To protect the public health by providing the Food and Drug Administration with certain authority to regulate tobacco products, to eliminate the Federal quota and price support programs for tobacco, and to provide assistance to quota holders, tobacco producers, and tobacco-dependent communities.

TEXT OF AMENDMENTS

SA 3562. Mr. McCONNELL (for Mr. Grassley (for himself and Mr.
Baucus)) proposed an amendment to the bill H.R. 4520, to amend the
Internal

[[Page S8244]]

Revenue Code of 1986 to remove impediments in such Code and make our
manufacturing, service, and high-technology businesses and workers more
competitive and productive both at home and abroad; as follows:

(a) Short Ttile.--This Act may be cited as the ``Jumpstart
Our Business Strength (JOBS) Act''.

The text of Amendment S.A. 3562 was printed in the Congressional
Record on May 18, 2004, as the text of S. 1637 which was passed by the
Senate on May 11, 2004.
______

SA 3563. Mr. DeWINE (for himself, Mr. Kennedy, Mr. McConnell, Mr.
Hollings, Ms. Collins, Mrs. Murray, Mr. Durbin, Mrs. Feinstein, Mr.
Graham of Florida, Mr. Jeffords, Mr. Reed, Mr. Lautenberg, and Mr.
Schumer) proposed an amendment to amendment SA 3562 proposed by Mr.
McConnell (for Mr. Grassley (for himself and Mr. Baucus)) to the bill
H.R. 4520, to amend the Internal Revenue Code of 1986 to remove
impediments in such Code and make our manufacturing, service, and high-
technology businesses and workers more competitive and productive both
at home and abroad; as follows:

At the appropriate place, insert the following:

TITLE __--PROVISIONS RELATING TO TOBACCO

Subtitle A--Family Smoking Prevention and Tobacco Control

SEC. __01. SHORT TITLE.

This subtitle may be cited as the ``Family Smoking
Prevention and Tobacco Control Act''.

SEC. __02. FINDINGS.

The Congress finds the following:
(1) The use of tobacco products by the Nation's children is
a pediatric disease of considerable proportions that results
in new generations of tobacco-dependent children and adults.
(2) A consensus exists within the scientific and medical
communities that tobacco products are inherently dangerous
and cause cancer, heart disease, and other serious adverse
health effects.
(3) Nicotine is an addictive drug.
(4) Virtually all new users of tobacco products are under
the minimum legal age to purchase such products.
(5) Tobacco advertising and marketing contribute
significantly to the use of nicotine-containing tobacco
products by adolescents.
(6) Because past efforts to restrict advertising and
marketing of tobacco products have failed adequately to curb
tobacco use by adolescents, comprehensive restrictions on the
sale, promotion, and distribution of such products are
needed.
(7) Federal and State governments have lacked the legal and
regulatory authority and resources they need to address
comprehensively the public health and societal problems
caused by the use of tobacco products.
(8) Federal and State public health officials, the public
health community, and the public at large recognize that the
tobacco industry should be subject to ongoing oversight.
(9) Under article I, section 8 of the Constitution, the
Congress is vested with the responsibility for regulating
interstate commerce and commerce with Indian tribes.
(10) The sale, distribution, marketing, advertising, and
use of tobacco products are activities in and substantially
affecting interstate commerce because they are sold,
marketed, advertised, and distributed in interstate commerce
on a nationwide basis, and have a substantial effect on the
Nation's economy.
(11) The sale, distribution, marketing, advertising, and
use of such products substantially affect interstate commerce
through the health care and other costs attributable to the
use of tobacco products.
(12) It is in the public interest for Congress to enact
legislation that provides the Food and Drug Administration
with the authority to regulate tobacco products and the
advertising and promotion of such products. The benefits to
the American people from enacting such legislation would be
significant in human and economic terms.
(13) Tobacco use is the foremost preventable cause of
premature death in America. It causes over 400,000 deaths in
the United States each year and approximately 8,600,000
Americans have chronic illnesses related to smoking.
(14) Reducing the use of tobacco by minors by 50 percent
would prevent well over 6,500,000 of today's children from
becoming regular, daily smokers, saving over 2,000,000 of
them from premature death due to tobacco induced disease.
Such a reduction in youth smoking would also result in
approximately $75,000,000,000 in savings attributable to
reduced health care costs.
(15) Advertising, marketing, and promotion of tobacco
products have been especially directed to attract young
persons to use tobacco products and these efforts have
resulted in increased use of such products by youth. Past
efforts to oversee these activities have not been successful
in adequately preventing such increased use.
(16) In 2001, the tobacco industry spent more than
$11,000,000,000 to attract new users, retain current users,
increase current consumption, and generate favorable long-
term attitudes toward smoking and tobacco use.
(17) Tobacco product advertising often misleadingly
portrays the use of tobacco as socially acceptable and
healthful to minors.
(18) Tobacco product advertising is regularly seen by
persons under the age of 18, and persons under the age of 18
are regularly exposed to tobacco product promotional efforts.
(19) Through advertisements during and sponsorship of
sporting events, tobacco has become strongly associated with
sports and has become portrayed as an integral part of sports
and the healthy lifestyle associated with rigorous sporting
activity.
(20) Children are exposed to substantial and unavoidable
tobacco advertising that leads to favorable beliefs about
tobacco use, plays a role in leading young people to
overestimate the prevalence of tobacco use, and increases the
number of young people who begin to use tobacco.
(21) The use of tobacco products in motion pictures and
other mass media glamorizes its use for young people and
encourages them to use tobacco products.
(22) Tobacco advertising expands the size of the tobacco
market by increasing consumption of tobacco products
including tobacco use by young people.
(23) Children are more influenced by tobacco advertising
than adults, they smoke the most advertised brands.
(24) Tobacco company documents indicate that young people
are an important and often crucial segment of the tobacco
market. Children, who tend to be more price-sensitive than
adults, are influenced by advertising and promotion practices
that result in drastically reduced cigarette prices.
(25) Comprehensive advertising restrictions will have a
positive effect on the smoking rates of young people.
(26) Restrictions on advertising are necessary to prevent
unrestricted tobacco advertising from undermining legislation
prohibiting access to young people and providing for
education about tobacco use.
(27) International experience shows that advertising
regulations that are stringent and comprehensive have a
greater impact on overall tobacco use and young people's use
than weaker or less comprehensive ones.
(28) Text only requirements, although not as stringent as a
ban, will help reduce underage use of tobacco products while
preserving the informational function of advertising.
(29) It is in the public interest for Congress to adopt
legislation to address the public health crisis created by
actions of the tobacco industry.
(30) The final regulations promulgated by the Secretary of
Health and Human Services in the August 28, 1996, issue of
the Federal Register (61 Fed. Reg. 44615-44618) for inclusion
as part 897 of title 21, Code of Federal Regulations, are
consistent with the First Amendment to the United States
Constitution and with the standards set forth in the
amendments made by this subtitle for the regulation of
tobacco products by the Food and Drug Administration and the
restriction on the sale and distribution, including access to
and the advertising and promotion of, tobacco products
contained in such regulations are substantially related to
accomplishing the public health goals of this subtitle.
(31) The regulations described in paragraph (30) will
directly and materially advance the Federal Government's
substantial interest in reducing the number of children and
adolescents who use cigarettes and smokeless tobacco and in
preventing the life-threatening health consequences
associated with tobacco use. An overwhelming majority of
Americans who use tobacco products begin using such products
while they are minors and become addicted to the nicotine in
those products before reaching the age of 18. Tobacco
advertising and promotion plays a crucial role in the
decision of these minors to begin using tobacco products.
Less restrictive and less comprehensive approaches have not
and will not be effective in reducing the problems addressed
by such regulations. The reasonable restrictions on the
advertising and promotion of tobacco products contained in
such regulations will lead to a significant decrease in the
number of minors using and becoming addicted to those
products.
(32) The regulations described in paragraph (30) impose no
more extensive restrictions on communication by tobacco
manufacturers and sellers than are necessary to reduce the
number of children and adolescents who use cigarettes and
smokeless tobacco and to prevent the life-threatening health
consequences associated with tobacco use. Such regulations
are narrowly tailored to restrict those advertising and
promotional practices which are most likely to be seen or
heard by youth and most likely to entice them into tobacco
use, while affording tobacco manufacturers and sellers ample
opportunity to convey information about their products to
adult consumers.
(33) Tobacco dependence is a chronic disease, one that
typically requires repeated interventions to achieve long-
term or permanent abstinence.
(34) Because the only known safe alternative to smoking is
cessation, interventions should target all smokers to help
them quit completely.
(35) Tobacco products have been used to facilitate and
finance criminal activities both

[[Page S8245]]

domestically and internationally. Illicit trade of tobacco
products has been linked to organized crime and terrorist
groups.
(36) It is essential that the Food and Drug Administration
review products sold or distributed for use to reduce risks
or exposures associated with tobacco products and that it be
empowered to review any advertising and labeling for such
products. It is also essential that manufacturers, prior to
marketing such products, be required to demonstrate that such
products will meet a series of rigorous criteria, and will
benefit the health of the population as a whole, taking into
account both users of tobacco products and persons who do not
currently use tobacco products.
(37) Unless tobacco products that purport to reduce the
risks to the public of tobacco use actually reduce such
risks, those products can cause substantial harm to the
public health to the extent that the individuals, who would
otherwise not consume tobacco products or would consume such
products less, use tobacco products purporting to reduce
risk. Those who use products sold or distributed as modified
risk products that do not in fact reduce risk, rather than
quitting or reducing their use of tobacco products, have a
substantially increased likelihood of suffering disability
and premature death. The costs to society of the widespread
use of products sold or distributed as modified risk products
that do not in fact reduce risk or that increase risk include
thousands of unnecessary deaths and injuries and huge costs
to our health care system.
(38) As the National Cancer Institute has found, many
smokers mistakenly believe that ``low tar'' and ``light''
cigarettes cause fewer health problems than other cigarettes.
As the National Cancer Institute has also found, mistaken
beliefs about the health consequences of smoking ``low tar''
and ``light'' cigarettes can reduce the motivation to quit
smoking entirely and thereby lead to disease and death.
(39) Recent studies have demonstrated that there has been
no reduction in risk on a population-wide basis from ``low
tar'' and ``light'' cigarettes and such products may actually
increase the risk of tobacco use.
(40) The dangers of products sold or distributed as
modified risk tobacco products that do not in fact reduce
risk are so high that there is a compelling governmental
interest in insuring that statements about modified risk
tobacco products are complete, accurate, and relate to the
overall disease risk of the product.
(41) As the Federal Trade Commission has found, consumers
have misinterpreted advertisements in which one product is
claimed to be less harmful than a comparable product, even in
the presence of disclosures and advisories intended to
provide clarification.
(42) Permitting manufacturers to make unsubstantiated
statements concerning modified risk tobacco products, whether
express or implied, even if accompanied by disclaimers would
be detrimental to the public health.
(43) The only way to effectively protect the public health
from the dangers of unsubstantiated modified risk tobacco
products is to empower the Food and Drug Administration to
require that products that tobacco manufacturers sold or
distributed for risk reduction be approved in advance of
marketing, and to require that the evidence relied on to
support approval of these products is rigorous.

SEC. __03. PURPOSE.

The purposes of this subtitle are--
(1) to provide authority to the Food and Drug
Administration to regulate tobacco products under the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.), by
recognizing it as the primary Federal regulatory authority
with respect to the manufacture, marketing, and distribution
of tobacco products;
(2) to ensure that the Food and Drug Administration has the
authority to address issues of particular concern to public
health officials, especially the use of tobacco by young
people and dependence on tobacco;
(3) to authorize the Food and Drug Administration to set
national standards controlling the manufacture of tobacco
products and the identity, public disclosure, and amount of
ingredients used in such products;
(4) to provide new and flexible enforcement authority to
ensure that there is effective oversight of the tobacco
industry's efforts to develop, introduce, and promote less
harmful tobacco products;
(5) to vest the Food and Drug Administration with the
authority to regulate the levels of tar, nicotine, and other
harmful components of tobacco products;
(6) in order to ensure that consumers are better informed,
to require tobacco product manufacturers to disclose research
which has not previously been made available, as well as
research generated in the future, relating to the health and
dependency effects or safety of tobacco products;
(7) to continue to permit the sale of tobacco products to
adults in conjunction with measures to ensure that they are
not sold or accessible to underage purchasers;
(8) to impose appropriate regulatory controls on the
tobacco industry;
(9) to promote cessation to reduce disease risk and the
social costs associated with tobacco related diseases; and
(10) to strengthen legislation against illicit trade in
tobacco products.

SEC. __04. SCOPE AND EFFECT.

(a) Intended Effect.--Nothing in this subtitle (or an
amendment made by this subtitle) shall be construed to--
(1) establish a precedent with regard to any other
industry, situation, circumstance, or legal action; or
(2) affect any action pending in Federal, State, or Tribal
court, or any agreement, consent decree, or contract of any
kind.
(b) Agricultural Activities.--The provisions of this
subtitle (or an amendment made by this subtitle) which
authorize the Secretary to take certain actions with regard
to tobacco and tobacco products shall not be construed to
affect any authority of the Secretary of Agriculture under
existing law regarding the growing, cultivation, or curing of
raw tobacco.

SEC. __05. SEVERABILITY.

If any provision of this subtitle, the amendments made by
this subtitle, or the application of any provision of this
subtitle to any person or circumstance is held to be invalid,
the remainder of this subtitle, the amendments made by this
subtitle, and the application of the provisions of this
subtitle to any other person or circumstance shall not be
affected and shall continue to be enforced to the fullest
extent possible.

CHAPTER 1--AUTHORITY OF THE FOOD AND DRUG ADMINISTRATION

SEC. __11. AMENDMENT OF FEDERAL FOOD, DRUG, AND COSMETIC ACT.

(a) Definition of Tobacco Products.--Section 201 of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321) is
amended by adding at the end the following:
``(nn)(1) The term `tobacco product' means any product made
or derived from tobacco that is intended for human
consumption, including any component, part, or accessory of a
tobacco product (except for raw materials other than tobacco
used in manufacturing a component, part, or accessory of a
tobacco product).
``(2) The term `tobacco product' does not mean--
``(A) a product in the form of conventional food (including
water and chewing gum), a product represented for use as or
for use in a conventional food, or a product that is intended
for ingestion in capsule, tablet, softgel, or liquid form; or
``(B) an article that is approved or is regulated as a drug
by the Food and Drug Administration.
``(3) The products described in paragraph (2)(A) shall be
subject to chapter IV or chapter V of this Act and the
articles described in paragraph (2)(B) shall be subject to
chapter V of this Act.
``(4) A tobacco product may not be marketed in combination
with any other article or product regulated under this Act
(including a drug, biologic, food, cosmetics, medical device,
or a dietary supplement).''.
(b) FDA Authority Over Tobacco Products.--The Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 301 et seq.) is amended--
(1) by redesignating chapter IX as chapter X;
(2) by redesignating sections 901 through 907 as sections
1001 through 1007; and
(3) by inserting after section 803 the following:

``CHAPTER IX--TOBACCO PRODUCTS

``SEC. 900. DEFINITIONS.

``In this chapter:
``(1) Additive.--The term `additive' means any substance
the intended use of which results or may reasonably be
expected to result, directly or indirectly, in its becoming a
component or otherwise affecting the characteristic of any
tobacco product (including any substances intended for use as
a flavoring, coloring or in producing, manufacturing,
packing, processing, preparing, treating, packaging,
transporting, or holding), except that such term does not
include tobacco or a pesticide chemical residue in or on raw
tobacco or a pesticide chemical.
``(2) Brand.--The term `brand' means a variety of tobacco
product distinguished by the tobacco used, tar content,
nicotine content, flavoring used, size, filtration, or
packaging, logo, registered trademark or brand name,
identifiable pattern of colors, or any combination of such
attributes.
``(3) Cigarette.--The term `cigarette' has the meaning
given that term by section 3(1) of the Federal Cigarette
Labeling and Advertising Act (15 U.S.C. 1332(1)), but also
includes tobacco, in any form, that is functional in the
product, which, because of its appearance, the type of
tobacco used in the filler, or its packaging and labeling, is
likely to be offered to, or purchased by, consumers as a
cigarette or as roll-your-own tobacco.
``(4) Cigarette tobacco.--The term `cigarette tobacco'
means any product that consists of loose tobacco that is
intended for use by consumers in a cigarette. Unless
otherwise stated, the requirements for cigarettes shall also
apply to cigarette tobacco.
``(5) Commerce.--The term `commerce' has the meaning given
that term by section 3(2) of the Federal Cigarette Labeling
and Advertising Act (15 U.S.C. 1332(2)).
``(6) Counterfeit tobacco product.--The term `counterfeit
tobacco product' means a tobacco product (or the container or
labeling of such a product) that, without authorization,
bears the trademark, trade name, or other identifying mark,
imprint or device, or any likeness thereof, of a tobacco
product listed in a registration under section 905(i)(1).
``(7) Distributor.--The term `distributor' as regards a
tobacco product means any person who furthers the
distribution of a tobacco product, whether domestic or
imported, at any point from the original place

[[Page S8246]]

of manufacture to the person who sells or distributes the
product to individuals for personal consumption. Common
carriers are not considered distributors for purposes of this
chapter.
``(8) Illicit trade.--The term `illicit trade' means any
practice or conduct prohibited by law which relates to
production, shipment, receipt, possession, distribution,
sale, or purchase of tobacco products including any practice
or conduct intended to facilitate such activity.
``(9) Indian tribe.--The term `Indian tribe' has the
meaning given such term in section 4(e) of the Indian Self
Determination and Education Assistance Act (25 U.S.C.
450b(e)).
``(10) Little cigar.--The term `little cigar' has the
meaning given that term by section 3(7) of the Federal
Cigarette Labeling and Advertising Act (15 U.S.C. 1332(7)).
``(11) Nicotine.--The term `nicotine' means the chemical
substance named 3-(1-Methyl-2-pyrrolidinyl) pyridine or
C[10]H[14]N[2], including any salt or complex of nicotine.
``(12) Package.--The term `package' means a pack, box,
carton, or container of any kind or, if no other container,
any wrapping (including cellophane), in which a tobacco
product is offered for sale, sold, or otherwise distributed
to consumers.
``(13) Retailer.--The term `retailer' means any person who
sells tobacco products to individuals for personal
consumption, or who operates a facility where self-service
displays of tobacco products are permitted.
``(14) Roll-your-own tobacco.--The term `roll-your-own
tobacco' means any tobacco which, because of its appearance,
type, packaging, or labeling, is suitable for use and likely
to be offered to, or purchased by, consumers as tobacco for
making cigarettes.
``(15) Smoke constituent.--The term `smoke constituent'
means any chemical or chemical compound in mainstream or
sidestream tobacco smoke that either transfers from any
component of the cigarette to the smoke or that is formed by
the combustion or heating of tobacco, additives, or other
component of the tobacco product.
``(16) Smokeless tobacco.--The term `smokeless tobacco'
means any tobacco product that consists of cut, ground,
powdered, or leaf tobacco and that is intended to be placed
in the oral or nasal cavity.
``(17) State.--The term `State' means any State of the
United States and, for purposes of this chapter, includes the
District of Columbia, the Commonwealth of Puerto Rico, Guam,
the Virgin Islands, American Samoa, Wake Island, Midway
Islands, Kingman Reef, Johnston Atoll, the Northern Mariana
Islands, and any other trust territory or possession of the
United States.
``(18) Tobacco product manufacturer.--Term `tobacco product
manufacturer' means any person, including any repacker or
relabeler, who--
``(A) manufactures, fabricates, assembles, processes, or
labels a tobacco product; or
``(B) imports a finished cigarette or smokeless tobacco
product for sale or distribution in the United States.
``(19) United states.--The term `United States' means the
50 States of the United States of America and the District of
Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin
Islands, American Samoa, Wake Island, Midway Islands, Kingman
Reef, Johnston Atoll, the Northern Mariana Islands, and any
other trust territory or possession of the United States.

``SEC. 901. FDA AUTHORITY OVER TOBACCO PRODUCTS.

