[House Report 110-836]
[From the U.S. Government Publishing Office]



110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     110-836

======================================================================



 
       PREVENT ALL CIGARETTE TRAFFICKING ACT OF 2008 OR PACT ACT

                                _______
                                

 September 9, 2008.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

    Mr. Conyers, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 4081]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on the Judiciary, to whom was referred the bill 
(H.R. 4081) to prevent tobacco smuggling, to ensure the 
collection of all tobacco taxes, and for other purposes, having 
considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     2
Purpose and Summary..............................................    16
Background and Need for the Legislation..........................    16
Hearings.........................................................    18
Committee Consideration..........................................    18
Committee Votes..................................................    18
Committee Oversight Findings.....................................    18
New Budget Authority and Tax Expenditures........................    18
Congressional Budget Office Cost Estimate........................    18
Performance Goals and Objectives.................................    22
Constitutional Authority Statement...............................    22
Advisory on Earmarks.............................................    22
Section-by-Section Analysis......................................    22
Changes in Existing Law Made by the Bill, as Reported............    26
Dissenting Views.................................................    45

                             The Amendment

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; FINDINGS; PURPOSES.

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

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

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

``SECTION 1. DEFINITIONS.

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

``SEC. 2A. DELIVERY SALES.

  ``(a) In General.--With respect to delivery sales into a specific 
State and place, each delivery seller shall comply with--
          ``(1) the shipping requirements set forth in subsection (b);
          ``(2) the recordkeeping requirements set forth in subsection 
        (c);
          ``(3) all State, local, tribal, and other laws generally 
        applicable to sales of cigarettes or smokeless tobacco as if 
        such delivery sales occurred entirely within the specific State 
        and place, including laws imposing--
                  ``(A) excise taxes;
                  ``(B) licensing and tax-stamping requirements;
                  ``(C) restrictions on sales to minors; and
                  ``(D) other payment obligations or legal requirements 
                relating to the sale, distribution, or delivery of 
                cigarettes or smokeless tobacco; and
          ``(4) the tax collection requirements set forth in subsection 
        (d).
  ``(b) Shipping and Packaging.--
          ``(1) Required statement.--For any shipping package 
        containing cigarettes or smokeless tobacco, the delivery seller 
        shall include on the bill of lading, if any, and on the outside 
        of the shipping package, on the same surface as the delivery 
        address, a clear and conspicuous statement providing as 
        follows: `CIGARETTES/SMOKELESS TOBACCO: FEDERAL LAW REQUIRES 
        THE PAYMENT OF ALL APPLICABLE EXCISE TAXES, AND COMPLIANCE WITH 
        APPLICABLE LICENSING AND TAX-STAMPING OBLIGATIONS'.
          ``(2) Failure to label.--Any shipping package described in 
        paragraph (1) that is not labeled in accordance with that 
        paragraph shall be treated as nondeliverable matter by a common 
        carrier or other delivery service, if the common carrier or 
        other delivery service knows or should know the package 
        contains cigarettes or smokeless tobacco. If a common carrier 
        or other delivery service believes a package is being submitted 
        for delivery in violation of paragraph (1), it may require the 
        person submitting the package for delivery to establish that it 
        is not being sent in violation of paragraph (1) before 
        accepting the package for delivery. Nothing in this paragraph 
        shall require the common carrier or other delivery service to 
        open any package to determine its contents.
          ``(3) Weight restriction.--A delivery seller shall not sell, 
        offer for sale, deliver, or cause to be delivered in any single 
        sale or single delivery any cigarettes or smokeless tobacco 
        weighing more than 10 pounds.
          ``(4) Age verification.--
                  ``(A) In general.--Notwithstanding any other 
                provision of law, a delivery seller who mails or ships 
                tobacco products--
                          ``(i) shall not sell, deliver, or cause to be 
                        delivered any tobacco products to a person 
                        under the minimum age required for the legal 
                        sale or purchase of tobacco products, as 
                        determined by the applicable law at the place 
                        of delivery;
                          ``(ii) shall use a method of mailing or 
                        shipping that requires--
                                  ``(I) the purchaser placing the 
                                delivery sale order, or an adult who is 
                                at least the minimum age required for 
                                the legal sale or purchase of tobacco 
                                products, as determined by the 
                                applicable law at the place of 
                                delivery, to sign to accept delivery of 
                                the shipping container at the delivery 
                                address; and
                                  ``(II) the person who signs to accept 
                                delivery of the shipping container to 
                                provide proof, in the form of a valid, 
                                government-issued identification 
                                bearing a photograph of the individual, 
                                that the person is at least the minimum 
                                age required for the legal sale or 
                                purchase of tobacco products, as 
                                determined by the applicable law at the 
                                place of delivery; and
                          ``(iii) shall not accept a delivery sale 
                        order from a person without--
                                  ``(I) obtaining the full name, birth 
                                date, and residential address of that 
                                person; and
                                  ``(II) verifying the information 
                                provided in subclause (I), through the 
                                use of a commercially available 
                                database or aggregate of databases, 
                                consisting primarily of data from 
                                government sources, that are regularly 
                                used by government and businesses for 
                                the purpose of age and identity 
                                verification and authentication, to 
                                ensure that the purchaser is at least 
                                the minimum age required for the legal 
                                sale or purchase of tobacco products, 
                                as determined by the applicable law at 
                                the place of delivery.
                  ``(B) Limitation.--No database being used for age and 
                identity verification under subparagraph (A)(iii) shall 
                be in the possession or under the control of the 
                delivery seller, or be subject to any changes or 
                supplementation by the delivery seller.
  ``(c) Records.--
          ``(1) In general.--Each delivery seller shall keep a record 
        of any delivery sale, including all of the information 
        described in section 2(a)(2), organized by the State, and 
        within such State, by the city or town and by zip code, into 
        which such delivery sale is so made.
          ``(2) Record retention.--Records of a delivery sale shall be 
        kept as described in paragraph (1) in the year in which the 
        delivery sale is made and for the next 4 years.
          ``(3) Access for officials.--Records kept under paragraph (1) 
        shall be made available to tobacco tax administrators of the 
        States, to local governments and Indian tribes that apply their 
        own local or tribal taxes on cigarettes or smokeless tobacco, 
        to the attorneys general of the States, to the chief law 
        enforcement officers of such local governments and Indian 
        tribes, and to the Attorney General of the United States in 
        order to ensure the compliance of persons making delivery sales 
        with the requirements of this Act.
  ``(d) Delivery.--
          ``(1) In general.--Except as provided in paragraph (2), no 
        delivery seller may sell or deliver to any consumer, or tender 
        to any common carrier or other delivery service, any cigarettes 
        or smokeless tobacco pursuant to a delivery sale unless, in 
        advance of the sale, delivery, or tender--
                  ``(A) any cigarette or smokeless tobacco excise tax 
                that is imposed by the State in which the cigarettes or 
                smokeless tobacco are to be delivered has been paid to 
                the State;
                  ``(B) any cigarette or smokeless tobacco excise tax 
                that is imposed by the local government of the place in 
                which the cigarettes or smokeless tobacco are to be 
                delivered has been paid to the local government; and
                  ``(C) any required stamps or other indicia that such 
                excise tax has been paid are properly affixed or 
                applied to the cigarettes or smokeless tobacco.
          ``(2) Exception.--Paragraph (1) does not apply to a delivery 
        sale of smokeless tobacco if the law of the State or local 
        government of the place where the smokeless tobacco is to be 
        delivered requires or otherwise provides that delivery sellers 
        collect the excise tax from the consumer and remit the excise 
        tax to the State or local government, and the delivery seller 
        complies with the requirement.
  ``(e) List of Unregistered or Noncompliant Delivery Sellers.--
          ``(1) In general.--
                  ``(A) Initial list.--Not later than 90 days after 
                this subsection goes into effect under the Prevent All 
                Cigarette Trafficking Act of 2008, the Attorney General 
                of the United States shall compile a list of delivery 
                sellers of cigarettes or smokeless tobacco that have 
                not registered with the Attorney General, pursuant to 
                section 2(a) or that are otherwise not in compliance 
                with this Act, and--
                          ``(i) distribute the list to--
                                  ``(I) the attorney general and tax 
                                administrator of every State;
                                  ``(II) common carriers and other 
                                persons that deliver small packages to 
                                consumers in interstate commerce, 
                                including the United States Postal 
                                Service; and
                                  ``(III) at the discretion of the 
                                Attorney General of the United States, 
                                to any other persons; and
                          ``(ii) publicize and make the list available 
                        to any other person engaged in the business of 
                        interstate deliveries or who delivers 
                        cigarettes or smokeless tobacco in or into any 
                        State.
                  ``(B) List contents.--To the extent known, the 
                Attorney General of the United States shall include, 
                for each delivery seller on the list described in 
                subparagraph (A)--
                          ``(i) all names the delivery seller uses in 
                        the transaction of its business or on packages 
                        delivered to customers;
                          ``(ii) all addresses from which the delivery 
                        seller does business or ships cigarettes or 
                        smokeless tobacco;
                          ``(iii) the website addresses, primary e-mail 
                        address, and phone number of the delivery 
                        seller; and
                          ``(iv) any other information that the 
                        Attorney General determines would facilitate 
                        compliance with this subsection by recipients 
                        of the list.
                  ``(C) Updating.--The Attorney General of the United 
                States shall update and distribute the list at least 
                once every 4 months, and may distribute the list and 
                any updates by regular mail, electronic mail, or any 
                other reasonable means, or by providing recipients with 
                access to the list through a nonpublic website that the 
                Attorney General of the United States regularly 
                updates.
                  ``(D) State, local, or tribal additions.--The 
                Attorney General of the United States shall include in 
                the list under subparagraph (A) any noncomplying 
                delivery sellers identified by any State, local, or 
                tribal government under paragraph (5), and shall 
                distribute the list to the attorney general or chief 
                law enforcement official and the tax administrator of 
                any government submitting any such information and to 
                any common carriers or other persons who deliver small 
                packages to consumers identified by any government 
                pursuant to paragraph (5).
                  ``(E) Accuracy and completeness of list of 
                noncomplying delivery sellers.--In preparing and 
                revising the list required by subparagraph (A), the 
                Attorney General shall--
                          ``(i) use reasonable procedures to ensure 
                        maximum possible accuracy and completeness of 
                        the records and information relied on for the 
                        purpose of determining that such delivery 
                        seller is noncomplying;
                          ``(ii) not later than 14 days prior to 
                        including any delivery seller on the list under 
                        paragraph (1), make a reasonable attempt to 
                        send notice to the delivery seller by letter, 
                        electronic mail, or other means that the 
                        delivery seller is being placed on such list or 
                        update, with that notice citing the relevant 
                        provisions of this Act and the specific reasons 
                        for being placed on such list;
                          ``(iii) provide an opportunity to such 
                        delivery seller to challenge placement on such 
                        list;
                          ``(iv) investigate each such challenge by 
                        contacting the relevant Federal, State, tribal, 
                        and local law enforcement officials, and 
                        provide the specific findings and results of 
                        such investigation to such delivery seller not 
                        later than 30 days after the challenge is made; 
                        and
                          ``(v) upon finding that any placement is 
                        inaccurate, incomplete, or cannot be verified, 
                        promptly delete such delivery seller from the 
                        list as appropriate and notify each appropriate 
                        Federal, State, tribal, and local authority of 
                        such finding.
                  ``(F) Confidentiality.--The list distributed pursuant 
                to subparagraph (A) shall be confidential, and any 
                person receiving the list shall maintain the 
                confidentiality of the list but may deliver the list, 
                for enforcement purposes, to any government official or 
                to any common carrier or other person that delivers 
                tobacco products or small packages to consumers. 
                Nothing in this section shall prohibit a common 
                carrier, the United States Postal Service, or any other 
                person receiving the list from discussing with the 
                listed delivery sellers the delivery sellers' inclusion 
