be equal to that manufacturer's adjusted unit sales. This 
section provides how adjusted units are calculated for 
cigarettes and smokeless tobacco.

SECTION 404. ADJUSTMENTS

  This section provides for the inflation and volume 
adjustments described above.

SECTION 405. PAYMENTS TO BE PASSED THROUGH TO CONSUMERS

  This section provides that the yearly payments from 
participating tobacco manufacturers required under Section 403, 
be passed through to the price of tobacco products sold by such 
manufacturer. This is to ensure that the act effects the 
increases in price necessary to deter youth consumption.
  This section also provides for the assessment of a penalty 
against a participating manufacturer for the failure to pass 
through payments to product prices. The penalty is increased if 
such shortfall was intentional.

SECTION 406. TAX TREATMENT OF PAYMENTS

  This section provides that payments made under section 403 
are considered ordinary and necessary business expenses for 
purposes of tax treatment in accordance with current law. The 
administration has expressed its concurrence that current law 
be applied with respect to the tax treatment of annual 
payments.

SECTION 407. ENFORCEMENT FOR NONPAYMENT

  This section provides for the imposition of a civil penalty 
on a participating manufacturer for the failure to make any 
payment required under Section 404 and 405. The section 
specifies a penalty of $100,000 for each day, after 60 days, a 
payment is due. The section provides relief from the penalty 
for any failure to pay that is not willful or intentional. If a 
participating manufacturer fails to make a payment within one 
year of when such payment is due, such manufacturer will be 
deemed a non-participating manufacturer and will be ineligible 
for any protections or assistance provided for under this Act.

SECTION 408. IMPLEMENTING AND ENFORCEMENT FUNDS

  This section provides that not less than $300 million of the 
amounts available in the trust fund shall be available each 
year to the Commissioner of the Food and Drug Administration to 
reimburse the FDA for the cost of implementing and enforcing 
requirements related to tobacco products.

                Subtitle B--General Spending Provisions

SECTION 411. IMPROVING CHILD CARE AND EARLY CHILDHOOD DEVELOPMENT

  This section authorizes the Trustees to use funds from the 
Trust Fund to expand funding for the Child Care Development 
Block Grant to improve the affordability; quality, and 
availability of child care, including health services and 
improving services for children with disabilities. Proponents 
of the amendment by Senator Kerry, as adopted by the Committee, 
believe that good quality child care is key to the healthy 
development of children and constructive after-school 
activities are an important part of keeping school-age children 
from smoking. Proponents of the amendment believe that using 
tobacco settlement funds to expand the Child Care Development 
Block Grant, the major federal child care program for working 
families, by up to $4 billion a year would help accomplish 
these goals. This section provides that any funds made 
available by the trustees for the purposes of this section be 
further subject to appropriations.

   TITLE V--STANDARDS TO REDUCE INVOLUNTARY EXPOSURE TO TOBACCO SMOKE

  Title V provides regulations for a Smoke Free Environment 
Policy in public buildings in the U.S. Health and scientific 
studies show a causal relationship between secondhand tobacco 
smoke and disease in non-smokers. The presence of tobacco smoke 
in non-ventilated public buildings and corridors is an 
unhealthy and unfair imposition on the rights of non smokers. A 
smoke free atmosphere in public buildings will protect the 
health of all non-smokers from the ill-effects of tobacco 
smoke. This is of particular importance to adults and children 
who have medical ailments which are exacerbated by the presence 
of tobacco smoke. Importantly, Title V affords State officials 
the choice to determine whether the federal smoke free 
environment policies mandated herein are suitable for their 
States. The Committee recognizes that States have traditional 
authority over regulations pertaining to tobacco usage in 
public facilities, and the varying policy choices which will 
arise from new health-oriented requirements. Therefore, section 
507 provides States to opt-out of these federal requirements by 
the enactment of contrasting State law.
  Section 501 defines the type of buildings to which the 
federal policy for smoke free buildings will apply. The bill 
defines public buildings as those which are regularly entered 
by at least ten persons one day a week, including federally-
owned or leased buildings, other than buildings used for 
residential purposes. Section 501(B) lists the buildings which 
are not considered to be public buildings for the purposes of 
this Title, and thus are not subject to the smoke free policy 
requirements. These are largely buildings patronized by adults, 
such as bars, casinos, hotels, private clubs, and restaurants. 
Importantly, fast food restaurants are specifically required 
under section 501 (B) and (C) to establish a smoke free policy 
in compliance with this bill. The Committee believes that the 
large numbers and frequency of children and teenagers who 
patronize fast food restaurants warrants the adoption of smoke 
free environment policies.
  Section 502 provides the basic elements of the smoke free 
environment policy that the owners or controlling lessees 
public buildings must implement. The owner or lessee who 
operates the building must prohibit the smoking of tobacco 
products within the facility and in close proximity to the 
facility's entrance. They may establish a specially-designated 
smoking area in the building, under the following restrictions. 
The designated smoking areas must directly ventilated to the 
outside of the building and not allow tobacco smoke to enter 
other areas of the public building; the room must be maintained 
at negative pressure; and non-smoking individuals do not have 
to enter the room for any purpose. This section and Section 505 
authorizes the OSHA Administrator to promulgate regulations to 
carry out this Title.
  Enforcement of a smoke free environment policy is a key 
aspect of ensuring that non-smokers are not subject to an 
unhealthy environment due to violations of this Title. Section 
503 authorizes any aggrieved person, OSHA, and any State or 
local governmental agency to bring suit in a proper federal 
district court to enforce these smoke free environment 
requirements. Defendants are subject to injunctions against 
violative practices and civil penalties fines of up to $5,000 
per day of violation. However, to afford owners and lessors a 
fair opportunity to correct violations without unnecessary 
litigation, an aggrieved person must first provide notice to 
them about the violation. Section 503(c) stipulates that the 
owner or lessee that operates the building then has 60 days to 
correct the violation before the grievant can file an action 
under this Title.
  Section 506 and section 507 establish the effective date of 
this title and the ability of States to opt- out of its 
requirements, respectively. The Committee believes that this 
title should not take effect in a State until that State has 
the opportunity to evaluate whether they are suitable public 
building requirements. Therefore this title's federal smoke 
free environment policies will take effect on the first day of 
the January, following the regular session of a State 
legislature in which a measure to opt out may have been 
considered.
  Nothing in this title requires any public facility owner or 
lessee to make any structural change to such facility. If a 
public facility owner or lessee does not have a specially 
designated smoking area that meets the requirements of this 
title, and does not wish to incur any expense to create such an 
area, the owner or lessee may choose not to have a specially 
designated smoking area.

                 TITLE VI--APPLICATION TO INDIAN TRIBES

SECTION 601. SHORT TITLE

  Section 601 provides that this title may be cited as the 
``Reduction in Tobacco Use and Regulation of Tobacco Products 
in Indian Country Act of 1998''.

SECTION 602. FINDINGS AND PURPOSES

  Section 602 contains findings and purposes relevant to this 
Title.

SECTION 603. APPLICATION OF TOBACCO-RELATED PROVISIONS TO NATIVE 
                    AMERICANS

  In making the provisions of the bill applicable to Indian 
tribes and the manufacture, distribution, and sale of tobacco 
or tobacco products (tobacco-related activities) on Indian 
lands, the Committee had various principal objectives, 
including: first, to ensure national, uniform application of 
the Act with respect to the activities of Indian tribes, their 
members, and tobacco-related activities on Indian lands; 
second, to recognize and preserve specified traditional, 
religious, and ceremonial uses of tobacco as part of the Native 
American culture; and third, to recognize the inherent tribal 
authority to make and enforce laws governing persons and 
activities occurring on lands within the tribes' jurisdiction. 
The Committee does not intend to modify current law with regard 
to jurisdiction on Indian lands.
  Sections 601 through 603 of Title VI as reported by this 
Committee do not represent a final agreement by the Chairman 
and Committee members regarding a number of outstanding issues. 
It is the intent of the Committee to reach consensus on 
language to be included in a Manager's Amendment to be offered 
when the bill is considered by the full Senate. The Committee's 
intent, however, is clear with regard to a number of matters: 
to ensure national, uniform application of the Act with respect 
to the activities of Indian tribes, their members, and tobacco-
related activities on Indian lands; to recognize and preserve 
specified traditional, religious, and ceremonial uses of 
tobacco as part of the Native American culture; to disburse 
tobacco trust fund monies to tribes or tribal organizations on 
an equitable basis; and to provide eligible Indian tribes 
resources to operate tobacco retailer licensing programs, as 
prescribed for states under section 224 of the Act. If tribes 
are unwilling, unqualified or ineligible (or are non- 
participating tobacco products manufacturers under the Act) to 
conduct such licensing programs, then states may conduct the 
licensing programs under voluntary cooperative agreements with 
those tribes, or the federal government shall conduct such 
licensing programs.
  The Committee recognizes that language may have to be 
included to address the unique circumstances of Alaska, in 
particular, the Alaska Native Claims Settlement Act, the U.S. 
Supreme Court's Venetie decision, and health-care delivery 
systems traditionally serving Alaska Native communities.

SECTION 604. STATE TOBACCO EXCISE TAX COMPLIANCE

  Uniformly increasing the price of tobacco products and 
eliminating pricing disparities are basic functions of this 
Act, and Section 604 is designed to eliminate sources, for non-
tribal members, of cheaper tobacco products. For the sale of 
tobacco products to non-tribal members, Section 604 requires 
Indian tribes to collect and remit to the U.S. Treasury all 
excise and sales taxes of the state within which the sale 
occurs. The Treasury, in turn, is required to remit these taxes 
to the state within which they were collected.

    TITLE VII--CIVIL LIABILITY OF MANUFACTURERS OF TOBACCO PRODUCTS

SECTION 701. DEFINITIONS

  Section 701 provides definitions for terms which are not 
defined elsewhere in the bill or which have unique meaning in 
Title VII.

SECTION 702. APPLICATION

  Section 702 explains that the provisions of Title VII apply 
to all tobacco claims brought against participating 
manufacturers and various agents of the participating 
manufacturers, including retailers, wholesalers and growers. 
Section 702(b) clarifies that Title VII does not apply to non-
participating manufacturers, nor does it apply to claims which 
are not tobacco claims, such as enforcement actions by the 
states, workers' compensation claims, securities actions, and 
actions brought by the United States. Section 702 also provides 
a one-time opt out mechanism for states to elect not to settle 
their pending actions. The Secretary of the Treasury would 
establish procedures for the execution of this opt-out. If a 
state opts-out, then its actions against the tobacco 
manufacturers would not be settled. The state would forgo 
payments from the National Tobacco Settlement Trust Fund, but 
would receive any funds it receives in settlement or judgment 
from its suits against tobacco manufacturers.

SECTION 703. PREEMPTION AND RELATIONSHIP TO OTHER LAW

  The Section preempts other bases in state law for tobacco 
claims to the extent that state law is inconsistent with Title 
VII. It also clarifies that Title VII does not limit any 
criminal liability of the tobacco manufacturers.

SECTION 704. GOVERNMENTAL CLAIMS AND CASTANO CIVIL ACTIONS

  This section prohibits any state governmental entity, or 
political subdivision, and Indian tribes from bringing a 
tobacco claim, except as provided in Title VII. Section 702(b) 
provides for the settlement of existing state claims by consent 
decree. Section 702(c) settles the pending private class 
actions based solely on addiction and dependence and known as 
the Castano cases. While the Castano class actions are 
decertified, the plaintiffs within the class could bring their 
actions on an individual basis in accordance with Title VII. 
Subsections (2) and (3) of 704(c) provides a mechanism for 
awarding attorneys' fees in the Castano cases.

SECTION 705. CONCURRENT JURISDICTION; FEDERAL CAUSE OF ACTION; ACTIONS 
                    DAMAGES; LIABILITY; REMOVAL

  Section 705 establishes a federal cause of action for tobacco 
claims, based upon the substantive law of the state in which an 
action is brought. This federal cause of action is the 
exclusive cause of action for tobacco claims, and all other 
bases for claims are preempted. This approach of creating a 
federal cause of action allows this Act to cover all tobacco 
claims, while both permitting existing state law to apply to 
those actions and avoiding bringing all tobacco claims into the 
Federal court system.
  Section 705(b) provides that tobacco claims may only be 
brought against a tobacco manufacturer or the surviving entity 
of a tobacco manufacturer. This structure provides an incentive 
for tobacco manufacturers to elect to participate. Section 
(b)(2) preserves all causes of action which would have 
otherwise been viable under state law if the tobacco 
manufacturers are unable to make payments required by the Act. 
Subsection (c) prohibits addiction and dependence claims.
  Subsection (d) provides evidentiary rules for tobacco claims: 
including authentication of documents produced from the 
national depository established by the Act, and a prohibition 
against introducing evidence related to reduced-risk tobacco 
products to thereby eliminate a significant disincentive to the 
development of safer tobacco products.
  Section 705(e) establishes joint and several liability among 
the participating manufacturers, but provides that the 
participating manufacturers will not be jointly and severally 
liable with non-participating manufacturers. Participating 
manufacturers may be jointly and severally liable with any 
other person, except a non-participating manufacturer. 
Subsection (4) of (e) provides that trials in actions against a 
participating manufacturer and a non-participating manufacturer 
may be severed and heard by separate juries. Subsection (5) 
establishes an evidentiary rebuttable presumption that nicotine 
is addictive and that certain diseases are caused in whole or 
in part by use of tobacco products.