``(a) In General.--Tobacco products shall be regulated by
the Secretary under this chapter and shall not be subject to
the provisions of chapter V, unless--
``(1) such products are intended for use in the diagnosis,
cure, mitigation, treatment, or prevention of disease (within
the meaning of section 201(g)(1)(B) or section 201(h)(2)); or
``(2) a claim is made for such products under section
201(g)(1)(C) or 201(h)(3);
other than modified risk tobacco products approved in
accordance with section 911.
``(b) Applicability.--This chapter shall apply to all
tobacco products subject to the regulations referred to in
section __12 of the Family Smoking Prevention and Tobacco
Control Act, and to any other tobacco products that the
Secretary by regulation deems to be subject to this
chapter.
``(c) Scope.--
``(1) In general.--Nothing in this chapter, or any policy
issued or regulation promulgated thereunder, or the Family
Smoking Prevention and Tobacco Control Act, shall be
construed to affect the Secretary's authority over, or the
regulation of, products under this Act that are not tobacco
products under chapter V or any other chapter.
``(2) Limitation of authority.--
``(A) In general.--The provisions of this chapter shall not
apply to tobacco leaf that is not in the possession of a
manufacturer of tobacco products, or to the producers of
tobacco leaf, including tobacco growers, tobacco warehouses,
and tobacco grower cooperatives, nor shall any employee of
the Food and Drug Administration have any authority to enter
onto a farm owned by a producer of tobacco leaf without the
written consent of such producer.
``(B) Exception.--Notwithstanding any other provision of
this subparagraph, if a producer of tobacco leaf is also a
tobacco product manufacturer or controlled by a tobacco
product manufacturer, the producer shall be subject to this
chapter in the producer's capacity as a manufacturer.
``(C) Rule of construction.--Nothing in this chapter shall
be construed to grant the Secretary authority to promulgate
regulations on any matter that involves the production of
tobacco leaf or a producer thereof, other than activities by
a manufacturer affecting production.

``SEC. 902. ADULTERATED TOBACCO PRODUCTS.

``A tobacco product shall be deemed to be adulterated if--
``(1) it consists in whole or in part of any filthy,
putrid, or decomposed substance, or is otherwise contaminated
by any added poisonous or added deleterious substance that
may render the product injurious to health;
``(2) it has been prepared, packed, or held under
insanitary conditions whereby it may have been contaminated
with filth, or whereby it may have been rendered injurious to
health;
``(3) its package is composed, in whole or in part, of any
poisonous or deleterious substance which may render the
contents injurious to health;
``(4) it is, or purports to be or is represented as, a
tobacco product which is subject to a tobacco product
standard established under section 907 unless such tobacco
product is in all respects in conformity with such standard;
``(5)(A) it is required by section 910(a) to have premarket
approval and does not have an approved application in effect;
``(B) it is in violation of the order approving such an
application; or
``(6) the methods used in, or the facilities or controls
used for, its manufacture, packing or storage are not in
conformity with applicable requirements under section
906(e)(1) or an applicable condition prescribed by an order
under section 906(e)(2); or
``(7) it is in violation of section 911.

``SEC. 903. MISBRANDED TOBACCO PRODUCTS.

``(a) In General.--A tobacco product shall be deemed to be
misbranded--
``(1) if its labeling is false or misleading in any
particular;
``(2) if in package form unless it bears a label
containing--
``(A) the name and place of business of the tobacco product
manufacturer, packer, or distributor;
``(B) an accurate statement of the quantity of the contents
in terms of weight, measure, or numerical count;
``(C) an accurate statement of the percentage of the
tobacco used in the product that is domestically grown
tobacco and the percentage that is foreign grown tobacco; and
``(D) the statement required under section 921(a),

except that under subparagraph (B) reasonable variations
shall be permitted, and exemptions as to small packages shall
be established, by regulations prescribed by the Secretary;
``(3) if any word, statement, or other information required
by or under authority of this chapter to appear on the label
or labeling is not prominently placed thereon with such
conspicuousness (as compared with other words, statements or
designs in the labeling) and in such terms as to render it
likely to be read and understood by the ordinary individual
under customary conditions of purchase and use;
``(4) if it has an established name, unless its label
bears, to the exclusion of any other nonproprietary name, its
established name prominently printed in type as required by
the Secretary by regulation;
``(5) if the Secretary has issued regulations requiring
that its labeling bear adequate directions for use, or
adequate warnings against use by children, that are necessary
for the protection of users unless its labeling conforms in
all respects to such regulations;
``(6) if it was manufactured, prepared, propagated,
compounded, or processed in any State in an establishment not
duly registered under section 905(b), 905(c), 905(d), or
905(h), if it was not included in a list required by section
905(i), if a notice or other information respecting it was
not provided as required by such section or section 905(j),
or if it does not bear such symbols from the uniform system
for identification of tobacco products prescribed under
section 905(e) as the Secretary by regulation requires;
``(7) if, in the case of any tobacco product distributed or
offered for sale in any State--
``(A) its advertising is false or misleading in any
particular; or
``(B) it is sold or distributed in violation of regulations
prescribed under section 906(d);
``(8) unless, in the case of any tobacco product
distributed or offered for sale in any State, the
manufacturer, packer, or distributor thereof includes in all
advertisements and other descriptive printed matter issued or
caused to be issued by the manufacturer, packer, or
distributor with respect to that tobacco product--
``(A) a true statement of the tobacco product's established
name as described in paragraph (4), printed prominently; and
``(B) a brief statement of--
``(i) the uses of the tobacco product and relevant
warnings, precautions, side effects, and contraindications;
and
``(ii) in the case of specific tobacco products made
subject to a finding by the Secretary after notice and
opportunity for comment that such action is appropriate to
protect the public health, a full description of the
components of such tobacco product or the formula showing
quantitatively each ingredient of such tobacco product to the
extent required in regulations which shall be issued by the
Secretary after an opportunity for a hearing;
``(9) if it is a tobacco product subject to a tobacco
product standard established under

[[Page S8247]]

section 907, unless it bears such labeling as may be
prescribed in such tobacco product standard; or
``(10) if there was a failure or refusal--
``(A) to comply with any requirement prescribed under
section 904 or 908; or
``(B) to furnish any material or information required under
section 909.
``(b) Prior Approval of Label Statements.--The Secretary
may, by regulation, require prior approval of statements made
on the label of a tobacco product. No regulation issued under
this subsection may require prior approval by the Secretary
of the content of any advertisement, except for modified risk
tobacco products as provided in section 911. No advertisement
of a tobacco product published after the date of enactment of
the Family Smoking Prevention and Tobacco Control Act shall,
with respect to the language of label statements as
prescribed under section 4 of the Cigarette Labeling and
Advertising Act and section 3 of the Comprehensive Smokeless
Tobacco Health Education Act of 1986 or the regulations
issued under such sections, be subject to the provisions of
sections 12 through 15 of the Federal Trade Commission Act
(15 U.S.C. 52 through 55).

``SEC. 904. SUBMISSION OF HEALTH INFORMATION TO THE
SECRETARY.

``(a) Requirement.--Not later than 6 months after the date
of enactment of the Family Smoking Prevention and Tobacco
Control Act, each tobacco product manufacturer or importer,
or agents thereof, shall submit to the Secretary the
following information:
``(1) A listing of all ingredients, including tobacco,
substances, compounds, and additives that are, as of such
date, added by the manufacturer to the tobacco, paper,
filter, or other part of each tobacco product by brand and by
quantity in each brand and subbrand.
``(2) A description of the content, delivery, and form of
nicotine in each tobacco product measured in milligrams of
nicotine in accordance with regulations promulgated by the
Secretary in accordance with section 4(a)(4) of the Federal
Cigarette Labeling and Advertising Act.
``(3) A listing of all constituents, including smoke
constituents as applicable, identified by the Secretary as
harmful or potentially harmful to health in each tobacco
product, and as applicable in the smoke of each tobacco
product, by brand and by quantity in each brand and subbrand.
Effective beginning 2 years after the date of enactment of
this chapter, the manufacturer, importer, or agent shall
comply with regulations promulgated under section 915 in
reporting information under this paragraph, where applicable.
``(4) All documents developed after the date of enactment
of the Family Smoking Prevention and Tobacco Control Act that
relate to health, toxicological, behavioral, or physiologic
effects of current or future tobacco products, their
constituents (including smoke constituents), ingredients,
components, and additives.
``(b) Data Submission.--At the request of the Secretary,
each tobacco product manufacturer or importer of tobacco
products, or agents thereof, shall submit the following:
``(1) Any or all documents (including underlying scientific
information) relating to research activities, and research
findings, conducted, supported, or possessed by the
manufacturer (or agents thereof) on the health,
toxicological, behavioral, or physiologic effects of tobacco
products and their constituents (including smoke
constituents), ingredients, components, and additives.
``(2) Any or all documents (including underlying scientific
information) relating to research activities, and research
findings, conducted, supported, or possessed by the
manufacturer (or agents thereof) that relate to the issue of
whether a reduction in risk to health from tobacco products
can occur upon the employment of technology available or
known to the manufacturer.
``(3) Any or all documents (including underlying scientific
or financial information) relating to marketing research
involving the use of tobacco products or marketing practices
and the effectiveness of such practices used by tobacco
manufacturers and distributors.

An importer of a tobacco product not manufactured in the
United States shall supply the information required of a
tobacco product manufacturer under this subsection.
``(c) Time for Submission.--
``(1) In general.--At least 90 days prior to the delivery
for introduction into interstate commerce of a tobacco
product not on the market on the date of enactment of the
Family Smoking Prevention and Tobacco Control Act, the
manufacturer of such product shall provide the information
required under subsection (a).
``(2) Disclosure of additive.--If at any time a tobacco
product manufacturer adds to its tobacco products a new
tobacco additive or increases the quantity of an existing
tobacco additive, the manufacturer shall, except as provided
in paragraph (3), at least 90 days prior to such action so
advise the Secretary in writing.
``(3) Disclosure of other actions.--If at any time a
tobacco product manufacturer eliminates or decreases an
existing additive, or adds or increases an additive that has
by regulation been designated by the Secretary as an additive
that is not a human or animal carcinogen, or otherwise
harmful to health under intended conditions of use, the
manufacturer shall within 60 days of such action so advise
the Secretary in writing.
``(d) Data List.--
``(1) In general.--Not later than 3 years after the date of
enactment of the Family Smoking Prevention and Tobacco
Control Act, and annually thereafter, the Secretary shall
publish in a format that is understandable and not misleading
to a lay person, and place on public display (in a manner
determined by the Secretary) the list established under
subsection (e).
``(2) Consumer research.--The Secretary shall conduct
periodic consumer research to ensure that the list published
under paragraph (1) is not misleading to lay persons. Not
later than 5 years after the date of enactment of the Family
Smoking Prevention and Tobacco Control Act, the Secretary
shall submit to the appropriate committees of Congress a
report on the results of such research, together with
recommendations on whether such publication should be
continued or modified.
``(e) Data Collection.--Not later than 12 months after the
date of enactment of the Family Smoking Prevention and
Tobacco Control Act, the Secretary shall establish a list of
harmful and potentially harmful constituents, including smoke
constituents, to health in each tobacco product by brand and
by quantity in each brand and subbrand. The Secretary shall
publish a public notice requesting the submission by
interested persons of scientific and other information
concerning the harmful and potentially harmful constituents
in tobacco products and tobacco smoke.

``SEC. 905. ANNUAL REGISTRATION.

``(a) Definitions.--In this section:
``(1) Manufacture, preparation, compounding, or
processing.--The term `manufacture, preparation, compounding,
or processing' shall include repackaging or otherwise
changing the container, wrapper, or labeling of any tobacco
product package in furtherance of the distribution of the
tobacco product from the original place of manufacture to the
person who makes final delivery or sale to the ultimate
consumer or user.
``(2) Name.--The term `name' shall include in the case of a
partnership the name of each partner and, in the case of a
corporation, the name of each corporate officer and director,
and the State of incorporation.
``(b) Registration by Owners and Operators.--On or before
December 31 of each year every person who owns or operates
any establishment in any State engaged in the manufacture,
preparation, compounding, or processing of a tobacco product
or tobacco products shall register with the Secretary the
name, places of business, and all such establishments of that
person.
``(c) Registration of New Owners and Operators.--Every
person upon first engaging in the manufacture, preparation,
compounding, or processing of a tobacco product or tobacco
products in any establishment owned or operated in any State
by that person shall immediately register with the Secretary
that person's name, place of business, and such
establishment.
``(d) Registration of Added Establishments.--Every person
required to register under subsection (b) or (c) shall
immediately register with the Secretary any additional
establishment which that person owns or operates in any State
and in which that person begins the manufacture, preparation,
compounding, or processing of a tobacco product or tobacco
products.
``(e) Uniform Product Identification System.--The Secretary
may by regulation prescribe a uniform system for the
identification of tobacco products and may require that
persons who are required to list such tobacco products under
subsection (i) shall list such tobacco products in accordance
with such system.
``(f) Public Access to Registration Information.--The
Secretary shall make available for inspection, to any person
so requesting, any registration filed under this section.
``(g) Biennial Inspection of Registered Establishments.--
Every establishment in any State registered with the
Secretary under this section shall be subject to inspection
under section 704, and every such establishment engaged in
the manufacture, compounding, or processing of a tobacco
product or tobacco products shall be so inspected by 1 or
more officers or employees duly designated by the Secretary
at least once in the 2-year period beginning with the date of
registration of such establishment under this section and at
least once in every successive 2-year period thereafter.
``(h) Foreign Establishments Shall Register.--Any
establishment within any foreign country engaged in the
manufacture, preparation, compounding, or processing of a
tobacco product or tobacco products, shall register under
this section under regulations promulgated by the Secretary.
Such regulations shall require such establishment to provide
the information required by subsection (i) of this section
and shall include provisions for registration of any such
establishment upon condition that adequate and effective
means are available, by arrangement with the government of
such foreign country or otherwise, to enable the Secretary to
determine from time to time whether tobacco products
manufactured, prepared, compounded, or processed in such
establishment, if imported or offered for import into the
United States, shall be refused admission on any of the
grounds set forth in section 801(a).
``(i) Registration Information.--
``(1) Product list.--Every person who registers with the
Secretary under subsection

[[Page S8248]]

(b), (c), (d), or (h) shall, at the time of registration
under any such subsection, file with the Secretary a list of
all tobacco products which are being manufactured, prepared,
compounded, or processed by that person for commercial
distribution and which has not been included in any list of
tobacco products filed by that person with the Secretary
under this paragraph or paragraph (2) before such time of
registration. Such list shall be prepared in such form and
manner as the Secretary may prescribe and shall be
accompanied by--
``(A) in the case of a tobacco product contained in the
applicable list with respect to which a tobacco product
standard has been established under section 907 or which is
subject to section 910, a reference to the authority for the
marketing of such tobacco product and a copy of all labeling
for such tobacco product;
``(B) in the case of any other tobacco product contained in
an applicable list, a copy of all consumer information and
other labeling for such tobacco product, a representative
sampling of advertisements for such tobacco product, and,
upon request made by the Secretary for good cause, a copy
of all advertisements for a particular tobacco product;
and
``(C) if the registrant filing a list has determined that a
tobacco product contained in such list is not subject to a
tobacco product standard established under section 907, a
brief statement of the basis upon which the registrant made
such determination if the Secretary requests such a statement
with respect to that particular tobacco product.
``(2) Biannual report of any change in product list.--Each
person who registers with the Secretary under this section
shall report to the Secretary once during the month of June
of each year and once during the month of December of each
year the following:
``(A) A list of each tobacco product introduced by the
registrant for commercial distribution which has not been
included in any list previously filed by that person with the
Secretary under this subparagraph or paragraph (1). A list
under this subparagraph shall list a tobacco product by its
established name and shall be accompanied by the other
information required by paragraph (1).
``(B) If since the date the registrant last made a report
under this paragraph that person has discontinued the
manufacture, preparation, compounding, or processing for
commercial distribution of a tobacco product included in a
list filed under subparagraph (A) or paragraph (1), notice of
such discontinuance, the date of such discontinuance, and the
identity of its established name.
``(C) If since the date the registrant reported under
subparagraph (B) a notice of discontinuance that person has
resumed the manufacture, preparation, compounding, or
processing for commercial distribution of the tobacco product
with respect to which such notice of discontinuance was
reported, notice of such resumption, the date of such
resumption, the identity of such tobacco product by
established name, and other information required by paragraph
(1), unless the registrant has previously reported such
resumption to the Secretary under this subparagraph.
``(D) Any material change in any information previously
submitted under this paragraph or paragraph (1).
``(j) Report Preceding Introduction of Certain
Substantially-Equivalent Products Into Interstate Commerce.--
``(1) In general.--Each person who is required to register
under this section and who proposes to begin the introduction
or delivery for introduction into interstate commerce for
commercial distribution of a tobacco product intended for
human use that was not commercially marketed (other than for
test marketing) in the United States as of June 1, 2003,
shall, at least 90 days prior to making such introduction or
delivery, report to the Secretary (in such form and manner as
the Secretary shall prescribe)--
``(A) the basis for such person's determination that the
tobacco product is substantially equivalent, within the
meaning of section 910, to a tobacco product commercially
marketed (other than for test marketing) in the United States
as of June 1, 2003, that is in compliance with the
requirements of this Act; and
``(B) action taken by such person to comply with the
requirements under section 907 that are applicable to the
tobacco product.
``(2) Application to certain post june 1, 2003 products.--A
report under this subsection for a tobacco product that was
first introduced or delivered for introduction into
interstate commerce for commercial distribution in the United
States after June 1, 2003, and prior to the date that is 15
months after the date of enactment of the Family Smoking
Prevention and Tobacco Control Act shall be submitted to the
Secretary not later than 15 months after such date of
enactment.
``(3) Exemptions.--
``(A) In general.--The Secretary may by regulation, exempt
from the requirements of this subsection tobacco products
that are modified by adding or deleting a tobacco additive,
or increasing or decreasing the quantity of an existing
tobacco additive, if the Secretary determines that--
``(i) such modification would be a minor modification of a
tobacco product authorized for sale under this Act;
``(ii) a report under this subsection is not necessary to
ensure that permitting the tobacco product to be marketed
would be appropriate for protection of the public health; and
``(iii) an exemption is otherwise appropriate.
``(B) Regulations.--Not later than 9 months after the date
of enactment of the Family Smoking Prevention and Tobacco
Control Act, the Secretary shall issue regulations to
implement this paragraph.

``SEC. 906. GENERAL PROVISIONS RESPECTING CONTROL OF TOBACCO
PRODUCTS.

``(a) In General.--Any requirement established by or under
section 902, 903, 905, or 909 applicable to a tobacco product
shall apply to such tobacco product until the applicability
of the requirement to the tobacco product has been changed by
action taken under section 907, section 910, section 911, or
subsection (d) of this section, and any requirement
established by or under section 902, 903, 905, or 909 which
is inconsistent with a requirement imposed on such tobacco
product under section 907, section 910, section 911, or
subsection (d) of this section shall not apply to such
tobacco product.
``(b) Information on Public Access and Comment.--Each
notice of proposed rulemaking under section 907, 908, 909,
910, or 911 or under this section, any other notice which is
published in the Federal Register with respect to any other
action taken under any such section and which states the
reasons for such action, and each publication of findings
required to be made in connection with rulemaking under any
such section shall set forth--
``(1) the manner in which interested persons may examine
data and other information on which the notice or findings is
based; and
``(2) the period within which interested persons may
present their comments on the notice or findings (including
the need therefore) orally or in writing, which period shall
be at least 60 days but may not exceed 90 days unless the
time is extended by the Secretary by a notice published in
the Federal Register stating good cause therefore.
``(c) Limited Confidentiality of Information.--Any
information reported to or otherwise obtained by the
Secretary or the Secretary's representative under section
903, 904, 907, 908, 909, 910, 911, or 704, or under
subsection (e) or (f) of this section, which is exempt from
disclosure under subsection (a) of section 552 of title 5,
United States Code, by reason of subsection (b)(4) of that
section shall be considered confidential and shall not be
disclosed, except that the information may be disclosed to
other officers or employees concerned with carrying out this
chapter, or when relevant in any proceeding under this
chapter.
``(d) Restrictions.--
``(1) In general.--The Secretary may by regulation require
restrictions on the sale and distribution of a tobacco
product, including restrictions on the access to, and the
advertising and promotion of, the tobacco product, if the
Secretary determines that such regulation would be
appropriate for the protection of the public health. The
Secretary may by regulation impose restrictions on the
advertising and promotion of a tobacco product consistent
with and to full extent permitted by the first amendment to
the Constitution. The finding as to whether such regulation
would be appropriate for the protection of the public health
shall be determined with respect to the risks and benefits to
the population as a whole, including users and non-users of
the tobacco product, and taking into account--
``(A) the increased or decreased likelihood that existing
users of tobacco products will stop using such products; and
``(B) the increased or decreased likelihood that those who
do not use tobacco products will start using such products.