                on the list and the resulting effects on any services 
                requested by such listed delivery seller.
          ``(2) Prohibition on delivery.--
                  ``(A) In general.--Commencing on the date that is 60 
                days after the date of the initial distribution or 
                availability of the list under paragraph (1)(A), no 
                person who receives the list under paragraph (1), and 
                no person who delivers cigarettes or smokeless tobacco 
                to consumers, shall knowingly complete, cause to be 
                completed, or complete its portion of a delivery of any 
                package for any person whose name and address are on 
                the list, unless--
                          ``(i) the person making the delivery knows or 
                        believes in good faith that the item does not 
                        include cigarettes or smokeless tobacco;
                          ``(ii) the delivery is made to a person 
                        lawfully engaged in the business of 
                        manufacturing, distributing, or selling 
                        cigarettes or smokeless tobacco; or
                          ``(iii) the package being delivered weighs 
                        more than 100 pounds and the person making the 
                        delivery does not know or have reasonable cause 
                        to believe that the package contains cigarettes 
                        or smokeless tobacco.
                  ``(B) Implementation of updates.--Commencing on the 
                date that is 30 days after the date of the distribution 
                or availability of any updates or corrections to the 
                list under paragraph (1), all recipients and all common 
                carriers or other persons that deliver cigarettes or 
                smokeless tobacco to consumers shall be subject to 
                subparagraph (A) in regard to such corrections or 
                updates.
                  ``(C) Exemptions.--Subparagraphs (A) and (B), and any 
                other requirements or restrictions placed directly on 
                common carriers elsewhere in this subsection, shall not 
                apply to a common carrier that is subject to a 
                settlement agreement relating to tobacco product 
                deliveries to consumers.   For the purposes of this 
                section, `settlement agreement' shall be defined to 
                include the Assurance of Discontinuance entered into by 
                the Attorney General of New York and DHL Holdings USA, 
                Inc. and DHL Express (USA), Inc. on or about July 1, 
                2005, the Assurance of Discontinuance entered into by 
                the Attorney General of New York and United Parcel 
                Service, Inc. on or about October 21, 2005,  and the 
                Assurance of Compliance entered into by the Attorney 
                General of New York and Federal Express Corporation and 
                Fed Ex Ground package Systems, Inc. on or about 
                February 3, 2006,  so long as  each is  honored 
                nationwide to block illegal deliveries of cigarettes or 
                smokeless tobacco to consumers, and also includes any 
                other active agreement between a common carrier and the 
                states that operates nationwide to ensure that no 
                deliveries of cigarettes and smokeless tobacco shall be 
                made to consumers  for illegally operating Internet or 
                mail-order sellers and that any such deliveries to 
                consumers  shall not be made to minors or without 
                payment to the states and localities where the 
                consumers are located of all taxes on the tobacco 
                products.
          ``(3) Shipments from persons on list.--
                  ``(A) In general.--In the event that a common carrier 
                or other delivery service delays or interrupts the 
                delivery of a package it has in its possession because 
                it determines or has reason to believe that the person 
                ordering the delivery is on a list distributed under 
                paragraph (1)--
                          ``(i) the person ordering the delivery shall 
                        be obligated to pay--
                                  ``(I) the common carrier or other 
                                delivery service as if the delivery of 
                                the package had been timely completed; 
                                and
                                  ``(II) if the package is not 
                                deliverable, any reasonable additional 
                                fee or charge levied by the common 
                                carrier or other delivery service to 
                                cover its extra costs and inconvenience 
                                and to serve as a disincentive against 
                                such noncomplying delivery orders; and
                          ``(ii) if the package is determined not to be 
                        deliverable, the common carrier or other 
                        delivery service shall, in its discretion, 
                        either provide the package and its contents to 
                        a Federal, State, or local law enforcement 
                        agency or destroy the package and its contents.
                  ``(B) Records.--A common carrier or other delivery 
                service shall maintain, for a period of 5 years, any 
                records kept in the ordinary course of business 
                relating to any deliveries interrupted pursuant to this 
                paragraph and provide that information, upon request, 
                to the Attorney General of the United States or to the 
                attorney general or chief law enforcement official or 
                tax administrator of any State, local, or tribal 
                government.
                  ``(C) Confidentiality.--Any person receiving records 
                under subparagraph (B) shall use such records solely 
                for the purposes of the enforcement of this Act and the 
                collection of any taxes owed on related sales of 
                cigarettes and smokeless tobacco, and the person 
                receiving records under subparagraph (B) shall keep 
                confidential any personal information in such records 
                not otherwise required for such purposes.
          ``(4) Preemption.--
                  ``(A) In general.--No State, local, or tribal 
                government, nor any political authority of 2 or more 
                State, local, or tribal governments, may enact or 
                enforce any law or regulation relating to delivery 
                sales that restricts deliveries of cigarettes or 
                smokeless tobacco to consumers by common carriers or 
                other delivery services on behalf of delivery sellers 
                by--
                          ``(i) requiring that the common carrier or 
                        other delivery service verify the age or 
                        identity of the consumer accepting the delivery 
                        by requiring the person who signs to accept 
                        delivery of the shipping container to provide 
                        proof, in the form of a valid, government-
                        issued identification bearing a photograph of 
                        the individual, that such person is at least 
                        the minimum age required for the legal sale or 
                        purchase of tobacco products, as determined by 
                        either State or local law at the place of 
                        delivery;
                          ``(ii) requiring that the common carrier or 
                        other delivery service obtain a signature from 
                        the consumer accepting the delivery;
                          ``(iii) requiring that the common carrier or 
                        other delivery service verify that all 
                        applicable taxes have been paid;
                          ``(iv) requiring that packages delivered by 
                        the common carrier or other delivery service 
                        contain any particular labels, notice, or 
                        markings; or
                          ``(v) prohibiting common carriers or other 
                        delivery services from making deliveries on the 
                        basis of whether the delivery seller is or is 
                        not identified on any list of delivery sellers 
                        maintained and distributed by any entity other 
                        than the Federal Government.
                  ``(B) Relationship to other laws.--Except as provided 
                in subparagraph (C), nothing in this paragraph shall be 
                construed to prohibit, expand, restrict, or otherwise 
                amend or modify--
                          ``(i) section 14501(c)(1) or 41713(b)(4) of 
                        title 49, United States Code;
                          ``(ii) any other restrictions in Federal law 
                        on the ability of State, local, or tribal 
                        governments to regulate common carriers; or
                          ``(iii) any provision of State, local, or 
                        tribal law regulating common carriers that 
                        falls within the provisions of sections 
                        14501(c)(2) or 41713(b)(4)(B) of title 49 of 
                        the United States Code.
                  ``(C) State laws prohibiting delivery sales.--Nothing 
                in the Prevent All Cigarette Trafficking Act of 2008, 
                the amendments made by that Act, or in any other 
                Federal statute shall be construed to preempt, 
                supersede, or otherwise limit or restrict State laws 
                prohibiting the delivery sale, or the shipment or 
                delivery pursuant to a delivery sale, of cigarettes or 
                other tobacco products to individual consumers or 
                personal residences.
          ``(5) State, local, and tribal additions.--
                  ``(A) In general.--Any State, local, or tribal 
                government shall provide the Attorney General of the 
                United States with--
                          ``(i) all known names, addresses, website 
                        addresses, and other primary contact 
                        information of any delivery seller that offers 
                        for sale or makes sales of cigarettes or 
                        smokeless tobacco in or into the State, 
                        locality, or tribal land but has failed to 
                        register with or make reports to the respective 
                        tax administrator, as required by this Act, or 
                        that has been found in a legal proceeding to 
                        have otherwise failed to comply with this Act; 
                        and
                          ``(ii) a list of common carriers and other 
                        persons who make deliveries of cigarettes or 
                        smokeless tobacco in or into the State, 
                        locality, or tribal lands.
                  ``(B) Updates.--Any government providing a list to 
                the Attorney General of the United States under 
                subparagraph (A) shall also provide updates and 
                corrections every 4 months until such time as such 
                government notifies the Attorney General of the United 
                States in writing that such government no longer 
                desires to submit such information to supplement the 
                list maintained and distributed by the Attorney General 
                of the United States under paragraph (1).
                  ``(C) Removal after withdrawal.--Upon receiving 
                written notice that a government no longer desires to 
                submit information under subparagraph (A), the Attorney 
                General of the United States shall remove from the list 
                under paragraph (1) any persons that are on the list 
                solely because of such government's prior submissions 
                of its list of noncomplying delivery sellers of 
                cigarettes or smokeless tobacco or its subsequent 
                updates and corrections.
          ``(6) Deadline to incorporate additions.--The Attorney 
        General of the United States shall--
                  ``(A) include any delivery seller identified and 
                submitted by a State, local, or tribal government under 
                paragraph (5) in any list or update that is distributed 
                or made available under paragraph (1) on or after the 
                date that is 30 days after the date on which the 
                information is received by the Attorney General of the 
                United States; and
                  ``(B) distribute any such list or update to any 
                common carrier or other person who makes deliveries of 
                cigarettes or smokeless tobacco that has been 
                identified and submitted by another government, 
                pursuant to paragraph (5).
          ``(7) Notice to delivery sellers.--Not later than 14 days 
        prior to including any delivery seller on the initial list 
        distributed or made available under paragraph (1), or on any 
        subsequent list or update for the first time, the Attorney 
        General of the United States shall make a reasonable attempt to 
        send notice to the delivery seller by letter, electronic mail, 
        or other means that the delivery seller is being placed on such 
        list or update, with that notice citing the relevant provisions 
        of this Act.
          ``(8) Limitations.--
                  ``(A) In general.--Any common carrier or other person 
                making a delivery subject to this subsection shall not 
                be required or otherwise obligated to--
                          ``(i) determine whether any list distributed 
                        or made available under paragraph (1) is 
                        complete, accurate, or up-to-date;
                          ``(ii) determine whether a person ordering a 
                        delivery is in compliance with this Act; or
                          ``(iii) open or inspect, pursuant to this 
                        Act, any package being delivered to determine 
                        its contents.
                  ``(B) Alternate names.--Any common carrier or other 
                person making a delivery subject to this subsection 
                shall not be required or otherwise obligated to make 
                any inquiries or otherwise determine whether a person 
                ordering a delivery is a delivery seller on the list 
                under paragraph (1) who is using a different name or 
                address in order to evade the related delivery 
                restrictions, but shall not knowingly deliver any 
                packages to consumers for any such delivery seller who 
                the common carrier or other delivery service knows is a 
                delivery seller who is on the list under paragraph (1) 
                but is using a different name or address to evade the 
                delivery restrictions of paragraph (2).
                  ``(C) Penalties.--Any common carrier or person in the 
                business of delivering packages on behalf of other 
                persons shall not be subject to any penalty under 
                section 14101(a) of title 49, United States Code, or 
                any other provision of law for--
                          ``(i) not making any specific delivery, or 
                        any deliveries at all, on behalf of any person 
                        on the list under paragraph (1);
                          ``(ii) not, as a matter of regular practice 
                        and procedure, making any deliveries, or any 
                        deliveries in certain States, of any cigarettes 
                        or smokeless tobacco for any person or for any 
                        person not in the business of manufacturing, 
                        distributing, or selling cigarettes or 
                        smokeless tobacco; or
                          ``(iii) delaying or not making a delivery for 
                        any person because of reasonable efforts to 
                        comply with this Act.
                  ``(D) Other limits.--Section 2 and subsections (a), 
                (b), (c), and (d) of this section shall not be 
                interpreted to impose any responsibilities, 
                requirements, or liability on common carriers.
  ``(f) Presumption.--For purposes of this Act, a delivery sale shall 
be deemed to have occurred in the State and place where the buyer 
obtains personal possession of the cigarettes or smokeless tobacco, and 
a delivery pursuant to a delivery sale is deemed to have been initiated 
or ordered by the delivery seller.''.
  (d) Penalties.--The Jenkins Act is amended by striking section 3 and 
inserting the following:

``SEC. 3. PENALTIES.