SECTION 706. PAYMENT OF TOBACCO CLAIM SETTLEMENTS AND JUDGMENTS

  This section established a system for payment of settlements 
and judgments of tobacco claims out of the fund set aside for 
these payments. This section coordinates the payment of 
judgments and settlements from all courts to ensure that the 
fund is distributed according to certain procedures and 
guidelines. Subsection (b) provides that the Secretary of the 
Treasury will maintain a record or judgments and settlements 
and will establish a priority for their payment. Payment is 
made according to the date when the judgment or settlement is 
registered with the Secretary. The annual payment cap is 
established at $6.5 billion. If that amount is insufficient to 
pay all the recorded judgments and settlements in any year, 
then the unpaid judgments and settlements will be paid in the 
following year. Subsection (d) permits a participating tobacco 
manufacturer to seek an injunction against any state court 
which attempts to enforce or execute any judgment in a manner 
inconsistent with this section. Section 706(e) provides that 
the participating tobacco manufacturers are jointly and 
severally liable for judgments and settlements payable under 
this section and shall enter into an agreement apportioning the 
amounts payable among themselves. The apportioned payments are 
to be given priority, and may not be avoided or discharged, in 
any bankruptcy proceeding or other insolvency proceeding.

SECTION 707. ATTORNEYS' FEES AND EXPENSES

  This section establishes an arbitration procedure for 
awarding plaintiff's attorney's fees in which the attorney is 
unable to agree with his client as to the fee to be paid. The 
arbitration panel shall consist of 3 people: 1 selected by the 
plaintiff, one selected by the attorney, and one chosen jointly 
by those 2 arbitrators. Subsection (4) sets forth the 
substantive criteria the panel must follow in making awards of 
fees, including the time and labor expended; the novelty and 
difficulty of the issues in the claim; the skill required; the 
extent to which the employment has precluded other employment; 
whether a fee agreement exists based upon a fixed fee or a 
percentage; time limitations imposed; the amount of the 
judgment or settlement; the experience and reputation of the 
attorney; the undesirability of the action; amounts already 
paid under the fee agreement in dispute; and such other factors 
as justice requires. Nothing in this section abrogates or 
restricts the rights of any parties to mediate, negotiate, or 
settle fee disputes, or to enter into fee agreements with 
respect to the allocation or division of fees.

SECTION 708. NON-PARTICIPATING MANUFACTURERS

  This section provides for fees to be paid by non-
participating manufacturers, including fees equivalent to 150 
percent of the annual payments made by participating 
manufacturers and an escrowed fee to cover potential tobacco 
claim related liability payments. This structure both provides 
an incentive for tobacco manufacturers to participate and 
ensures there will not be a price advantage for tobacco 
manufacturers that do not participate.

SECTION 709. CONFORMING AMENDMENTS

  This section contains provisions necessary to provide 
consistency with other statutes.

SECTION 710. TRUST FUND

  This section establishes a Tort Trust Fund, as requested by 
the Administration, to ensure that individual claimants have a 
source for payment of judgments and settlements against the 
tobacco companies. This section is a place holder and will be 
revised.

 TITLE VIII--TOBACCO INDUSTRY COMPLIANCE AND EMPLOYEE PROTECTION FROM 
                               REPRISALS

SECTION 801. TOBACCO INDUSTRY COMPLIANCE ACCOUNTABILITY REQUIREMENTS

  Section 801 would require the Commissioner of the Food and 
Drug Administration to establish an advisory panel called the 
``Tobacco Agreement Accountability Panel.'' Within one year of 
the effectiveness of the Act, each participating tobacco 
manufacturer must submit to the Commissioner a plan to reduce 
youth smoking. That plan will be reviewed by the Accountability 
Panel which may recommend additional measures to reduce youth 
smoking.
  Annually, the Accountability Panel would be required to 
submit to the Commissioner and Congress a report which 
describes each tobacco manufacturer's compliance with the Act 
and determines whether the efforts undertaken by each tobacco 
manufacturer is likely to meet the youth smoking reduction 
targets. The Commissioner is, within 60 days of receiving this 
report, required to implement any recommendation made by the 
Accountability Panel or report to Congress why the 
recommendation is not being implemented.
  The panel would be permitted to declare a public health 
emergency if it unanimously determines that a tobacco 
manufacturer's ``actions or inactions'' concerning compliance 
with the Act would create a ``clear and present danger to the 
attainment of the targets for underage smoking reduction.'' If 
the Commissioner determines that the Accountability Panel's 
determination is ``supported by clear and convincing evidence'' 
then the Commissioner would be required to bring an action, 
under provisions of the Act, to seek the ``immediate suspension 
of the manufacturer's annual limitation cap on civil 
judgments.'' If the court then determines that ``the Secretary 
has proved by clear and convincing evidence'' that the tobacco 
manufacturer's actions or inactions present a ``clear and 
present danger to the attainment of the targets for underage 
smoking reduction'', the court may suspend the tobacco 
manufacturer's annual limitation on civil judgements.
  If the Secretary determines that the tobacco manufacturer 
will miss its youth reduction targets by more than 20 
percentage points, the Secretary would be required to either 
bring an action against the tobacco manufacturer under section 
203 or issue a finding that the manufacturer made ``reasonable 
efforts'' to reach the attainment targets. Compliance with all 
Accountability Panel recommendations will be prima facie 
evidence that the tobacco manufacturer made ``reasonable 
efforts'' to achieve the targets for reduction of youth 
smoking.

SECTION 802. TOBACCO PRODUCT MANUFACTURER EMPLOYEE PROTECTION

  The Act would provide various whistle blower protections for 
employees of tobacco manufacturers. The Act would also give the 
Secretary certain investigatory and enforcement powers to 
protect such employees. The Act would provide for judicial 
review of such determinations.
  Tobacco manufacturers would be prohibited from taking action 
against an employee that exposed the manufacturers's violations 
of the Act, testified in government proceedings concerning 
those violations or refused to engage in practices made 
unlawful by the act.
  Employees that believe they have been adversely treated for 
their actions to expose tobacco manufacturer violations may 
file a complaint with the Secretary. The Secretary would be 
required to investigate the employee's complaint and may take 
action to reinstate a fired employee or take other actions to 
abate the violation if the employee makes a prima facie showing 
of discriminatory treatment due to the employee's actions to 
expose the tobacco company's violations. The Secretary may 
dismiss the employee's complaint if the tobacco manufacturer 
proves by clear and convincing evidence that it did not 
discriminate or retaliate against the employee.

       TITLE IX--PUBLIC DISCLOSURE OF TOBACCO INDUSTRY DOCUMENTS

  Over the past several decades, tobacco companies have amassed 
a truly massive amount of scientific, manufacturing, marketing, 
and company policy information. These documents, which include 
internal tobacco company studies and strategic policy 
assessments, comprise literally millions of pages. They are of 
tremendous importance to public health officials interested in 
an effective national tobacco policy, as well as private 
citizens. The information that can be gleaned from these 
materials will be especially vital to individuals who have 
suffered medical problems due to tobacco products, and who are 
considering whether to file suit for compensation. Without a 
centralized tobacco document repository, citizen plaintiffs 
would face considerable costs, delays, and difficulties in 
investigating company information that may be relevant to the 
consideration of their claim. Discovery efforts could prove 
extremely burdensome and time consuming for many individuals. 
The Committee supports the State Attorneys General 
recommendation that a central document repository of 
appropriate, non-privileged tobacco company information be 
established. The repository will serve the Act's objective of a 
sound national tobacco policy by providing public access to 
documentary evidence of the industry's knowledge, policies, and 
conduct.

SECTION 901. FINDINGS

  Section 901 contains Congressional findings that the tobacco 
manufacturers have taken action in bad faith to protect 
internal documents from public disclosure when disclosure of 
those documents would promote public understanding of the 
tobacco industry's research and business practices.

SECTION 902. APPLICABILITY

  This Title applies only to participating manufacturers of 
tobacco products as defined under the Act.

SECTION 903. NATIONAL TOBACCO DOCUMENT DEPOSITORY

  Section 903 would require the participating tobacco product 
manufacturers to establish in the Washington DC area, within 
180 days of the enactment of this Act, a document repository 
called the National Tobacco Document Depository. This document 
depository would greatly enhance the knowledge of both the 
public and the public health community concerning tobacco 
industry behavior and research concerning tobacco products. The 
document depository would also greatly facilitate individuals 
in bringing lawsuits against the tobacco manufacturers to gain 
compensation for injuries related to tobacco use.
  Each participating tobacco product manufacturer would be 
required to place in the Depository all of its documents, and 
those of the Center of Tobacco Research or the Tobacco 
Institute, concerning: all original laboratory research; all 
industry documents produced in discovery in the actions brought 
by state attorneys general; any documents produced in 
conjunction with the Federal Trade Commission's investigation 
concerning Joe Camel; all documents produced to litigation 
adversaries during any private litigation and in specifically 
enumerated litigation; any trial-related documents; any 
documents referring to health research about tobacco products, 
dependency of consumers on tobacco products, and safer or less 
hazardous tobacco products; all indices of documents relating 
to tobacco products and health; and, various privilege and 
trade secrecy logs describing certain documents exempt from 
disclosure.
  Section 903(d) would provide for the disclosure, by 
participating tobacco manufacturers, of documents created after 
the effective date of the Act. The following types of documents 
would have to be supplied to the depository within 90 days of 
the document's completion: all original laboratory research 
relating to the health effects or safety of tobacco products; 
all studies relating to tobacco product use by minors; all 
documents referring to the relationship between advertising and 
promotion of tobacco products and their use by minors; a 
privilege log to describe those documents that are exempt from 
disclosure; and, a trade secrecy log to describe such documents 
that are exempt from disclosure.
  All documents supplied to the Depository would be 
sequentially numbered and coded to identify the tobacco 
manufacturer that is the source of the document.

SECTION 904. PRIVILEGE AND TRADE SECRET CLAIMS

  Section 904 establishes procedures for handling documents the 
tobacco manufacturers claim should not be made available to the 
public due to attorney-client privilege, attorney work product 
protection or trade secret protection. The tobacco 
manufacturers would be required to submit such documents to the 
Depository but they would be marked as privileged documents. 
Submitting such documents to the Depository would not waive any 
claim of privilege or trade secret protection.
  The tobacco manufacturers would be required to provide a 
comprehensive log that identifies all documents for which a 
privilege is asserted. The log of documents would describe each 
document and explain why a privilege is asserted. Tobacco 
manufacturers would be required to examine each document for 
which they had previously made a claim of privilege and make a 
good faith review as to whether that claim is still 
appropriate.

SECTION 905. DISCLOSURE BY THE DEPOSITORY

  The Depository would be required to release to the public all 
documents that are not privileged by placing them on the 
Internet and through other appropriate methods.
  Under Section 905(b), documents that are submitted to the 
Depository are to be treated for evidentiary purposes in the 
same manner as documents from the National Archives. In other 
words, if the document is certified as coming from the 
Depository, then it is authenticated as a matter of evidence 
and is treated as if it were the original document.
  Under Section 905(c), if a document, protected as a trade 
secret, is released inappropriately by the Board or the 
Depository it is a criminal violation.

SECTION 906. NATIONAL TOBACCO DOCUMENTS REVIEW BOARD

  Section 906 creates the National Tobacco Documents Review 
Board with 5 members, appointed by the President and confirmed 
by the Senate. The Board would have responsibility for 
maintaining and operating the Depository. The Board would be 
charged with applying the doctrines of attorney-client 
privilege and attorney work-product in a manner consistent with 
Federal law.

SECTION 907. RESOLUTION OF DISPUTED PRIVILEGE AND TRADE SECRET CLAIMS

  The Board would be responsible for determining whether to 
uphold or reject a tobacco manufacturer's claim that a document 
should not be revealed to the public due to a claim that the 
document is protected by attorney client privilege, the 
attorney work product doctrine or trade secret protection. Such 
a determination could be made by a single member of the Board. 
The decision is to be made in writing and is subject to 
judicial review.