No such regulation may require that the sale or distribution
of a tobacco product be limited to the written or oral
authorization of a practitioner licensed by law to prescribe
medical products.
``(2) Label statements.--The label of a tobacco product
shall bear such appropriate statements of the restrictions
required by a regulation under subsection (a) as the
Secretary may in such regulation prescribe.
``(3) Limitations.--
``(A) In general.--No restrictions under paragraph (1)
may--
``(i) prohibit the sale of any tobacco product in face-to-
face transactions by a specific category of retail outlets;
or
``(ii) establish a minimum age of sale of tobacco products
to any person older than 18 years of age.
``(B) Matchbooks.--For purposes of any regulations issued
by the Secretary, matchbooks of conventional size containing
not more than 20 paper matches, and which are customarily
given away for free with the purchase of tobacco products
shall be considered as adult written publications which shall
be permitted to contain advertising. Notwithstanding the
preceding sentence, if the Secretary finds that such
treatment of matchbooks is not appropriate for the protection
of the public health, the Secretary may determine by
regulation that matchbooks shall not be considered adult
written publications.
``(e) Good Manufacturing Practice Requirements.--
``(1) Methods, facilities, and controls to conform.--
``(A) In general.--The Secretary may, in accordance with
subparagraph (B), prescribe regulations (which may differ
based on the type of tobacco product involved) requiring that
the methods used in, and the facilities

[[Page S8249]]

and controls used for, the manufacture, pre-production design
validation (including a process to assess the performance of
a tobacco product), packing and storage of a tobacco product,
conform to current good manufacturing practice, as prescribed
in such regulations, to assure that the public health is
protected and that the tobacco product is in compliance with
this chapter. Good manufacturing practices may include the
testing of raw tobacco for pesticide chemical residues
regardless of whether a tolerance for such chemical residues
has been established.
``(B) Requirements.--The Secretary shall--
``(i) before promulgating any regulation under subparagraph
(A), afford the Tobacco Products Scientific Advisory
Committee an opportunity to submit recommendations with
respect to the regulation proposed to be promulgated;
``(ii) before promulgating any regulation under
subparagraph (A), afford opportunity for an oral hearing;
``(iii) provide the advisory committee a reasonable time to
make its recommendation with respect to proposed regulations
under subparagraph (A); and
``(iv) in establishing the effective date of a regulation
promulgated under this subsection, take into account the
differences in the manner in which the different types of
tobacco products have historically been produced, the
financial resources of the different tobacco product
manufacturers, and the state of their existing manufacturing
facilities, and shall provide for a reasonable period of time
for such manufacturers to conform to good manufacturing
practices.
``(2) Exemptions; variances.--
``(A) Petition.--Any person subject to any requirement
prescribed under paragraph (1) may petition the Secretary for
a permanent or temporary exemption or variance from such
requirement. Such a petition shall be submitted to the
Secretary in such form and manner as the Secretary shall
prescribe and shall--
``(i) in the case of a petition for an exemption from a
requirement, set forth the basis for the petitioner's
determination that compliance with the requirement is not
required to assure that the tobacco product will be in
compliance with this chapter;
``(ii) in the case of a petition for a variance from a
requirement, set forth the methods proposed to be used in,
and the facilities and controls proposed to be used for, the
manufacture, packing, and storage of the tobacco product in
lieu of the methods, facilities, and controls prescribed by
the requirement; and
``(iii) contain such other information as the Secretary
shall prescribe.
``(B) Referral to the tobacco products scientific advisory
committee.--The Secretary may refer to the Tobacco Products
Scientific Advisory Committee any petition submitted under
subparagraph (A). The Tobacco Products Scientific Advisory
Committee shall report its recommendations to the Secretary
with respect to a petition referred to it within 60 days
after the date of the petition's referral. Within 60 days
after--
``(i) the date the petition was submitted to the Secretary
under subparagraph (A); or
``(ii) the day after the petition was referred to the
Tobacco Products Scientific Advisory Committee,

whichever occurs later, the Secretary shall by order either
deny the petition or approve it.
``(C) Approval.--The Secretary may approve--
``(i) a petition for an exemption for a tobacco product
from a requirement if the Secretary determines that
compliance with such requirement is not required to assure
that the tobacco product will be in compliance with this
chapter; and
``(ii) a petition for a variance for a tobacco product from
a requirement if the Secretary determines that the methods to
be used in, and the facilities and controls to be used for,
the manufacture, packing, and storage of the tobacco product
in lieu of the methods, controls, and facilities prescribed
by the requirement are sufficient to assure that the tobacco
product will be in compliance with this chapter.
``(D) Conditions.--An order of the Secretary approving a
petition for a variance shall prescribe such conditions
respecting the methods used in, and the facilities and
controls used for, the manufacture, packing, and storage of
the tobacco product to be granted the variance under the
petition as may be necessary to assure that the tobacco
product will be in compliance with this chapter.
``(E) Hearing.--After the issuance of an order under
subparagraph (B) respecting a petition, the petitioner shall
have an opportunity for an informal hearing on such order.
``(3) Compliance.--Compliance with requirements under this
subsection shall not be required before the period ending 3
years after the date of enactment of the Family Smoking
Prevention and Tobacco Control Act.
``(f) Research and Development.--The Secretary may enter
into contracts for research, testing, and demonstrations
respecting tobacco products and may obtain tobacco products
for research, testing, and demonstration purposes without
regard to section 3324(a) and (b) of title 31, United States
Code, and section 5 of title 41, United States Code.

``SEC. 907. TOBACCO PRODUCT STANDARDS.

``(a) In General.--
``(1) Special rule for cigarettes.--A cigarette or any of
its component parts (including the tobacco, filter, or paper)
shall not contain, as a constituent (including a smoke
constituent) or additive, an artificial or natural flavor
(other than tobacco or menthol) or an herb or spice,
including strawberry, grape, orange, clove, cinnamon,
pineapple, vanilla, coconut, licorice, cocoa, chocolate,
cherry, or coffee, that is a characterizing flavor of the
tobacco product or tobacco smoke. Nothing in this
subparagraph shall be construed to limit the Secretary's
authority to take action under this section or other sections
of this Act applicable to menthol or any artificial or
natural flavor, herb, or spice not specified in this
paragraph.
``(2) Revision of tobacco product standards.--The Secretary
may revise the tobacco product standards in paragraph (1) in
accordance with subsection (b).
``(3) Tobacco product standards.--The Secretary may adopt
tobacco product standards in addition to those in paragraph
(1) if the Secretary finds that a tobacco product standard is
appropriate for the protection of the public health. This
finding shall be determined with respect to the risks and
benefits to the population as a whole, including users and
non-users of the tobacco product, and taking into account--
``(A) the increased or decreased likelihood that existing
users of tobacco products will stop using such products; and
``(B) the increased or decreased likelihood that those who
do not use tobacco products will start using such products.
``(4) Content of tobacco product standards.--A tobacco
product standard established under this section for a tobacco
product--
``(A) shall include provisions that are appropriate for the
protection of the public health, including provisions, where
appropriate--
``(i) for the reduction of nicotine yields of the product;
``(ii) for the reduction or elimination of other
constituents, including smoke constituents, or harmful
components of the product; or
``(iii) relating to any other requirement under (B);
``(B) shall, where appropriate for the protection of the
public health, include--
``(i) provisions respecting the construction, components,
ingredients, additives, constituents, including smoke
constituents, and properties of the tobacco product;
``(ii) provisions for the testing (on a sample basis or, if
necessary, on an individual basis) of the tobacco product;
``(iii) provisions for the measurement of the tobacco
product characteristics of the tobacco product;
``(iv) provisions requiring that the results of each or of
certain of the tests of the tobacco product required to be
made under clause (ii) show that the tobacco product is in
conformity with the portions of the standard for which the
test or tests were required; and
``(v) a provision requiring that the sale and distribution
of the tobacco product be restricted but only to the extent
that the sale and distribution of a tobacco product may be
restricted under a regulation under section 906(d); and
``(C) shall, where appropriate, require the use and
prescribe the form and content of labeling for the proper use
of the tobacco product.
``(5) Periodic re-evaluation of tobacco product
standards.--The Secretary shall provide for periodic
evaluation of tobacco product standards established under
this section to determine whether such standards should be
changed to reflect new medical, scientific, or other
technological data. The Secretary may provide for testing
under paragraph (4)(B) by any person.
``(6) Involvement of other agencies; informed persons.--In
carrying out duties under this section, the Secretary shall
endeavor to--
``(A) use personnel, facilities, and other technical
support available in other Federal agencies;
``(B) consult with other Federal agencies concerned with
standard-setting and other nationally or internationally
recognized standard-setting entities; and
``(C) invite appropriate participation, through joint or
other conferences, workshops, or other means, by informed
persons representative of scientific, professional, industry,
agricultural, or consumer organizations who in the
Secretary's judgment can make a significant contribution.
``(b) Establishment of Standards.--
``(1) Notice.--
``(A) In general.--The Secretary shall publish in the
Federal Register a notice of proposed rulemaking for the
establishment, amendment, or revocation of any tobacco
product standard.
``(B) Requirements of notice.--A notice of proposed
rulemaking for the establishment or amendment of a tobacco
product standard for a tobacco product shall--
``(i) set forth a finding with supporting justification
that the tobacco product standard is appropriate for the
protection of the public health;
``(ii) set forth proposed findings with respect to the risk
of illness or injury that the tobacco product standard is
intended to reduce or eliminate; and
``(iii) invite interested persons to submit an existing
tobacco product standard for the tobacco product, including a
draft or proposed tobacco product standard, for consideration
by the Secretary.

[[Page S8250]]

``(C) Standard.--Upon a determination by the Secretary that
an additive, constituent (including smoke constituent), or
other component of the product that is the subject of the
proposed tobacco product standard is harmful, it shall be the
burden of any party challenging the proposed standard to
prove that the proposed standard will not reduce or eliminate
the risk of illness or injury.
``(D) Finding.--A notice of proposed rulemaking for the
revocation of a tobacco product standard shall set forth a
finding with supporting justification that the tobacco
product standard is no longer appropriate for the protection
of the public health.
``(E) Consideration by secretary.--The Secretary shall
consider all information submitted in connection with a
proposed standard, including information concerning the
countervailing effects of the tobacco product standard on the
health of adolescent tobacco users, adult tobacco users, or
non-tobacco users, such as the creation of a significant
demand for contraband or other tobacco products that do not
meet the requirements of this chapter and the significance of
such demand, and shall issue the standard if the Secretary
determines that the standard would be appropriate for the
protection of the public health.
``(F) Comment.--The Secretary shall provide for a comment
period of not less than 60 days.
``(2) Promulgation.--
``(A) In general.--After the expiration of the period for
comment on a notice of proposed rulemaking published under
paragraph (1) respecting a tobacco product standard and after
consideration of such comments and any report from the
Tobacco Products Scientific Advisory Committee, the Secretary
shall--
``(i) promulgate a regulation establishing a tobacco
product standard and publish in the Federal Register findings
on the matters referred to in paragraph (1); or
``(ii) publish a notice terminating the proceeding for the
development of the standard together with the reasons for
such termination.
``(B) Effective date.--A regulation establishing a tobacco
product standard shall set forth the date or dates upon which
the standard shall take effect, but no such regulation may
take effect before 1 year after the date of its publication
unless the Secretary determines that an earlier effective
date is necessary for the protection of the public health.
Such date or dates shall be established so as to minimize,
consistent with the public health, economic loss to, and
disruption or dislocation of, domestic and international
trade.
``(3) Power reserved to congress.--Because of the
importance of a decision of the Secretary to issue a
regulation establishing a tobacco product standard--
``(A) banning all cigarettes, all smokeless tobacco
products, all little cigars, all cigars other than little
cigars, all pipe tobacco, or all roll your own tobacco
products; or
``(B) requiring the reduction of nicotine yields of a
tobacco product to zero,
Congress expressly reserves to itself such power.
``(4) Amendment; revocation.--
``(A) Authority.--The Secretary, upon the Secretary's own
initiative or upon petition of an interested person may by a
regulation, promulgated in accordance with the requirements
of paragraphs (1) and (2)(B), amend or revoke a tobacco
product standard.
``(B) Effective date.--The Secretary may declare a proposed
amendment of a tobacco product standard to be effective on
and after its publication in the Federal Register and until
the effective date of any final action taken on such
amendment if the Secretary determines that making it so
effective is in the public interest.
``(5) Reference to advisory committee.--The Secretary may--
``(A) on the Secretary's own initiative, refer a proposed
regulation for the establishment, amendment, or revocation of
a tobacco product standard; or
``(B) upon the request of an interested person which
demonstrates good cause for referral and which is made before
the expiration of the period for submission of comments on
such proposed regulation,

refer such proposed regulation to the Tobacco Products
Scientific Advisory Committee, for a report and
recommendation with respect to any matter involved in the
proposed regulation which requires the exercise of scientific
judgment. If a proposed regulation is referred under this
paragraph to the Tobacco Products Scientific Advisory
Committee, the Secretary shall provide the advisory committee
with the data and information on which such proposed
regulation is based. The Tobacco Products Scientific Advisory
Committee shall, within 60 days after the referral of a
proposed regulation and after independent study of the data
and information furnished to it by the Secretary and other
data and information before it, submit to the Secretary a
report and recommendation respecting such regulation,
together with all underlying data and information and a
statement of the reason or basis for the recommendation. A
copy of such report and recommendation shall be made public
by the Secretary.

``SEC. 908. NOTIFICATION AND OTHER REMEDIES.

``(a) Notification.--If the Secretary determines that--
``(1) a tobacco product which is introduced or delivered
for introduction into interstate commerce for commercial
distribution presents an unreasonable risk of substantial
harm to the public health; and
``(2) notification under this subsection is necessary to
eliminate the unreasonable risk of such harm and no more
practicable means is available under the provisions of this
chapter (other than this section) to eliminate such risk,

the Secretary may issue such order as may be necessary to
assure that adequate notification is provided in an
appropriate form, by the persons and means best suited under
the circumstances involved, to all persons who should
properly receive such notification in order to eliminate such
risk. The Secretary may order notification by any appropriate
means, including public service announcements. Before issuing
an order under this subsection, the Secretary shall consult
with the persons who are to give notice under the order.
``(b) No Exemption From Other Liability.--Compliance with
an order issued under this section shall not relieve any
person from liability under Federal or State law. In awarding
damages for economic loss in an action brought for the
enforcement of any such liability, the value to the plaintiff
in such action of any remedy provided under such order shall
be taken into account.
``(c) Recall Authority.--
``(1) In general.--If the Secretary finds that there is a
reasonable probability that a tobacco product contains a
manufacturing or other defect not ordinarily contained in
tobacco products on the market that would cause serious,
adverse health consequences or death, the Secretary shall
issue an order requiring the appropriate person (including
the manufacturers, importers, distributors, or retailers of
the tobacco product) to immediately cease distribution of
such tobacco product. The order shall provide the person
subject to the order with an opportunity for an informal
hearing, to be held not later than 10 days after the date of
the issuance of the order, on the actions required by the
order and on whether the order should be amended to require a
recall of such tobacco product. If, after providing an
opportunity for such a hearing, the Secretary determines that
inadequate grounds exist to support the actions required by
the order, the Secretary shall vacate the order.
``(2) Amendment of order to require recall.--
``(A) In general.--If, after providing an opportunity for
an informal hearing under paragraph (1), the Secretary
determines that the order should be amended to include a
recall of the tobacco product with respect to which the order
was issued, the Secretary shall, except as provided in
subparagraph (B), amend the order to require a recall. The
Secretary shall specify a timetable in which the tobacco
product recall will occur and shall require periodic reports
to the Secretary describing the progress of the recall.
``(B) Notice.--An amended order under subparagraph (A)--
``(i) shall not include recall of a tobacco product from
individuals; and
``(ii) shall provide for notice to persons subject to the
risks associated with the use of such tobacco product.

In providing the notice required by clause (ii), the
Secretary may use the assistance of retailers and other
persons who distributed such tobacco product. If a
significant number of such persons cannot be identified, the
Secretary shall notify such persons under section 705(b).
``(3) Remedy not exclusive.--The remedy provided by this
subsection shall be in addition to remedies provided by
subsection (a) of this section.

``SEC. 909. RECORDS AND REPORTS ON TOBACCO PRODUCTS.

``(a) In General.--Every person who is a tobacco product
manufacturer or importer of a tobacco product shall establish
and maintain such records, make such reports, and provide
such information, as the Secretary may by regulation
reasonably require to assure that such tobacco product is not
adulterated or misbranded and to otherwise protect public
health. Regulations prescribed under the preceding sentence--
``(1) may require a tobacco product manufacturer or
importer to report to the Secretary whenever the manufacturer
or importer receives or otherwise becomes aware of
information that reasonably suggests that one of its marketed
tobacco products may have caused or contributed to a serious
unexpected adverse experience associated with the use of the
product or any significant increase in the frequency of a
serious, expected adverse product experience;
``(2) shall require reporting of other significant adverse
tobacco product experiences as determined by the Secretary to
be necessary to be reported;
``(3) shall not impose requirements unduly burdensome to a
tobacco product manufacturer or importer, taking into account
the cost of complying with such requirements and the need for
the protection of the public health and the implementation
of this chapter;
``(4) when prescribing the procedure for making requests
for reports or information, shall require that each request
made under such regulations for submission of a report or
information to the Secretary state the reason or purpose for
such request and identify to the fullest extent practicable
such report or information;
``(5) when requiring submission of a report or information
to the Secretary, shall state the reason or purpose for the
submission of

[[Page S8251]]

such report or information and identify to the fullest extent
practicable such report or information; and
``(6) may not require that the identity of any patient or
user be disclosed in records, reports, or information
required under this subsection unless required for the
medical welfare of an individual, to determine risks to
public health of a tobacco product, or to verify a record,
report, or information submitted under this chapter.

In prescribing regulations under this subsection, the
Secretary shall have due regard for the professional ethics
of the medical profession and the interests of patients. The
prohibitions of paragraph (6) continue to apply to records,
reports, and information concerning any individual who has
been a patient, irrespective of whether or when he ceases to
be a patient.
``(b) Reports of Removals and Corrections.--
``(1) In general.--Except as provided in paragraph (2), the
Secretary shall by regulation require a tobacco product
manufacturer or importer of a tobacco product to report
promptly to the Secretary any corrective action taken or
removal from the market of a tobacco product undertaken by
such manufacturer or importer if the removal or correction
was undertaken--
``(A) to reduce a risk to health posed by the tobacco
product; or
``(B) to remedy a violation of this chapter caused by the
tobacco product which may present a risk to health.

A tobacco product manufacturer or importer of a tobacco
product who undertakes a corrective action or removal from
the market of a tobacco product which is not required to be
reported under this subsection shall keep a record of such
correction or removal.
``(2) Exception.--No report of the corrective action or
removal of a tobacco product may be required under paragraph
(1) if a report of the corrective action or removal is
required and has been submitted under subsection (a).

``SEC. 910. APPLICATION FOR REVIEW OF CERTAIN TOBACCO
PRODUCTS.

``(a) In General.--
``(1) New tobacco product defined.--For purposes of this
section the term `new tobacco product' means--
``(A) any tobacco product (including those products in test
markets) that was not commercially marketed in the United
States as of June 1, 2003; or
``(B) any modification (including a change in design, any
component, any part, or any constituent, including a smoke
constituent, or in the content, delivery or form of nicotine,
or any other additive or ingredient) of a tobacco product
where the modified product was commercially marketed in the
United States after June 1, 2003.
``(2) Premarket approval required.--
``(A) New products.--Approval under this section of an
application for premarket approval for any new tobacco
product is required unless--
``(i) the manufacturer has submitted a report under section
905(j); and
``(ii) the Secretary has issued an order that the tobacco
product--

``(I) is substantially equivalent to a tobacco product
commercially marketed (other than for test marketing) in the
United States as of June 1, 2003; and
``(II)(aa) is in compliance with the requirements of this
Act; or
``(bb) is exempt from the requirements of section 905(j)
pursuant to a regulation issued under section 905(j)(3).