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

``SEC. 4. ENFORCEMENT.

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

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

  (a) Section 1716 of title 18, United States Code, is amended--
          (1) by redesignating subsections (j) and (k) as subsections 
        (k) and (l), respectively; and
          (2) by inserting after subsection (i) the following:
  ``(j) Tobacco Products.--
          ``(1) Prohibition.--All cigarettes (as that term is defined 
        in section 2341 of this title) and smokeless tobacco (as that 
        term is defined in section 2341 of this title) are nonmailable 
        and shall not be deposited in or carried through the mails. The 
        United States Postal Service shall not accept for delivery or 
        transmit through the mails any package that is knows, or has 
        reasonable cause to believe, contains any cigarettes or 
        smokeless tobacco made nonmailable by this subsection.
          ``(2) Reasonable cause to believe.--For purposes of this 
        section, notification to the United States Postal Service by 
        the Attorney General, a United States attorney, a State 
        attorney general, or a local government or Indian tribe that 
        levies an excise tax on tobacco products that an individual or 
        entity is regularly engaged in the business of transmitting 
        cigarettes or smokeless tobacco made nonmailable by this 
        section shall constitute reasonable cause to believe that any 
        packages presented to the United States Postal Service by such 
        individual or entity contain nonmailable cigarettes or 
        smokeless tobacco.
          ``(3) Exceptions.--This subsection shall not apply to the 
        following:
                  ``(A) Cigars.--Cigars (as that term is defined in 
                section 5702(a) of the Internal Revenue Code of 1986).
                  ``(B) Geographic exception.--Mailings within any 
                State that is not contiguous with at least 1 other 
                State of the United States.
                  ``(C) Business purposes.--Tobacco products mailed 
                only for business purposes between legally operating 
                businesses that have all applicable State and Federal 
                government licenses or permits and are engaged in 
                tobacco product manufacturing, distribution, wholesale, 
                export, import, testing, investigation or research or 
                for regulatory purposes between any such businesses and 
                State or Federal Government regulatory agencies, if the 
                Postal Service issues a final rule establishing the 
                standards and requirements that applies to all such 
                mailings and which includes the following:
                          ``(i) The Postal Service shall verify that 
                        any person submitting an otherwise nonmailable 
                        tobacco product into the mails as authorized by 
                        this paragraph is a business or government 
                        agency permitted to make such mailings pursuant 
                        to this subsection and the related final rule.
                          ``(ii) The Postal Service shall ensure that 
                        any recipient of an otherwise nonmailable 
                        tobacco product sent through the mails pursuant 
                        to this paragraph is a business or government 
                        agency.
                          ``(iii) The mailings shall be sent through 
                        the Postal Service's systems that provide for 
                        the tracking and confirmation of the delivery.
                          ``(iv) The identities of the business or 
                        government entity submitting the mailing 
                        containing otherwise nonmailable tobacco 
                        products for delivery and the business or 
                        government entity receiving the mailing shall 
                        be clearly set forth on the package and such 
                        information shall be kept in Postal Service 
                        records and made available to the Postal 
                        Service, the Attorney General,  and to persons 
                        eligible to bring enforcement actions pursuant 
                        to subsection (j)(7) for a period of at least 
                        three years.
                          ``(v) The mailings shall be marked with a 
                        Postal Service label or marking that makes it 
                        clear to Postal Service employees that it is a 
                        permitted mailing of otherwise nonmailable 
                        tobacco products that may be delivered only to 
                        a permitted government agency or business and 
                        may not be delivered to any residence or 
                        individual person.
                          ``(vi) The mailings shall be delivered only 
                        to verified adult employees of the recipient 
                        businesses or government agencies who shall be 
                        required to sign for the mailing.
                  ``(D) Certain individuals.--Tobacco products mailed 
                by individual adult people for noncommercial, 
                nonbusiness and non-money making purposes, including 
                the return of a damaged or unacceptable tobacco product 
                to its manufacturer, if the Postal Service issues a 
                final rule establishing the standards and requirements 
                that applies to all such mailings and which includes 
                the following:
                          ``(i) The Postal Service shall verify that 
                        any person submitting an otherwise nonmailable 
                        tobacco product into the mails as authorized by 
                        this subsection is the individual person 
                        identified on the return address label of the 
                        package and is an adult.
                          ``(ii) For mailings to individual persons the 
                        Postal Service shall require the person 
                        submitting the otherwise nonmailable tobacco 
                        product into the mails as authorized by this 
                        subsection to affirm that the recipient is an 
                        adult.
                          ``(iii) The package shall not weigh more than 
                        10 ounces.
                          ``(iv) The mailings shall be sent through the 
                        Postal Service's systems that provide for the 
                        tracking and confirmation of the delivery.
                          ``(v) No package shall be delivered or placed 
                        in the possession of any individual person who 
                        is not a verified adult and, for mailings to 
                        individual persons. The Postal Service shall 
                        deliver the package only to the verified adult 
                        recipient at the recipient address or transfer 
                        it for delivery to an Air/Army Postal Office 
                        (APO) or Fleet Postal Office (FPO) number 
                        designated in the recipient address.
                          ``(vi) No person shall initiate more than ten 
                        such mailings in any thirty-day period.
                  ``(E) Definition of adult.--For the purposes of 
                subparagraphs (C) and (D), the term `adult' means an 
                individual person of at least the minimum age required 
                for the legal sale or purchase of tobacco products as 
                determined by the applicable law at the place the 
                individual person is located.
          ``(4) Packaging exceptions inapplicable.--Subsection (b) of 
        this section shall not apply to any tobacco product made 
        nonmailable by paragraph (2) of this subsection.
          ``(5) Seizure and forfeiture.--Any cigarettes or smokeless 
        tobacco made nonmailable by this subsection that are deposited 
        in the mails shall be subject to seizure and forfeiture, 
        pursuant to the procedures set forth in chapter 46 of this 
        title. Any tobacco products so seized and forfeited shall 
        either be destroyed or retained by Government officials for the 
        detection or prosecution of crimes or related investigations 
        and then destroyed.
          ``(6) Additional penalties.--In addition to any other fines 
        and penalties imposed by this chapter for violations of this 
        section, any person violating this subsection shall be subject 
        to an additional penalty in the amount of 10 times the retail 
        value of the nonmailable cigarettes or smokeless tobacco, 
        including all Federal, State, and local taxes.''.
  (b) Use of Penalties.--There is established a separate account in the 
Treasury of the United States, to be known as the ``PACT Postal Service 
Fund''. Notwithstanding any other provision of law, an amount equal to 
50 percent of any criminal and civil fines or monetary penalties 
collected by the United States Government in enforcing the provisions 
of this subsection shall be transferred into the PACT Postal Service 
Fund and shall be available to the Postmaster General for the purpose 
of enforcing the provisions of this subsection.
  (c) Coordination of Efforts.--In the enforcement of this section, the 
Postal Service shall cooperate and coordinate its efforts with related 
enforcement activities of any other Federal agency or of any State, 
local, or tribal government, whenever appropriate.
  (d) Actions by State, Local or Tribal Governments Relating to Certain 
Tobacco Products.--
          (1) A State, through its attorney general (or a designee 
        thereof), or a local government or Indian tribe that levies an 
        excise tax on tobacco products, through its chief law 
        enforcement officer (or a designee thereof), may bring a civil 
        action in a United States district court to prevent and 
        restrain any person (or any person controlling such person or 
        aiding and abet-ting such person) or to obtain damages, 
        penalties, including the penalties specified in paragraph (6), 
        injunctive or other equitable relief from any such person (or 
        from any person either controlling such person or aiding and 
        abetting such person) who violates paragraph (1) by depositing 
        nonmailable tobacco products into the mails for commercial, 
        business, or money-making purposes.
          (2) Nothing in this section shall be deemed to abrogate or 
        constitute a waiver of any sovereign immunity of a State or 
        local government or Indian tribe against any unconsented 
        lawsuit under paragraph (1), or otherwise to restrict, expand, 
        or modify any sovereign immunity of a State or local government 
        or Indian tribe.
          (3) A State, through its attorney general, or a local 
        government or Indian tribe that levies an excise tax on tobacco 
        products, through its chief law enforcement officer (or a 
        designee thereof), may provide evidence of a violation of 
        paragraph (1) for commercial, business or money-making purposes 
        by any person not subject to State, local, or tribal government 
        enforcement actions for violations of paragraph (1) to the 
        Attorney General of the United States or a United States 
        attorney, who shall take appropriate actions to enforce the 
        provisions of this subsection.
          (4) The remedies available under this subsection are in 
        addition to any other remedies available under Federal, State, 
        local, tribal, or other law. Nothing in this subsection shall 
        be construed to expand, restrict, or otherwise modify any right 
        of an authorized State, local, or tribal government official to 
        proceed in a State, tribal, or other appropriate court, or take 
        other enforcement actions, on the basis of an alleged violation 
        of State, local, tribal, or other law.

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

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

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

  (a) Recordkeeping, Reporting, and Inspection.--Section 2343(c) of 
title 18, United States Code, is amended to read as follows:
  ``(c) Any officer of the Bureau of Alcohol, Tobacco, Firearms, and 
Explosives may, during normal business hours, enter the premises of any 
person described in subsection (a) or (b) for the purposes of 
inspecting--
          ``(1) any records or information required to be maintained by 
        such person under the provisions of law referred to in this 
        chapter; or
          ``(2) any cigarettes or smokeless tobacco kept or stored by 
        such person at such premises.''.
  (b) Penalties.--Section 2344(b) of title 18, United States Code, is 
amended to read as follows:
  ``(b) Whoever knowingly violates any rule or regulation promulgated 
under section 2343 or 2346 or violates section 2342(b) shall be fined 
under this title or imprisoned not more than three years, or both.''.

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

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

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

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

SEC. 8. EFFECTIVE DATE.

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

SEC. 9. SEVERABILITY.

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

                          Purpose and Summary

    H.R. 4081, the Prevent All Cigarette Trafficking Act of 
2007 (``PACT Act''), will help prevent tobacco smuggling and 
ensure the collection of tobacco taxes. This legislation will 
combat unlawful cigarette trafficking by updating existing 
anti-trafficking laws and introducing new tools to combat 
illegal remote sales, such as those conducted over the 
Internet.