SECTION 908. APPEAL OF BOARD DECISION

  Any person may appeal a decision by the Board by filing a 
petition for review with the United States Court of Appeals for 
the Federal Circuit. In the Appeals Court's review, the Board's 
findings of fact are conclusive if supported by ``substantial 
evidence on the record taken as a whole''. The Appeals Court 
would be able to conduct a de novo review of the Board's legal 
decisions. The Supreme Court may review any decision made by 
the Appeals Court.
  Once a final decision has been reached about the document, 
the Board would be required to make it available to the public 
within 30 days. Once a final decision has been reached no 
Federal or State court would have jurisdiction to again 
evaluate a claim of privilege as to that document.
  If the Board decides that a document should not be made 
available to the public due to an appropriate claim of 
privilege, the Board's decision is not binding in a judicial 
proceeding concerning that document.
  Section 907(f) would require participating tobacco 
manufacturers to supply to the Food and Drug Administration any 
document it submits to the Depository for public review and all 
documents for which it asserts a trade secret protection. 
Tobacco manufacturers would not have to supply documents for 
which it asserts attorney-client privilege or attorney work 
product protection.

SECTION 909. MISCELLANEOUS

  Section 909(a) appears to be a duplicate power of Section 
908(f).
  The disclosure process in this Title does not affect the 
Federal Rules of Civil Procedure or Criminal Procedure and the 
Title does not affect any Federal law that requires the 
disclosure of documents. The Title also does not affect any law 
the deals with attorney-client privilege, attorney work product 
protection, or trade secret protection.

SECTION 910. PENALTIES

  Each tobacco manufacturer is required to act with good faith 
as to document disclosure. If the Board determines that a 
manufacturer has not acted in good faith then it may impose 
certain costs and attorney's fees on that manufacturer. The 
board would also be able to impose civil penalties of up to 
$10,000 per violation if it determines the tobacco manufacturer 
acted in bad faith.
  If a participating tobacco manufacturer fails to produce 
indexes and documents in accord with the schedule outlined in 
this Title then a civil penalty of up to $500 may be assessed 
per violation. A separate violation occurs for each document 
that is not produced. The maximum penalty for a related series 
of violations is $10,000.

SECTION 911. DEFINITIONS

  Section 911 defines relevant terms.

               TITLE X--LONG-TERM ASSISTANCE FOR FARMERS

SECTION 1001. SHORT TITLE

  This section names title X as the ``Long-Term Economic 
Assistance for Farmers (LEAF) Act.''

SECTION 1002. DEFINITIONS

  This section sets out the definitions applicable to title X.

        Subtitle A--Tobacco Community Revitalization Trust Fund

SECTION 1011. ESTABLISHMENT OF TRUST FUND

  This section establishes the ``Tobacco Community 
Revitalization Trust Fund.'' The trust fund is to be funded by 
assessments to tobacco manufacturers and importers as 
designated in section 1012. It is not the Committee's intention 
to require that tobacco manufacturers that have made their full 
annual payment into the National Tobacco Settlement Trust Fund 
under section 403 also make a separate annual payment of their 
assessment for the Tobacco Community Revitalization Trust Fund. 
Rather, their obligation to make payments under this title will 
be satisfied by transfers from the National Tobacco Settlement 
Trust Fund of amounts equivalent to their annual assessment 
under this title. Funds deposited into the Tobacco Community 
Trust Fund are to be used for the following: payments for lost 
tobacco quota, payments for sale of quotas, payments for 
community economic development grants, worker transition 
program, higher education assistance programs, and to reimburse 
the federal government for the administration of the program. 
The legislation includes specific dollar limitations on annual 
payouts for each program. All monies and payments under the 
Trust Fund are deemed to constitute budget authority in advance 
of appropriations Acts. The legislation has earmarked $28.5 
billion for the program, pursuant to section 1012. Of this 
amount, the following annual expenditures are to be made 
annually for fiscal years 1999-2023: (1) Payments for lost 
tobacco quota as delineated under section 1021, except that 
such payments are not exceed $1.65 billion annually, unless 
additional monies are needed for acceleration of lost tobacco 
quota; (2) Payments for the administration of the tobacco 
support program by the Department of Agriculture under section 
1022; (3) Payments for the community economic development 
program under section 1023, which is not to exceed $375 million 
annually for fiscal years 1999-2008, and $450 million annually 
for fiscal years 2009-2023; (4) Payments for the worker 
transition program under section 1031, which is not to exceed 
$25 million in any fiscal year; and (5) Payments for the higher 
education opportunity grants under section 1032, which are not 
to exceed: $42.5 million for each of the academic years from 
1999 to 2004; $50 million for each of the academic years from 
2004 to 2009; $57.5 million for each of the academic years from 
2009 to 2014; $65 million for each of the academic years from 
2014 to 2019; and $72.5 million for each of the academic years 
from 2019 to 2024.

SECTION 1012. CONTRIBUTIONS BY TOBACCO PRODUCT MANUFACTURERS AND 
                    IMPORTERS

  This section specifies that contributions are to be made by 
tobacco manufacturers and importers to the Tobacco Community 
Revitalization Trust Fund on a market share basis. The total 
contribution that is to be made by companies is $28.5 billion. 
The payments are to be pursuant to the following schedule: $2.1 
billion annually for fiscal years 1999-2008 and $500 million 
annually for fiscal years 2009-2023.

            Subtitle B--Tobacco Market Transition Assistance

SECTION 1021. PAYMENTS FOR LOST TOBACCO QUOTA

  This section restructures the procedures for compensating 
tobacco quota holders, quota lessees, and quota tenants for 
lost tobacco quota as a result of declines in the tobacco 
market. Tobacco quota holders, lessees, and tenants are to be 
compensated on a lost quota basis. Reimbursements are to be 
made based on the average base quota of each party. The base 
quotas are to be determined as specified: (1) For quota 
holders, the base quota is the average tobacco farm marketing 
quota for the 1995-1997 marketing years; (2) For a quota 
lessee, the base quota level is fifty percent of the average 
number of pounds of tobacco quota established for a farm for 
the 1995-1997 marketing years that was leased or rented to the 
quota lessee minus twenty-five percent of the average number of 
pounds of that quota grown by a quota tenant; and (3) For a 
quota tenant, the base quota level is fifty percent of the 
average number of tobacco quota pounds for marketing years 
1995-1997 which were leased to the tenant by a quota holder and 
produced by the tenant, plus twenty-five percent of the average 
number of tobacco quota pounds for marketing years 1995-1997 
that were leased by a quota lessee and grown by the tenant.

 Monetary Reimbursements for Lost Quota/Regulations for Sale of Quotas

  The legislation has included set dollar amounts for 
determining the actual amount of reimbursement due to each 
party in the tobacco support program. Additionally, consistent 
with the Committee's desire to restructure the current quota 
system, so as to ensure quota owners are actual producers, 
provisions have been included to encourage the transfer of 
quotas by quota owners to persons who are actual producers. The 
Committee recognizes, however, that there are different market 
conditions regarding the nation's two prominent types of 
tobacco--burley and flue-cured. Accordingly, the legislation 
includes separate monetary payout and quota-buyout incentives 
for burley and flue-cured businesses. These procedures set out 
below:

               Compensation Procedures for Burley Tobacco

  Compensation for Lost Quota. Annual payments for lost quota 
for persons involved in the production of tobacco, other than 
flue-cured tobacco, are to made pursuant to the following 
formulas: (1) For quota holders, payments are to be based on 
the number of pounds by which the farm marketing quota is less 
than the base quota level for the quota holder times $4 per 
pound, subject to a lifetime limitation of $8 per pound; and 
(2) For lessees and tenants, the formula for determining actual 
payments is the percentage by which the national marketing 
quota is less than the national marketing quota for marketing 
years 1995-1997 times the base quota level of the lessee or 
tenant times $4 per pound, subject to a lifetime limitation of 
$8 per pound.
  If the amounts that are due to quota holders, lessees, and 
tenants exceed the amount available for lost quota payments 
under section 1011, the actual payments are to be adjusted and 
made on a pro-rata share. The amount of the reductions to each 
party, however, are to be rolled-over to such succeeding fiscal 
years as are necessary.
  In general, payments are to be made on a yearly basis. 
However, payments are to be accelerated any time the national 
marketing quota is below 50 percent of the national tobacco 
marketing quota for the 1998 marketing year for three 
consecutive years, or if Congress abolishes the tobacco support 
program.
  Relinquishment of Quota by Quota Holders. Burley quota 
holders will be given an option to relinquish their quotas in 
return for a payment. Notification to exercise the option must 
be made by January 15, 1999. The payments to relinquishing 
quota holders are to be made annually in fiscal years 1999-
2008, based on a lifetime payment of $8 per pound multiplied by 
the base quota level. The payments are to be made annually, and 
are to be equal to 1/10 of the lifetime payment. Quota holders 
who relinquish their quota are ineligible for any other 
payments for lost or relinquishing quota.
  Reissuance of Quota. Lessees and tenants of burley quota 
holders are to be given a one-year option of having an 
allotment of the farm or acreage marketing quota relinquished 
by the quota holder relocated to a farm owned by the quota 
tenant or lessee. The relocated amount is not to exceed 50% of 
the farm acreage owned by the quota lessee or tenant. Lessees 
and tenants that receive transferred quota allotments are not 
to receive any additional compensation for lost quota as a 
result of the reallocation. The recovery of payments as a quota 
holder and lessee or tenant is prohibited.
  If the relinquished quota is not transferred to a quota 
lessee or tenant, the Secretary may transfer the quota to other 
quota holders. Such transfers are to be limited to quota 
holders in the same county, unless state law permits county-to-
county transfers. Quota holders are not eligible for additional 
lost quota payments to quota holders as a result of the 
transfer of the relinquished quota.
  Death Of Quota Lessee or Tenant. If a quota lessee or tenant 
dies, his or her lost quota payments are to transfer to his or 
her spouse or dependents.

                    Treatment of Flue-cured Tobacco

  Abolishment of Quota System for Flue-cured Tobacco. The 
legislation will abolish the quota system for flue-cured 
tobacco. The procedures for exchange of quotas for permits are 
set out in section 1024. Current quota holders who are 
producers, as well as lessees and tenants, will be given the 
option of transitioning to the permit system. All flue-cured 
quota owners, who are not actual producers, will be required to 
relinquish their quotas in exchange for a payment. The quotas 
are to be yielded by November 15, 1998. Relinquishing quota 
owners are to be paid annually 1/10 of a lifetime limitation of 
$8 per pound times their base quota level. The payments are to 
be made for fiscal years 1999-2008. The lessee or tenant of the 
quota will be given an automatic option under section 1024 of 
obtaining a permit to continue farming. However, if the lessee 
or tenant rejects the option of continuing to farm under the 
new permit system, each is eligible under section 1021 for a 
transition payment of $8 per pound times their base quota level 
as established by the legislation. The payments are to be made 
for fiscal years 1999-2008.
  Lost Quota Payments for Lessees and Tenants Under Permit 
System. Lessees and tenants that have active permits are 
eligible for annual lost quota payments of $2 per pound times 
the number of pounds by which the production authorized under 
their permit is less than twice their base quota level, subject 
to a lifetime limitation of $4 per pound.
  If the amounts that are due to quota holders, lessees, and 
tenants, exceed the amount available for lost quota payments 
under section 1011, the actual payments are to be adjusted and 
made on a pro-rata share. The amount of reductions to each 
party, however, are to be rolled-over to such succeeding fiscal 
years as are necessary.
  In general, payments are to be made on a yearly basis. 
However, payments are to be accelerated any time the national 
marketing quota for flue-cured tobacco is below 50% of the 
national marketing quota allotment for the 1998 marketing year 
for three years in a row.

SECTION 1022. INDUSTRY PAYMENTS FOR ALL DEPARTMENT COSTS ASSOCIATED 
                    WITH TOBACCO PRODUCTION

  This section authorizes the Department of Agriculture to use 
monies from the Tobacco Community Revitalization Trust Fund for 
the administration of the tobacco support programs.

SECTION 1023. TOBACCO COMMUNITY ECONOMIC DEVELOPMENT GRANTS

  This section authorizes the Department of Agriculture to 
award economic development grants to tobacco-growing 
communities. The amount of the grants is to be based on the 
amount of the state's farm income pursuant to the 1995-1997 
marketing years. States must submit an application to the 
Department before a grant can be awarded. The application is to 
describe the purposes for which the grant will be used. The 
grants may be used for such programs as loan assistance 
programs for restructuring communities or for the support of 
new industries. Such funds, however, are reserved for counties 
in the state that had at least $100,000 in tobacco production 
in one or more of the 1995-1997 marketing years. Although 
states are given considerable latitude in determining the use 
of the grant funds, the legislation does include the following 
earmarks: (1) at least 20% of the funds must be used for 
economic development and agriculture-based rural development 
activities; (2) a minimum of 4% is to be used for technical 
assistance; and (3) no less than 6% of the funds are to be used 
to provide direct payments to tobacco warehouse owners based on 
declines in yearly volume sales as compared to sales during the 
1998 marketing year.
  Additionally, a state may require recipients of funds to 
provide preferences in hiring persons who, during the 1998 
calendar year, were employed in farming, manufacturing, and 
processing of tobacco and are eligible for assistance under the 
tobacco worker transition program, as well as persons eligible 
for higher education grants under the bill.