``(B) Application to certain post june 1, 2003 products.--
Subparagraph (A) shall not apply to a tobacco product--
``(i) that was first introduced or delivered for
introduction into interstate commerce for commercial
distribution in the United States after June 1, 2003, and
prior to the date that is 15 months after the date of
enactment of the Family Smoking Prevention and Tobacco
Control Act; and
``(ii) for which a report was submitted under section
905(j) within such 15-month period, until the Secretary
issues an order that the tobacco product is not substantially
equivalent.
``(3) Substantially equivalent defined.--
``(A) In general.--In this section and section 905(j), the
terms `substantially equivalent' or `substantial equivalence'
mean, with respect to the tobacco product being compared to
the predicate tobacco product, that the Secretary by order
has found that the tobacco product--
``(i) has the same characteristics as the predicate tobacco
product; or
``(ii) has different characteristics and the information
submitted contains information, including clinical data if
deemed necessary by the Secretary, that demonstrates that it
is not appropriate to regulate the product under this section
because the product does not raise different questions of
public health.
``(B) Characteristics.--In subparagraph (A), the term
`characteristics' means the materials, ingredients, design,
composition, heating source, or other features of a tobacco
product.
``(C) Limitation.--A tobacco product may not be found to be
substantially equivalent to a predicate tobacco product that
has been removed from the market at the initiative of the
Secretary or that has been determined by a judicial order to
be misbranded or adulterated.
``(4) Health information.--
``(A) Summary.--As part of a submission under section
905(j) respecting a tobacco product, the person required to
file a premarket notification under such section shall
provide an adequate summary of any health information related
to the tobacco product or state that such information will be
made available upon request by any person.
``(B) Required information.--Any summary under subparagraph
(A) respecting a tobacco product shall contain detailed
information regarding data concerning adverse health effects
and shall be made available to the public by the Secretary
within 30 days of the issuance of a determination that
such tobacco product is substantially equivalent to
another tobacco product.
``(b) Application.--
``(1) Contents.--An application for premarket approval
shall contain--
``(A) full reports of all information, published or known
to, or which should reasonably be known to, the applicant,
concerning investigations which have been made to show the
health risks of such tobacco product and whether such tobacco
product presents less risk than other tobacco products;
``(B) a full statement of the components, ingredients,
additives, and properties, and of the principle or principles
of operation, of such tobacco product;
``(C) a full description of the methods used in, and the
facilities and controls used for, the manufacture,
processing, and, when relevant, packing and installation of,
such tobacco product;
``(D) an identifying reference to any tobacco product
standard under section 907 which would be applicable to any
aspect of such tobacco product, and either adequate
information to show that such aspect of such tobacco product
fully meets such tobacco product standard or adequate
information to justify any deviation from such standard;
``(E) such samples of such tobacco product and of
components thereof as the Secretary may reasonably require;
``(F) specimens of the labeling proposed to be used for
such tobacco product; and
``(G) such other information relevant to the subject matter
of the application as the Secretary may require.
``(2) Reference to tobacco products scientific advisory
committee.--Upon receipt of an application meeting the
requirements set forth in paragraph (1), the Secretary--
``(A) may, on the Secretary's own initiative; or
``(B) may, upon the request of an applicant,

refer such application to the Tobacco Products Scientific
Advisory Committee for reference and for submission (within
such period as the Secretary may establish) of a report and
recommendation respecting approval of the application,
together with all underlying data and the reasons or basis
for the recommendation.
``(c) Action on Application.--
``(1) Deadline.--
``(A) In general.--As promptly as possible, but in no event
later than 180 days after the receipt of an application under
subsection (b), the Secretary, after considering the report
and recommendation submitted under paragraph (2) of such
subsection, shall--
``(i) issue an order approving the application if the
Secretary finds that none of the grounds for denying approval
specified in paragraph (2) of this subsection applies; or
``(ii) deny approval of the application if the Secretary
finds (and sets forth the basis for such finding as part of
or accompanying such denial) that 1 or more grounds for
denial specified in paragraph (2) of this subsection apply.
``(B) Restrictions on sale and distribution.--An order
approving an application for a tobacco product may require as
a condition to such approval that the sale and distribution
of the tobacco product be restricted but only to the extent
that the sale and distribution of a tobacco product may be
restricted under a regulation under section 906(d).
``(2) Denial of approval.--The Secretary shall deny
approval of an application for a tobacco product if, upon the
basis of the information submitted to the Secretary as part
of the application and any other information before the
Secretary with respect to such tobacco product, the Secretary
finds that--
``(A) there is a lack of a showing that permitting such
tobacco product to be marketed would be appropriate for the
protection of the public health;
``(B) the methods used in, or the facilities or controls
used for, the manufacture, processing, or packing of such
tobacco product do not conform to the requirements of section
906(e);
``(C) based on a fair evaluation of all material facts, the
proposed labeling is false or misleading in any particular;
or
``(D) such tobacco product is not shown to conform in all
respects to a tobacco product standard in effect under
section 907, compliance with which is a condition to approval
of the application, and there is a lack of adequate
information to justify the deviation from such standard.
``(3) Denial information.--Any denial of an application
shall, insofar as the Secretary determines to be practicable,
be accompanied by a statement informing the applicant of the
measures required to place such application in approvable
form (which measures may include further research by the
applicant in accordance with 1 or more protocols prescribed
by the Secretary).
``(4) Basis for finding.--For purposes of this section, the
finding as to whether approval of a tobacco product is
appropriate for

[[Page S8252]]

the protection of the public health shall be determined with
respect to the risks and benefits to the population as a
whole, including users and nonusers of the tobacco product,
and taking into account--
``(A) the increased or decreased likelihood that existing
users of tobacco products will stop using such products; and
``(B) the increased or decreased likelihood that those who
do not use tobacco products will start using such products.
``(5) Basis for action.--
``(A) Investigations.--For purposes of paragraph (2)(A),
whether permitting a tobacco product to be marketed would be
appropriate for the protection of the public health shall,
when appropriate, be determined on the basis of well-
controlled investigations, which may include 1 or more
clinical investigations by experts qualified by training and
experience to evaluate the tobacco product.
``(B) Other evidence.--If the Secretary determines that
there exists valid scientific evidence (other than evidence
derived from investigations described in subparagraph (A))
which is sufficient to evaluate the tobacco product the
Secretary may authorize that the determination for purposes
of paragraph (2)(A) be made on the basis of such evidence.
``(d) Withdrawal and Temporary Suspension.--
``(1) In general.--The Secretary shall, upon obtaining,
where appropriate, advice on scientific matters from an
advisory committee, and after due notice and opportunity for
informal hearing to the holder of an approved application for
a tobacco product, issue an order withdrawing approval of the
application if the Secretary finds--
``(A) that the continued marketing of such tobacco product
no longer is appropriate for the protection of the public
health;
``(B) that the application contained or was accompanied by
an untrue statement of a material fact;
``(C) that the applicant--
``(i) has failed to establish a system for maintaining
records, or has repeatedly or deliberately failed to maintain
records or to make reports, required by an applicable
regulation under section 909;
``(ii) has refused to permit access to, or copying or
verification of, such records as required by section 704; or
``(iii) has not complied with the requirements of section
905;
``(D) on the basis of new information before the Secretary
with respect to such tobacco product, evaluated together with
the evidence before the Secretary when the application was
approved, that the methods used in, or the facilities and
controls used for, the manufacture, processing, packing, or
installation of such tobacco product do not conform with the
requirements of section 906(e) and were not brought into
conformity with such requirements within a reasonable time
after receipt of written notice from the Secretary of
nonconformity;
``(E) on the basis of new information before the Secretary,
evaluated together with the evidence before the Secretary
when the application was approved, that the labeling of such
tobacco product, based on a fair evaluation of all material
facts, is false or misleading in any particular and was not
corrected within a reasonable time after receipt of written
notice from the Secretary of such fact; or
``(F) on the basis of new information before the Secretary,
evaluated together with the evidence before the Secretary
when the application was approved, that such tobacco product
is not shown to conform in all respects to a tobacco product
standard which is in effect under section 907, compliance
with which was a condition to approval of the application,
and that there is a lack of adequate information to justify
the deviation from such standard.
``(2) Appeal.--The holder of an application subject to an
order issued under paragraph (1) withdrawing approval of the
application may, by petition filed on or before the 30th day
after the date upon which such holder receives notice of such
withdrawal, obtain review thereof in accordance with
subsection (e).
``(3) Temporary suspension.--If, after providing an
opportunity for an informal hearing, the Secretary determines
there is reasonable probability that the continuation of
distribution of a tobacco product under an approved
application would cause serious, adverse health consequences
or death, that is greater than ordinarily caused by tobacco
products on the market, the Secretary shall by order
temporarily suspend the approval of the application approved
under this section. If the Secretary issues such an order,
the Secretary shall proceed expeditiously under paragraph (1)
to withdraw such application.
``(e) Service of Order.--An order issued by the Secretary
under this section shall be served--
``(1) in person by any officer or employee of the
department designated by the Secretary; or
``(2) by mailing the order by registered mail or certified
mail addressed to the applicant at the applicant's last known
address in the records of the Secretary.
``(f) Records.--
``(1) Additional information.--In the case of any tobacco
product for which an approval of an application filed under
subsection (b) is in effect, the applicant shall establish
and maintain such records, and make such reports to the
Secretary, as the Secretary may by regulation, or by order
with respect to such application, prescribe on the basis of a
finding that such records and reports are necessary in order
to enable the Secretary to determine, or facilitate a
determination of, whether there is or may be grounds for
withdrawing or temporarily suspending such approval.
``(2) Access to records.--Each person required under this
section to maintain records, and each person in charge or
custody thereof, shall, upon request of an officer or
employee designated by the Secretary, permit such officer or
employee at all reasonable times to have access to and copy
and verify such records.
``(g) Investigational Tobacco Product Exemption for
Investigational Use.--The Secretary may exempt tobacco
products intended for investigational use from the provisions
of this chapter under such conditions as the Secretary may by
regulation prescribe.

``SEC. 911. MODIFIED RISK TOBACCO PRODUCTS.

``(a) In General.--No person may introduce or deliver for
introduction into interstate commerce any modified risk
tobacco product unless approval of an application filed
pursuant to subsection (d) is effective with respect to such
product.
``(b) Definitions.--In this section:
``(1) Modified risk tobacco product.--The term `modified
risk tobacco product' means any tobacco product that is sold
or distributed for use to reduce harm or the risk of tobacco-
related disease associated with commercially marketed tobacco
products.
``(2) Sold or distributed.--
``(A) In general.--With respect to a tobacco product, the
term `sold or distributed for use to reduce harm or the risk
of tobacco-related disease associated with commercially
marketed tobacco products' means a tobacco product--
``(A) the label, labeling, or advertising of which
represents explicitly or implicitly that--

``(I) the tobacco product presents a lower risk of tobacco-
related disease or is less harmful than one or more other
commercially marketed tobacco products;
``(II) the tobacco product or its smoke contains a reduced
level of a substance or presents a reduced exposure to a
substance; or
``(III) the tobacco product or its smoke does not contain
or is free of a substance;

``(ii) the label, labeling, or advertising of which uses
the descriptors `light', `mild', or `low' or similar
descriptors; or
``(iii) the tobacco product manufacturer of which has taken
any action directed to consumers through the media or
otherwise, other than by means of the tobacco product's
label, labeling or advertising, after the date of enactment
of the Family Smoking Prevention and Tobacco Control Act,
respecting the product that would be reasonably expected to
result in consumers believing that the tobacco product or its
smoke may present a lower risk of disease or is less harmful
than one or more commercially marketed tobacco products, or
presents a reduced exposure to, or does not contain or is
free of, a substance or substances.
``(B) Limitation.--No tobacco product shall be considered
to be `sold or distributed for use to reduce harm or the risk
of tobacco-related disease associated with commercially
marketed tobacco products', except as described in
subparagraph (A).
``(c) Tobacco Dependence Products.--A product that is
intended to be used for the treatment of tobacco dependence,
including smoking cessation, is not a modified risk tobacco
product under this section and is subject to the requirements
of chapter V.
``(d) Filing.--Any person may file with the Secretary an
application for a modified risk tobacco product. Such
application shall include--
``(1) a description of the proposed product and any
proposed advertising and labeling;
``(2) the conditions for using the product;
``(3) the formulation of the product;
``(4) sample product labels and labeling;
``(5) all documents (including underlying scientific
information) relating to research findings conducted,
supported, or possessed by the tobacco product manufacturer
relating to the effect of the product on tobacco related
diseases and health-related conditions, including information
both favorable and unfavorable to the ability of the product
to reduce risk or exposure and relating to human health;
``(6) data and information on how consumers actually use
the tobacco product; and
``(7) such other information as the Secretary may require.
``(e) Public Availability.--The Secretary shall make the
application described in subsection (d) publicly available
(except matters in the application which are trade secrets or
otherwise confidential, commercial information) and shall
request comments by interested persons on the information
contained in the application and on the label, labeling, and
advertising accompanying such application.
``(f) Advisory Committee.--
``(1) In general.--The Secretary shall refer to an advisory
committee any application submitted under this subsection.
``(2) Recommendations.--Not later than 60 days after the
date an application is referred to an advisory committee
under paragraph (1), the advisory committee shall report its
recommendations on the application to the Secretary.
``(g) Approval.--
``(1) Modified risk products.--Except as provided in
paragraph (2), the Secretary

[[Page S8253]]

shall approve an application for a modified risk tobacco
product filed under this section only if the Secretary
determines that the applicant has demonstrated that such
product, as it is actually used by consumers, will--
``(A) significantly reduce harm and the risk of tobacco-
related disease to individual tobacco users; and
``(B) benefit the health of the population as a whole
taking into account both users of tobacco products and
persons who do not currently use tobacco products.
``(2) Special rule for certain products.--
``(A) In general.--The Secretary may approve an application
for a tobacco product that has not been approved as a
modified risk tobacco product pursuant to paragraph (1) if
the Secretary makes the findings required under this
paragraph and determines that the applicant has demonstrated
that--
``(i) the approval of the application would be appropriate
to promote the public health;
``(ii) any aspect of the label, labeling, and advertising
for such product that would cause the tobacco product to be a
modified risk tobacco product under subsection (b)(2) is
limited to an explicit or implicit representation that such
tobacco product or its smoke contains or is free of a
substance or contains a reduced level of a substance, or
presents a reduced exposure to a substance in tobacco smoke.
``(iii) scientific evidence is not available and, using the
best available scientific methods, cannot be made available
without conducting long-term epidemiological studies for an
application to meet the standards set forth in paragraph (1);
and
``(iv) the scientific evidence that is available without
conducting long-term epidemiological studies demonstrates
that a measurable and substantial reduction in morbidity or
mortality among individual tobacco users is anticipated in
subsequent studies.
``(B) Additional findings required.--In order to approve an
application under subparagraph (A) the Secretary must also
find that the applicant has demonstrated that--
``(i) the magnitude of the overall reductions in exposure
to the substance or substances which are the subject of the
application is substantial, such substance or substances are
harmful, and the product as actually used exposes consumers
to the specified reduced level of the substance or
substances;
``(ii) the product as actually used by consumers will not
expose them to higher levels of other harmful substances
compared to the similar types of tobacco products then on the
market unless such increases are minimal and the anticipated
overall impact of use of the product remains a substantial
and measurable reduction in overall morbidity and mortality
among individual tobacco users;
``(iii) testing of actual consumer perception shows that,
as the applicant proposes to label and market the product,
consumers will not be misled into believing that the
product--

``(I) is or has been demonstrated to be less harmful; or
``(II) presents or has been demonstrated to present less of
a risk of disease than 1 or more other commercially marketed
tobacco products; and

``(iv) approval of the application is expected to benefit
the health of the population as a whole taking into account
both users of tobacco products and persons who do not
currently use tobacco products.
``(C) Conditions of approval.--
``(i) In general.--Applications approved under this
paragraph shall be limited to a term of not more than 5
years, but may be renewed upon a finding by the Secretary
that the requirements of this paragraph continue to be
satisfied based on the filing of a new application.
``(ii) Agreements by applicant.--Applications approved
under this paragraph shall be conditioned on the applicant's
agreement to conduct post-market surveillance and studies and
to submit to the Secretary the results of such surveillance
and studies to determine the impact of the application
approval on consumer perception, behavior, and health and to
enable the Secretary to review the accuracy of the
determinations upon which the approval was based in
accordance with a protocol approved by the Secretary.
``(iii) Annual submission.--The results of such post-market
surveillance and studies described in clause (ii) shall be
submitted annually.
``(3) Basis.--The determinations under paragraphs (1) and
(2) shall be based on--
``(A) the scientific evidence submitted by the applicant;
and
``(B) scientific evidence and other information that is
available to the Secretary.
``(4) Benefit to health of individuals and of population as
a whole.--In making the determinations under paragraphs (1)
and (2), the Secretary shall take into account--
``(A) the relative health risks to individuals of the
tobacco product that is the subject of the application;
``(B) the increased or decreased likelihood that existing
users of tobacco products who would otherwise stop using such
products will switch to the tobacco product that is the
subject of the application;
``(C) the increased or decreased likelihood that persons
who do not use tobacco products will start using the tobacco
product that is the subject of the application;
``(D) the risks and benefits to persons from the use of the
tobacco product that is the subject of the application as
compared to the use of products for smoking cessation
approved under chapter V to treat nicotine dependence; and
``(E) comments, data, and information submitted by
interested persons.
``(h) Additional Conditions for Approval.--
``(1) Modified risk products.--The Secretary shall require
for the approval of an application under this section that
any advertising or labeling concerning modified risk products
enable the public to comprehend the information concerning
modified risk and to understand the relative significance of
such information in the context of total health and in
relation to all of the diseases and health-related conditions
associated with the use of tobacco products.
``(2) Comparative claims.--
``(A) In general.--The Secretary may require for the
approval of an application under this subsection that a claim
comparing a tobacco product to 1 or more other commercially
marketed tobacco products shall compare the tobacco product
to a commercially marketed tobacco product that is
representative of that type of tobacco product on the market
(for example the average value of the top 3 brands of an
established regular tobacco product).
``(B) Quantitative comparisons.--The Secretary may also
require, for purposes of subparagraph (A), that the percent
(or fraction) of change and identity of the reference tobacco
product and a quantitative comparison of the amount of the
substance claimed to be reduced shall be stated in immediate
proximity to the most prominent claim.
``(3) Label disclosure.--
``(A) In general.--The Secretary may require the disclosure
on the label of other substances in the tobacco product, or
substances that may be produced by the consumption of that
tobacco product, that may affect a disease or health-related
condition or may increase the risk of other diseases or
health-related conditions associated with the use of tobacco
products.
``(B) Conditions of use.--If the conditions of use of the
tobacco product may affect the risk of the product to human
health, the Secretary may require the labeling of conditions
of use.
``(4) Time.--The Secretary shall limit an approval under
subsection (g)(1) for a specified period of time.
``(5) Advertising.--The Secretary may require that an
applicant, whose application has been approved under this
subsection, comply with requirements relating to advertising
and promotion of the tobacco product.
``(i) Postmarket Surveillance and Studies.--
``(1) In general.--The Secretary shall require that an
applicant under subsection (g)(1) conduct post market
surveillance and studies for a tobacco product for which an
application has been approved to determine the impact of the
application approval on consumer perception, behavior, and
health, to enable the Secretary to review the accuracy of the
determinations upon which the approval was based, and to
provide information that the Secretary determines is
otherwise necessary regarding the use or health risks
involving the tobacco product. The results of post-market
surveillance and studies shall be submitted to the
Secretary on an annual basis.
``(2) Surveillance protocol.--Each applicant required to
conduct a surveillance of a tobacco product under paragraph
(1) shall, within 30 days after receiving notice that the
applicant is required to conduct such surveillance, submit,
for the approval of the Secretary, a protocol for the
required surveillance. The Secretary, within 60 days of the
receipt of such protocol, shall determine if the principal
investigator proposed to be used in the surveillance has
sufficient qualifications and experience to conduct such
surveillance and if such protocol will result in collection
of the data or other information designated by the Secretary
as necessary to protect the public health.
``(j) Withdrawal of Approval.--The Secretary, after an
opportunity for an informal hearing, shall withdraw the
approval of an application under this section if the
Secretary determines that--
``(1) the applicant, based on new information, can no
longer make the demonstrations required under subsection (g),
or the Secretary can no longer make the determinations
required under subsection (g);
``(2) the application failed to include material
information or included any untrue statement of material
fact;
``(3) any explicit or implicit representation that the
product reduces risk or exposure is no longer valid,
including if--
``(A) a tobacco product standard is established pursuant to
section 907;
``(B) an action is taken that affects the risks presented
by other commercially marketed tobacco products that were
compared to the product that is the subject of the
application; or
``(C) any postmarket surveillance or studies reveal that
the approval of the application is no longer consistent with
the protection of the public health;
``(4) the applicant failed to conduct or submit the
postmarket surveillance and studies required under subsection
(g)(2)(C)(ii) or (i); or
``(5) the applicant failed to meet a condition imposed
under subsection (h).
``(k) Chapter IV or V.--A product approved in accordance
with this section shall not be subject to chapter IV or V.