                Background and Need for the Legislation

                        OVERVIEW OF THE PROBLEM

    Every year, tens of billions of cigarettes flow into the 
lucrative black market for tobacco products and are trafficked 
throughout the world. This smuggling seriously harms public 
health by undermining tobacco tax policies and making tax-free 
cigarettes available to young people who might otherwise not 
obtain them. Cigarette smuggling also helps finance criminal 
activity, as well as reducing government revenue that is an 
increasingly important funding source for public health 
programs.\1\
---------------------------------------------------------------------------
    \1\Campaign for Tobacco-Free Kids, International Resource Center, 
available at http://tobaccofreecenter.org.
---------------------------------------------------------------------------
    Organized tobacco smuggling generally involves the 
diversion of large consignments of cigarettes onto the black 
market while the product is in transit. It is estimated that 
the illicit worldwide trade in cigarettes accounts for 
approximately 11 percent of all cigarettes sold.\2\ By 
diverting cigarettes while they are in the wholesale 
distribution chain, large-scale smugglers generally avoid all 
taxes.\3\ Estimates of worldwide tax loss to governments are 
between $40 billion and $50 billion per year.\4\ In fact, 
cigarette smuggling is depleting State and local treasuries in 
the United States. The tax losses to States from cigarette 
trafficking were estimated at $1 billion for 2005. New York 
State alone loses approximately $500 million annually.\5\
---------------------------------------------------------------------------
    \2\See H.R. 4081, the Prevent All Cigarette Trafficking Act of 
2007, and H.R. 5689, the Smuggled Tobacco Prevention Act of 2008: 
Hearing Before the Subcomm. on Crime, Terrorism, and Homeland Security 
of the H. Comm. on the Judiciary, 110th Cong. (2008) (testimony of 
William Hoover, Assistant Director for Field Operations, Bureau of 
Alcohol, Tobacco, Firearms and Explosives).
    \3\Campaign for Tobacco-Free Kids, International Resource Center, 
available at http://tobaccofreecenter.org.
    \4\See H.R. 4081, the Prevent All Cigarette Trafficking Act of 
2007, and H.R. 5689, the Smuggled Tobacco Prevention Act of 2008: 
Hearing Before the Subcomm. on Crime, Terrorism, and Homeland Security 
of the H. Comm. on the Judiciary, 110th Cong. (2008) (testimony of 
William Hoover, Assistant Director for Field Operations, Bureau of 
Alcohol, Tobacco, Firearms and Explosives).
    \5\Id.
---------------------------------------------------------------------------
    Unfortunately, tobacco smuggling appears to be an 
increasing problem in the United States. The U.S. Bureau of 
Alcohol, Tobacco, Firearms and Explosives (``ATF'') states that 
the number of ATF tobacco smuggling investigations has 
increased from ten in 1998 to 425 in fiscal year 2005.\6\
---------------------------------------------------------------------------
    \6\S. Rep. No. 110-153 (2007).
---------------------------------------------------------------------------

 INADEQUACY OF CURRENT LAW FOR COMBATING UNLAWFUL CIGARETTE TRAFFICKING

    Existing Federal statutes available for prosecuting tobacco 
smugglers include the Jenkins Act\7\ and the Contraband 
Cigarette Trafficking Act.\8\ The Jenkins Act prohibits anyone 
from selling and shipping cigarettes across a State line to a 
buyer, other than to a licensed distributor, without reporting 
the sale to tax officials in the buyer's State. The Contraband 
Cigarette Trafficking Act prohibits anyone from knowingly 
shipping, transporting, receiving, possessing, selling, 
distributing, or purchasing contraband cigarettes or contraband 
smokeless tobacco. It also prohibits any person from knowingly 
making any false statement with respect to information it 
requires be kept in the records of anyone who ships, sells, or 
distributes in excess of 10,000 cigarettes in any single 
transaction.\9\
---------------------------------------------------------------------------
    \7\15 U.S.C. Sec. 375.
    \8\18 U.S.C. Sec. 2342.
    \9\The threshold was originally 60,000 in a transaction, but was 
amended to 10,000 in 2006.
---------------------------------------------------------------------------
    Unfortunately, these existing laws are inadequate in the 
Internet Age. The Internet, in particular, makes it possible 
for today's illegal tobacco vendors to be mobile and invisible, 
and to operate with near impunity. Even when they can be 
identified and pursued, they can often quickly shut down 
operations and reappear under a new name and website. Internet-
based unlawful tobacco trafficking has resulted in an estimated 
loss of billions of dollars in tax revenue.\10\
---------------------------------------------------------------------------
    \10\Internet Cigarette Sales: Limited Compliance and Enforcement of 
the Jenkins Act Result in Loss of State Tax Revenue, U.S. Government 
Accountability Office, May 1, 2003, at http://www.gao.gov/docdblite/
details.php?rptno=GAO-03-714T>
---------------------------------------------------------------------------

                              THE PACT ACT

    As illegal vendors can easily elude traditional enforcement 
actions, one option can be to focus aggressively on the point 
of delivery. Illegal remote sellers of cigarettes and smokeless 
tobacco have, to date, been very successful by making their 
cigarette and smokeless tobacco deliveries to their customers 
by mail. To combat this problem, the PACT Act makes cigarettes 
and smokeless tobacco a non-mailable matter through the U.S. 
Postal Service. Moreover, under the bill, Internet sellers are 
required to verify the purchaser's age and identity through 
easily accessible databases, and distributors are also required 
under the Act to use a method of delivery that requires the 
person accepting delivery to verify their age and to sign for 
delivery.

                                Hearings

    The Committee's Subcommittee on Crime, Terrorism, and 
Homeland Security held 1 day of hearings on H.R. 4081, the 
``Prevent All Cigarette Trafficking Act of 2007,'' and a 
related bill, H.R. 5689, the ``Smuggled Tobacco Prevention Act 
of 2008,'' on May 1, 2008. Testimony was received from 
Representative Anthony Weiner (D-NY); Representative Dale E. 
Kildee (D-MI); Arian Melendez, Chairman, Reno-Sparks Indian 
Colony; Matthew L. Myers, President, Campaign for Tobacco-Free 
Kids; Steve Rosenthal, New York State Association of Wholesale 
Marketers; John Colledge, Independent Consultant; and David 
Lapp, Chief Counsel, Tobacco Enforcement Unit, Office of the 
Attorney General of Maryland.

                        Committee Consideration

    On July 16, 2008, the Committee met in open session and 
ordered the bill, H.R. 4081, favorably reported with an 
amendment, by voice vote, a quorum being present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that there 
were no recorded votes during the Committee's consideration of 
H.R. 4081.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee advises that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 4081, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 25, 2008.
Hon. John Conyers, Jr., Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4081, the Prevent 
All Cigarette Trafficking Act of 2007.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Mark 
Grabowicz (for Federal costs), who can be reached at 226-2860, 
Melissa Merrell (for the State, local, and tribal impact), who 
can be reached at 225-3220, and Jacob Kuipers (for the private-
sector impact), who can be reached at 226-2940.
            Sincerely,
                                           Peter R. Orszag,
                                                  Director.

Enclosure

cc:
        Honorable Lamar S. Smith.
        Ranking Member
H.R. 4081--Prevent All Cigarette Trafficking Act of 2007.

                                SUMMARY

    H.R. 4081 would require individuals and businesses that 
make interstate sales of cigarettes or smokeless tobacco to 
comply with State tax laws and register with the Bureau of 
Alcohol, Tobacco, Firearms, and Explosives (ATFE). The bill 
would permit ATFE to inspect the premises of anyone who 
distributes or sells more than 10,000 cigarettes or 500 cans or 
packages of smokeless tobacco in a month via telephone, the 
mail, or the Internet. H.R. 4081 also would increase penalties, 
including criminal and civil fines, for violations of the laws 
relating to taxation of cigarettes and smokeless tobacco.
    CBO estimates that implementing H.R. 4081 would cost about 
$120 million over the 2009-2013 period for ATFE to enforce the 
bill's provisions, assuming appropriation of the necessary 
amounts. Enacting the bill could affect direct spending and 
receipts, but we estimate that any such effects would not be 
significant.
    H.R. 4081 would impose both intergovernmental and private-
sector mandates, as defined in the Unfunded Mandates Reform Act 
(UMRA), on certain tobacco sellers, common carriers, and 
individuals. The bill also would preempt certain State, local, 
and tribal laws regulating the delivery of tobacco products. 
CBO expects that the direct costs to comply with those mandates 
would not be significant and would not exceed the annual 
thresholds established in UMRA for intergovernmental and 
private-sector mandates ($68 million and $136 million 
respectively in 2008, adjusted annually for inflation).

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    The estimated budgetary impact of H.R. 4081 is shown in the 
following table. The costs of this legislation fall within 
budget function 750 (administration of justice). In addition to 
the costs shown below, enacting H.R. 4081 could affect direct 
spending and receipts. However, we estimate that any such 
effects would be insignificant.

                                     By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
                                                             2008   2009   2010   2011   2012   2013   2009-2013
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level                                   0     18     25     26     27     28         124

Estimated Outlays                                               0     15     24     26     27     28         120
----------------------------------------------------------------------------------------------------------------

                           BASIS OF ESTIMATE

    CBO estimates that implementing H.R. 4081 would increase 
ATFE's operating costs by about $120 million over the 2009-2013 
period. For this estimate, CBO assumes that the necessary 
amounts will be appropriated near the start of each fiscal year 
and that spending will follow historical patterns for similar 
activities conducted by ATFE. In addition, the bill would have 
an insignificant effect on direct spending and receipts.
Spending Subject to Appropriation
    H.R. 4081 would permit ATFE to inspect the premises of 
businesses that distribute or sell more than 10,000 cigarettes 
or 500 cans or packages of smokeless tobacco each month via 
telephone, the mail, or the Internet. Under the bill, the 
agency expects that it would need to conduct inspections of 
about 7,500 businesses each year. ATFE anticipates that it 
would need to hire about 130 new employees, including 
inspectors, agents, auditors, and support personnel, to carry 
out inspections and any subsequent investigations into illegal 
activity. Once fully phased in, CBO estimates that the costs of 
additional employees under the bill would reach $25 million 
annually, including salaries, benefits, training, equipment, 
upgraded computer systems, and support costs. For this 
estimate, we assume that the new positions would be fully 
staffed by fiscal year 2010.
Direct Spending and Revenues
    Enacting H.R. 4081 could increase collections of civil and 
criminal fines for violations of the bill's provisions relating 
to the sale of cigarettes and smokeless tobacco. CBO expects 
that any additional collections would not be significant 
because of the relatively small number of additional cases 
likely to be affected. The receipt of criminal and civil fines 
is recorded as additional revenue.
    Under the bill's provisions, some of those fines would not 
be available for spending, some would be deposited in the Crime 
Victims fund and later spent, and others would be deposited in 
new funds established by the bill and later spent from those 
funds. (Deposits into one of those new funds would be spent by 
the U.S. Postal Service and thus would be classified as off-
budget.) CBO estimates that spending of fines collected under 
H.R. 4081 would not be significant.

              INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

    H.R. 4081 contains both intergovernmental and private-
sector mandates as defined in UMRA. It would impose new 
requirements related to certain sales of tobacco products by 
private and tribal entities and preempt certain State, local, 
and tribal laws. According to ATFE and industry sources, most 
of the entities affected by the requirements already perform 
many of the duties that would be imposed by this bill, and CBO 
estimates that the additional requirements would impose minimal 
costs. CBO expects that the preemption would impose minimal 
costs on State, local, or tribal governments. Consequently, CBO 
estimates that the total direct costs to comply with the 
requirements of the bill would fall well below the annual 
thresholds established in UMRA for intergovernmental and 
private-sector mandates ($68 million and $136 million 
respectively in 2008, adjusted annually for inflation).
    Requirements Related to Delivery Sales of Tobacco. H.R. 
4081 would require delivery sellers of tobacco products to 
comply with certain requirements regarding reporting, shipping, 
record keeping, and tax collection. Delivery sellers include 
those businesses that sell or deliver tobacco products 
purchased online, by catalog, or by phone. The bill also would 
prohibit importers and interstate tobacco sellers from selling 
certain types of cigarettes that are not in full compliance 
with the terms of the tobacco settlement agreement between 
States and tobacco manufacturers and sellers. The requirements 
would be both intergovernmental and private-sector mandates 
because tobacco delivery sales are conducted by both private-
sector and tribal entities.
    H.R. 4081 also would require common carriers and delivery 
services to keep records for 5 years of any business relating 
to a delivery that has been interrupted because the carrier or 
service determines or has reason to believe that the person 
ordering the delivery is in violation of this act. In addition, 
the bill would affect individuals who currently send or receive 
tobacco products in the mail by prohibiting the mailing of such 
tobacco products in the continental United States through the 
U.S. Postal Service. Information from industry experts 
indicates that most companies that ship tobacco products, 
including two tribal governments, rarely use the Postal Service 
to distribute their products.
    Preemption of State, Local, and Tribal Laws. The bill also 
would preempt certain State, local, and tribal laws that 
require common carriers and delivery services to verify the age 
and require the signature of the individual accepting a tobacco 
delivery or place other restrictions on those services.
Other Impacts on State, Local, and Tribal Governments
    H.R. 4081 would benefit State governments by expanding 
their authority to enforce cigarette tax collection through the 
Jenkins Act. This expanded authority would allow State 
attorneys general to file charges in U.S. district courts 
against sellers or deliverers who violate this law. This bill 
also would preserve existing agreements between States and 
tribal governments regarding cigarette taxes.