SECTION 1024. FLUE-CURED TOBACCO PRODUCTION PERMITS

  This section replaces the tobacco quota system for flue-cured 
tobacco with a federal tobacco permit system. The federal 
tobacco permit system will require official permits to farm 
tobacco. These permits will be issued by the Department of 
Agriculture, which will include production and acreage 
allotment limitations. Permits will only be issued to actual 
producers. Lessees and tenants that produce flue-cured tobacco 
under agreements with quota owners will automatically be given 
the right to obtain permits to continue their farming. The 
permits will not be transferable, and will be prohibited from 
being used as an asset. Permits, however, will be permitted to 
be transferred to the permit owner's surviving spouse and 
descendants. Lessees and tenants that have permits that 
automatically revert to them will be given the option of 
relinquishing their permits for a payment. The payments are to 
be made on an annual basis from 1999 to 2008, subject to a 
lifetime limitation of $8 per pound times the base quota level 
(section 1021).

SECTION 1025. MODIFICATIONS IN FEDERAL TOBACCO PROGRAMS

  This section includes technical changes to the tobacco quota 
program. The section provides that in cases where tobacco 
marketing quotas are still in effect following the enactment of 
the bill, the Department of Agriculture, on receipt of a 
petition from 5% of the producers of a particular type of 
tobacco in a state, is to conduct a statewide referendum on a 
proposal regarding the lease and transfer of tobacco quota. If 
a majority of the state's producers of that type of tobacco 
approve, the state is to implement quota transfers and leases 
according to the proposed procedures.
  This section changes the penalties that are to be assessed to 
tobacco companies for failure to meet quota purchase 
agreements. The penalty is changed from the current penalty 
assessment of twice the per pound assessment times the quantity 
of purchasers that are less than 90% of the quantity of 
intended purchases, to 105% of the average market price times 
the quantity of purchasers that are less than 90% of the 
quantity of intended purchases.

          Subtitle C--Farmer and Worker Transition Assistance

SECTION 1031. TOBACCO WORKER TRANSITION PROGRAM

  This section sets forth a program that is to be administered 
by the Department of Labor to assist workers in the tobacco 
industry. To benefit, a group of workers of a tobacco entity 
will be required to file a petition with the Labor Department 
for assistance. The workers will be required to show that: (1) 
they have or will become totally or partially separated; (2) 
the entity's sales production has decreased substantially; and 
(3) that the national tobacco settlement contributed 
importantly to the production declines. If the petition is 
approved, the workers are to be provided the following benefits 
and services: employment services; training for new employment; 
and adjustment allowances (payments to aid in the transition to 
a new job, except that these payments are to be made only if 
the person is in the job training program). No person who has 
received payments for tobacco lost quota is eligible for the 
program. The program is to be funded at a rate of $25 million 
yearly through fiscal year 2008. At least $12.5 million is to 
be used for the job training program.

SECTION 1032. FARMER OPPORTUNITY GRANTS

  This section provides for the establishment of educational 
grants to assist tobacco producers and their relatives in 
obtaining undergraduate degrees. To be eligible, a person has 
to be a member of a tobacco farm family. The section defines a 
tobacco farm family or member as an active tobacco producer or 
worker, and their spouse, son, daughter, stepson, stepdaughter, 
brother, sister, stepbrother, stepsister, son-in-law, or 
daughter-in-law. The bill sets forth the following yearly 
amounts of the grants: $1700 for each of the academic years 
from 1999 to 2004; $2000 for each of the academic years from 
2004 to 2009; $2300 for each of the academic years from 2009 to 
2014; $2600 for each of the academic years from 2014 to 2019; 
and $2600 for each of the academic years from 2019 to 2024. The 
monies are to be paid to the institution directly or to the 
student. A grantee may receive a scholarship for only one 
institution, and is required to maintain a qualifying average 
for student eligibility at the institution. A grantee is barred 
from receiving a grant if he or she is in default on a higher 
education loan or is indebted to an institution of higher 
education.

                          Subtitle D--Immunity

SECTION 1041. GENERAL IMMUNITY FOR TOBACCO PRODUCERS AND TOBACCO 
                    WAREHOUSE OWNERS

  This section immunizes tobacco producers, tobacco-related 
growers associations, tobacco warehouse owners and employees 
from any liability associated with the failure of a tobacco 
product manufacturer, distributor, or retailer to comply with 
the national tobacco settlement legislation.

                        TITLE XI--MISCELLANEOUS

   Subtitle A: Prohibitions Relating to Tobacco Products and Children

SECTION 1101. SHORT TITLE

  This subtitle may be cited as the ``Tobacco Use by Minors 
Prevention Act''.

SECTION 1102. PROHIBITIONS RELATING TO TOBACCO PRODUCTS AND CHILDREN

  Section 1102 would amend Chapter VIII of the Federal Food, 
Drug, and Cosmetic Act by adding two new sections at the end of 
that Chapter. The Committee does not intend for these 
provisions to have extraterritorial application.
  Section 804 ``Prohibition on Sale or Distribution of Tobacco 
Products to Children'' would make in unlawful for any domestic 
tobacco concern to in any way contribute to the ``sale or 
distribution of tobacco products in a foreign country to 
children'' or to advertise or promote tobacco products in a 
foreign country in a manner that does not comply with Federal 
requirements for advertising or promotion within the United 
States.
  Section 805, ``Labeling'' would make it unlawful for any 
domestic concern to in any way participate in the sale of a 
tobacco product in a foreign country if that tobacco product 
does not contain a warning label, in that country's dominant 
language, that complies with the Federal labeling requirements 
for tobacco products sold in the United States. The only 
exception would be if the Secretary determines the foreign 
country's labeling requirements are ``substantially similar'' 
to those in the United States and those requirements are 
``adequately enforced'' then the domestic concern may abide by 
the labeling laws of the country where the tobacco product is 
sold.

SECTION 1103. ENFORCEMENT

  Enforcement would be provided under Section 301 of the 
Federal Food, Drug and Cosmetic Act.

SECTION 1104. REWARD

  A reward of up to $125,000 would be available to those 
providing information leading to a criminal conviction for a 
violation of the international sales and labeling requirements.

SECTION 1105. DEFINITIONS

  Section 1105 defines the term ``domestic concern''.

SECTION 1106. AMENDMENTS TO PUBLIC HEALTH SERVICE ACT

  This portion of the bill authorizes a major new medical 
research initiative to more effectively prevent and treat 
tobacco addiction and tobacco-related diseases.
  Tobacco use kills more than 400,000 Americans each year and 
therefore is, according to former Surgeon General C. Everett 
Koop, ``the chief, single avoidable cause of death in our 
society and the most important public health issue of our 
time.'' Yet despite the billions of dollars expended each year 
to research diseases caused by tobacco addiction, only a tiny 
fraction of medical research in the United States is devoted to 
understanding the causes of tobacco addiction, how to decrease 
the number of children who start, and how to best help people 
to quit. As a result, we know too little about how to prevent 
and treat this destructive behavior
  For example, according to a report by the Society for 
Research on Nicotine and Tobacco, the National Institutes of 
Health (NIH) spends less than one percent of its budget to 
research a behavior that accounts for 20 percent of mortality 
in our nation. Despite the large increases in youth smoking 
rates and the leveling off of reductions in adult smoking, our 
nation's commitment to tobacco research has increased only 
slightly over the last ten years. Lack of funding has resulted 
in missed opportunities for advancement in tobacco control and 
has likely discouraged young behavioral researchers from 
pursuing this area of research. The research that does take 
place on this subject at NIH is spread across numerous 
Institutes and is inadequately coordinated.
  Despite inadequate funding, tobacco researchers have in 
recent years made important preliminary findings about the 
health effects of tobacco, the addictiveness of nicotine, 
addictive behaviors in general, as well as treatments for 
cessation of tobacco use. Reflected in several reports of the 
Surgeon General, as well as in medical and scientific journals, 
these findings have played a vital role in the public demand 
for a national tobacco control policy. But much more research 
is needed to inform public policy. Significant new funding is 
warranted to support epidemiological, behavioral, 
pharmacological, health services and social services research 
related to the prevention and treatment of tobacco addiction.
  An increased commitment to tobacco-related research will help 
save lives and tobacco-related health care costs. For example, 
additional research will lead to increased knowledge about 
cost-effective prevention strategies such as counter-
advertising, education, and community based activities. 
Enhanced research will also yield more affordable and effective 
cessation tools and perhaps safer tobacco products. The 
Committee intends for the research initiative in the 
Committee's bill to inform and ensure that the prevention 
programs, including the education and counter-advertising 
programs as well as the cessation programs that are also 
included in the Committee bill are effective and built on sound 
scientific evidence about how to reduce tobacco use.
  

SECTION 1106 OF THE COMMITTEE BILL EMPHASIZES THE ROLE OF BEHAVIORAL 
                    RESEARCH IN PREVENTING AND TREATING ADDICTION TO 
                    TOBACCO PRODUCTS. THE COMMITTEE URGES THAT THE 
                    FOLLOWING TOPICS BE AMONG THOSE ADDRESSED BY THIS 
                    RESEARCH INITIATIVE:

          Initiation. Smoking and other uses of tobacco are 
        forms of addiction, involving physical and 
        psychological factors. But smoking initiation is purely 
        behavioral. Research should focus on why children begin 
        to smoke and the role of such individual traits as risk 
        taking, attitudes toward health, self- perception, 
        decision making and the impact of tobacco industry 
        marketing on decisions, and how childhood and 
        adolescent development affects these and other relevant 
        psychological processes.
          Cessation. Not everyone tries smoking, and not 
        everyone who tries it becomes addicted. Some who do 
        become addicted quit on their own. What are the 
        protective factors in these cases? How can those 
        factors be encouraged in people who are at risk? It is 
        also important to understand the effects of smoking on 
        behavior, such as the changes in the brain and 
        cognitive impairment that can result from smoking. 
        Research is also needed on the behavioral effects of 
        withdrawal, which range from anger and aggression to 
        reduced motor and cognitive functioning.
          Effective strategies. Smoking initiation and 
        cessation are both influenced by social, economic and 
        cultural factors. The effects of peer pressure on 
        shaping beliefs and behaviors, the role of family in 
        promoting or protecting against tobacco use, and other 
        socially-based factors must be understood to help 
        develop interventions that encourage and sustain 
        healthy behavior.
  The Committee believes that a narrow biomedical approach to 
tobacco addiction is shortsighted. We must expand scientific 
inquiry into the behavioral aspects of smoking in order to 
prevent children from smoking in the first place and to treat 
nicotine addiction more effectively. In addition, behavioral 
research on tobacco use will help policy makers address related 
health concerns, such as illicit drug abuse and underage 
drinking, and will help the development of effective 
interventions for those risky behaviors as well.
  At the same time, the Committee anticipates that enactment of 
this bill will result in sufficient new resources at the NIH to 
justify increased expenditures on diseases associated with 
tobacco use, such as cancer and heart disease. However, it is 
the Committee's intent that the NIH give the highest priority 
to epidemiological, behavioral and social science research on 
the prevention and treatment of tobacco addiction itself. The 
Committee believes very strongly that research focused on 
prevention and treatment of tobacco addiction will be very 
cost-effective and be instrumental in reducing tobacco use and 
avoiding the high human and economic costs associated with 
tobacco.
  The Committee recognizes that aspects of tobacco related 
research will occur at federal agencies other than the NIH, 
including the Food and Drug Administration, the Centers for 
Disease Control, the Agency for Health Care Policy and 
Research, the Occupational Safety and Health Administration, 
and the Environmental Protection Agency. The Committee expects 
the Secretary of Health and Human Services acting through, 
among others, the Director of the Centers for Disease Control 
and the Director of the new Office of Tobacco-Related Research 
at NIH, to coordinate the work of these disparate agencies.
  The Committee has also sought to spur coordination by means 
of the National Tobacco Task Force established in the new 
section 2802 of the Public Health Service Act. The Committee 
expects the Task Force, guided in part by the Institute of 
Medicine study mandated by the new section 2801 of the Public 
Health Service Act, to prepare a national tobacco research 
agenda, periodically update this agenda, and make policy 
recommendations based on the research findings.
  Research on the use of tobacco and its effects must take into 
account the needs of special populations, especially those 
groups that have been targeted by the tobacco industry.
  Section 1106(a) amends the Public Health Service Act by 
adding a new title at the end of the Act. That title, Title 
XXVIII, would require various research programs concerning 
youth smoking.
  Section 2801, ``Study By the Institute of Medicine'', would 
require the Secretary to enter into a contract with the 
Institute of Medicine ``for the conduct of a study on the 
framework for a research agenda and research priorities to be 
used by the National Tobacco Task Force''. Various 
considerations are outlined for the development of the this 
framework. The Institute of Medicine would be required to 
report on its recommendations within 10 months of entering into 
the contract. Appropriations of $750,000 are authorized for 
this activity.
  Section 2802, National Tobacco Task Force, would require the 
Secretary to establish a National Tobacco Task Force to 
``foster coordination'' among entities undertaking tobacco-
related research. The section outlines the composition of the 
Task Force, its duties and the research activities it shall 
undertake.
  Section 2803, Research Activities of the Centers for Disease 
Control and Prevention, would require the expenditure of $4.195 
Billion in research over 10 years. The funds are directed to be 
taken from the Tobacco Settlement Trust Fund.
  Section 2804, Research Activities of the National Institutes 
of Health, would require expenditures of $20 Billion over 10 
years for research by the NIH concerning tobacco. The Secretary 
would be required to establish a Tobacco-Related Research 
Initiative, headed by the Director of the NIH, to provide funds 
to conduct research ``related to the prevention and treatment 
of tobacco addiction, and the prevention and treatment of 
diseases associated with tobacco use. At least one-third of the 
funds provided must be used to address the ``prevention and 
treatment of addiction.''
  The Director of NIH is to ensure appropriate coordination of 
these research efforts by cooperating with the National Tobacco 
Task Force and by establishing the Office of Tobacco-Related 
Research. The Office of Tobacco-Related Research will be headed 
by a director appointed by the Secretary and it shall undertake 
various administrative tasks to assure appropriate research 
coordination.
  Section 1106(b) of this Act further amends the Public Health 
Service Act by adding further duties for the Secretary. The 
Secretary shall, with respect to minority health activities, 
seek interagency coordination of research and monitor and then 
report periodically to Congress the amount of Federal funds 
targeted for research related to minorities and tobacco.
  The Committee is concerned about the significant rise in 
smoking among minority youth in the U.S. The most recent report 
by the Surgeon General found that smoking by high school age 
African Americans rose nearly 80% between 1991 and 1997, and 
that cigarette smoking among Hispanic teens rose by 34% in that 
period. These disturbing figures represent a growing public 
health problem among many of our nation's minority citizens, 
and the Secretary should advise the Congress about federal 
research activities targeted to remedy it.