[[Page S8254]]

``(l) Implementing Regulations or Guidance.--
``(1) Scientific evidence.--Not later than 2 years after
the date of enactment of the Family Smoking Prevention and
Tobacco Control Act, the Secretary shall issue regulations or
guidance (or any combination thereof) on the scientific
evidence required for assessment and ongoing review of
modified risk tobacco products. Such regulations or guidance
shall--
``(A) establish minimum standards for scientific studies
needed prior to approval to show that a substantial reduction
in morbidity or mortality among individual tobacco users is
likely;
``(B) include validated biomarkers, intermediate clinical
endpoints, and other feasible outcome measures, as
appropriate;
``(C) establish minimum standards for post market studies,
that shall include regular and long-term assessments of
health outcomes and mortality, intermediate clinical
endpoints, consumer perception of harm reduction, and the
impact on quitting behavior and new use of tobacco products,
as appropriate;
``(D) establish minimum standards for required postmarket
surveillance, including ongoing assessments of consumer
perception; and
``(E) require that data from the required studies and
surveillance be made available to the Secretary prior to the
decision on renewal of a modified risk tobacco product.
``(2) Consultation.--The regulations or guidance issued
under paragraph (1) shall be developed in consultation with
the Institute of Medicine, and with the input of other
appropriate scientific and medical experts, on the design and
conduct of such studies and surveillance.
``(3) Revision.--The regulations or guidance under
paragraph (1) shall be revised on a regular basis as new
scientific information becomes available.
``(4) New tobacco products.--Not later than 2 years after
the date of enactment of the Family Smoking Prevention and
Tobacco Control Act, the Secretary shall issue a regulation
or guidance that permits the filing of a single application
for any tobacco product that is a new tobacco product under
section 910 and for which the applicant seeks approval as a
modified risk tobacco product under this section.
``(m) Distributors.--No distributor may take any action,
after the date of enactment of the Family Smoking Prevention
and Tobacco Control Act, with respect to a tobacco product
that would reasonably be expected to result in consumers
believing that the tobacco product or its smoke may present a
lower risk of disease or is less harmful than one or more
commercially marketed tobacco products, or presents a reduced
exposure to, or does not contain or is free of, a substance
or substances.

``SEC. 912. JUDICIAL REVIEW.

``(a) Right To Review.--
``(1) In general.--Not later than 30 days after--
``(A) the promulgation of a regulation under section 907
establishing, amending, or revoking a tobacco product
standard; or
``(B) a denial of an application for approval under section
910(c),

any person adversely affected by such regulation or denial
may file a petition for judicial review of such regulation or
denial with the United States Court of Appeals for the
District of Columbia or for the circuit in which such person
resides or has their principal place of business.
``(2) Requirements.--
``(A) Copy of petition.--A copy of the petition filed under
paragraph (1) shall be transmitted by the clerk of the court
involved to the Secretary.
``(B) Record of proceedings.--On receipt of a petition
under subparagraph (A), the Secretary shall file in the court
in which such petition was filed--
``(i) the record of the proceedings on which the regulation
or order was based; and
``(ii) a statement of the reasons for the issuance of such
a regulation or order.
``(C) Definition of record.--In this section, the term
`record' means--
``(i) all notices and other matter published in the Federal
Register with respect to the regulation or order reviewed;
``(ii) all information submitted to the Secretary with
respect to such regulation or order;
``(iii) proceedings of any panel or advisory committee with
respect to such regulation or order;
``(iv) any hearing held with respect to such regulation or
order; and
``(v) any other information identified by the Secretary, in
the administrative proceeding held with respect to such
regulation or order, as being relevant to such regulation or
order.
``(b) Standard of Review.--Upon the filing of the petition
under subsection (a) for judicial review of a regulation or
order, the court shall have jurisdiction to review the
regulation or order in accordance with chapter 7 of title 5,
United States Code, and to grant appropriate relief,
including interim relief, as provided for in such chapter. A
regulation or denial described in subsection (a) shall be
reviewed in accordance with section 706(2)(A) of title 5,
United States Code.
``(c) Finality of Judgment.--The judgment of the court
affirming or setting aside, in whole or in part, any
regulation or order shall be final, subject to review by the
Supreme Court of the United States upon certiorari or
certification, as provided in section 1254 of title 28,
United States Code.
``(d) Other Remedies.--The remedies provided for in this
section shall be in addition to, and not in lieu of, any
other remedies provided by law.
``(e) Regulations and Orders Must Recite Basis in Record.--
To facilitate judicial review, a regulation or order issued
under section 906, 907, 908, 909, 910, or 916 shall contain a
statement of the reasons for the issuance of such regulation
or order in the record of the proceedings held in connection
with its issuance.

``SEC. 913. EQUAL TREATMENT OF RETAIL OUTLETS.

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

``SEC. 914. JURISDICTION OF AND COORDINATION WITH THE FEDERAL
TRADE COMMISSION.

``(a) Jurisdiction.--
``(1) In general.--Except where expressly provided in this
chapter, nothing in this chapter shall be construed as
limiting or diminishing the authority of the Federal Trade
Commission to enforce the laws under its jurisdiction with
respect to the advertising, sale, or distribution of tobacco
products.
``(2) Enforcement.--Any advertising that violates this
chapter or a provision of the regulations referred to in
section __12 of the Family Smoking Prevention and Tobacco
Control Act, is an unfair or deceptive act or practice under
section 5(a) of the Federal Trade Commission Act (15 U.S.C.
45(a)) and shall be considered a violation of a rule
promulgated under section 18 of that Act (15 U.S.C. 57a).
``(b) Coordination.--With respect to the requirements of
section 4 of the Federal Cigarette Labeling and Advertising
Act (15 U.S.C. 1333) and section 3 of the Comprehensive
Smokeless Tobacco Health Education Act of 1986 (15 U.S.C.
4402)--
``(1) the Chairman of the Federal Trade Commission shall
coordinate with the Secretary concerning the enforcement of
such Act as such enforcement relates to unfair or deceptive
acts or practices in the advertising of cigarettes or
smokeless tobacco; and
``(2) the Secretary shall consult with the Chairman of such
Commission in revising the label statements and requirements
under such sections.

``SEC. 915. CONGRESSIONAL REVIEW PROVISIONS.

``In accordance with section 801 of title 5, United States
Code, Congress shall review, and may disapprove, any rule
under this chapter that is subject to section 801. This
section and section 801 do not apply to the regulations
referred to in section __12 of the Family Smoking Prevention
and Tobacco Control Act.

``SEC. 916. REGULATION REQUIREMENT.

``(a) Testing, Reporting, and Disclosure.--Not later than
24 months after the date of enactment of the Family Smoking
Prevention and Tobacco Control Act, the Secretary, acting
through the Commissioner of the Food and Drug Administration,
shall promulgate regulations under this Act that meet the
requirements of subsection (b).
``(b) Contents of Rules.--The regulations promulgated under
subsection (a) shall require testing and reporting of tobacco
product constituents, ingredients, and additives, including
smoke constituents, by brand and sub-brand that the Secretary
determines should be tested to protect the public health. The
regulations may require that tobacco product manufacturers,
packagers, or importers make disclosures relating to the
results of the testing of tar and nicotine through labels or
advertising or other appropriate means, and make disclosures
regarding the results of the testing of other constituents,
including smoke constituents, ingredients, or additives, that
the Secretary determines should be disclosed to the public to
protect the public health and will not mislead consumers
about the risk of tobacco related disease.
``(c) Authority.--The Food and Drug Administration shall
have the authority under this chapter to conduct or to
require the testing, reporting, or disclosure of tobacco
product constituents, including smoke constituents.

``SEC. 917. PRESERVATION OF STATE AND LOCAL AUTHORITY.

``(a) In General.--
``(1) Preservation.--Nothing in this chapter, or rules
promulgated under this chapter, shall be construed to limit
the authority of a Federal agency (including the Armed
Forces), a State or political subdivision of a State, or the
government of an Indian tribe to enact, adopt, promulgate,
and enforce any law, rule, regulation, or other measure with
respect to tobacco products that is in addition to, or more
stringent than, requirements established under this chapter,
including a law, rule, regulation, or other measure relating
to or prohibiting the sale, distribution, possession,
exposure to, access to, advertising and promotion of, or use
of tobacco products by individuals of any age, information
reporting to the State, or measures relating to fire safety
standards for tobacco products. No provision of this chapter
shall limit or otherwise affect any State, Tribal, or
local taxation of tobacco products.
``(2) Preemption of certain state and local requirements.--
``(A) In general.--Except as provided in paragraph (1) and
subparagraph (B), no State

[[Page S8255]]

or political subdivision of a State may establish or continue
in effect with respect to a tobacco product any requirement
which is different from, or in addition to, any requirement
under the provisions of this chapter relating to tobacco
product standards, premarket approval, adulteration,
misbranding, labeling, registration, good manufacturing
standards, or reduced risk products.
``(B) Exception.--Subparagraph (A) does not apply to
requirements relating to the sale, distribution, possession,
information reporting to the State, exposure to, access to,
the advertising and promotion of, or use of, tobacco products
by individuals of any age, or relating to fire safety
standards for tobacco products. Information disclosed to a
State under subparagraph (A) that is exempt from disclosure
under section 554(b)(4) of title 5, United States Code, shall
be treated as trade secret and confidential information by
the State.
``(b) Rule of Construction Regarding Product Liability.--No
provision of this chapter relating to a tobacco product shall
be construed to modify or otherwise affect any action or the
liability of any person under the product liability law of
any State.

``SEC. 918. TOBACCO PRODUCTS SCIENTIFIC ADVISORY COMMITTEE.

``(a) Establishment.--Not later than 1 year after the date
of enactment of the Family Smoking Prevention and Tobacco
Control Act, the Secretary shall establish a 11-member
advisory committee, to be known as the `Tobacco Products
Scientific Advisory Committee'.
``(b) Membership.--
``(1) In general.--
``(A) Members.--The Secretary shall appoint as members of
the Tobacco Products Scientific Advisory Committee
individuals who are technically qualified by training and
experience in the medicine, medical ethics, science, or
technology involving the manufacture, evaluation, or use of
tobacco products, who are of appropriately diversified
professional backgrounds. The committee shall be composed
of--
``(i) 7 individuals who are physicians, dentists,
scientists, or health care professionals practicing in the
area of oncology, pulmonology, cardiology, toxicology,
pharmacology, addiction, or any other relevant specialty;
``(ii) 1 individual who is an officer or employee of a
State or local government or of the Federal Government;
``(iii) 1 individual as a representative of the general
public;
``(iv) 1 individual as a representative of the interests in
the tobacco manufacturing industry; and
``(v) 1 individual as a representative of the interests of
the tobacco growers.
``(B) Nonvoting members.--The members of the committee
appointed under clauses (iv) and (v) of subparagraph (A)
shall serve as consultants to those described in clauses (i)
through (iii) of subparagraph (A) and shall be nonvoting
representatives.
``(2) Limitation.--The Secretary may not appoint to the
Advisory Committee any individual who is in the regular full-
time employ of the Food and Drug Administration or any agency
responsible for the enforcement of this Act. The Secretary
may appoint Federal officials as ex officio members.
``(3) Chairperson.--The Secretary shall designate 1 of the
members of the Advisory Committee to serve as chairperson.
``(c) Duties.--The Tobacco Products Scientific Advisory
Committee shall provide advice, information, and
recommendations to the Secretary--
``(1) as provided in this chapter;
``(2) on the effects of the alteration of the nicotine
yields from tobacco products;
``(3) on whether there is a threshold level below which
nicotine yields do not produce dependence on the tobacco
product involved; and
``(4) on its review of other safety, dependence, or health
issues relating to tobacco products as requested by the
Secretary.
``(d) Compensation; Support; FACA.--
``(1) Compensation and travel.--Members of the Advisory
Committee who are not officers or employees of the United
States, while attending conferences or meetings of the
committee or otherwise engaged in its business, shall be
entitled to receive compensation at rates to be fixed by the
Secretary, which may not exceed the daily equivalent of the
rate in effect for level 4 of the Senior Executive Schedule
under section 5382 of title 5, United States Code, for each
day (including travel time) they are so engaged; and while so
serving away from their homes or regular places of business
each member may be allowed travel expenses, including per
diem in lieu of subsistence, as authorized by section 5703 of
title 5, United States Code, for persons in the Government
service employed intermittently.
``(2) Administrative support.--The Secretary shall furnish
the Advisory Committee clerical and other assistance.
``(3) Nonapplication of faca.--Section 14 of the Federal
Advisory Committee Act (5 U.S.C. App.) does not apply to the
Advisory Committee.
``(e) Proceedings of Advisory Panels and Committees.--The
Advisory Committee shall make and maintain a transcript of
any proceeding of the panel or committee. Each such panel and
committee shall delete from any transcript made under this
subsection information which is exempt from disclosure under
section 552(b) of title 5, United States Code.

``SEC. 919. DRUG PRODUCTS USED TO TREAT TOBACCO DEPENDENCE.

The Secretary shall consider--
``(1) at the request of the applicant, designating nicotine
replacement products as fast track research and approval
products within the meaning of section 506;
``(2) direct the Commissioner to consider approving the
extended use of nicotine replacement products (such as
nicotine patches, nicotine gum, and nicotine lozenges) for
the treatment of tobacco dependence;
``(3) review and consider the evidence for additional
indications for nicotine replacement products, such as for
craving relief or relapse prevention; and
``(4) consider--
``(A) relieving companies of premarket burdens under
section 505 if the requirement is redundant considering other
nicotine replacement therapies already on the market; and
``(B) time and extent applications for nicotine replacement
therapies that have been approved by a regulatory body in a
foreign country and have marketing experience in such
country.

``SEC. 920. USER FEE.

``(a) Establishment of Quarterly User Fee.--The Secretary
shall assess a quarterly user fee with respect to every
quarter of each fiscal year commencing fiscal year 2004,
calculated in accordance with this section, upon each
manufacturer and importer of tobacco products subject to this
chapter.
``(b) Funding of FDA Regulation of Tobacco Products.--The
Secretary shall make user fees collected pursuant to this
section available to pay, in each fiscal year, for the costs
of the activities of the Food and Drug Administration related
to the regulation of tobacco products under this chapter.
``(c) Assessment of User Fee.--
``(1) Amount of assessment.--Except as provided in
paragraph (4), the total user fees assessed each year
pursuant to this section shall be sufficient, and shall not
exceed what is necessary, to pay for the costs of the
activities described in subsection (b) for each fiscal year.
``(2) Allocation of assessment by class of tobacco
products.--
``(A) In general.--Subject to paragraph (3), the total user
fees assessed each fiscal year with respect to each class of
importers and manufacturers shall be equal to an amount that
is the applicable percentage of the total costs of activities
of the Food and Drug Administration described in subsection
(b).
``(B) Applicable percentage.--For purposes of subparagraph
(A) the applicable percentage for a fiscal year shall be the
following:
``(i) 92.07 percent shall be assessed on manufacturers and
importers of cigarettes;
``(ii) 0.05 percent shall be assessed on manufacturers and
importers of little cigars;
``(iii) 7.15 percent shall be assessed on manufacturers and
importers of cigars other than little cigars;
``(iv) 0.43 percent shall be assessed on manufacturers and
importers of snuff;
``(v) 0.10 percent shall be assessed on manufacturers and
importers of chewing tobacco;
``(vi) 0.06 percent shall be assessed on manufacturers and
importers of pipe tobacco; and
``(vii) 0.14 percent shall be assessed on manufacturers and
importers of roll-your-own tobacco.
``(3) Distribution of fee shares of manufacturers and
importers exempt from user fee.--Where a class of tobacco
products is not subject to a user fee under this section, the
portion of the user fee assigned to such class under
subsection (d)(2) shall be allocated by the Secretary on a
pro rata basis among the classes of tobacco products that are
subject to a user fee under this section. Such pro rata
allocation for each class of tobacco products that are
subject to a user fee under this section shall be the
quotient of--
``(A) the sum of the percentages assigned to all classes of
tobacco products subject to this section; divided by
``(B) the percentage assigned to such class under paragraph
(2).
``(4) Annual limit on assessment.--The total assessment
under this section--
``(A) for fiscal year 2004 shall be $85,000,000;
``(B) for fiscal year 2005 shall be $175,000,000;
``(C) for fiscal year 2006 shall be $300,000,000; and
``(D) for each subsequent fiscal year, shall not exceed the
limit on the assessment imposed during the previous fiscal
year, as adjusted by the Secretary (after notice, published
in the Federal Register) to reflect the greater of--
``(i) the total percentage change that occurred in the
Consumer Price Index for all urban consumers (all items;
United States city average) for the 12-month period ending on
June 30 of the preceding fiscal year for which fees are being
established; or
``(ii) the total percentage change for the previous fiscal
year in basic pay under the General Schedule in accordance
with section 5332 of title 5, United States Code, as adjusted
by any locality-based comparability payment pursuant to
section 5304 of such title for Federal employees stationed in
the District of Columbia.
``(5) Timing of user fee assessment.--The Secretary shall
notify each manufacturer and importer of tobacco products
subject to this section of the amount of the quarterly
assessment imposed on such manufacturer or importer under
subsection (f) during each quarter of each fiscal year. Such
notifications shall occur not earlier than 3 months prior to
the end of the quarter for which such

[[Page S8256]]

assessment is made, and payments of all assessments shall be
made not later than 60 days after each such notification.
``(d) Determination of User Fee by Company Market Share.--
``(1) In general.--The user fee to be paid by each
manufacturer or importer of a given class of tobacco products
shall be determined in each quarter by multiplying--
``(A) such manufacturer's or importer's market share of
such class of tobacco products; by
``(B) the portion of the user fee amount for the current
quarter to be assessed on manufacturers and importers of such
class of tobacco products as determined under subsection (e).
``(2) No fee in excess of market share.--No manufacturer or
importer of tobacco products shall be required to pay a user
fee in excess of the market share of such manufacturer or
importer.
``(e) Determination of Volume of Domestic Sales.--
``(1) In general.--The calculation of gross domestic volume
of a class of tobacco product by a manufacturer or importer,
and by all manufacturers and importers as a group, shall be
made by the Secretary using information provided by
manufacturers and importers pursuant to subsection (f), as
well as any other relevant information provided to or
obtained by the Secretary.
``(2) Measurement.--For purposes of the calculations under
this subsection and the information provided under subsection
(f) by the Secretary, gross domestic volume shall be measured
by--
``(A) in the case of cigarettes, the number of cigarettes
sold;
``(B) in the case of little cigars, the number of little
cigars sold;
``(C) in the case of large cigars, the number of cigars
weighing more than 3 pounds per thousand sold; and
``(D) in the case of other classes of tobacco products, in
terms of number of pounds, or fraction thereof, of these
products sold.
``(f) Measurement of Gross Domestic Volume.--
``(1) In general.--Each manufacturer and importer of
tobacco products shall submit to the Secretary a certified
copy of each of the returns or forms described by this
paragraph that are required to be filed with a Government
agency on the same date that those returns or forms are
filed, or required to be filed, with such agency. The returns
and forms described by this paragraph are those returns and
forms related to the release of tobacco products into
domestic commerce, as defined by section 5702(k) of the
Internal Revenue Code of 1986, and the repayment of the taxes
imposed under chapter 52 of such Code (ATF Form 500.24 and
United States Customs Form 7501 under currently applicable
regulations).
``(2) Penalties.--Any person that knowingly fails to
provide information required under this subsection or that
provides false information under this subsection shall be
subject to the penalties described in section 1003 of title
18, United States Code. In addition, such person may be
subject to a civil penalty in an amount not to exceed 2
percent of the value of the kind of tobacco products
manufactured or imported by such person during the applicable
quarter, as determined by the Secretary.
``(h) Effective Date.--The user fees prescribed by this
section shall be assessed in fiscal year 2004, based on
domestic sales of tobacco products during fiscal year 2003
and shall be assessed in each fiscal year thereafter.''.