                         PREVIOUS CBO ESTIMATE

    On July 20, 2007, CBO transmitted a cost estimate for S. 
1027, the Prevent All Cigarette Trafficking Act of 2007, as 
ordered reported by the Senate Committee on the Judiciary on 
May 17, 2007. The two bills are similar, and the cost estimates 
are identical.

                         ESTIMATE PREPARED BY:

Federal Spending: Mark Grabowicz (226-2860)
Impact on State, Local, and Tribal Governments: Melissa Merrell 
    (225-3220)
Impact on the Private Sector: Jacob Kuipers (226-2940)

                         ESTIMATE APPROVED BY:

Theresa Gullo
Deputy Assistant Director for Budget Analysis

                    Performance Goals and Objectives

    The Committee states, pursuant to clause 3(c)(4) of rule 
XIII of the Rules of the House of Representatives, that H.R. 
4081 strengthens and updates existing cigarette trafficking 
laws to ensure the collection of tobacco taxes and introduces 
new law enforcement tools to combat illegal remote sales of 
cigarettes, such as those conducted over the Internet.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in article I, section 8, clause 3 of the 
Constitution.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 4081 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(d), 9(e), or 9(f) of Rule XXI.

                      Section-by-Section Analysis

    The following discussion describes the bill as reported by 
the Committee.
    Sec. 1. Short Title; Findings; Purposes. Section 1(a) sets 
forth the short title of the bill as the ``Prevent All 
Cigarette Trafficking Act of 2007'' or ``PACT Act.''
    Section 1(b) sets forth certain findings. It notes, for 
example, that federal, State, and local governments are losing 
billions of dollars in tax revenue each year due to the sale of 
illegal tobacco products.
    Section 1(c) sets forth the purposes of the bill. These 
include, for instance, that the legislation is intended to 
provide the government with more tools to combat tobacco 
smuggling, increase collections on lost tax revenue, and 
prevent youth access to tobacco products.
    Sec. 2. Collection of State Cigarette and Smokeless Tobacco 
Taxes. Section 2(a) sets forth various definitions. Subsection 
(a) replaces the entire definition section of the Jenkins Act. 
It adds a definition of ``delivery sale'' to ensure that the 
provisions of the Jenkins Act apply to all remote sellers, 
whether they conduct sales by telephone, fax, Internet, or 
mail. The provision also expands the definition of ``use'' to 
include the consumption, storage, handling, or disposal of 
smokeless tobacco, in addition to cigarettes. In addition, 
subsection (a) amends the Act's definition of ``tobacco tax 
administrator'' to include local or tribal officials duly 
authorized to collect and administer the tobacco tax in 
addition to the State official.
    Subsection (b) enhances the existing reporting requirements 
under the Jenkins Act. While current law requires sellers to 
file reports with the tobacco tax administrator of a State, 
locality, or tribal government, this subsection would also 
require sellers to file these reports with the Attorney General 
of the United States. It also requires vendors to provide 
additional identifying information in these reports to ensure 
that law enforcement officials can locate them for inspection 
and enforcement purposes.
    Subsection (c) adds a new section to the Jenkins Act to 
provide for stronger enforcement of the Act's requirements 
against illegal Internet and other remote sellers, defined as 
``delivery sellers'' under the bill, by requiring them to 
comply with specified requirements.
    First, a delivery seller must comply with the shipping 
requirements outlined in the PACT Act. For example, the 
delivery seller would have to place a label on the outside of 
all packages to indicate that it contains cigarettes or 
smokeless tobacco, to provide notice to a common carrier or 
other delivery service. This subsection also prohibits a 
delivery seller from selling tobacco products to a person under 
the minimum age required for the legal sale or purchase of 
tobacco at the place of delivery, and requires a delivery 
seller to ensure that its customers are of legal age to 
purchase tobacco.
    Second, delivery sellers would be required to keep records 
of all delivery sales made, for at least 4 years. These records 
would have to be made available to State, local, tribal, and 
Federal officials for enforcement purposes.
    Third, the subsection prohibits delivery sellers from 
selling or delivering cigarettes or smokeless tobacco into a 
State or locality unless the seller has paid all applicable 
excise taxes and affixed all required stamps or other indicia 
to the cigarettes or smokeless tobacco in advance of completing 
the sale or delivery.
    In addition, this subsection would authorize the Attorney 
General of the United States to compile a list of unauthorized 
delivery sellers. The list would include any delivery seller 
who has not registered with the Attorney General, as required 
under the Jenkins Act, or has failed to comply with the 
requirements of the Jenkins Act or the PACT Act. The list would 
be compiled with the input of Federal law enforcement 
officials, as well as the State attorney general, tax 
administrator, or chief law enforcement official in each State, 
local or tribal government that levies a tobacco tax. Both the 
initial list and any updates would be distributed to these tax 
and law enforcement officials, and to all common carriers and 
other delivery services, including the United States Postal 
Service. The bill would prohibit any common carrier from 
knowingly completing the delivery of any package for a person 
whose name and other identifying information is included on the 
list.
    The subsection provides due process procedures for those 
sellers who have been incorrectly placed on the list of 
prohibited delivery sellers. For example, the subsection 
requires that the Attorney General ensure maximum possible 
accuracy and completeness of the list, and that individuals be 
given the right to challenge placement on the list, with the 
Attorney General required to investigate any such challenge and 
provide the results to the individual in question. If the 
Attorney General finds that the placement is inaccurate or 
flawed, the individual must be removed from the list, and all 
of the appropriate authorities specified in the bill must be 
notified.
    Finally, the subsection provides a limited exception from 
these requirements for a common carrier with an active 
settlement agreement with a State, honored nationwide, to block 
deliveries of cigarettes and smokeless tobacco or shipments 
where applicable taxes have not been paid. The three major 
common carriers--United Parcel Service, FedEx, and DHL--all 
have such agreements with the New York State Attorney General's 
office. At the May 1, 2008, hearing on the bill, the Crime, 
Terrorism, and Homeland Security Subcommittee received 
testimony that these agreements were effective at stopping the 
illegal shipment of cigarettes. To consumers.
    Subsection (2)(d) replaces section 3 of the Jenkins Act to 
enhance existing penalties and provide for punishment of any 
violation of the new requirements added to the Jenkins Act by 
the PACT Act. The subsection would place two limitations on the 
applicable criminal penalties. First, it clarifies that State, 
local and tribal governments are not subject to criminal 
penalties. Second, it provides that common carriers, 
independent delivery services, and their employees are subject 
to criminal penalties only if the violation was committed 
intentionally, either for economic gain or to assist a delivery 
seller in violating the Act.
    Subsection (2)(e) of the bill includes new authorities for 
State, local, and tribal law enforcement officials. Currently, 
the ability of State and local law enforcement officials to 
reach out-of-State cigarette traffickers through enforcement 
actions in their own State courts is limited. To extend the 
reach of these officials, this subsection provides jurisdiction 
to U.S. district courts to prevent and restrain violations of 
this Act, as well as to award injunctive or equitable relief, 
including money damages, for such violations.
    Subsection (2)(e) also establishes a PACT Anti-Trafficking 
Fund in the U.S. Treasury. Fifty percent of penalties collected 
by the Federal Government through PACT enforcement efforts 
would be transferred into the PACT Anti-Trafficking Fund and 
made available to the Attorney General for use in connection 
with enforcement of the Jenkins Act and other tobacco product 
anti-contraband laws.
    Sec. 3. Treatment of Cigarettes and Smokeless Tobacco as 
Nonmailable Matter. Section 1716 of Title 18, United States 
Code, provides that alcohol, poisons, weapons, and other 
specified materials must be treated as nonmailable matter by 
the United States Postal Service. Section 3 of the bill amends 
that section to add cigarettes and smokeless tobacco to the 
list of nonmailable matter. This would make it illegal for 
delivery sellers to deposit tobacco products in the U.S. mails, 
and would prohibit the U.S. Postal Service from accepting for 
delivery, or delivering, packages its employees know or have 
reason to believe contain cigarettes or smokeless tobacco.
    This section of the bill allows for limited instances of 
allowable mailings through the U.S. Postal Service. For 
example, it allows for returns of damaged tobacco products by 
adult consumers and business mailings to government testing 
facilities.
    Sec. 4. Compliance with Model Statute or Qualifying 
Statute. In 1998, 46 States, along with Puerto Rico, the U.S. 
Virgin Islands, American Samoa, the Northern Mariana Islands, 
Guam, and the District of Columbia, entered into an agreement 
known as the Master Settlement Agreement (MSA) with the Brown & 
Williamson Tobacco Corporation, Lorillard Tobacco Company, 
Philip Morris Incorporated, R.J. Reynolds Tobacco Company, 
Commonwealth Tobacco, and Liggett & Myers. The MSA imposed a 
variety of restrictions on the advertising, marketing, and 
promotion of cigarettes.
    In addition to avoiding taxes, an important way in which 
cigarette traffickers are able to raise money and compete with 
legitimate sellers is to avoid compliance with State escrow 
statutes, which require manufacturers that are not parties to 
the MSA to pay money into an escrow fund. Subsection (a) 
addresses this loophole by prohibiting tobacco manufacturers 
that do not pay funds into the State escrow accounts from 
selling or delivering for sale cigarettes in States that are a 
party to the MSA.
    Subsection (b) provides that U.S. district courts have 
jurisdiction to prevent and restrain violations of this 
section. It allows States, through their attorneys general, to 
bring suit in U.S. district courts for violations of the 
compliance provisions of this section and to recover attorney's 
fees from persons found to have willfully and knowingly 
violated this section.
    Sec. 5. Inspection by Bureau of Alcohol, Tobacco, Firearms, 
and Explosives of Records of Certain Cigarette and Smokeless 
Tobacco Sellers. Section 5 of the bill amends the Contraband 
Cigarette Trafficking Act by authorizing the Bureau of Alcohol, 
Tobacco, Firearms, and Explosives to inspect the premises and 
records of delivery sellers who transfer more than ten thousand 
cigarettes or more than five hundred single-unit cans or 
packages of smokeless tobacco in a single month.
    Sec. 6. Exclusions Regarding Indian Tribes and Tribal 
Matters. Section 6(a)(1) provides that nothing in the PACT Act 
is intended to affect, amend, or modify any agreements, 
compacts, or other intergovernmental arrangements between an 
Indian tribe and any State or local government relating to the 
collection of taxes on cigarettes or smokeless tobacco.
    Section 6(a)(3) clarifies that nothing in the PACT Act 
should be construed to affect, amend, or modify limitations 
under existing Federal law, including Federal common law and 
treaties on State, local, and tribal tax and regulatory 
authority with respect to the sale, use or distribution of 
cigarettes and smokeless tobacco by or to Indian tribes or 
tribal members in Indian country.
    Sections 6(a)(4) and 6(a)(5) clarify that the bill does not 
have any impact on the current state of law regarding Tribal 
sovereignty. The Committee intends that the terms ``Indian 
country'' and ``tribal enterprise'' as used in section 6 are to 
be interpreted broadly. For example, the term ``tribal 
enterprise'' encompasses different types of business entities 
owned by one or more tribes. ``Indian country'' includes, among 
other things, Indian lands and cultural centers held in trust. 
These various entities benefit from the same jurisdictional 
status as the tribe or tribes that own them.
    Sec. 7. Sense of Congress Concerning the Precedential 
Effect of this Act. Section 7 of the bill expresses the sense 
of the Congress that unique harms are associated with online 
cigarette sales and that this bill is not intended to create a 
precedent regarding the collection of other State sales or use 
taxes by out-of-State entities that do not have a physical 
presence within the taxing State.
    Sec. 8. Effective Date. Section 8 of the bill provides that 
Section 5, dealing with Bureau of Alcohol, Tobacco, Firearms, 
and Explosives authority, takes effect on the date of 
enactment, and that other provisions of the bill take effect 
ninety days after that date.
    Sec. 9. Severability. Section 8 provides that the 
invalidation of any provision of the bill or its application 
will not affect other provisions of the bill, or their 
application to any other person or circumstance.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

                        ACT OF OCTOBER 19, 1949

                (Commonly known as the ``Jenkins Act'')

     AN ACT to assist States in collecting sales and use taxes on 
                              cigarettes.

  Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, [That for 
the purposes of this Act--
          [(1) The term ``person'' includes corporations, 
        companies, associations, firms, partnerships, 
        societies, and joint stock companies, as well as 
        individuals.
          [(2) The term ``cigarette'' means any roll for 
        smoking made wholly or in part of tobacco, irrespective 
        of size or shape and whether or not such tobacco is 
        flavored, adulterated, or mixed with any other 
        ingredient, the wrapper or cover of which is made of 
        paper or any other substance or material except 
        tobacco.
          [(3) The term ``distributor licensed by or located in 
        such State'' means--
                  [(A) in the case of any State which by State 
                statute or regulation authorizes the 
                distribution of cigarettes at wholesale or 
                retail, any person so authorized, or
                  [(B) in the case of any other State, any 
                person located in such State who distributes 
                cigarettes at wholesale or retail;
          but such term in no case includes a person who 
        acquires cigarettes for purposes other than resale.
          [(4) The term ``use'' in addition to its ordinary 
        meaning, means the consumption, storage, handling, or 
        disposal of cigarettes.
          [(5) The term ``tobacco tax administratior'' means 
        the State official duly authorized to administer the 
        cigarette tax law of a State.
          [(6) The term ``State'' includes the District of 
        Columbia, Alaska, Hawaii, and the Commonwealth of 
        Puerto Rico.
          [(7) The term ``transfers for profit'' means any 
        transfer for profit or other disposition for profit, 
        including any transfer or disposition by an agent to 
        his principal in connection with which the agent 
        receives anything of value.]

SECTION. 1. DEFINITIONS.

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

SEC. 2A. DELIVERY SALES.