SECTION 1107. BAN ON DISTRIBUTION OF TOBACCO PRODUCTS PRODUCED BY CHILD 
                    LABOR

  This Section amends Section 307 of the Tariff Act of 1930 to 
include a ban on ``tobacco products produced or manufactured 
wholly or in part in any foreign country by child labor.''

     Subtitle B: Federal licensing of Tobacco Product Distribution

SECTION 1121. LICENSING OF TOBACCO PRODUCT DISTRIBUTION

  Section 1121 provides for a program to license any ``domestic 
concern'' that manufactures or distributes tobacco products. 
Tobacco retailers would not be covered by this program. Such 
manufacturers and distributors would require a license from the 
Secretary. The fee for that license would be $1 for every 1,000 
cigarettes manufactured or distributed. Manufacturing or 
distributing tobacco products without a license would be a 
violation of Section 301 of the Federal Food, Drug and Cosmetic 
Act. The definition of ``tobacco products'' would include more 
than cigarettes, yet the licensing fee is based solely on a 
number of cigarettes. An appropriate conversion would be 
necessary to handle smokeless tobacco products.
  The Committee does not intend for this provision to have 
extraterritorial application.

                  Subtitle C: International Provisions

SECTION 1131. INTERNATIONAL TOBACCO CONTROL TRUST FUND

  Section 1131 would create within the Department of the 
Treasury the International Tobacco Control Trust Fund to be 
funded through the licensing fees established in Section 1121.
  Annual funds of $150 million will be available to the 
American Center on Global Health and Tobacco from the 
International Tobacco Control Trust Fund. The Secretary may 
also use the resources in the International Trust Fund ``for 
grants and other forms of assistance to foreign governments, 
nongovernmental organizations, and international organizations 
to support tobacco control activities in foreign countries.'' 
Furthermore, the Secretary may also use resources in the 
International Trust Fund to enforce ``any requirements related 
to the sale, distribution, marketing, or promotion of tobacco 
products internationally.''

SECTION 1132. AMERICAN CENTER ON GLOBAL HEALTH AND TOBACCO

  Section 1132 would establish the American Center on Global 
Health and Tobacco (ACT) ``to assist organizations in other 
countries to reduce and prevent the use of tobacco'' through 
public education programs and mass media campaigns.
  ACT would be a not-for-profit corporation established within 
the District of Columbia and would not be and agency or 
establishment of the United States.
  ACT would be funded through the creation within the National 
Tobacco Settlement Trust Fund of the Global Public Health and 
Education Resource Account which is to be credited with $150 
million each fiscal year. The $150 million would be transferred 
each October 1 from the Resource Account to ACT.
  ACT and its grantees would be subject to oversight by 
Congress and ACT would be required to annually report to 
Congress on its activities. ACT would only be permitted to fund 
private sector groups, it could not carry out programs 
directly. ACT's accounts are to be audited annually by 
independent certified public accountants. ACT's financial 
transactions may also be audited by the Comptroller General.

SECTION 1133. PROHIBITION ON USE OF FUNDS TO FACILITATE THE EXPORTATION 
                    OR PROMOTION OF TOBACCO

  Section 1133 would bar any appropriation or use of Federal 
funds to promote or encourage the export, sale, distribution or 
advertising of tobacco products in a foreign country, or to 
seek through negotiation or otherwise the removal or reduction 
by any foreign country of limitations on the importation, sale, 
distribution or advertising of tobacco products. This 
prohibition would not apply if the foreign country's 
restriction is ``applied in a manner which constitutes a means 
of arbitrary or unjustified discrimination between countries''. 
To invoke this exception the Secretary of Commerce would have 
to make a certification to Congress in writing concerning the 
nature of the actions by the foreign country and the Secretary 
of HHS would have to certify to Congress in writing that the 
restriction is not a ``reasonable means of protecting the 
public health.''

SECTION 1134. HARMONIZATION WITH UNITED STATES INTERNATIONAL 
                    COMMITMENTS AND OBLIGATIONS

  The United States Trade Representative would be required to 
report to Congress, within 90 days of the Act's effectiveness, 
on ``any provisions of this Act that are inconsistent with 
obligations of the United States . . . together with 
recommendations as to how to implement or modify the provision 
without violating international law.''

              Subtitle D: Prevention of Tobacco Smuggling

SECTION 1141. DEFINITIONS

  Section 1141 defines terms used in this Subtitle.

SECTION 1142. TOBACCO PRODUCT LABELING REQUIREMENTS

  Section 1142 would make it unlawful to in any way introduce 
into or receive from ``interstate or foreign commerce'' any 
tobacco product that is not packaged and labeled in conformity 
with the requirements of this section.
  The Secretary of the Treasury would be required to promulgate 
regulations to require manufacturers of tobacco products to 
place a unique serial number on each package of tobacco 
products so that the manufacturer and the location and date of 
production may be determined. The package of each tobacco 
product produced for export must be labeled with the name of 
the country of final destination.

SECTION 1143. REQUIREMENTS FOR THE TRACKING OF TOBACCO PRODUCTS

  Section 1143 would require the posting of a bond for all 
exports of tobacco products. Each export would require posting 
with the Secretary of the Treasury: a bond that indicates the 
country of final destination, a written statement from the 
recipient of the tobacco products that recipient will not 
violate any laws of that country concerning tobacco products 
and indicating they have never been convicted of any offense 
with respect to tobacco products.
  The Secretary of the Treasury would be required to promulgate 
regulations to determine the amount and frequency of each bond 
that must be posted. The bond, however, cannot be less than the 
amount of Federal tax imposed, on tobacco products consumed in 
the United States, under Chapter 52 of the Internal Revenue 
Code of 1986.
  The Secretary of the Treasury would return a bond upon 
determination the tobacco products had been received in the 
country of final destination as specified in the bond.

SECTION 1144. TOBACCO PRODUCT PERMITS

  Section 1144 would require the Secretary of the Treasury to 
establish a program to require permits for all persons involved 
in the distribution or receipt of tobacco products in 
interstate or foreign commerce. This section would not apply to 
retailers but retailers would need to maintain commercial 
records of the receipt of tobacco products and have those 
records available for inspection and audit.
  The Secretary of the Treasury would be required to demand 
that permit holders ``keep records concerning the chain of 
custody of the tobacco products that are the subject of the 
permit''.

SECTION 1145. PROHIBITIONS

  Section 1145 would make it unlawful, without a permit issued 
under Section 1144, to import tobacco products, to engage in 
the business of manufacturing, packaging or warehousing tobacco 
products, or to engage in the business of purchasing tobacco 
products for resale at wholesale. These prohibitions are to 
come into effect 180 days after the date of enactment of this 
subtitle.

SECTION 1146. PRICING AND LABELING OF PRODUCTS SOLD ON MILITARY 
                    INSTALLATIONS OR BY NATIVE AMERICANS

  Section 1146(a) would require the Secretary of the Treasury, 
in conjunction with the Secretary of Defense, to issue 
regulations to make sure the price of tobacco products sold on 
a military installation is equal to the greater of the average 
price of the tobacco product when sold in the nearest 
metropolitan area or the highest price for which the product is 
sold on military installations in the United States. Tobacco 
products intended for sale on a military installations would 
have to be labeled with that indication.
  Section 1146(b) would require that tobacco products intended 
for sale on an Indian reservation be labeled with that 
indication.

SECTION 1147. PROHIBITION AGAINST SALE OF TOBACCO PRODUCTS IN OR TO 
                    DUTY-FREE SHOPS OR FORWARDING THROUGH OR 
                    MANUFACTURE IN TRADE ZONES

  Section 1147(a) would make it unlawful to sell any tobacco 
product in a duty-free shop located in the United States or to 
sell to any duty-free shop. Section 1147(b) would make it 
unlawful to forward through or manufacture a tobacco product in 
any foreign trade zone.

SECTION 1148. JURISDICTION; PENALTIES; COMPROMISE OF LIABILITY

  Federal District Courts have jurisdiction for suits brought 
by the Attorney General to prevent or restrain violations of 
any of the provisions of this subtitle.
  In any conviction of the provisions of this subtitle, the 
provisions of section 3571 of Title 18 U.S.C. will apply as if 
the person were convicted of a felony under that title.
  The Secretary of the Treasury is authorized to compromise the 
liability arising from a violation of this subtitle upon 
payment of fine not to exceed $10,000 per violation. In the 
case of repetitious violations and in order to avoid multiple 
criminal violations the United States may enter a consent 
decree to enjoin the repetition of the violation.

SECTION 1149. AMENDMENTS TO THE CONTRABAND CIGARETTE TRAFFICKING ACT

  Section 1149 would amend the Contraband Cigarette Trafficking 
Act in the following key ways: to have the Act apply to more 
than cigarettes by defining tobacco products to include cigars, 
cigarettes, smokeless tobacco and pipe tobacco; to lower the 
threshold amount of tobacco product which triggers the Act from 
60,000 units to 30,000 units; to add prohibitions on knowingly 
failing to maintain distribution records, altering or 
obliterating required markings, or interfering with an 
inspection; and, by making it unlawful to knowingly transport 
tobacco products under a false bill of lading or without a bill 
of lading. Any proceeds from the unlawful distribution of 
tobacco products would be subject to seizure and forfeiture.

SECTION 1150. AUTHORIZATION OF APPROPRIATIONS

  Such sums as are necessary to carry out this subtitle are 
authorized for appropriations.

                    Subtitle E: Antitrust Exemption

SECTION 1161. LIMITED ANTITRUST EXEMPTION

  Section 1161 would provide a limited antitrust exemption for 
participating tobacco manufactures to facilitate actions in 
conjunction with this Act. This limited exemption is necessary 
to protect certain business agreements by tobacco companies, as 
recommended by the State Attorneys General who negotiated the 
original tobacco settlement. The Act requires cooperation by 
tobacco companies regarding certain pricing, advertising, and 
compliance activities, in order to ensure a uniform and 
comprehensive national policy to regulate tobacco products in 
the public interest. Without a limited antitrust exemption, 
agreements by the tobacco companies to adopt similar pricing 
and advertising policies could be subject to antitrust 
challenges.

     Subtitle F: Special Provisions Concerning Programs for Women, 
                         Minorities, and Others

SECTION 1171. RESEARCH RELATED TO PATTERNS OF SMOKING BY WOMEN AND 
                    MINORITIES

  Research funded by this Act should where appropriate to the 
``scope and purpose investigation, include data and analysis 
with respect to different factors that may be present in the 
case of women or minorities.''
  Research funded under this Act to examine patterns of smoking 
among minorities ``should be conducted in proportion to their 
prevalence in the smoking population and shall be conducted at 
minority education institutions, where available, or 
institutions that provide the greatest amount of health care to 
minority populations in a State.''

SECTION 1172. COUNTER-ADVERTISING PROGRAMS

  Section 1172 would require the Secretary to carry out 
programs to reduce tobacco usage to ``discourage the use of 
tobacco products by individuals and to encourage those who use 
such products to quit.'' To receive assistance through these 
programs an entity would apply to the Secretary and meet such 
eligibility requirements as the Secretary establishes. Funds 
necessary to carry out this section will be provided from the 
funds made available under Title IV of this Act.