SEC. __12. INTERIM FINAL RULE.

(a) Cigarettes and Smokeless Tobacco.--
(1) In general.--Not later than 30 days after the date of
enactment of this Act, the Secretary of Health and Human
Services shall publish in the Federal Register an interim
final rule regarding cigarettes and smokeless tobacco, which
is hereby deemed to be in compliance with the Administrative
Procedures Act and other applicable law.
(2) Contents of rule.--Except as provided in this
subsection, the interim final rule published under paragraph
(1), shall be identical in its provisions to part 897 of the
regulations promulgated by the Secretary of Health and Human
Services in the August 28, 1996, issue of the Federal
Register (61 Fed. Reg., 44615-44618). Such rule shall--
(A) provide for the designation of jurisdictional authority
that is in accordance with this subsection;
(B) strike Subpart C--Labeling and section 897.32(c); and
(C) become effective not later than 1 year after the date
of enactment of this Act.
(3) Amendments to rule.--Prior to making amendments to the
rule published under paragraph (1), the Secretary shall
promulgate a proposed rule in accordance with the
Administrative Procedures Act.
(4) Rule of construction.--Except as provided in paragraph
(3), nothing in this section shall be construed to limit the
authority of the Secretary to amend, in accordance with the
Administrative Procedures Act, the regulation promulgated
pursuant to this section.
(b) Limitation on Advisory Opinions.--As of the date of
enactment of this Act, the following documents issued by the
Food and Drug Administration shall not constitute advisory
opinions under section 10.85(d)(1) of title 21, Code of
Federal Regulations, except as they apply to tobacco
products, and shall not be cited by the Secretary of Health
and Human Services or the Food and Drug Administration as
binding precedent:
(1) The preamble to the proposed rule in the document
entitled ``Regulations Restricting the Sale and Distribution
of Cigarettes and Smokeless Tobacco Products to Protect
Children and Adolescents'' (60 Fed. Reg. 41314-41372 (August
11, 1995)).
(2) The document entitled ``Nicotine in Cigarettes and
Smokeless Tobacco Products is a Drug and These Products Are
Nicotine Delivery Devices Under the Federal Food, Drug, and
Cosmetic Act'' (60 Fed. Reg. 41453-41787 (August 11, 1995)).
(3) The preamble to the final rule in the document entitled
``Regulations Restricting the Sale and Distribution of
Cigarettes and Smokeless Tobacco to Protect Children and
Adolescents'' (61 Fed. Reg. 44396-44615 (August 28, 1996)).
(4) The document entitled ``Nicotine in Cigarettes and
Smokeless Tobacco is a Drug and These Products are Nicotine
Delivery Devices Under the Federal Food, Drug, and Cosmetic
Act; Jurisdictional Determination'' (61 Fed. Reg. 44619-45318
(August 28, 1996)).

SEC. __13. CONFORMING AND OTHER AMENDMENTS TO GENERAL
PROVISIONS.

(a) Amendment of Federal Food, Drug, and Cosmetic Act.--
Except as otherwise expressly provided, whenever in this
section an amendment is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference
is to a section or other provision of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 301 et seq.).
(b) Section 301.--Section 301 (21 U.S.C. 331) is amended--
(1) in subsection (a), by inserting ``tobacco product,''
after ``device,'';
(2) in subsection (b), by inserting ``tobacco product,''
after ``device,'';
(3) in subsection (c), by inserting ``tobacco product,''
after ``device,'';
(4) in subsection (e), by striking ``515(f), or 519'' and
inserting ``515(f), 519, or 909'';
(5) in subsection (g), by inserting ``tobacco product,''
after ``device,'';
(6) in subsection (h), by inserting ``tobacco product,''
after ``device,'';
(7) in subsection (j), by striking ``708, or 721'' and
inserting ``708, 721, 904, 905, 906, 907, 908, 909, or
section 921(b)'';
(8) in subsection (k), by inserting ``tobacco product,''
after ``device,'';
(9) by striking subsection (p) and inserting the following:
``(p) The failure to register in accordance with section
510 or 905, the failure to provide any information required
by section 510(j), 510(k), 905(i), or 905(j), or the failure
to provide a notice required by section 510(j)(2) or
905(i)(2).'';
(10) by striking subsection (q)(1) and inserting the
following:
``(q)(1) The failure or refusal--
``(A) to comply with any requirement prescribed under
section 518, 520(g), 903(b)(8), or 908, or condition
prescribed under section 903(b)(6)(B)(ii)(II);
``(B) to furnish any notification or other material or
information required by or under section 519, 520(g), 904,
909, or section 921; or
``(C) to comply with a requirement under section 522 or
913.'';
(11) in subsection (q)(2), by striking ``device,'' and
inserting ``device or tobacco product,'';
(12) in subsection (r), by inserting ``or tobacco product''
after ``device'' each time that it appears; and
(13) by adding at the end the following:
``(aa) The sale of tobacco products in violation of a no-
tobacco-sale order issued under section 303(f).
``(bb) The introduction or delivery for introduction into
interstate commerce of a tobacco product in violation of
section 911.
``(cc)(1) Forging, counterfeiting, simulating, or falsely
representing, or without proper authority using any mark,
stamp (including tax stamp), tag, label, or other
identification device upon any tobacco product or container
or labeling thereof so as to render such tobacco product a
counterfeit tobacco product.
``(2) Making, selling, disposing of, or keeping in
possession, control, or custody, or concealing any punch,
die, plate, stone, or other item that is designed to print,
imprint, or reproduce the trademark, trade name, or other
identifying mark, imprint, or device of another or any
likeness of any of the foregoing upon any tobacco product or
container or labeling thereof so as to render such tobacco
product a counterfeit tobacco product.
``(3) The doing of any act that causes a tobacco product to
be a counterfeit tobacco product, or the sale or dispensing,
or the holding for sale or dispensing, of a counterfeit
tobacco product.
``(dd) The charitable distribution of tobacco products.
``(ee) The failure of a manufacturer or distributor to
notify the Attorney General of their knowledge of tobacco
products used in illicit trade.''.
(c) Section 303.--Section 303 (21 U.S.C. 333(f)) is amended
in subsection (f)--
(1) by striking the subsection heading and inserting the
following:
``(f) Civil Penalties; No-Tobacco-Sale Orders.--'';
(2) in paragraph (1)(A), by inserting ``or tobacco
products'' after ``devices'';
(3) by redesignating paragraphs (3), (4), and (5) as
paragraphs (4), (5), and (6), and inserting after paragraph
(2) the following:
``(3) If the Secretary finds that a person has committed
repeated violations of restrictions promulgated under section
906(d) at a particular retail outlet then the Secretary

[[Page S8257]]

may impose a no-tobacco-sale order on that person prohibiting
the sale of tobacco products in that outlet. A no-tobacco-
sale order may be imposed with a civil penalty under
paragraph (1).'';
(4) in paragraph (4) as so redesignated--
(A) in subparagraph (A)--
(i) by striking ``assessed'' the first time it appears and
inserting ``assessed, or a no-tobacco-sale order may be
imposed,''; and
(ii) by striking ``penalty'' and inserting ``penalty, or
upon whom a no-tobacco-order is to be imposed,'';
(B) in subparagraph (B)--
(i) by inserting after ``penalty,'' the following: ``or the
period to be covered by a no-tobacco-sale order,''; and
(ii) by adding at the end the following: ``A no-tobacco-
sale order permanently prohibiting an individual retail
outlet from selling tobacco products shall include provisions
that allow the outlet, after a specified period of time, to
request that the Secretary compromise, modify, or terminate
the order.''; and
(C) by adding at the end, the following:
``(D) The Secretary may compromise, modify, or terminate,
with or without conditions, any no-tobacco-sale order.'';
(5) in paragraph (5) as so redesignated--
(A) by striking ``(3)(A)'' as redesignated, and inserting
``(4)(A)'';
(B) by inserting ``or the imposition of a no-tobacco-sale
order'' after ``penalty'' the first 2 places it appears; and
(C) by striking ``issued.'' and inserting ``issued, or on
which the no-tobacco-sale order was imposed, as the case may
be.''; and
(6) in paragraph (6), as so redesignated, by striking
``paragraph (4)'' each place it appears and inserting
``paragraph (5)''.
(d) Section 304.--Section 304 (21 U.S.C. 334) is amended--
(1) in subsection (a)(2)--
(A) by striking ``and'' before ``(D)''; and
(B) by striking ``device.'' and inserting the following:
``, (E) Any adulterated or misbranded tobacco product.'';
(2) in subsection (d)(1), by inserting ``tobacco product,''
after ``device,'';
(3) in subsection (g)(1), by inserting ``or tobacco
product'' after ``device'' each place it appears; and
(4) in subsection (g)(2)(A), by inserting ``or tobacco
product'' after ``device'' each place it appears.
(e) Section 702.--Section 702(a) (21 U.S.C. 372(a)) is
amended--
(1) by inserting ``(1)'' after ``(a)''; and
(2) by adding at the end thereof the following:
``(2) For a tobacco product, to the extent feasible, the
Secretary shall contract with the States in accordance with
paragraph (1) to carry out inspections of retailers in
connection with the enforcement of this Act.''.
(f) Section 703.--Section 703 (21 U.S.C. 373) is amended--
(1) by inserting ``tobacco product,'' after ``device,''
each place it appears; and
(2) by inserting ``tobacco products,'' after ``devices,''
each place it appears.
(g) Section 704.--Section 704 (21 U.S.C. 374) is amended--
(1) in subsection (a)(1)(A), by inserting ``tobacco
products,'' after ``devices,'' each place it appears;
(2) in subsection (a)(1)(B), by inserting ``or tobacco
product'' after ``restricted devices'' each place it appears;
and
(3) in subsection (b), by inserting ``tobacco product,''
after ``device,''.
(h) Section 705.--Section 705(b) (21 U.S.C. 375(b)) is
amended by inserting ``tobacco products,'' after
``devices,''.
(i) Section 709.--Section 709 (21 U.S.C. 379) is amended by
inserting ``or tobacco product'' after ``device''.
(j) Section 801.--Section 801 (21 U.S.C. 381) is amended--
(1) in subsection (a)--
(A) by inserting ``tobacco products,'' after ``devices,''
the first time it appears;
(B) by inserting ``or section 905(j)'' after ``section
510''; and
(C) by striking ``drugs or devices'' each time it appears
and inserting ``drugs, devices, or tobacco products'';
(2) in subsection (e)(1), by inserting ``tobacco product,''
after ``device,''; and
(3) by adding at the end the following:
``(p)(1) Not later than 2 years after the date of enactment
of the Family Smoking Prevention and Tobacco Control Act, and
annually thereafter, the Secretary shall submit to the
Committee on Health, Education, Labor, and Pensions of the
Senate and the Committee on Energy and Commerce of the House
of Representatives, a report regarding--
``(A) the nature, extent, and destination of United States
tobacco product exports that do not conform to tobacco
product standards established pursuant to this Act;
``(B) the public health implications of such exports,
including any evidence of a negative public health impact;
and
``(C) recommendations or assessments of policy alternatives
available to Congress and the Executive Branch to reduce any
negative public health impact caused by such exports.
``(2) The Secretary is authorized to establish appropriate
information disclosure requirements to carry out this
subsection.''.
(k) Section 1003.--Section 1003(d)(2)(C) (as redesignated
by section 101(a)) is amended--
(1) by striking ``and'' after ``cosmetics,''; and
(2) inserting a comma and ``and tobacco products'' after
``devices''.
(l) Effective Date for No-Tobacco-Sale Order Amendments.--
The amendments made by subsection (c), other than the
amendment made by paragraph (2) of such subsection, shall
take effect upon the issuance of guidance by the Secretary of
Health and Human Services--
(1) defining the term ``repeated violation'', as used in
section 303(f) of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 333(f)) as amended by subsection (c), by
identifying the number of violations of particular
requirements over a specified period of time at a particular
retail outlet that constitute a repeated violation;
(2) providing for timely and effective notice to the
retailer of each alleged violation at a particular retail
outlet and an expedited procedure for the administrative
appeal of an alleged violation;
(3) providing that a person may not be charged with a
violation at a particular retail outlet unless the Secretary
has provided notice to the retailer of all previous
violations at that outlet;
(4) establishing a period of time during which, if there
are no violations by a particular retail outlet, that outlet
will not be considered to have been the site of repeated
violations when the next violation occurs; and
(5) providing that good faith reliance on the presentation
of a false government issued photographic identification that
contains the bearer's date of birth does not constitute a
violation of any minimum age requirement for the sale of
tobacco products if the retailer has taken effective steps to
prevent such violations, including--
(A) adopting and enforcing a written policy against sales
to minors;
(B) informing its employees of all applicable laws;
(C) establishing disciplinary sanctions for employee
noncompliance; and
(D) requiring its employees to verify age by way of
photographic identification or electronic scanning device.

CHAPTER 2--TOBACCO PRODUCT WARNINGS; CONSTITUENT AND SMOKE CONSTITUENT
DISCLOSURE

SEC. __21. CIGARETTE LABEL AND ADVERTISING WARNINGS.

Section 4 of the Federal Cigarette Labeling and Advertising
Act (15 U.S.C. 1333) is amended to read as follows:

``SEC. 4. LABELING.

``(a) Label Requirements.--
``(1) In general.--It shall be unlawful for any person to
manufacture, package, sell, offer to sell, distribute, or
import for sale or distribution within the United States any
cigarettes the package of which fails to bear, in accordance
with the requirements of this section, one of the following
labels:

`WARNING: Cigarettes are addictive'.
`WARNING: Tobacco smoke can harm your children'.
`WARNING: Cigarettes cause fatal lung disease'.
`WARNING: Cigarettes cause cancer'.
`WARNING: Cigarettes cause strokes and heart disease'.
`WARNING: Smoking during pregnancy can harm your baby'.
`WARNING: Smoking can kill you'.
`WARNING: Tobacco smoke causes fatal lung disease in non-
smokers'.
`WARNING: Quitting smoking now greatly reduces serious risks
to your health'.
``(2) Placement; typography; etc.--
``(A) In general.--Each label statement required by
paragraph (1) shall be located in the upper portion of the
front and rear panels of the package, directly on the package
underneath the cellophane or other clear wrapping. Except as
provided in subparagraph (B), each label statement shall
comprise at least the top 30 percent of the front and rear
panels of the package. The word `WARNING' shall appear in
capital letters and all text shall be in conspicuous and
legible 17-point type, unless the text of the label statement
would occupy more than 70 percent of such area, in which case
the text may be in a smaller conspicuous and legible type
size, provided that at least 60 percent of such area is
occupied by required text. The text shall be black on a white
background, or white on a black background, in a manner that
contrasts, by typography, layout, or color, with all other
printed material on the package, in an alternating fashion
under the plan submitted under subsection (b)(4).
``(B) Flip-top boxes.--For any cigarette brand package
manufactured or distributed before January 1, 2000, which
employs a flip-top style (if such packaging was used for that
brand in commerce prior to June 21, 1997), the label
statement required by paragraph (1) shall be located on the
flip-top area of the package, even if such area is less than
25 percent of the area of the front panel. Except as provided
in this paragraph, the provisions of this subsection shall
apply to such packages.
``(3) Does not apply to foreign distribution.--The
provisions of this subsection do not apply to a tobacco
product manufacturer or distributor of cigarettes which does
not manufacture, package, or import cigarettes for sale or
distribution within the United States.
``(4) Applicability to retailers.--A retailer of cigarettes
shall not be in violation of this subsection for packaging
that is supplied to the retailer by a tobacco product
manufacturer, importer, or distributor and is not altered by
the retailer in a way that is material to the requirements of
this subsection except that this paragraph shall not relieve
a retailer of liability if the retailer

[[Page S8258]]

sells or distributes tobacco products that are not labeled in
accordance with this subsection.
``(b) Advertising Requirements.--
``(1) In general.--It shall be unlawful for any tobacco
product manufacturer, importer, distributor, or retailer of
cigarettes to advertise or cause to be advertised within the
United States any cigarette unless its advertising bears, in
accordance with the requirements of this section, one of the
labels specified in subsection (a) of this section.
``(2) Typography, etc.--Each label statement required by
subsection (a) of this section in cigarette advertising shall
comply with the standards set forth in this paragraph. For
press and poster advertisements, each such statement and
(where applicable) any required statement relating to tar,
nicotine, or other constituent (including a smoke
constituent) yield shall comprise at least 20 percent of the
area of the advertisement and shall appear in a conspicuous
and prominent format and location at the top of each
advertisement within the trim area. The Secretary may revise
the required type sizes in such area in such manner as the
Secretary determines appropriate. The word `WARNING' shall
appear in capital letters, and each label statement shall
appear in conspicuous and legible type. The text of the label
statement shall be black if the background is white and white
if the background is black, under the plan submitted under
paragraph (4) of this subsection. The label statements shall
be enclosed by a rectangular border that is the same color as
the letters of the statements and that is the width of the
first downstroke of the capital `W' of the word `WARNING' in
the label statements. The text of such label statements shall
be in a typeface pro rata to the following requirements: 45-
point type for a whole-page broadsheet newspaper
advertisement; 39-point type for a half-page broadsheet
newspaper advertisement; 39-point type for a whole-page
tabloid newspaper advertisement; 27-point type for a half-
page tabloid newspaper advertisement; 31.5-point type for a
double page spread magazine or whole-page magazine
advertisement; 22.5-point type for a 28 centimeter by 3
column advertisement; and 15-point type for a 20 centimeter
by 2 column advertisement. The label statements shall be in
English, except that in the case of--
``(A) an advertisement that appears in a newspaper,
magazine, periodical, or other publication that is not in
English, the statements shall appear in the predominant
language of the publication; and
``(B) in the case of any other advertisement that is not in
English, the statements shall appear in the same language as
that principally used in the advertisement.
``(3) Matchbooks.--Notwithstanding paragraph (2), for
matchbooks (defined as containing not more than 20 matches)
customarily given away with the purchase of tobacco products,
each label statement required by subsection (a) may be
printed on the inside cover of the matchbook.
``(4) Adjustment by secretary.--The Secretary may, through
a rulemaking under section 553 of title 5, United States
Code, adjust the format and type sizes for the label
statements required by this section or the text, format, and
type sizes of any required tar, nicotine yield, or other
constituent (including smoke constituent) disclosures, or to
establish the text, format, and type sizes for any other
disclosures required under the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 301 et. seq.). The text of any such
label statements or disclosures shall be required to appear
only within the 20 percent area of cigarette advertisements
provided by paragraph (2) of this subsection. The Secretary
shall promulgate regulations which provide for adjustments in
the format and type sizes of any text required to appear in
such area to ensure that the total text required to appear by
law will fit within such area.
``(5) Marketing requirements.--
``(A) The label statements specified in subsection (a)(1)
shall be randomly displayed in each 12-month period, in as
equal a number of times as is possible on each brand of the
product and be randomly distributed in all areas of the
United States in which the product is marketed in accordance
with a plan submitted by the tobacco product manufacturer,
importer, distributor, or retailer and approved by the
Secretary.
``(B) The label statements specified in subsection (a)(1)
shall be rotated quarterly in alternating sequence in
advertisements for each brand of cigarettes in accordance
with a plan submitted by the tobacco product
manufacturer, importer, distributor, or retailer to, and
approved by, the Secretary.
``(C) The Secretary shall review each plan submitted under
subparagraph (B) and approve it if the plan--
``(i) will provide for the equal distribution and display
on packaging and the rotation required in advertising under
this subsection; and
``(ii) assures that all of the labels required under this
section will be displayed by the tobacco product
manufacturer, importer, distributor, or retailer at the same
time.
``(6) Applicability to retailers.--This subsection applies
to a retailer only if that retailer is responsible for or
directs the label statements required under this section
except that this paragraph shall not relieve a retailer of
liability if the retailer displays, in a location open to the
public, an advertisement that is not labeled in accordance
with the requirements of this subsection.''.

SEC. __22. AUTHORITY TO REVISE CIGARETTE WARNING LABEL
STATEMENTS.

Section 4 of the Federal Cigarette Labeling and Advertising
Act (15 U.S.C. 1333), as amended by section __21, is further
amended by adding at the end the following:
``(c) Change in Required Statements.--The Secretary may, by
a rulemaking conducted under section 553 of title 5, United
States Code, adjust the format, type size, and text of any of
the label requirements, require color graphics to accompany
the text, increase the required label area from 30 percent up
to 50 percent of the front and rear panels of the package, or
establish the format, type size, and text of any other
disclosures required under the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 301 et seq.), if the Secretary finds
that such a change would promote greater public understanding
of the risks associated with the use of tobacco products.''.