  (a) In General.--With respect to delivery sales into a 
specific State and place, each delivery seller shall comply 
with--
          (1) the shipping requirements set forth in subsection 
        (b);
          (2) the recordkeeping requirements set forth in 
        subsection (c);
          (3) all State, local, tribal, and other laws 
        generally applicable to sales of cigarettes or 
        smokeless tobacco as if such delivery sales occurred 
        entirely within the specific State and place, including 
        laws imposing--
                  (A) excise taxes;
                  (B) licensing and tax-stamping requirements;
                  (C) restrictions on sales to minors; and
                  (D) other payment obligations or legal 
                requirements relating to the sale, 
                distribution, or delivery of cigarettes or 
                smokeless tobacco; and
          (4) the tax collection requirements set forth in 
        subsection (d).
  (b) Shipping and Packaging.--
          (1) Required statement.--For any shipping package 
        containing cigarettes or smokeless tobacco, the 
        delivery seller shall include on the bill of lading, if 
        any, and on the outside of the shipping package, on the 
        same surface as the delivery address, a clear and 
        conspicuous statement providing as follows: 
        ``CIGARETTES/SMOKELESS TOBACCO: FEDERAL LAW REQUIRES 
        THE PAYMENT OF ALL APPLICABLE EXCISE TAXES, AND 
        COMPLIANCE WITH APPLICABLE LICENSING AND TAX-STAMPING 
        OBLIGATIONS''.
          (2) Failure to label.--Any shipping package described 
        in paragraph (1) that is not labeled in accordance with 
        that paragraph shall be treated as nondeliverable 
        matter by a common carrier or other delivery service, 
        if the common carrier or other delivery service knows 
        or should know the package contains cigarettes or 
        smokeless tobacco. If a common carrier or other 
        delivery service believes a package is being submitted 
        for delivery in violation of paragraph (1), it may 
        require the person submitting the package for delivery 
        to establish that it is not being sent in violation of 
        paragraph (1) before accepting the package for 
        delivery. Nothing in this paragraph shall require the 
        common carrier or other delivery service to open any 
        package to determine its contents.
          (3) Weight restriction.--A delivery seller shall not 
        sell, offer for sale, deliver, or cause to be delivered 
        in any single sale or single delivery any cigarettes or 
        smokeless tobacco weighing more than 10 pounds.
          (4) Age verification.--
                  (A) In general.--Notwithstanding any other 
                provision of law, a delivery seller who mails 
                or ships tobacco products--
                          (i) shall not sell, deliver, or cause 
                        to be delivered any tobacco products to 
                        a person under the minimum age required 
                        for the legal sale or purchase of 
                        tobacco products, as determined by the 
                        applicable law at the place of 
                        delivery;
                          (ii) shall use a method of mailing or 
                        shipping that requires--
                                  (I) the purchaser placing the 
                                delivery sale order, or an 
                                adult who is at least the 
                                minimum age required for the 
                                legal sale or purchase of 
                                tobacco products, as determined 
                                by the applicable law at the 
                                place of delivery, to sign to 
                                accept delivery of the shipping 
                                container at the delivery 
                                address; and
                                  (II) the person who signs to 
                                accept delivery of the shipping 
                                container to provide proof, in 
                                the form of a valid, 
                                government-issued 
                                identification bearing a 
                                photograph of the individual, 
                                that the person is at least the 
                                minimum age required for the 
                                legal sale or purchase of 
                                tobacco products, as determined 
                                by the applicable law at the 
                                place of delivery; and
                          (iii) shall not accept a delivery 
                        sale order from a person without--
                                  (I) obtaining the full name, 
                                birth date, and residential 
                                address of that person; and
                                  (II) verifying the 
                                information provided in 
                                subclause (I), through the use 
                                of a commercially available 
                                database or aggregate of 
                                databases, consisting primarily 
                                of data from government 
                                sources, that are regularly 
                                used by government and 
                                businesses for the purpose of 
                                age and identity verification 
                                and authentication, to ensure 
                                that the purchaser is at least 
                                the minimum age required for 
                                the legal sale or purchase of 
                                tobacco products, as determined 
                                by the applicable law at the 
                                place of delivery.
                  (B) Limitation.--No database being used for 
                age and identity verification under 
                subparagraph (A)(iii) shall be in the 
                possession or under the control of the delivery 
                seller, or be subject to any changes or 
                supplementation by the delivery seller.
  (c) Records.--
          (1) In general.--Each delivery seller shall keep a 
        record of any delivery sale, including all of the 
        information described in section 2(a)(2), organized by 
        the State, and within such State, by the city or town 
        and by zip code, into which such delivery sale is so 
        made.
          (2) Record retention.--Records of a delivery sale 
        shall be kept as described in paragraph (1) in the year 
        in which the delivery sale is made and for the next 4 
        years.
          (3) Access for officials.--Records kept under 
        paragraph (1) shall be made available to tobacco tax 
        administrators of the States, to local governments and 
        Indian tribes that apply their own local or tribal 
        taxes on cigarettes or smokeless tobacco, to the 
        attorneys general of the States, to the chief law 
        enforcement officers of such local governments and 
        Indian tribes, and to the Attorney General of the 
        United States in order to ensure the compliance of 
        persons making delivery sales with the requirements of 
        this Act.
  (d) Delivery.--
          (1) In general.--Except as provided in paragraph (2), 
        no delivery seller may sell or deliver to any consumer, 
        or tender to any common carrier or other delivery 
        service, any cigarettes or smokeless tobacco pursuant 
        to a delivery sale unless, in advance of the sale, 
        delivery, or tender--
                  (A) any cigarette or smokeless tobacco excise 
                tax that is imposed by the State in which the 
                cigarettes or smokeless tobacco are to be 
                delivered has been paid to the State;
                  (B) any cigarette or smokeless tobacco excise 
                tax that is imposed by the local government of 
                the place in which the cigarettes or smokeless 
                tobacco are to be delivered has been paid to 
                the local government; and
                  (C) any required stamps or other indicia that 
                such excise tax has been paid are properly 
                affixed or applied to the cigarettes or 
                smokeless tobacco.
          (2) Exception.--Paragraph (1) does not apply to a 
        delivery sale of smokeless tobacco if the law of the 
        State or local government of the place where the 
        smokeless tobacco is to be delivered requires or 
        otherwise provides that delivery sellers collect the 
        excise tax from the consumer and remit the excise tax 
        to the State or local government, and the delivery 
        seller complies with the requirement.
  (e) List of Unregistered or Noncompliant Delivery Sellers.--
          (1) In general.--
                  (A) Initial list.--Not later than 90 days 
                after this subsection goes into effect under 
                the Prevent All Cigarette Trafficking Act of 
                2008, the Attorney General of the United States 
                shall compile a list of delivery sellers of 
                cigarettes or smokeless tobacco that have not 
                registered with the Attorney General, pursuant 
                to section 2(a) or that are otherwise not in 
                compliance with this Act, and--
                          (i) distribute the list to--
                                  (I) the attorney general and 
                                tax administrator of every 
                                State;
                                  (II) common carriers and 
                                other persons that deliver 
                                small packages to consumers in 
                                interstate commerce, including 
                                the United States Postal 
                                Service; and
                                  (III) at the discretion of 
                                the Attorney General of the 
                                United States, to any other 
                                persons; and
                          (ii) publicize and make the list 
                        available to any other person engaged 
                        in the business of interstate 
                        deliveries or who delivers cigarettes 
                        or smokeless tobacco in or into any 
                        State.
                  (B) List contents.--To the extent known, the 
                Attorney General of the United States shall 
                include, for each delivery seller on the list 
                described in subparagraph (A)--
                          (i) all names the delivery seller 
                        uses in the transaction of its business 
                        or on packages delivered to customers;
                          (ii) all addresses from which the 
                        delivery seller does business or ships 
                        cigarettes or smokeless tobacco;
                          (iii) the website addresses, primary 
                        e-mail address, and phone number of the 
                        delivery seller; and
                          (iv) any other information that the 
                        Attorney General determines would 
                        facilitate compliance with this 
                        subsection by recipients of the list.
                  (C) Updating.--The Attorney General of the 
                United States shall update and distribute the 
                list at least once every 4 months, and may 
                distribute the list and any updates by regular 
                mail, electronic mail, or any other reasonable 
                means, or by providing recipients with access 
                to the list through a nonpublic website that 
                the Attorney General of the United States 
                regularly updates.
                  (D) State, local, or tribal additions.--The 
                Attorney General of the United States shall 
                include in the list under subparagraph (A) any 
                noncomplying delivery sellers identified by any 
                State, local, or tribal government under 
                paragraph (5), and shall distribute the list to 
                the attorney general or chief law enforcement 
                official and the tax administrator of any 
                government submitting any such information and 
                to any common carriers or other persons who 
                deliver small packages to consumers identified 
                by any government pursuant to paragraph (5).
                  (E) Accuracy and completeness of list of 
                noncomplying delivery sellers.--In preparing 
                and revising the list required by subparagraph 
                (A), the Attorney General shall--
                          (i) use reasonable procedures to 
                        ensure maximum possible accuracy and 
                        completeness of the records and 
                        information relied on for the purpose 
                        of determining that such delivery 
                        seller is noncomplying;
                          (ii) not later than 14 days prior to 
                        including any delivery seller on the 
                        list under paragraph (1), make a 
                        reasonable attempt to send notice to 
                        the delivery seller by letter, 
                        electronic mail, or other means that 
                        the delivery seller is being placed on 
                        such list or update, with that notice 
                        citing the relevant provisions of this 
                        Act and the specific reasons for being 
                        placed on such list;
                          (iii) provide an opportunity to such 
                        delivery seller to challenge placement 
                        on such list;
                          (iv) investigate each such challenge 
                        by contacting the relevant Federal, 
                        State, tribal, and local law 
                        enforcement officials, and provide the 
                        specific findings and results of such 
                        investigation to such delivery seller 
                        not later than 30 days after the 
                        challenge is made; and
                          (v) upon finding that any placement 
                        is inaccurate, incomplete, or cannot be 
                        verified, promptly delete such delivery 
                        seller from the list as appropriate and 
                        notify each appropriate Federal, State, 
                        tribal, and local authority of such 
                        finding.
                  (F) Confidentiality.--The list distributed 
                pursuant to subparagraph (A) shall be 
                confidential, and any person receiving the list 
                shall maintain the confidentiality of the list 
                but may deliver the list, for enforcement 
                purposes, to any government official or to any 
                common carrier or other person that delivers 
                tobacco products or small packages to 
                consumers. Nothing in this section shall 
                prohibit a common carrier, the United States 
                Postal Service, or any other person receiving 
                the list from discussing with the listed 
                delivery sellers the delivery sellers' 
                inclusion on the list and the resulting effects 
                on any services requested by such listed 
                delivery seller.
          (2) Prohibition on delivery.--
                  (A) In general.--Commencing on the date that 
                is 60 days after the date of the initial 
                distribution or availability of the list under 
                paragraph (1)(A), no person who receives the 
                list under paragraph (1), and no person who 
                delivers cigarettes or smokeless tobacco to 
                consumers, shall knowingly complete, cause to 
                be completed, or complete its portion of a 
                delivery of any package for any person whose 
                name and address are on the list, unless--
                          (i) the person making the delivery 
                        knows or believes in good faith that 
                        the item does not include cigarettes or 
                        smokeless tobacco;
                          (ii) the delivery is made to a person 
                        lawfully engaged in the business of 
                        manufacturing, distributing, or selling 
                        cigarettes or smokeless tobacco; or
                          (iii) the package being delivered 
                        weighs more than 100 pounds and the 
                        person making the delivery does not 
                        know or have reasonable cause to 
                        believe that the package contains 
                        cigarettes or smokeless tobacco.
                  (B) Implementation of updates.--Commencing on 
                the date that is 30 days after the date of the 
                distribution or availability of any updates or 
                corrections to the list under paragraph (1), 
                all recipients and all common carriers or other 
                persons that deliver cigarettes or smokeless 
                tobacco to consumers shall be subject to 
                subparagraph (A) in regard to such corrections 
                or updates.
                  (C) Exemptions.--Subparagraphs (A) and (B), 
                and any other requirements or restrictions 
                placed directly on common carriers elsewhere in 
                this subsection, shall not apply to a common 
                carrier that is subject to a settlement 
                agreement relating to tobacco product 
                deliveries to consumers. For the purposes of 
                this section, ``settlement agreement'' shall be 
                defined to include the Assurance of 
                Discontinuance entered into by the Attorney 
                General of New York and DHL Holdings USA, Inc. 
                and DHL Express (USA), Inc. on or about July 1, 
                2005, the Assurance of Discontinuance entered 
                into by the Attorney General of New York and 
                United Parcel Service, Inc. on or about October 
                21, 2005, and the Assurance of Compliance 
                entered into by the Attorney General of New 
                York and Federal Express Corporation and Fed Ex 
                Ground package Systems, Inc. on or about 
                February 3, 2006, so long as each is honored 
                nationwide to block illegal deliveries of 
                cigarettes or smokeless tobacco to consumers, 
                and also includes any other active agreement 
                between a common carrier and the states that 
                operates nationwide to ensure that no 
                deliveries of cigarettes and smokeless tobacco 
                shall be made to consumers for illegally 
                operating Internet or mail-order sellers and 
                that any such deliveries to consumers shall not 
                be made to minors or without payment to the 
                states and localities where the consumers are 
                located of all taxes on the tobacco products.
          (3) Shipments from persons on list.--
                  (A) In general.--In the event that a common 
                carrier or other delivery service delays or 
                interrupts the delivery of a package it has in 
                its possession because it determines or has 
                reason to believe that the person ordering the 
                delivery is on a list distributed under 
                paragraph (1)--
                          (i) the person ordering the delivery 
                        shall be obligated to pay--
                                  (I) the common carrier or 
                                other delivery service as if 
                                the delivery of the package had 
                                been timely completed; and
                                  (II) if the package is not 
                                deliverable, any reasonable 
                                additional fee or charge levied 
                                by the common carrier or other 
                                delivery service to cover its 
                                extra costs and inconvenience 
                                and to serve as a disincentive 
                                against such noncomplying 
                                delivery orders; and
                          (ii) if the package is determined not 
                        to be deliverable, the common carrier 
                        or other delivery service shall, in its 
                        discretion, either provide the package 
                        and its contents to a Federal, State, 
                        or local law enforcement agency or 
                        destroy the package and its contents.
                  (B) Records.--A common carrier or other 
                delivery service shall maintain, for a period 
                of 5 years, any records kept in the ordinary 
                course of business relating to any deliveries 
                interrupted pursuant to this paragraph and 
                provide that information, upon request, to the 
                Attorney General of the United States or to the 
                attorney general or chief law enforcement 
                official or tax administrator of any State, 
                local, or tribal government.
                  (C) Confidentiality.--Any person receiving 
                records under subparagraph (B) shall use such 
                records solely for the purposes of the 
                enforcement of this Act and the collection of 
                any taxes owed on related sales of cigarettes 
                and smokeless tobacco, and the person receiving 
                records under subparagraph (B) shall keep 
                confidential any personal information in such 
                records not otherwise required for such 
                purposes.
          (4) Preemption.--
                  (A) In general.--No State, local, or tribal 
                government, nor any political authority of 2 or 
                more State, local, or tribal governments, may 
                enact or enforce any law or regulation relating 
                to delivery sales that restricts deliveries of 
                cigarettes or smokeless tobacco to consumers by 
                common carriers or other delivery services on 
                behalf of delivery sellers by--
                          (i) requiring that the common carrier 
                        or other delivery service verify the 
                        age or identity of the consumer 
                        accepting the delivery by requiring the 
                        person who signs to accept delivery of 
                        the shipping container to provide 
                        proof, in the form of a valid, 
                        government-issued identification 
                        bearing a photograph of the individual, 
                        that such person is at least the 
                        minimum age required for the legal sale 
                        or purchase of tobacco products, as 
                        determined by either State or local law 
                        at the place of delivery;
                          (ii) requiring that the common 
                        carrier or other delivery service 
                        obtain a signature from the consumer 
                        accepting the delivery;
                          (iii) requiring that the common 
                        carrier or other delivery service 
                        verify that all applicable taxes have 
                        been paid;
                          (iv) requiring that packages 
                        delivered by the common carrier or 
                        other delivery service contain any 
                        particular labels, notice, or markings; 
                        or
                          (v) prohibiting common carriers or 
                        other delivery services from making 
                        deliveries on the basis of whether the 
                        delivery seller is or is not identified 
                        on any list of delivery sellers 
                        maintained and distributed by any 
                        entity other than the Federal 
                        Government.
                  (B) Relationship to other laws.--Except as 
                provided in subparagraph (C), nothing in this 
                paragraph shall be construed to prohibit, 
                expand, restrict, or otherwise amend or 
                modify--
                          (i) section 14501(c)(1) or 
                        41713(b)(4) of title 49, United States 
                        Code;
                          (ii) any other restrictions in 
                        Federal law on the ability of State, 
                        local, or tribal governments to 
                        regulate common carriers; or
                          (iii) any provision of State, local, 
                        or tribal law regulating common 
                        carriers that falls within the 
                        provisions of sections 14501(c)(2) or 
                        41713(b)(4)(B) of title 49 of the 
                        United States Code.
                  (C) State laws prohibiting delivery sales.--
                Nothing in the Prevent All Cigarette 
                Trafficking Act of 2008, the amendments made by 
                that Act, or in any other Federal statute shall 
                be construed to preempt, supersede, or 
                otherwise limit or restrict State laws 
                prohibiting the delivery sale, or the shipment 
                or delivery pursuant to a delivery sale, of 
                cigarettes or other tobacco products to 
                individual consumers or personal residences.
          (5) State, local, and tribal additions.--
                  (A) In general.--Any State, local, or tribal 
                government shall provide the Attorney General 
                of the United States with--
                          (i) all known names, addresses, 
                        website addresses, and other primary 
                        contact information of any delivery 
                        seller that offers for sale or makes 
                        sales of cigarettes or smokeless 
                        tobacco in or into the State, locality, 
                        or tribal land but has failed to 
                        register with or make reports to the 
                        respective tax administrator, as 
                        required by this Act, or that has been 
                        found in a legal proceeding to have 
                        otherwise failed to comply with this 
                        Act; and
                          (ii) a list of common carriers and 
                        other persons who make deliveries of 
                        cigarettes or smokeless tobacco in or 
                        into the State, locality, or tribal 
                        lands.
                  (B) Updates.--Any government providing a list 
                to the Attorney General of the United States 
                under subparagraph (A) shall also provide 
                updates and corrections every 4 months until 
                such time as such government notifies the 
                Attorney General of the United States in 
                writing that such government no longer desires 
                to submit such information to supplement the 
                list maintained and distributed by the Attorney 
                General of the United States under paragraph 
                (1).
                  (C) Removal after withdrawal.--Upon receiving 
                written notice that a government no longer 
                desires to submit information under 
                subparagraph (A), the Attorney General of the 
                United States shall remove from the list under 
                paragraph (1) any persons that are on the list 
                solely because of such government's prior 
                submissions of its list of noncomplying 
                delivery sellers of cigarettes or smokeless 
                tobacco or its subsequent updates and 
                corrections.
          (6) Deadline to incorporate additions.--The Attorney 
        General of the United States shall--
                  (A) include any delivery seller identified 
                and submitted by a State, local, or tribal 
                government under paragraph (5) in any list or 
                update that is distributed or made available 
                under paragraph (1) on or after the date that 
                is 30 days after the date on which the 
                information is received by the Attorney General 
                of the United States; and
                  (B) distribute any such list or update to any 
                common carrier or other person who makes 
                deliveries of cigarettes or smokeless tobacco 
                that has been identified and submitted by 
                another government, pursuant to paragraph (5).
          (7) Notice to delivery sellers.--Not later than 14 
        days prior to including any delivery seller on the 
        initial list distributed or made available under 
        paragraph (1), or on any subsequent list or update for 
        the first time, the Attorney General of the United 
        States shall make a reasonable attempt to send notice 
        to the delivery seller by letter, electronic mail, or 
        other means that the delivery seller is being placed on 
        such list or update, with that notice citing the 
        relevant provisions of this Act.
          (8) Limitations.--
                  (A) In general.--Any common carrier or other 
                person making a delivery subject to this 
                subsection shall not be required or otherwise 
                obligated to--
                          (i) determine whether any list 
                        distributed or made available under 
                        paragraph (1) is complete, accurate, or 
                        up-to-date;
                          (ii) determine whether a person 
                        ordering a delivery is in compliance 
                        with this Act; or
                          (iii) open or inspect, pursuant to 
                        this Act, any package being delivered 
                        to determine its contents.
                  (B) Alternate names.--Any common carrier or 
                other person making a delivery subject to this 
                subsection shall not be required or otherwise 
                obligated to make any inquiries or otherwise 
                determine whether a person ordering a delivery 
                is a delivery seller on the list under 
                paragraph (1) who is using a different name or 
                address in order to evade the related delivery 
                restrictions, but shall not knowingly deliver 
                any packages to consumers for any such delivery 
                seller who the common carrier or other delivery 
                service knows is a delivery seller who is on 
                the list under paragraph (1) but is using a 
                different name or address to evade the delivery 
                restrictions of paragraph (2).
                  (C) Penalties.--Any common carrier or person 
                in the business of delivering packages on 
                behalf of other persons shall not be subject to 
                any penalty under section 14101(a) of title 49, 
                United States Code, or any other provision of 
                law for--
                          (i) not making any specific delivery, 
                        or any deliveries at all, on behalf of 
                        any person on the list under paragraph 
                        (1);
                          (ii) not, as a matter of regular 
                        practice and procedure, making any 
                        deliveries, or any deliveries in 
                        certain States, of any cigarettes or 
                        smokeless tobacco for any person or for 
                        any person not in the business of 
                        manufacturing, distributing, or selling 
                        cigarettes or smokeless tobacco; or
                          (iii) delaying or not making a 
                        delivery for any person because of 
                        reasonable efforts to comply with this 
                        Act.
                  (D) Other limits.--Section 2 and subsections 
                (a), (b), (c), and (d) of this section shall 
                not be interpreted to impose any 
                responsibilities, requirements, or liability on 
                common carriers.
  (f) Presumption.--For purposes of this Act, a delivery sale 
shall be deemed to have occurred in the State and place where 
the buyer obtains personal possession of the cigarettes or 
smokeless tobacco, and a delivery pursuant to a delivery sale 
is deemed to have been initiated or ordered by the delivery 
seller.
  [Sec. 3. Whoever violates any provision of this Act shall be 
guilty of a misdemeanor and shall be fined not more than 
$1,000, or imprisoned not more than 6 months, or both.
  [Sec. 4. The United States district courts shall have 
jurisdiction to prevent and restrain violations of this Act.]