SECTION 1173. PREVENTION ACTIVITIES OF COMMUNITY AND MIGRANT HEALTH 
                    CENTERS

  Section 1173 would provide $3 billion over 10 years from the 
National Tobacco Trust Fund to Community and Migrant Health 
Centers to ``provide health services for diseases related to 
tobacco and to prevent tobacco-related diseases.

                    Subtitle G: Sense of the Senate

  Subtitle G provides a list of purposes for which it would be 
the sense of the Senate that the proceeds of this Act may be 
applied. The Sense of the Senate would not limit the 
application of the proceeds to other purposes.

Subtitle H: Ban on Sale of Tobacco Products Through the Use of Vending 
                                Machines

SECTION 1191. BAN OF SALE OF TOBACCO PRODUCTS THROUGH THE USE OF 
                    VENDING MACHINES

  The Committee is concerned about the fact that vending 
machines may represent a potential source of unrestricted 
access to cigarettes for underage youths. While a ban on 
tobacco vending machines enhances the Act's comprehensive 
program to prevent youth smoking, it also raises issues of 
economic injury and job loss to our nation's vending machine 
industry.
  The vending machine industry relies heavily on revenues from 
the sales of tobacco products. There are over 2,000 vending 
machine companies spread throughout the U.S., most of them 
small, family-owned operations. The vending machine industry 
employs an estimated 10,000 individuals, over one-third of them 
minority citizens. There are an estimated 350,000 commercial 
vending machines in operation in the U.S. Vending machine 
industry representatives advised the Committee that 25% of 
these companies rely solely on the sale of tobacco products in 
their business operations, and that tobacco products produce 
the large majority of sales and profits for the remaining 75% 
of vending machine businesses.
  Section 1191 would ban the use of vending machines to sell 
tobacco products, effective one year after the of enactment of 
this Act. Owners of tobacco vending machines would be 
``reimbursed for the fair market value of their businesses, 
including the cost of banned vending machines, compensation for 
lost profits, unexpired contracts, and for the owner's or 
operator's plant and equipment.'' Such reimbursal would be 
directed through the Tobacco Vending Reimbursement Corporation, 
which would be a private, not-for-profit corporation 
established in the District of Columbia. Certain guidelines and 
duties for that Corporation would be established by the Act.
  The Secretary of the Treasury would be required to transfer 
to the Reimbursement Corporation ``such sums as are necessary 
to make due compensation to owners and operators of tobacco 
vending machines and to carry out the duties of the 
Corporation.'' These funds would be taken from the funds paid 
by the tobacco manufacturers under Title IV of this Act.

                 TITLE XII--TOBACCO ASBESTOS TRUST FUND

  Scientific evidence suggests that asbestos related health 
problems are greatly facilitated and enhanced by cigarette 
smoking. As a result, those injured by asbestos also believe 
they should be able to seek compensation for their damages from 
tobacco manufacturers.

SECTION 1201. DEFINITIONS

  Section 1201 defines relevant terms used in this title.

SECTION 1202. TOBACCO ASBESTOS TRUST FUND

  Section 1202 would establish in the United States Treasury a 
Tobacco Asbestos Trust Fund. There would be five trustees, two 
appointed by the Secretary of Health and Human Services to 
represent the interests of asbestos trusts and asbestos 
defendants, and two appointed by the Secretary of Labor to 
represent asbestos claimants and labor unions with claimants as 
members, and one chosen by the other four, who shall be a 
health care professional with expertise in asbestos disease.
  The Trust Fund receives funds from assessments made by the 
Secretary of the Treasury on the tobacco industry. The Trust 
would receive a total of $20 billion by the end of 2014.
  Funds may be paid out of the Trust Fund only to victims 
harmed by tobacco and asbestos.
  The Trust Fund is divided into two equal funds - Fund I and 
Fund II. Fund I would be administered by three trustees: the 
two appointed by the Secretary of HHS, and the health 
professional. Fund II would be administered by three trustees: 
the two appointed by the Secretary of Labor, and the health 
professional.
  Fund I would assign credits to asbestos defendants and trusts 
in proportion to their past payments to claimants for tobacco-
caused harm. The asbestos defendants, however, do not receive 
any funds. Rather, they may direct the Trust to use such funds 
to pay asbestos claims.
  Fund II is used to pay the tobacco-caused portion of future 
tobacco/asbestos claims. The funds available to the Trust are 
allocated equally between Fund I and Fund II, but the trustees 
of Fund II may provide an advance from Fund II as a loan to 
Fund I.

SECTION 1203. PAYMENTS FROM FUND I

  In order to determine the allocation of credits within Fund 
I, the trustees shall request that all asbestos trusts and 
defendants provide information as to the amount of payments or 
settlements of asbestos claims made by or on behalf of the 
defendants and trusts, and all bonded judgments as of the date 
of enactment. The trustees shall establish credits base on each 
trust's or defendant's payments as a percentage of the total. 
The trustees shall include twenty percent of unpaid 
settlements. In no event shall the total of the credits 
relating to these unpaid settlements constitute more than six 
percent of the total of Fund I.
  Credits may be used only for the payment of asbestos claims. 
None of the credits may be used for the payment of corporate 
dividends, reimbursements of insurers, or any other corporate 
purpose.
  An asbestos defendant may use a credit to direct payment from 
Fund I to any asbestos claimant. An asbestos trust shall use 
its credits for payment to victims according to the rules of 
the trust.

SECTION 1204. PAYMENTS FROM FUND II

  Section 1204 would establish the rules for payment of funds 
out of Fund II. The trustees of Fund II would be required to 
establish the following: rules ensuring that funds can only be 
used for the portion of harm caused by tobacco to an asbestos 
claimant; rules ensuring that future and current claimants are 
treated equally, and in the event that future demands require 
limitations on current payments, those with the most serious 
disease or disability get priority; criteria establishing a 
minimum degree of asbestos- related disability or impairment 
for a claimant to receive compensation; criteria to establish 
an optional claims handling mechanism for asbestos caused harm 
in accordance with the Louisiana Agreement Providing 
Administrative Alternative for Claimants with Asbestos Related 
Conditions; rules to insure fair and equitable administration 
of the claims process, including attorneys' fees; and, rules 
requiring Fund II recipients to execute a release of all 
liability for tobacco-caused harm.

SECTION 1205. TRANSFERS FROM NATIONAL TOBACCO SETTLEMENT TRUST FUND.

  To provide the funds that would be needed under Section 1202, 
the Secretary of the Treasury would each year transfer from the 
National Tobacco Settlement Trust Fund with certain indicated 
amounts to a total of $21 billion by the year 2014.

SECTION 1206. RULES FOR CLAIMS AGAINST ASBESTOS TRUSTS, ASBESTOS 
                    DEFENDANTS, AND TOBACCO COMPANIES

  Section 1206 indicates the general purpose of the title is to 
ensure that asbestos claimants and asbestos/tobacco claimants 
receive compensation in a fair and timely manner.
  Before a lawsuit for harm caused by tobacco and asbestos can 
proceed to trial or judgment, the plaintiff must submit a claim 
to Fund II for the tobacco-caused portion of the harm. The 
plaintiff would receive a determination within 120 days, or 
earlier if exigent circumstances exist. A claimant who rejects 
an offer from, or is denied an award by, Fund II may proceed to 
trial or judgment in a tort action.
  A claimant who accepts an award from Fund II must execute a 
release of liability for all tobacco-caused harm.
  Tobacco companies shall not be liable to asbestos trusts and 
defendants for claims arising from payments or obligations for 
payments to asbestos/tobacco claimants made or incurred prior 
to the date of enactment. Any existing lawsuits based on such 
claims are extinguished. For claims subsequent to the date of 
enactment, asbestos trusts and defendants may aggregate and 
establish them based on valid statistical proof of relative 
causation for each disease category.
  A claimant who accepts an award from Fund II may not sue for 
tobacco-caused harm. A claimant who rejects an award may sue 
asbestos defendants for asbestos and tobacco harm in accordance 
with other applicable law. An asbestos defendant that pays for 
tobacco-caused harm may succeed to the claimant's rights to 
request compensation from Fund II, or may bring an indemnity or 
contribution action against a tobacco company.
  In an asbestos action where the claimant had exposure to 
tobacco, the trier of fact must apportion the relative 
causation between asbestos and tobacco. The apportionment may 
be determined based upon valid statistical data.
  Nothing in this legislation shall limit any existing joint 
liability among asbestos trusts or defendants for asbestos-
caused harm, limit anyone's ability to claim disability caused 
by asbestos, or delay resolution of a claim.

                     TITLE XIII: VETERANS' BENEFITS

SECTION 1301. RECOVERY BY SECRETARY OF VETERANS AFFAIRS

  Section 1301 would amend Title 38 of the United States Code 
by adding ``Part VII: Recovery of Compensation Costs for 
Tobacco-Related Disability or Death.''
  Section 9101 of that Part VII would permit the Secretary of 
Veteran's Affairs to sue tobacco manufacturers for cost of 
compensation to be paid to veterans for their smoking related 
injuries associated with their military service.
  The funds recovered from such suits would be paid into a 
revolving fund in the United States Treasury. The fund would be 
called the Department of Veterans Affairs Tobacco Recovery 
Fund. The ``Fund shall be available to the Secretary without 
fiscal year limitation for purposes of veterans benefit 
programs, including administrative costs.''
  Section 9102 of Part VII would allow the Secretary to 
establish procedures to determine the present value of future 
benefits paid to a veteran in compensation of smoking related 
injury. No action taken by the Secretary to seek compensation 
from the tobacco manufacturers would ``operate to deny the 
injured veteran . . . the recovery for that portion of his or 
her damage not covered'' by compensation through the Veterans 
Administration.
  Section 9104 would exclude any sums recovered through this 
Title by the Secretary from the annual limitations of damages 
available to participating manufacturers.

                     Statement of Committee Intent

  The Committee is working on additional amendments to S. 1415. 
These amendments would be offered on the Senate floor to make 
further technical and conforming changes, as well as 
substantive modifications to further improve the bill and to 
remedy language that does not correspond with the Committee's 
intent.
  The Committee intends that any further amendments would be 
adopted by the Senate and considered as original text for 
purposes of amendment.

    Additional Views of Senator Ted Stevens and Senator Conrad Burns

  The Committee includes payments to the Federal Black Lung 
Program on the Sense of the Senate list of purposes to which 
the proceeds from the tobacco legislation may be used.
  Epidemiological evidence strongly suggests that cigarette 
smoking is correlated to the decline in lung function of miners 
exposed to coal dust who now receive payments from the Federal 
Black Lung Program. The Committee therefore adopted the Sense 
of the Senate that proceeds from the tobacco legislation may be 
used for payments to the Federal Black Lung Program.
  In 1985, the Surgeon General of the United States (C. Everett 
Koop) reported that ``since the introduction of more effective 
controls to reduce the levels of coal dust exposure at the 
worksite, cigarette smoking has become the more significant 
contributor to reported cases of disabling airflow obstruction 
among coal miners'' . . . and further, that ``the prevalence of 
ventilatory disabilities in coal miners could be substantially 
reduced by reducing the prevalence of cigarette smoking, and 
efforts aimed at reducing ventilatory disability should include 
efforts to enhance successful smoking cessation.''
  Since the Surgeon General's Report, numerous medical and 
scientific studies have documented the direct relationship 
between cigarette smoking and black lung disease or 
pneumoconiosis. U.S. Department of Labor statistics reveal that 
non-smoking coal miners rarely are awarded disability 
compensation from the Black Lung Trust Fund while a substantial 
majority of black lung claimants who have received federal 
benefits are cigarette smokers. Medical studies have in fact 
reported ``that the effect of (cigarette) smoking is five times 
that of coal dust'' on decline in lung function while having 
``five to ten times greater negative effect on ventilatory 
capacity than coal dust.'' In short, the Federal Black Lung 
Program is likely paying for harm caused, in part, by cigarette 
smoking. Current estimates indicate that an infusion of $15 
billion dollars from the tobacco industry would help keep the 
federal programs working for black lung victims.
  We recommend, in light of the relationship between cigarette 
smoking and coal workers pneumoconiosis, and the fact that 
Federal Black Lung Programs have paid almost $60 billion in 
medical and disability benefits to those afflicted 
beneficiaries, that the tobacco industry should also contribute 
to the Federal Black Lung Program. We therefore recommend that 
adequate funding be allocated from revenues from tobacco 
legislation to ensure the solvency of the Federal Black Lung 
Program and to provide for future benefits.

                      Rollcall Votes in Committee

  In accordance with paragraph 7(c) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following description of the record votes during its 
consideration of S. 1415:
  Senator Ashcroft offered an amendment to delete all 
references to limitations of liability. By rollcall vote of 2 
yeas and 16 nays as follows, the amendment was defeated:
        YEAS--2                       NAYS--16
Mr. Ashcroft                        Mr. McCain
Mr. Brownback                       Mr. Stevens
                                    Mr. Burns
                                    Mr. Gorton
                                    Mrs. Hutchison
                                    Ms. Snowe
                                    Mr. Frist \1\
                                    Mr. Abraham \1\
                                    Mr. Hollings
                                    Mr. Inouye
                                    Mr. Rockefeller
                                    Mr. Kerry
                                    Mr. Breaux \1\
                                    Mr. Bryan
                                    Mr. Dorgan
                                    Mr. Wyden

    \1\ By proxy.