SEC. __23. STATE REGULATION OF CIGARETTE ADVERTISING AND
PROMOTION.

Section 5 of the Federal Cigarette Labeling and Advertising
Act (15 U.S.C. 1334) is amended by adding at the end the
following:
``(c) Exception.--Notwithstanding subsection (b), a State
or locality may enact statutes and promulgate regulations,
based on smoking and health, that take effect after the
effective date of the Family Smoking Prevention and Tobacco
Control Act, imposing specific bans or restrictions on the
time, place, and manner, but not content, of the advertising
or promotion of any cigarettes.''.

SEC. __24. SMOKELESS TOBACCO LABELS AND ADVERTISING WARNINGS.

Section 3 of the Comprehensive Smokeless Tobacco Health
Education Act of 1986 (15 U.S.C. 4402) is amended to read as
follows:

``SEC. 3. SMOKELESS TOBACCO WARNING.

``(a) General Rule.--
``(1) It shall be unlawful for any person to manufacture,
package, sell, offer to sell, distribute, or import for sale
or distribution within the United States any smokeless
tobacco product unless the product package bears, in
accordance with the requirements of this Act, one of the
following labels:

`WARNING: This product can cause mouth cancer'.
`WARNING: This product can cause gum disease and tooth loss'.
`WARNING: This product is not a safe alternative to
cigarettes'.
`WARNING: Smokeless tobacco is addictive'.
``(2) Each label statement required by paragraph (1) shall
be--
``(A) located on the 2 principal display panels of the
package, and each label statement shall comprise at least 30
percent of each such display panel; and
``(B) in 17-point conspicuous and legible type and in black
text on a white background, or white text on a black
background, in a manner that contrasts by typography, layout,
or color, with all other printed material on the package, in
an alternating fashion under the plan submitted under
subsection (b)(3), except that if the text of a label
statement would occupy more than 70 percent of the area
specified by subparagraph (A), such text may appear in a
smaller type size, so long as at least 60 percent of such
warning area is occupied by the label statement.
``(3) The label statements required by paragraph (1) shall
be introduced by each tobacco product manufacturer, packager,
importer, distributor, or retailer of smokeless tobacco
products concurrently into the distribution chain of such
products.
``(4) The provisions of this subsection do not apply to a
tobacco product manufacturer or distributor of any smokeless
tobacco product that does not manufacture, package, or import
smokeless tobacco products for sale or distribution within
the United States.
``(5) A retailer of smokeless tobacco products shall not be
in violation of this subsection for packaging that is
supplied to the retailer by a tobacco products manufacturer,
importer, or distributor and that is not altered by the
retailer unless the retailer offers for sale, sells, or
distributes a smokeless tobacco product that is not labeled
in accordance with this subsection.
``(b) Required Labels.--
``(1) It shall be unlawful for any tobacco product
manufacturer, packager, importer, distributor, or retailer of
smokeless tobacco products to advertise or cause to be
advertised within the United States any smokeless tobacco
product unless its advertising bears, in accordance with the
requirements of this section, one of the labels specified in
subsection (a).
``(2) Each label statement required by subsection (a) in
smokeless tobacco advertising shall comply with the standards
set forth in this paragraph. For press and poster
advertisements, each such statement and (where applicable)
any required statement relating to tar, nicotine, or other
constituent yield shall--
``(A) comprise at least 20 percent of the area of the
advertisement, and the warning area shall be delineated by a
dividing line of contrasting color from the advertisement;
and
``(B) the word `WARNING' shall appear in capital letters
and each label statement shall appear in conspicuous and
legible type. The text of the label statement shall be black
on a white background, or white on a black background, in an
alternating fashion under the plan submitted under paragraph
(3).
``(3)(A) The label statements specified in subsection
(a)(1) shall be randomly displayed

[[Page S8259]]

in each 12-month period, in as equal a number of times as is
possible on each brand of the product and be randomly
distributed in all areas of the United States in which the
product is marketed in accordance with a plan submitted by
the tobacco product manufacturer, importer, distributor, or
retailer and approved by the Secretary.
``(B) The label statements specified in subsection (a)(1)
shall be rotated quarterly in alternating sequence in
advertisements for each brand of smokeless tobacco product in
accordance with a plan submitted by the tobacco product
manufacturer, importer, distributor, or retailer to, and
approved by, the Secretary.
``(C) The Secretary shall review each plan submitted under
subparagraph (B) and approve it if the plan--
``(i) will provide for the equal distribution and display
on packaging and the rotation required in advertising under
this subsection; and
``(ii) assures that all of the labels required under this
section will be displayed by the tobacco product
manufacturer, importer, distributor, or retailer at the same
time.
``(D) This paragraph applies to a retailer only if that
retailer is responsible for or directs the label statements
under this section, unless the retailer displays in a
location open to the public, an advertisement that is not
labeled in accordance with the requirements of this
subsection.
``(c) Television and Radio Advertising.--It is unlawful to
advertise smokeless tobacco on any medium of electronic
communications subject to the jurisdiction of the Federal
Communications Commission.''.

SEC. __25. AUTHORITY TO REVISE SMOKELESS TOBACCO PRODUCT
WARNING LABEL STATEMENTS.

Section 3 of the Comprehensive Smokeless Tobacco Health
Education Act of 1986 (15 U.S.C. 4402), as amended by section
__23, is further amended by adding at the end the following:
``(d) Authority To Revise Warning Label Statements.--The
Secretary may, by a rulemaking conducted under section 553 of
title 5, United States Code, adjust the format, type size,
and text of any of the label requirements, require color
graphics to accompany the text, increase the required label
area from 30 percent up to 50 percent of the front and rear
panels of the package, or establish the format, type size,
and text of any other disclosures required under the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.), if the
Secretary finds that such a change would promote greater
public understanding of the risks associated with the use of
smokeless tobacco products.''.

SEC. __26. TAR, NICOTINE, AND OTHER SMOKE CONSTITUENT
DISCLOSURE TO THE PUBLIC.

Section 4(a) of the Federal Cigarette Labeling and
Advertising Act (15 U.S.C. 1333 (a)), as amended by section
__21, is further amended by adding at the end the following:
``(4)(A) The Secretary shall, by a rulemaking conducted
under section 553 of title 5, United States Code, determine
(in the Secretary's sole discretion) whether cigarette and
other tobacco product manufacturers shall be required to
include in the area of each cigarette advertisement specified
by subsection (b) of this section, or on the package label,
or both, the tar and nicotine yields of the advertised or
packaged brand. Any such disclosure shall be in accordance
with the methodology established under such regulations,
shall conform to the type size requirements of subsection (b)
of this section, and shall appear within the area specified
in subsection (b) of this section.
``(B) Any differences between the requirements established
by the Secretary under subparagraph (A) and tar and nicotine
yield reporting requirements established by the Federal Trade
Commission shall be resolved by a memorandum of understanding
between the Secretary and the Federal Trade Commission.
``(C) In addition to the disclosures required by
subparagraph (A) of this paragraph, the Secretary may, under
a rulemaking conducted under section 553 of title 5, United
States Code, prescribe disclosure requirements regarding the
level of any cigarette or other tobacco product constituent
including any smoke constituent. Any such disclosure may be
required if the Secretary determines that disclosure would be
of benefit to the public health, or otherwise would increase
consumer awareness of the health consequences of the use of
tobacco products, except that no such prescribed disclosure
shall be required on the face of any cigarette package or
advertisement. Nothing in this section shall prohibit the
Secretary from requiring such prescribed disclosure through a
cigarette or other tobacco product package or advertisement
insert, or by any other means under the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 301 et seq.).
``(D) This paragraph applies to a retailer only if that
retailer is responsible for or directs the label statements
required under this section, except that this paragraph shall
not relieve a retailer of liability if the retailer sells or
distributes tobacco products that are not labeled in
accordance with the requirements of this subsection.''.

CHAPTER 3--PREVENTION OF ILLICIT TRADE IN TOBACCO PRODUCTS

SEC. __31. LABELING, RECORDKEEPING, RECORDS INSPECTION.

Chapter IX of the Federal Food, Drug, and Cosmetic Act, as
added by section __11, is further amended by adding at the
end the following:

``SEC. 921. LABELING, RECORDKEEPING, RECORDS INSPECTION.

``(a) Origin Labeling.--The label, packaging, and shipping
containers of tobacco products for introduction or delivery
for introduction into interstate commerce shall bear the
statement `sale only allowed in the United States.'
``(b) Regulations Concerning Recordkeeping for Tracking and
Tracing.--
``(1) In general.--Not later than 9 months after the date
of enactment of the Family Smoking Prevention and Tobacco
Control Act, the Secretary shall promulgate regulations
regarding the establishment and maintenance of records by any
person who manufactures, processes, transports, distributes,
receives, packages, holds, exports, or imports tobacco
products.
``(2) Inspection.--In promulgating the regulations
described in paragraph (1), the Secretary shall consider
which records are needed for inspection to monitor the
movement of tobacco products from the point of manufacture
through distribution to retail outlets to assist in
investigating potential illicit trade, smuggling or
counterfeiting of tobacco products.
``(3) Codes.--The Secretary may require codes on the labels
of tobacco products or other designs or devices for the
purpose of tracking or tracing the tobacco product through
the distribution system.
``(4) Size of business.--The Secretary shall take into
account the size of a business in promulgating regulations
under this section.
``(5) Recordkeeping by retailers.--The Secretary shall not
require any retailer to maintain records relating to
individual purchasers of tobacco products for personal
consumption.
``(c) Records Inspection.--If the Secretary has a
reasonable belief that a tobacco product is part of an
illicit trade or smuggling or is a counterfeit product, each
person who manufactures, processes, transports, distributes,
receives, holds, packages, exports, or imports tobacco
products shall, at the request of an officer or employee duly
designated by the Secretary, permit such officer or employee,
at reasonable times and within reasonable limits and in a
reasonable manner, upon the presentation of appropriate
credentials and a written notice to such person, to have
access to and copy all records (including financial records)
relating to such article that are needed to assist the
Secretary in investigating potential illicit trade, smuggling
or counterfeiting of tobacco products.
``(d) Knowledge of Illegal Transaction.--If the
manufacturer or distributor of a tobacco product has
knowledge which reasonably supports the conclusion that a
tobacco product manufactured or distributed by such
manufacturer or distributor that has left the control of such
person may be or has been--
``(A) imported, exported, distributed or offered for sale
in interstate commerce by a person without paying duties or
taxes required by law; or
``(B) imported, exported, distributed or diverted for
possible illicit marketing,

the manufacturer or distributor shall promptly notify the
Attorney General of such knowledge.
``(2) Knowledge defined.--For purposes of this subsection,
the term `knowledge' as applied to a manufacturer or
distributor means--
``(A) the actual knowledge that the manufacturer or
distributor had; or
``(B) the knowledge which a reasonable person would have
had under like circumstances or which would have been
obtained upon the exercise of due care.

SEC. __32. STUDY AND REPORT.

(a) Study.--The Comptroller General of the United States
shall conduct a study of cross-border trade in tobacco
products to--
(1) collect data on cross-border trade in tobacco products,
including illicit trade and trade of counterfeit tobacco
products and make recommendations on the monitoring of such
trade;
(2) collect data on cross-border advertising (any
advertising intended to be broadcast, transmitted, or
distributed from the United States to another country) of
tobacco products and make recommendations on how to prevent
or eliminate, and what technologies could help facilitate the
elimination of, cross-border advertising.
(b) Report.--Not later than 18 months after the date of
enactment of this Act, the Comptroller General of the United
States shall submit to the Committee on Health, Education,
Labor, and Pensions of the Senate and the Committee on Energy
and Commerce of the House of Representatives a report on the
study described in subsection (a).

Subtitle B--Tobacco Market Transition

SEC. __40. SHORT TITLE OF SUBTITLE.

This subtitle may be cited as the ``Tobacco Market
Transition Act of 2004''.

CHAPTER 1--TERMINATION OF CURRENT TOBACCO PROGRAMS

SEC. __41. TERMINATION OF TOBACCO PRODUCTION ADJUSTMENT
PROGRAMS.

(a) Tobacco Statistics.--The Act of January 14, 1929 (45
Stat. 1079; 7 U.S.C. 501 et seq.) is repealed.
(b) Tobacco Standards.--The Tobacco Inspection Act (7
U.S.C. 511 et seq.) is repealed.
(c) Tobacco Inspections.--Section 213 of the Tobacco
Adjustment Act of 1983 (7 U.S.C. 511r) is repealed.
(d) Tobacco Control.--The Act of April 25, 1936 (commonly
known as the Tobacco Control Act; 7 U.S.C. 515 et seq.), is
repealed.

[[Page S8260]]

(e) Commodity Handling Orders.--Section 8c(2)(A) of the
Agricultural Adjustment Act (7 U.S.C. 608c(2)(A)), reenacted
with amendments by the Agricultural Marketing Agreement Act
of 1937, is amended by striking ``tobacco,''.
(f) Processing Tax.--Section 9(b) of the Agricultural
Adjustment Act (7 U.S.C. 609(b)), reenacted with amendments
by the Agricultural Marketing Agreement Act of 1937, is
amended--
(1) in paragraph (2), by striking ``tobacco,''; and
(2) in paragraph (6)B)(i), by striking ``, or, in the case
of tobacco, is less than the fair exchange value by not more
than 10 per centum,''.
(g) Burley Tobacco Import Review.--Section 3 of Public Law
98-59 (7 U.S.C. 625) is repealed.
(h) Declaration of Policy.--Section 2 of the Agricultural
Adjustment Act of 1938 (7 U.S.C. 1282) is amended by striking
``tobacco,''.
(i) Definitions.--Section 301(b) of the Agricultural
Adjustment Act of 1938 (7 U.S.C. 1301(b)) is amended--
(1) in paragraph (3)--
(A) by striking subparagraph (C); and
(B) by redesignating subparagraph (D) as subparagraph (C);
(2) in paragraph (6)(A), by striking ``tobacco,'';
(3) in paragraph (10)--
(A) by striking subparagraph (B); and
(B) by redesignating subparagraph (C) as subparagraph (B);
(4) in paragraph (11)(B), by striking ``and tobacco'';
(5) in paragraph (12), by striking ``tobacco,'';
(6) in paragraph (14)--
(A) in subparagraph (A), by striking ``(A)''; and
(B) by striking subparagraphs (B), (C), and (D);
(7) by striking paragraph (15);
(8) in paragraph (16)--
(A) by striking subparagraph (B); and
(B) by redesignating subparagraph (C) as subparagraph (B);
(9) by striking paragraph (17); and
(10) by redesignating paragraph (16) as paragraph (15).
(j) Parity Payments.--Section 303 of the Agricultural
Adjustment Act of 1938 (7 U.S.C. 1303) is amended in the
first sentence by striking ``rice, or tobacco,'' and
inserting ``or rice,''.
(k) Marketing Quotas.--Part I of subtitle B of title III of
the Agricultural Adjustment Act of 1938 (7 U.S.C. 1311 et
seq.) is repealed.
(l) Administrative Provisions.--Section 361 of the
Agricultural Adjustment Act of 1938 (7 U.S.C. 1361) is
amended by striking ``tobacco,''.
(m) Adjustment of Quotas.--Section 371 of the Agricultural
Adjustment Act of 1938 (7 U.S.C. 1371) is amended--
(1) in the first sentence of subsection (a), by striking
``rice, or tobacco'' and inserting ``or rice''; and
(2) in the first sentence of subsection (b), by striking
``rice, or tobacco'' and inserting ``or rice''.
(n) Reports and Records.--Section 373 of the Agricultural
Adjustment Act of 1938 (7 U.S.C. 1373) is amended--
(1) by striking ``rice, or tobacco'' each place it appears
in subsections (a) and (b) and inserting ``or rice''; and
(2) in subsection (a)--
(A) in the first sentence, by striking ``all persons
engaged in the business of redrying, prizing, or stemming
tobacco for producers,''; and
(B) in the last sentence, by striking ``$500;'' and all
that follows through the period at the end of the sentence
and inserting ``$500.''.
(o) Regulations.--Section 375 of the Agricultural
Adjustment Act of 1938 (7 U.S.C. 1375) is amended--
(1) in subsection (a), by striking ``peanuts, or tobacco''
and inserting ``or peanuts''; and
(2) by striking subsection (c).
(p) Eminent Domain.--Section 378 of the Agricultural
Adjustment Act of 1938 (7 U.S.C. 1378) is amended--
(1) in the first sentence of subsection (c), by striking
``cotton, and tobacco'' and inserting ``and cotton''; and
(2) by striking subsections (d), (e), and (f).
(q) Burley Tobacco Farm Reconstitution.--Section 379 of the
Agricultural Adjustment Act of 1938 (7 U.S.C. 1379) is
amended--
(1) in subsection (a)--
(A) by striking ``(a)''; and
(B) in paragraph (6), by striking ``, but this clause (6)
shall not be applicable in the case of burley tobacco''; and
(2) by striking subsections (b) and (c).
(r) Acreage-Poundage Quotas.--Section 4 of the Act of April
16, 1955 (Public Law 89-12; 7 U.S.C. 1314c note), is
repealed.
(s) Burley Tobacco Acreage Allotments.--The Act of July 12,
1952 (7 U.S.C. 1315), is repealed.
(t) Transfer of Allotments.--Section 703 of the Food and
Agriculture Act of 1965 (7 U.S.C. 1316) is repealed.
(u) Advance Recourse Loans.--Section 13(a)(2)(B) of the
Food Security Improvements Act of 1986 (7 U.S.C. 1433c-
1(a)(2)(B)) is amended by striking ``tobacco and''.
(v) Tobacco Field Measurement.--Section 1112 of the Omnibus
Budget Reconciliation Act of 1987 (Public Law 100-203) is
amended by striking subsection (c).

SEC. __42. TERMINATION OF TOBACCO PRICE SUPPORT PROGRAM.

(a) Parity Price Support.--Section 101 of the Agricultural
Act of 1949 (7 U.S.C. 1441) is amended--
(1) in the first sentence of subsection (a), by striking
``tobacco (except as otherwise provided herein), corn,'' and
inserting ``corn'';
(2) by striking subsections (c), (g), (h), and (i);
(3) in subsection (d)(3)--
(A) by striking ``, except tobacco,''; and
(B) by striking ``and no price support shall be made
available for any crop of tobacco for which marketing quotas
have been disapproved by producers;''; and
(4) by redesignating subsections (d) and (e) as subsections
(c) and (d), respectively.
(b) Termination of Tobacco Price Support and No Net Cost
Provisions.--Sections 106, 106A, and 106B of the Agricultural
Act of 1949 (7 U.S.C. 1445, 1445-1, 1445-2) are repealed.
(c) Definition of Basic Agricultural Commodity.--Section
408(c) of the Agricultural Act of 1949 (7 U.S.C. 1428(c)) is
amended by striking ``tobacco,''.
(d) Review of Burley Tobacco Imports.--Section 3 of Public
Law 98-59 (7 U.S.C. 625) is repealed.
(e) Powers of Commodity Credit Corporation.--Section 5 of
the Commodity Credit Corporation Charter Act (15 U.S.C. 714c)
is amended by inserting ``(other than tobacco)'' after
``agricultural commodities'' each place it appears.

SEC. __43. LIABILITY.

This title and the amendments made by this title shall not
affect the liability of any person under any provision of law
with respect to any crop of tobacco planted before the
effective date prescribed in section __62.

CHAPTER 2--TOBACCO ASSISTANCE

SEC. __51. TOBACCO ASSISTANCE.

Title III of the Agricultural Adjustment Act of 1938 is
amended by inserting after subtitle D (7 U.S.C. 1379a et
seq.) the following:

``Subtitle E--Tobacco Assistance

``SEC. 380A. DEFINITIONS.