SEC. 3. PENALTIES.

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

SEC. 4. ENFORCEMENT.

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


                      TITLE 18, UNITED STATES CODE



           *       *       *       *       *       *       *
PART I--CRIMES

           *       *       *       *       *       *       *


CHAPTER 83--POSTAL SERVICE

           *       *       *       *       *       *       *


Sec. 1716. Injurious articles as nonmailable

  (a) * * *

           *       *       *       *       *       *       *

  (j) Tobacco Products.--
          (1) Prohibition.--All cigarettes (as that term is 
        defined in section 2341 of this title) and smokeless 
        tobacco (as that term is defined in section 2341 of 
        this title) are nonmailable and shall not be deposited 
        in or carried through the mails. The United States 
        Postal Service shall not accept for delivery or 
        transmit through the mails any package that is knows, 
        or has reasonable cause to believe, contains any 
        cigarettes or smokeless tobacco made nonmailable by 
        this subsection.
          (2) Reasonable cause to believe.--For purposes of 
        this section, notification to the United States Postal 
        Service by the Attorney General, a United States 
        attorney, a State attorney general, or a local 
        government or Indian tribe that levies an excise tax on 
        tobacco products that an individual or entity is 
        regularly engaged in the business of transmitting 
        cigarettes or smokeless tobacco made nonmailable by 
        this section shall constitute reasonable cause to 
        believe that any packages presented to the United 
        States Postal Service by such individual or entity 
        contain nonmailable cigarettes or smokeless tobacco.
          (3) Exceptions.--This subsection shall not apply to 
        the following:
                  (A) Cigars.--Cigars (as that term is defined 
                in section 5702(a) of the Internal Revenue Code 
                of 1986).
                  (B) Geographic exception.--Mailings within 
                any State that is not contiguous with at least 
                1 other State of the United States.
                  (C) Business purposes.--Tobacco products 
                mailed only for business purposes between 
                legally operating businesses that have all 
                applicable State and Federal government 
                licenses or permits and are engaged in tobacco 
                product manufacturing, distribution, wholesale, 
                export, import, testing, investigation or 
                research or for regulatory purposes between any 
                such businesses and State or Federal Government 
                regulatory agencies, if the Postal Service 
                issues a final rule establishing the standards 
                and requirements that applies to all such 
                mailings and which includes the following:
                          (i) The Postal Service shall verify 
                        that any person submitting an otherwise 
                        nonmailable tobacco product into the 
                        mails as authorized by this paragraph 
                        is a business or government agency 
                        permitted to make such mailings 
                        pursuant to this subsection and the 
                        related final rule.
                          (ii) The Postal Service shall ensure 
                        that any recipient of an otherwise 
                        nonmailable tobacco product sent 
                        through the mails pursuant to this 
                        paragraph is a business or government 
                        agency.
                          (iii) The mailings shall be sent 
                        through the Postal Service's systems 
                        that provide for the tracking and 
                        confirmation of the delivery.
                          (iv) The identities of the business 
                        or government entity submitting the 
                        mailing containing otherwise 
                        nonmailable tobacco products for 
                        delivery and the business or government 
                        entity receiving the mailing shall be 
                        clearly set forth on the package and 
                        such information shall be kept in 
                        Postal Service records and made 
                        available to the Postal Service, the 
                        Attorney General,A and to persons 
                        eligible to bring enforcement actions 
                        pursuant to subsection (j)(7) for a 
                        period of at least three years.
                          (v) The mailings shall be marked with 
                        a Postal Service label or marking that 
                        makes it clear to Postal Service 
                        employees that it is a permitted 
                        mailing of otherwise nonmailable 
                        tobacco products that may be delivered 
                        only to a permitted government agency 
                        or business and may not be delivered to 
                        any residence or individual person.
                          (vi) The mailings shall be delivered 
                        only to verified adult employees of the 
                        recipient businesses or government 
                        agencies who shall be required to sign 
                        for the mailing.
                  (D) Certain individuals.--Tobacco products 
                mailed by individual adult people for 
                noncommercial, nonbusiness and non-money making 
                purposes, including the return of a damaged or 
                unacceptable tobacco product to its 
                manufacturer, if the Postal Service issues a 
                final rule establishing the standards and 
                requirements that applies to all such mailings 
                and which includes the following:
                          (i) The Postal Service shall verify 
                        that any person submitting an otherwise 
                        nonmailable tobacco product into the 
                        mails as authorized by this subsection 
                        is the individual person identified on 
                        the return address label of the package 
                        and is an adult.
                          (ii) For mailings to individual 
                        persons the Postal Service shall 
                        require the person submitting the 
                        otherwise nonmailable tobacco product 
                        into the mails as authorized by this 
                        subsection to affirm that the recipient 
                        is an adult.
                          (iii) The package shall not weigh 
                        more than 10 ounces.
                          (iv) The mailings shall be sent 
                        through the Postal Service's systems 
                        that provide for the tracking and 
                        confirmation of the delivery.
                          (v) No package shall be delivered or 
                        placed in the possession of any 
                        individual person who is not a verified 
                        adult and, for mailings to individual 
                        persons. The Postal Service shall 
                        deliver the package only to the 
                        verified adult recipient at the 
                        recipient address or transfer it for 
                        delivery to an Air/Army Postal Office 
                        (APO) or Fleet Postal Office (FPO) 
                        number designated in the recipient 
                        address.
                          (vi) No person shall initiate more 
                        than ten such mailings in any thirty-
                        day period.
                  (E) Definition of adult.--For the purposes of 
                subparagraphs (C) and (D), the term ``adult'' 
                means an individual person of at least the 
                minimum age required for the legal sale or 
                purchase of tobacco products as determined by 
                the applicable law at the place the individual 
                person is located.
          (4) Packaging exceptions inapplicable.--Subsection 
        (b) of this section shall not apply to any tobacco 
        product made nonmailable by paragraph (2) of this 
        subsection.
          (5) Seizure and forfeiture.--Any cigarettes or 
        smokeless tobacco made nonmailable by this subsection 
        that are deposited in the mails shall be subject to 
        seizure and forfeiture, pursuant to the procedures set 
        forth in chapter 46 of this title. Any tobacco products 
        so seized and forfeited shall either be destroyed or 
        retained by Government officials for the detection or 
        prosecution of crimes or related investigations and 
        then destroyed.
          (6) Additional penalties.--In addition to any other 
        fines and penalties imposed by this chapter for 
        violations of this section, any person violating this 
        subsection shall be subject to an additional penalty in 
        the amount of 10 times the retail value of the 
        nonmailable cigarettes or smokeless tobacco, including 
        all Federal, State, and local taxes.
  [(j)] (k)(1) * * *

           *       *       *       *       *       *       *

  [(k)] (l) For purposes of this section, the term ``State'' 
includes a State of the United States, the District of 
Columbia, and any commonwealth, territory, or possession of the 
United States.

           *       *       *       *       *       *       *


CHAPTER 114--TRAFFICKING IN CONTRABAND CIGARETTES AND SMOKELESS TOBACCO

           *       *       *       *       *       *       *


Sec. 2343. Recordkeeping, reporting, and inspection

  (a) * * *

           *       *       *       *       *       *       *

  [(c) Upon the consent of any person who ships, sells, or 
distributes any quantity of cigarettes in excess of 10,000 in a 
single transaction, or pursuant to a duly issued search 
warrant, the Attorney General may enter the premises (including 
places of storage) of such person for the purpose of inspecting 
any records or information required to be maintained by such 
person under this chapter, and any cigarettes kept or stored by 
such person at such premises.]
  (c) Any officer of the Bureau of Alcohol, Tobacco, Firearms, 
and Explosives may, during normal business hours, enter the 
premises of any person described in subsection (a) or (b) for 
the purposes of inspecting--
          (1) any records or information required to be 
        maintained by such person under the provisions of law 
        referred to in this chapter; or
          (2) any cigarettes or smokeless tobacco kept or 
        stored by such person at such premises.

           *       *       *       *       *       *       *


Sec. 2344. Penalties

  (a) * * *
  [(b) Whoever knowingly violates any rule or regulation 
promulgated under section 2343(a) or 2346 of this title or 
violates section 2342(b) of this title shall be fined under 
this title or imprisoned not more than three years, or both.]
  (b) Whoever knowingly violates any rule or regulation 
promulgated under section 2343 or 2346 or violates section 
2342(b) shall be fined under this title or imprisoned not more 
than three years, or both.

           *       *       *       *       *       *       *


                            DISSENTING VIEWS

    While I support the overall objectives of H.R. 4081--
preventing the illegal sale of cigarettes--I have serious 
concerns that legitimate and legal business practices will be 
unintentionally affected by the current language of the bill.
    H.R. 4081 provides several exceptions for sending 
cigarettes through the mail for various non-commercial uses. 
For example, it permits a tobacco company to use the mail to 
send tobacco products to a third party for testing purposes. 
Consumers are also permitted to return defective or damaged 
tobacco products through the mail.
    Unfortunately, H.R. 4081 is lacking one more exception: the 
mailing of products for consumer testing purposes. Like any 
other consumer product, tobacco products are test marketed, and 
tobacco companies should continue to have the right to use the 
mail for such purposes. No sales are involved by such mailings, 
no business transactions occur, and no profits are made. 
Therefore, this exemption should be included in the current 
list of exemptions for non-commercial purposes.
    In the 109th Congress we amended the Contraband Cigarette 
Trafficking Act (CCTA) to address cigarette smuggling schemes 
that were linked by the Justice Department to organizations 
funneling funds to terrorist groups around the world. One 
particular smuggling operation involved contraband cigarettes 
from North Carolina. When we amended the CCTA in the 109th 
Congress, it was supported by all stakeholders and was limited 
to cigarette smuggling. Unfortunately, H.R. 4081 has not 
garnered universal support from stakeholders because it would 
outlaw consumer testing which is a legitimate and legal 
business practice that is not in any way linked to the sale of 
counterfeit cigarettes.

                                   Howard Coble.

                                  
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