  Senator Snowe offered an amendment to codify provisions 
relating to advertising and marketing. By rollcall vote of 5 
yeas and 14 nays as follows, the amendment was defeated:
        YEAS--5                       NAYS--14
Ms. Snowe                           Mr. McCain
Mr. Rockefeller                     Mr. Stevens \1\
Mr. Breaux                          Mr. Burns
Mr. Dorgan                          Mr. Gorton
Mr. Wyden                           Mrs. Hutchison
                                    Mr. Ashcroft
                                    Mr. Frist
                                    Mr. Abraham
                                    Mr. Brownback
                                    Mr. Hollings
                                    Mr. Inouye \1\
                                    Mr. Ford
                                    Mr. Kerry \1\
                                    Mr. Bryan

    \1\ By proxy.

  Senator Ashcroft offered an amendment to provide legal 
standards and procedures for suppliers of raw materials and 
component parts for medical devices. By rollcall vote of 3 yeas 
and 13 nays as follows, the amendment was defeated:
        YEAS--3                       NAYS--13
Mr. Ashcroft                        Mr. McCain
Mr. Abraham                         Mr. Stevens \1\
Mr. Brownback                       Mr. Burns \1\
                                    Mr. Gorton \1\
                                    Ms. Snowe
                                    Mr. Frist \1\
                                    Mr. Hollings
                                    Mr. Inouye \1\
                                    Mr. Ford
                                    Mr. Rockefeller
                                    Mr. Kerry
                                    Mr. Breaux
                                    Mr. Bryan

    \1\ By proxy.

  Senator Dorgan offered an amendment to strike the cap on 
liability limitations. By rollcall vote of 4 yeas and 15 nays 
as follows, the amendment was defeated:
        YEAS--4                       NAYS--15
Mr. Ashcroft                        Mr. McCain
Mr. Brownback                       Mr. Stevens
Mr. Rockefeller                     Mr. Burns
Mr. Dorgan                          Mr. Gorton
                                    Mrs. Hutchison
                                    Ms. Snowe
                                    Mr. Frist \1\
                                    Mr. Abraham \1\
                                    Mr. Hollings
                                    Mr. Inouye
                                    Mr. Ford
                                    Mr. Kerry
                                    Mr. Breaux
                                    Mr. Bryan
                                    Mr. Wyden

    \1\ By proxy.

  Senator Ashcroft offered an amendment to establish legal 
standards procedures for product liability litigation. By 
rollcall vote of 2 yeas and 16 nays as follows, the amendment 
was defeated:
        YEAS--2                       NAYS--16
Mr. Ashcroft                        Mr. McCain
Mr. Brownback                       Mr. Stevens \1\
                                    Mr. Burns \1\
                                    Mr. Gorton \1\
                                    Mrs. Hutchison
                                    Ms. Snowe
                                    Mr. Frist \1\
                                    Mr. Abraham
                                    Mr. Hollings
                                    Mr. Inouye \1\
                                    Mr. Ford
                                    Mr. Rockefeller
                                    Mr. Kerry
                                    Mr. Breaux
                                    Mr. Bryan
                                    Mr. Wyden

    \1\ By proxy.

  Senator Ford offered an amendment to reduce annual payment 
amounts to those contained in the Clinton budget. By rollcall 
vote of 4 yeas and 13 nays as follows, the amendment was 
defeated:
        YEAS--4                       NAYS--13
Mr. Burns                           Mr. McCain
Mr. Gorton                          Mr. Stevens
Mr. Ashcroft                        Ms. Snowe
Mr. Ford                            Mr. Frist \1\
                                    Mr. Abraham
                                    Mr. Brownback
                                    Mr. Hollings
                                    Mr. Inouye
                                    Mr. Rockefeller
                                    Mr. Kerry
                                    Mr. Breaux
                                    Mr. Bryan
                                    Mr. Wyden

    \1\ By proxy.

  Senator Ford offered an amendment to limit ``real'' annual 
payments to $506 billion over 25 years, as the legislation has 
been publicly described. By rollcall vote of 1 yea and 16 nays 
as follows, the amendment was defeated:
        YEAS--1                       NAYS--16
Mr. Ford                            Mr. McCain
                                    Mr. Stevens \1\
                                    Mr. Burns
                                    Mr. Gorton
                                    Ms. Snowe
                                    Mr. Frist
                                    Mr. Abraham
                                    Mr. Brownback
                                    Mr. Hollings
                                    Mr. Inouye
                                    Mr. Rockefeller
                                    Mr. Kerry
                                    Mr. Breaux
                                    Mr. Bryan
                                    Mr. Dorgan
                                    Mr. Wyden

    \1\ By proxy.

  Senator Dorgan offered an amendment to strike the limited 
antitrust exemption. By rollcall vote of 4 yeas and 15 nays as 
follows, the amendment was defeated:
        YEAS--4                       NAYS--16
Mr. Rockefeller                     Mr. McCain
Mr. Kerry \1\                       Mr. Stevens \1\
Mr. Dorgan                          Mr. Burns
Mr. Wyden                           Mr. Gorton
                                    Mrs. Hutchison
                                    Ms. Snowe
                                    Mr. Ashcroft \1\
                                    Mr. Frist \1\
                                    Mr. Abraham
                                    Mr. Brownback
                                    Mr. Hollings \1\
                                    Mr. Inouye
                                    Mr. Ford
                                    Mr. Breaux
                                    Mr. Bryan

    \1\ By proxy.

  Senator Gorton offered an amendment to require Indian tribes 
to collect State taxes on tobacco and remit them to the State. 
Senator Bryan offered an amendment in the nature of a 
substitute to require the tribes to remit the taxes to the 
United States Treasury for distribution to the States. Senator 
Gorton accepted the Bryan amendment as a modification of his 
amendment. By rollcall vote of 10 yeas and 9 nays as follows, 
the amendment was agreed to:
        YEAS--10                      NAYS--9
Mr. Burns                           Mr. McCain
Mr. Gorton                          Mr. Stevens \1\
Mrs. Hutchison                      Ms. Snowe
Mr. Ashcroft \1\                    Mr. Hollings
Mr. Frist                           Mr. Inouye
Mr. Abraham                         Mr. Ford
Mr. Brownback \1\                   Mr. Rockefeller
Mr. Kerry                           Mr. Breaux
Mr. Bryan                           Mr. Dorgan
Mr. Wyden

    \1\ By proxy.

  On a rollcall vote of 19 yeas and 1 nay as follows, the 
Committee ordered S. 1415 favorably reported:
        YEAS--19                      NAYS--1
Mr. McCain                          Mr. Ashcroft
Mr. Stevens \1\
Mr. Burns
Mr. Gorton
Mr. Lott \1\
Mrs. Hutchison
Ms. Snowe
Mr. Frist
Mr. Abraham
Mr. Brownback
Mr. Hollings \1\
Mr. Inouye
Mr. Ford
Mr. Rockefeller
Mr. Kerry
Mr. Breaux
Mr. Bryan
Mr. Dorgan
Mr. Wyden

    \1\ By proxy.

  Without objection, the Committee authorized the staff to make 
any necessary technical or conforming amendments to the bill.

                            Estimated Costs

  In the opinion of the Committee, it is necessary under 
paragraph 11(a)(3) of Rule XXVI of the Standing Rules of the 
Senate to dispense with the requirements of paragraphs 11(a)(1) 
and (2) of the Rule and section 403 of the Congressional Budget 
Act of 1974 in order to expedite the business of the Senate.

                      Regulatory Impact Statement

  In the opinion of the Committee, it is necessary under 
paragraph 11(b)(2) of rule XXVI of the Standing Rules of the 
Senate to dispense with the requirements of paragraph 11(b)(1) 
of Rule XXVI of the Standing Rules of the Senate in order to 
expedite the business of the Senate.

                        Changes in Existing Law

  In the opinion of the Committee, it is necessary to dispense 
with the requirements of paragraph 12 of Rule XXVI of the 
Standing Rules of the Senate in order to expedite the business 
of the Senate.

                  Additional Views by Chairman McCain

  The Committee is working on additional amendment to S. 1415. 
These amendment would be offered on the floor to make further 
technical and conforming changes, as well as substantive 
modifications to further improve the bill and to remedy 
language that does not correspond with Committee intent.
  The Committee intends that any further amendments would be 
adopted by the Senate and considered as original text for 
purpose of amendment.

        funding for public health purposes and farmer assistance

  The Committee intends that precise funding level for the 
administration, enforcement and implementation of this act be 
developed in consultation with the full Senate and the 
administration prior to and during floor consideration of 
S.1415.
  While in certain cases funding amount are identified in the 
legislation, the Committee recognizes that precise funding 
level must be reconciled with the needs, priorities and 
purposes of this Act.
  The Committee intends to ensure that amounts reserved or 
authorized for any purpose are fully prioritized, justified and 
fiscally responsible.

                              spit tobacco

  During the Executive Session on S. 1415 the Committee adopted 
an amendment by Senator Ford regarding small tobacco 
manufacturers. This amendment contained a formula by which spit 
tobacco is equated in volume to cigarettes for purpose of 
manufacturer payments and pricing.
  The Committee subsequently learned that the effect of the 
amendment would be to reduce the price increase on spit tobacco 
pursuant to this act. Spit tobacco poses a substantial health 
risk to youth. It is the Committee's intent that the price of 
spit tobacco rise commensurately with cigarettes to effectively 
deter youth consumption. The Committee will work on a further 
amendment to repair this serious problem with the reported 
bill.

                            native americans

  A fundamental debate in the course of drafting tobacco 
regulatory policy for our nation has centered on the question 
of a potential unregulated tobacco loophole in Indian country. 
Throughout the course of developing this tobacco proposal, I 
have respected the inherent authority of Indian tribes in the 
same manner as we do state governments. Certainly, no one 
disagrees that the intent and scope of this bill applies to the 
regulation of tobacco related activities of Indian tribes and 
their members while providing the necessary protections to 
Indian children from the dangers of tobacco.
  It is clear that ``Indian country'' is an anomaly to many in 
the Congress and to the general public. Indeed, the course of 
federal policy with respect to Indian tribes has further 
convoluted the national sentiment toward tribal governments, 
with the actions of the Congress creating a matrix of 
regulatory laws and jurisdictional complexity. It is this 
intricate nature of federal policy and tribal governance which 
compels our fair and deliberative consideration of any policy 
we develop which affects multiple jurisdictional authorities.
  An attempt was made in Section 604 of Title VI to broadly 
treat what has been interpreted as a tax evasion issue in 
Indian country in the collection of state taxes to non-members 
who buy cigarette products on tribal lands or from tribal 
retailers. However, a fundamental flaw exists within Section 
604 to achieve this objective to ``eliminate pricing 
disparity'' as a ``basic function of the Act.''
  I note that although ``eliminating pricing disparity'' is a 
``basic function of the Act,'' this is not an absolute 
objective. For example, each of the fifty states retain their 
ability to set their own cigarette tax rates notwithstanding 
the near certainty that this will result in significant 
(perhaps dramatic) interstate price disparities. In short, the 
national objective of uniformity pauses to recognize the 
sovereign nature of the state governments, in that states are 
permitted to establish their own tax rates, even if those rates 
frustrate and impede the policies of neighboring states. Indian 
tribal governments, however, are not to be afforded the same 
respect and discretion with regard to cigarette tax rates.
  The Supreme Court has recognized that deference must be paid 
to the sovereign status of Indian tribal governments. 
Specifically, in Washington v. Colville, 447 U.S. 134 (1980) 
the Supreme Court stopped far short of endorsing the state's 
authority to ``enter onto the reservations, seize stocks of 
cigarettes which are intended for sale to nonmembers, and sell 
theses stocks to nonmembers, and sell these stocks in order to 
obtain payment of the taxes due.'' The Court determined that 
the state's ability to take this action was not properly before 
the Court, but nevertheless, did recognize that seizure of on-
reservation cigarettes was ``considerably different'' from the 
state's ability to seize off-reservation cigarettes ``where 
state power over Indian affairs is considerably more expansive 
than it is within reservation boundaries.'' The Court explained 
that off-reservation seizure of cigarettes ``polices against 
wholesale evasion of [state] taxes without unnecessarily 
intruding on core tribal interests.''
  Because of the federal trust responsibility to Indian tribes 
and their members, Congress has a strong responsibility to 
protect such ``core tribal interests'' even while seeking to 
achieve other federal objectives. In addition, Congress must 
consider these interests when enacting legislation or it risks 
judicial invalidation of these provisions, just as it must be 
solicitous of federalism concerns or it risks similar judicial 
invalidation.
  I am concerned that some interpretation of Section 604 could 
result in a violation of the federal government's trust 
obligation to tribes. Specifically, where tribes and states 
have negotiated agreements providing for the collection of 
state taxes, there is simply no rational basis for Congress to 
de facto invalidate these agreement, arrangements, or state 
laws simply because some tribes and states have not worked out 
such satisfactory arrangements. Of course, Section 604 need not 
be read to necessarily invalidate these freely negotiated 
arrangements. I am sure that no one believes the Treasury 
Department should implement this provision in a manner that 
preempts state law or tribal-state voluntary agreements.
  Second, the provision should not be interpreted to impose 
state taxes on transactions that are otherwise exempt from 
state taxes. For example, in Colville, the Court found that in 
some circumstances states must credit tribes for the amount of 
tribal taxes applicable to transactions between tribes and 
nonmembers. The Supreme Court has encouraged Congress to 
address both sides of the tribal-state taxing equation: equity 
to tribes and states. Section 604 seeks to resolve state 
concerns without considering legitimate issues raised by Indian 
tribes.
  If eliminating pricing disparities for those products is 
indeed a paramount objective of the proposed tobacco 
legislation, fundamental fairness as well as a desire to 
realistically achieve such an end require that uniform 
application of the principal be proposed. Short of that, the 
disparate treatment accorded tribal and state governments 
cannot be maintained as an equitable principal and will not 
succeed as a practical matter.
  In my home state of Arizona, the state tax law does not apply 
to tribal or individual tribal retailers located on Indian 
reservations where the tribal government imposes a commensurate 
tax. Twelve tribes in the state enacted their own cigarette tax 
and the state has cooperative agreements with three other 
tribes which authorize the state to act as the tax collector 
for the tribe. I note that the State of Nevada enacted 
legislation in 1979 which authorizes tribes of the state to 
collect a tribal sales tax in lieu of the state sales tax, 
provided that the tax was equal to or greater than the 
commensurate state tax. This applies to cigarette sales. The 
tribes utilize the revenue from the tribal sales tax for 
governmental services and benefits for their tribal members. 
State-tribal tax agreements are operating in several states and 
tribes are operating pursuant to state laws in others.
  In conclusion, I am most concerned with the provision for two 
reasons. First, as the Colville decision shows, even with 
respect to transactions between tribes and non-Indians, not all 
state retail sales are applicable. If this provision is 
interpreted to impose all state taxes, then this Committee has 
taken drastically needed tax revenues from this Nation's 
poorest citizens. Second, this provision should not be 
interpreted to discourage tribal-state agreements. There are 
far more examples of tribal-state cooperation than conflict in 
the field of tribal-state taxation. Our legislation should 
build on such cooperation and not nullify the fruits of 
cooperation.

                    Additional Views of Mr. Hollings

  I acknowledge that some believe it is necessary to have 
provisions in a comprehensive tobacco bill that relate to the 
international aspects of tobacco sales. However, I am concerned 
with the constitutionality and extraterritorial application of 
some of the international provisions of this bill. Ultimately, 
any such provisions must be constitutional, administrable, and 
not result in the loss of American jobs or harm to American 
farmers.

 Additional Views of Senator Spencer Abraham: Explanation of Selected 
                                 Votes

  Now that the Committee has reported out tobacco settlement 
legislation--legislation that I know will require more work on 
the floor--I would like to comment on several of the more 
important votes that took place in Committee.
  One of several contentious issues that arose during the mark-
up was the amendment offered by Senator Snowe proposing to 
codify the provisions in the tobacco agreement relating to 
advertising and marketing by the tobacco companies. The problem 
with the Snowe amendment is that the vast majority of legal 
scholars agree that the amendment, by definition, is 
unconstitutional. The tobacco agreement negotiated between the 
tobacco companies and the attorneys general from various states 
was a very complex amalgam of legal and policy issues. To bring 
the agreement to fruition will require a number of actions, 
including laws passed by Congress (and obviously signed by the 
President) and executive branch directives. In addition, 
because the tobacco companies had expressed a willingness to 
curtail, voluntarily, many advertising and marketing tactics 
that are entirely legal under the Supreme Court's 
interpretation of commercial free speech, the tobacco companies 
also would have been required to enter into a consent decree in 
which they would agree to cease such constitutionally protected 
activities. In other words, what they could not be compelled to 
do through legislative or executive action, they have agreed to 
do voluntarily in order to obtain other aspects of the tobacco 
agreement.
  By codifying these provisions via the Snowe amendment, 
Congress would have seriously risked ``torpedoing'' the entire 
tobacco agreement by preemptively and--as most observers 
agree--unconstitutionally restricting the companies' rights to 
advertise and market their products. Primarily out of 
constitutional concerns, the committee defeated the Snowe 
amendment on a 5-14 vote, and I voted against it on those 
grounds as well.
  Several votes also occurred with respect to amendments 
offered by Senator Ashcroft on important legal reform issues, 
and they deserve some mention as well. I continue to be a 
strong advocate of legal reform, but it is important to include 
only reforms that belong in this legislation.
  Senator Ashcroft first offered as an amendment to the tobacco 
settlement legislation the text of the Biomaterials Access 
Assurance Act, which the Committee had already reported out 
this Congress as part of product liability reform legislation. 
That amendment failed by a vote of 3-13, with the Committee 
members who spoke in opposition to it indicating that they 
supported the substance of the amendment but did not think that 
the place for it was on this legislation. I supported that 
amendment, however. Such important health-related legislation 
as the biomaterials bill would be appropriate to include as 
part of tobacco settlement legislation, and, in my view, should 
in fact be directly linked to and included in the legislation.
  While I support the substance of product liability reform 
legislation and broader civil justice reform generally, I did 
not support Senator Ashcroft's second amendment, which was 
defeated by a vote of 2-16, to add the entire product liability 
reform legislation to this bill. That legislation has already 
been reported out of the Commerce Committee. Moreover, it has 
been and still is the subject of sensitive negotiations, and 
also deals with a broad array of products that do not 
necessarily have anything to do with health. Including such 
legislation here would have only complicated an already 
difficult issue with a matter that the Committee has already 
dealt with separately.
  Finally, Senator Ashcroft and Senator Dorgan both offered 
slightly different amendments to remove all liability limits 
from the tobacco legislation. Each was defeated by a wide 
margin. I opposed those amendments because the carefully 
circumscribed liability limits developed by the Chairman were 
central to the legislation that he was able to put together 
with sufficient support to be reported out of Committee. 
Nonetheless, Senator Ashcroft makes a valid point that if the 
Congress is not willing to grant liability protections to 
businesses and individuals that make and market safe and useful 
products, then perhaps Congress should not be protecting 
cigarette manufacturers, who produce a harmful product that 
contributes to the deaths of millions of Americans each year.
  Passage of Senator Ashcroft's efforts, while well-
intentioned, would simply have prevented any tobacco settlement 
legislation from moving forward. The Chairman was able to put 
together a piece of legislation on this complex and 
controversial issue only through striking a delicate balance. 
It is important for the Committee to move forward at this point 
and to report out tobacco settlement legislation so that the 
full Senate will have the opportunity to consider it this 
Session.

                 Additional Views of Senator Ron Wyden

  This bill takes an historic step toward reducing the negative 
health consequences of tobacco on future generations of 
Americans. It provides a comprehensive approach to addressing 
the problems of advertising and labeling at home and abroad, 
establishes youth smoking goals and addresses the unique 
concerns of tobacco farmers.

                             accountability

  As we address the problem of youth smoking and changing the 
behavior of tobacco companies, it is important that there be an 
objective body that can report on the success or failure of 
those changes. The Accountability Panel will be the only 
``watch-dog'' apparatus available to determine company specific 
behavior. It will report annually on the success or failure of 
specific company behavior in meeting the public health goal of 
this bill--reducing youth smoking.
  At any time, the panel may recommend a specific company's 
liability protections be removed because the company's behavior 
is significant enough to hinder the achievement of youth 
smoking reduction goals. By creating the only link between 
public health and the company's continued receipt of its 
liability protection, the Accountability Panel will serve as a 
trigger to those protections. In addition, should action be 
initiated to remove liability protections, whether a company 
has adopted the panel's recommendations can be considered 
during the deliberations. Company specific accountability is 
even more important because the look back provisions are 
established on an industry-wide basis in this legislation.
  The Accountability Panel would be composed of career public 
health officials, including a voice for minority communities 
that were targeted by tobacco companies. As unanticipated 
technology and behavior changes occur, this panel will provide 
the mechanism to identify the impact of specific company's 
behavior that we cannot now predict. Under this bill, only the 
Accountability Panel will provide an ongoing record of company 
specific behavior to reduce youth smoking with the power to 
recommend ending a company's liability protections.

                            minority health

  This bill is the first serious attempt to resolve minority 
health issues related to tobacco. While consumers are targeted 
every day by companies, the targeting of minorities and women 
by tobacco companies resulted in the lives of many individuals 
and families being decimated by smoking-related diseases. The 
importance of research and providing smoking prevention and 
cessation programs for minority communities cannot be 
understated. Research must focus on developing successful 
cessation programs and smoking-related minority health 
concerns. In addition, prevention and cessation programs should 
be culturally and linguistically appropriate; cessation 
programs must be affordable and community-based, including 
community health centers to reach migrant populations and 
others who might not have regular sources of health care.

                     international tobacco control

  Another important aspect of this bill are the provisions that 
relate to international tobacco control. Nothing in these 
provisions is intended to prevent the U.S. government or 
tobacco companies themselves from working with other nations to 
develop strict standards against marketing to children. Through 
a code of conduct, restrictions on U.S. government institutions 
to promote tobacco exports, labeling and marketing standards, 
anti-smuggling efforts and the creation of a non-governmental 
organization to focus on tobacco control in developing nations, 
this bill ensures that any U.S. tobacco settlement is not paid 
for by selling tobacco to children overseas.
  As one-in-three cigarettes produced in the U.S. is currently 
exported, the issue of the U.S. establishing a strong position 
concerning international tobacco control is critical to public 
health and as a foreign policy goal. The World Health 
Organization (WHO) projects that one-third of the world's 
population over the age of 15 currently smokes--equivalent to 
1.1. billion smokers. Over 90 percent of the smokers are 
located outside the U.S., and 70 percent live in developing 
countries.
  It has been demonstrated repeatedly that when a U.S. tobacco 
company enters a foreign market, overall consumption of 
cigarettes increases in that country. In Taiwan and Japan, U.S. 
brands jumped from one percent of the market to 20 percent in 
less than two years. U.S. tobacco companies, like other 
companies, know the image of the U.S. sells their products 
overseas. We should insure that image our national image is not 
used to promote tobacco products to children overseas.

                   environmental tobacco smoke (ets)

  This legislation sets a tough standard against environmental 
tobacco smoke, but creates exceptions for some public places 
and allows states to opt out of the standard completely. There 
should be no option for states to opt out. ETS causes or 
exacerbates a wide range of adverse health effects, including 
cancer, respiratory infections and asthma. ETS contains over 
4000 chemical; 200 are poisons; 43 cause cancer. The 
Environmental Protection Agency has classified ETS as a known 
cause of cancer in human. Because one of the primary goals of 
this legislation is the health of children, it is unfortunate 
that the bill would allow ETS to harm children.
  The Building Owners and Managers Association International 
have correctly stated that this provision as written gives the 
states the ability to ``just say no'' to protections against 
ETS. The opportunity to remove a significant health hazard 
should not be lost.

       look back provisions and penalties to reduce youth smoking

  While this bill sets reasonable goals for reductions in youth 
smoking rates, it permits tobacco companies to miss the targets 
by 20 percentage points. In addition, while the penalties in a 
cumulative sense may appear large, they are capped and amount 
to a graduated cost to the company ranging from under one-third 
of a penny-a-pack to just a penny-per-pack.
  The penalties, combined with the look back provision based on 
an industry-wide basis are not enough. Companies must be held 
accountable. One way to do that is to establish company 
specific look-backs and penalties. In addition, the current 
provision may result in smaller tobacco companies bearing a 
larger share of the burden than their market share, should 
other, larger companies not succeed in reducing youth smoking.
  An amendment, which was offered in mark-up but was withdrawn, 
would have provided company-specific look back provisions, and 
imposed greater reductions in youth smoking goals. From a 
public health perspective, this approach would be better than 
the provisions of the current bill. Look back provisions should 
be on a company-by-company basis in order to achieve 
accountability for bad actors and to learn what strategies work 
for different companies in achieving reductions in youth 
smoking. Greater penalties should be required for missing those 
targets. Finally, language to assure minority children are 
appropriate counted in any look-back provisions would have been 
preferable.

                               conclusion

  Although some provisions of this bill could be strengthened, 
the Committee's product is comprehensive and provides the 
opportunity for Congress to take historic action to reduce one 
of the known preventable health problems. In doing so, Congress 
would increase the health status of all our communities and 
reduce the long-term health care costs for smoking-related 
diseases.

                                