``In this subtitle:
``(1) Active producer of tobacco.--The term `active
producer of tobacco' means a person that--
``(A) is actively engaged in the production of tobacco
marketed or considered planted; and
``(B) shares in the risk of producing the tobacco.
``(2) Applicable fiscal year.--The term `applicable fiscal
year' means each of fiscal years 2004 through 2013.
``(3) Base period.--The term `base period' means the 1-year
period ending the June 30 preceding each applicable fiscal
year.
``(4) Considered planted.--The term `considered planted'
means tobacco planted but failed to be produced as a result
of a natural disaster, as determined by the Secretary.
``(5) Department.--The term `Department' means the
Department of Agriculture.
``(6) Eligible state.--The term `eligible State' means--
``(A) in the case of section 380O, each of the States of
Maryland, Pennsylvania, South Carolina, and North Carolina;
and
``(B) in the case of section 380Q, each of the States of
Alabama, Arkansas, Florida, Georgia, Indiana, Kansas,
Kentucky, Minnesota, Missouri, North Carolina, Ohio,
Oklahoma, South Carolina, Tennessee, Virginia, West Virginia,
and Wisconsin.
``(7) Impacted community.--The term `impacted community'
means a community in an eligible State that is adversely
affected by a reduction in gross receipts from the sale of
tobacco.
``(8) Market share.--The term `market share' means the
share of each manufacturer or importer of a class of tobacco
product (expressed as a decimal to the fourth place) of the
total volume of domestic sales of the class of tobacco
product during the base period for the applicable fiscal year
for an assessment under section 380T.
``(9) Production board.--The term `Production Board' means
a Production Board established for a kind of tobacco under
section 380H.
``(10) Quota tobacco.--The term `quota tobacco' means a
kind of tobacco that is subject to a farm marketing quota or
farm acreage allotment for the 2002 tobacco marketing years
under a marketing quota or allotment program established
under part I of subtitle B (as in effect before the effective
date of this subtitle).
``(11) Tobacco.--The term `tobacco' means each of the
following kinds of tobacco:
``(A) Flue-cured tobacco, comprising types 11, 12, 13, and
14.
``(B) Fire-cured tobacco, comprising types 22 and 23.
``(C) Dark air-cured tobacco, comprising types 35 and 36.
``(D) Virginia sun-cured tobacco, comprising type 37.
``(E) Virginia fire-cured tobacco, comprising type 21.
``(F) Burley tobacco, comprising type 31.
``(G) Cigar-filler and cigar-binder tobacco, comprising
types 42, 43, 44, 53, 54, and 55.
``(12) Tobacco quality board.--The term `Tobacco Quality
Board' means the Tobacco Quality Board established under
section 380G.
``(13) Tobacco quota holder.--The term `tobacco quota
holder' means a person that is considered an tobacco quota
holder under section 380B(b).
``(14) Tobacco trust fund.--The term `Tobacco Trust Fund'
means the Tobacco Trust Fund established under section 380S.
``(15) Traditional producer of tobacco.--The term
`traditional producer of tobacco'

[[Page S8261]]

means a person that, for at least 1 of the 2000, 2001, or
2002 tobacco marketing years--
``(A) was actively engaged in the production of tobacco
marketed, or considered planted, under a marketing quota
established under part I of subtitle B (as in effect before
the effective date of this subtitle); and
``(B) shared in the risk of producing the tobacco.
``(16) Traditional tobacco county.--
``(A) In general.--The term `traditional tobacco county'
means a county in the United States that had 1 or more farms
operated by traditional producers of tobacco under a
marketing quota for at least 1 of the marketing years
described in paragraph (15).
``(B) Inclusion.--For the purpose of determining the crop
acreage base of an active producer of tobacco for a kind of
tobacco produced in the State of Georgia under section
380I(c)(3), the term `traditional tobacco county' includes a
county that is contiguous to a county described in
subparagraph (A).

``CHAPTER 1--PAYMENTS TO TOBACCO QUOTA HOLDERS AND TRADITIONAL
PRODUCERS

``SEC. 380B. TRANSITION PAYMENTS TO TOBACCO QUOTA HOLDERS.

``(a) In General.--The Secretary shall make transition
payments to each tobacco quota holder.
``(b) Tobacco Quota Holder.--
``(1) In general.--Except as otherwise provided in this
subsection, the Secretary shall consider a person to be a
tobacco quota holder under this section if the person held,
as of July 1, 2002, a basic quota or farm acreage allotment
(as applicable) for quota tobacco established for the 2002
tobacco marketing year under a marketing quota program
established under part I of subtitle B (as in effect before
the effective date of this subtitle).
``(2) Effect of purchase contract.--If there was an
agreement for the purchase of all or part of a farm described
in paragraph (1) as of July 1, 2002, and the parties to the
sale are unable to agree to the disposition of eligibility
for payments under this section, the Secretary, taking into
account any transfer of quota that has been agreed to, shall
provide for the equitable division of the payments among the
parties by adjusting the determination of who is the tobacco
quota holder with respect to particular pounds of the quota.
``(3) Effect of agreement for permanent quota transfer.--If
the Secretary determines that there was in existence, as of
July 1, 2002, an agreement for the permanent transfer of
quota, but that the transfer was not completed by that date,
the Secretary shall consider the tobacco quota holder to be
the party to the agreement that, as of that date, was the
owner of the farm to which the quota was to be transferred.
``(4) Protected bases.--A person that owns a farm with a
tobacco poundage quota that is protected under a conservation
reserve program contract entered into under section 1231 of
the Food Security Act of 1985 (16 U.S.C. 3831) shall be
considered to be a tobacco quota holder with respect to the
protected poundage.
``(5) Quantity of quota held.--
``(A) In general.--A person shall be considered a tobacco
quota holder for purposes of this section only with respect
to that quantity of quota that qualifies the person as a
tobacco quota holder.
``(B) Included quota.--The determination of the tobacco
poundage amount for which the person qualifies shall--
``(i) be based on the quantity of quota held by person on
January 1, 2004;
``(ii) subject to clause (iii), not be greater than the
quantity of quota held by the person for the 2002 crop; and
``(iii) take into account--

``(I) sales of quota that occurred during the period
beginning July 1, 2002, and ending December 31, 2004; and
``(II) any transfers of quota that took place after July 1,
2002.

``(c) Application.--
``(1) In general.--To be eligible to receive a payment
under this section, a person shall submit to the Secretary an
application containing such information as the Secretary may
require to demonstrate to the satisfaction of the Secretary
that the person is a tobacco quota holder.
``(2) Administration.--The application shall be submitted
within such time, in such form, and in such manner as the
Secretary may require.
``(d) Base Quota Level.--
``(1) In general.--The Secretary shall establish a base
quota level applicable to each tobacco quota holder, as
determined under this subsection.
``(2) Level.--The base quota level for each tobacco quota
holder shall be equal to the quantity of quota that qualifies
a person as the tobacco quota holder under subsection (b)(5).
``(e) Payment.--The Secretary shall make payments to each
tobacco quota holder under subsection (b) in an amount
obtained by multiplying--
``(1) 80 cents per pound for each of fiscal years 2004
through 2013; by
``(2) the base quota level established for the quota holder
under subsection (d).
``(f) Time for Payment.--Subject to section 380D(c), the
payments to tobacco quota holders required under this section
shall be made by, to the maximum extent practicable, the date
that is 180 days after the date of enactment of this subtitle
and each November 1 thereafter.

``SEC. 380C. DIRECT PAYMENTS TO TRADITIONAL PRODUCERS OF
TOBACCO.

``(a) In General.--The Secretary shall make direct payments
under this section to traditional producers of tobacco.
``(b) Eligibility.--
``(1) In general.--To be eligible to receive a payment
under this section, a person shall submit to the Secretary an
application containing such information as the Secretary may
require to demonstrate to the satisfaction of the Secretary
that the person is a traditional producer of tobacco.
``(2) Administration.--The application shall be submitted
within such time, in such form, and in such manner as the
Secretary may require.
``(c) Base Quota Level.--
``(1) In general.--The Secretary shall establish a base
quota level applicable to each traditional producer of
tobacco, as determined under this subsection.
``(2) Flue-cured and burley tobacco.--In the case of Flue-
cured tobacco (types 11, 12, 13, and 14) and Burley tobacco
(type 31), the base quota level for each tobacco quota holder
shall be equal to the effective tobacco marketing quota
(irrespective of disaster lease and transfers) under part I
of subtitle B (as in effect before the effective date of this
subtitle) for the 2002 marketing year for quota tobacco
produced on the farm.
``(3) Other kinds of tobacco.--In the case of each kind of
tobacco other than Flue-cured tobacco (types 11, 12, 13, and
14) and Burley tobacco (type 31), for the purpose of
calculating a payment to a traditional producer of tobacco,
the base quota level for the traditional producer of tobacco
shall be the quantity obtained by multiplying--
``(A) the basic tobacco farm acreage allotment for the 2002
marketing year established by the Secretary for quota tobacco
produced on the farm; by
``(B) the actual yield of the crop of quota tobacco
produced on the farm.
``(d) Payment.--
``(1) In general.--Subject to paragraph (2), the Secretary
shall make payments to each traditional producer of tobacco,
as determined under subsection (b), in an amount obtained by
multiplying--
``(A) 40 cents per pound for each of fiscal years 2004
through 2013; by
``(B) the base quota level established for the traditional
producer of tobacco under subsection (c).
``(2) Payment rate.--The rate for payments to a traditional
producer of quota tobacco under paragraph (1)(A) shall be
equal to--
``(A) in the case of a person that produced quota tobacco
marketed, or considered planted, under a marketing quota for
all 3 of the 2000, 2001, and 2002 tobacco marketing years,
the rate prescribed under paragraph (1)(A) for the applicable
fiscal year;
``(B) in the case of a person that produced quota tobacco
marketed, or considered planted, under a marketing quota for
not more than 2 of the 2000, 2001, and 2002 tobacco marketing
years, \2/3\ of the rate prescribed under paragraph (1)(A)
for the applicable fiscal year; and
``(C) in the case of a person that produced quota tobacco
marketed, or considered planted, under a marketing quota for
not more than 1 of the 2000, 2001, and 2002 tobacco marketing
years, \1/3\ of the rate prescribed under paragraph (1)(A)
for the applicable fiscal year.
``(e) Time for Payment.--Subject to section 380D(c), the
payments to traditional producers of tobacco required under
this section shall be made by, to the maximum extent
practicable, the date that is 180 days after the date of
enactment of this subtitle and each November 1 thereafter.

``SEC. 380D. ADMINISTRATION.

``(a) Resolution of Disputes.--
``(1) In general.--Any dispute regarding the eligibility of
a person to receive a payment under this subtitle, or the
amount of the payment, may be appealed to the county
committee established under section 8 of the Soil
Conservation and Domestic Allotment Act (16 U.S.C. 590h) for
the county or other area in which the farming operation of
the person is located.
``(2) National appeals division.--Any adverse determination
of a county committee under subsection (a) may be appealed to
the National Appeals Division established under subtitle H of
the Department of Agriculture Reorganization Act of 1994 (7
U.S.C. 6991 et seq.).
``(b) Use of Qualified Financial Institutions.--The
Secretary may use qualified financial institutions to manage
assets, make payments, and otherwise carry out this subtitle.
``(c) Advanced Payments.--
``(1) In general.--The Secretary shall permit a tobacco
quota holder and a traditional producer of tobacco to elect
to receive advanced payments for 2 or more fiscal years under
this chapter by selecting 1 of 4 advance payment options
established by the Secretary, including a lump sum payment
option.
``(2) Risk.--A tobacco quota holder or traditional producer
of tobacco that elects to receive accelerated payments shall
bear the expense of the discount in value for acceleration of
the payments.
``(3) Qualified financial institutions.--
``(A) In general.--The Secretary shall provide advanced
payments under this subsection through 1 or more qualified
financial institutions designated by the Secretary.
``(B) Administration.--In providing advanced payments under
this subsection, a

[[Page S8262]]

qualified financial institution shall (in accordance with
guidance issued by the Secretary)--
``(i) offer the advanced payments regardless of the
location or size of the payments;
``(ii) apply updated discount rates that vary only by
payment term; and
``(iii) distribute the advanced payments in accordance with
the option elected by the tobacco quota holder or traditional
producer of tobacco.
``(4) County offices.--A county office of the Department
may receive applications and other documentation necessary to
receive advanced payments under this subsection, on behalf of
the Secretary and qualified financial institutions.
``(d) Treatment of Payments.--Payments received by a
tobacco quota holder or traditional producer of tobacco under
this chapter shall be considered received not earlier than
the date the tobacco quota holder or traditional producer of
tobacco first receives the payments.

``CHAPTER 2--TOBACCO QUALITY AND QUANTITY

``SEC. 380G. TOBACCO QUALITY BOARD.

``(a) In General.--The Secretary shall establish a
permanent advisory board within the Department, to be known
as the `Tobacco Quality Board'.
``(b) Membership.--
``(1) In general.--The Tobacco Quality Board shall consist
of 13 members, of which--
``(A) 5 members shall be appointed by the Secretary from
nominations submitted by representatives of tobacco producers
in the United States, including at least--
``(i) 1 representative of Flue-cured tobacco producers;
``(ii) 1 representative of Burley tobacco producers; and
``(iii) 1 representative of dark fire-cured tobacco
producers;
``(B) 5 members shall be appointed by the Secretary from
nominations submitted by representatives of tobacco product
manufacturers in the United States, including at least--
``(i) 1 representative of smokeless tobacco product
manufacturers; and
``(ii) 1 representative of export dealers of tobacco; and
``(C) 3 at-large members shall be appointed by the
Secretary, including at least 1 officer or employee of the
Department.
``(2) Chairperson.--The Secretary shall appoint the
chairperson of the Tobacco Quality Board, with a different
member serving as chairperson of the Tobacco Quality Board
each term.
``(3) Terms.--Each member of the Tobacco Quality Board
shall serve for 2-year terms, except that the terms of the
members first appointed to the Tobacco Quality Board shall be
staggered so as to establish a rotating membership of the
Tobacco Quality Board, as determined by the Secretary.
``(c) Duties.--The Tobacco Quality Board shall--
``(1) determine and describe the physical characteristics
of tobacco produced in the United States and unmanufactured
tobacco imported into the United States;
``(2) assemble and evaluate, in a systematic manner,
concerns and problems with the quality of tobacco produced in
the United States, expressed by domestic and foreign buyers
and manufacturers of tobacco products;
``(3) review data collected by Federal agencies on the
physical and chemical integrity of tobacco produced in the
United States and unmanufactured tobacco imported into the
United States, to ensure that tobacco being used in
domestically-manufactured tobacco products is of the highest
quality and is free from prohibited physical and chemical
agents;
``(4) investigate and communicate to the Secretary--
``(A) conditions with respect to the production of tobacco
that discourage improvements in the quality of tobacco
produced in the United States; and
``(B) recommendations for regulatory changes that would
address tobacco quality issues;
``(5) conduct oversight regarding tobacco marketing issues
(such as opening sales dates and marketing regulations)
applicable to auction markets;
``(6) provide assistance to Federal agencies on actions
taken by the Federal agencies that affect the quality or
quantity of tobacco produced in the United States;
``(7) not later than a date determined by the Secretary,
make recommendations to the Secretary, and the applicable
Production Board established for the kind of tobacco, on the
range of base years for the maximum crop acreage base under
section 380I(c)(3)(B), and for the maximum crop poundage base
under section 380I(d)(3)(B), for each crop of each kind of
tobacco, except that the range of base years shall be the
crop years for the 1998 through 2002 crops unless otherwise
determined by the Tobacco Quality Board; and
``(8) carry out such other related activities as are
assigned to the Tobacco Quality Board by the Secretary.
``(d) Administration.--The Secretary shall provide the
Tobacco Quality Board with (as determined by the Secretary)--
``(1) a staff that is--
``(A) experienced in the sampling and analysis of
unmanufactured tobacco; and
``(B) capable of collecting data and monitoring tobacco
production information; and
``(2) other resources and information necessary for the
Tobacco Quality Board to perform the duties of the Tobacco
Quality Board under this subtitle, including--
``(A) information concerning acreage devoted to the
production of each kind of tobacco; and
``(B) international information from the Foreign
Agricultural Service.
``(e) Applicability of Federal Advisory Committee Act.--The
Federal Advisory Committee Act (5 U.S.C. App.) shall not
apply to the Tobacco Quality Board.

``SEC. 380H. PRODUCTION BOARDS.

``(a) In General.--The Secretary shall establish a
permanent advisory board for each kind of tobacco, to be
known as a `Production Board'.
``(b) Membership.--
``(1) In general.--Subject to paragraph (2), a Production
Board for a kind of tobacco shall consist of--
``(A) not more than 10 members appointed by the Secretary
from nominations submitted by representatives of producers of
that kind of tobacco in the United States; and
``(B) 1 officer or employee of the Department appointed by
the Secretary.
``(2) Allocation of membership.--In appointing members to a
Production Board established for a kind of tobacco, the
number of members appointed by the Secretary to represent
each State shall, to the maximum extent practicable, bear the
same ratio to the total number of members of the Production
Board as--
``(A) the total volume of domestic sales of the kind of
tobacco produced in the State during the most recent period
for which data is available; bears to
``(B) the total volume of domestic sales of the kind of
tobacco produced in all States during the most recent period
for which data is available.
``(3) Chairperson.--The Secretary shall appoint the
chairperson of a Production Board, with a different member
serving as chairperson of the Production Board each term.
``(4) Terms.--Each member of a Production Board shall serve
for 2-year terms, except that the terms of the members first
appointed to the Production Board shall be staggered so as to
establish a rotating membership of the Production Board, as
determined by the Secretary.
``(c) Duties.--A Production Board established for a kind of
tobacco shall--
``(1) not later than a date determined by the Secretary,
make recommendations to the Secretary on the base year,
within the range of base years recommended by the Tobacco
Quality Board under section 380G(c)(7), for the maximum crop
acreage base under section 380I(c)(3)(B) for each crop of
each kind of tobacco; and
``(2) carry out such other related activities as are
assigned to the Production Board by the Secretary.
``(d) Administration.--The Secretary shall provide each
Production Board established for a kind of tobacco with (as
determined by the Secretary)--
``(1) a staff that is knowledgeable about production and
marketing of that kind of tobacco; and
``(2) other resources and information necessary for the
Production Board to perform the duties of the Production
Board under this subtitle, including information concerning
acreage devoted to the production of each kind of tobacco.
``(e) Applicability of Federal Advisory Committee Act.--The
Federal Advisory Committee Act (5 U.S.C. App.) shall not
apply to a Production Board.

``SEC. 380I. TOBACCO PRODUCTION LIMITATION PROGRAMS.

``(a) Definitions.--In this section:
``(1) Crop acreage base.--The term `crop acreage base'
means the crop acreage base for a kind of tobacco for a crop
for an active producer of tobacco, as determined by the
Secretary.
``(2) Crop poundage base.--The term `crop poundage base'
means the crop poundage base for a kind of tobacco for a crop
for an active producer of tobacco, as determined by the
Secretary.
``(3) Permitted acreage.--The term `permitted acreage'
means the number of acres that may be devoted to the
production of a kind of tobacco by an active producer of
tobacco, consistent with the annual acreage limitation
program, as determined by the Secretary.
``(4) Permitted poundage.--The term `permitted poundage'
means the number of pounds of a kind of tobacco for a crop
may be produced by an active tobacco producer, consistent
with the annual poundage limitation program, as determined by
the Secretary.
``(b) Establishment.--
``(1) In general.--The Secretary shall establish for each
crop of each kind of tobacco--
``(A) an acreage limitation program in accordance with
subsection (c); or
``(B) a poundage limitation in accordance with subsection
(d).
``(2) Consultation.--The Secretary shall carry out the
acreage limitation program and the poundage limitation
program for a kind of tobacco in consultation with the
Tobacco Advisory Board and the applicable Production Board
established for that kind of tobacco.
``(3) Supply.--In carrying out an acreage limitation
program or a poundage limitation program for a crop of a kind
of tobacco, the Secretary shall determine whether the total
supply of that kind of tobacco, in the absence of the
respective production limitation

[[Page S8263]]

program, will be excessive, taking into account the need for
an adequate carryover to maintain reasonable and stable
supplies and prices.
``(4) Announcement.--
``(A) In general.--Except as provided in subparagraph (B),
the Secretary shall announce an acreage limitation program or
poundage limitation program for each kind of tobacco not
later than December 15 of the calendar year preceding the
year in which the crop is harvested.
``(B) Special rule for 2004 crop.--In the case of the 2004
crop for a kind of tobacco, the Secretary shall announce an
acreage limitation program or poundage limitation for each
kind of tobacco as soon as practicable after the date of the
enactment of the Tobacco Market Transition Act of 2004.
``(c) Acreage Limitation Program.--
``(1) In general.--Under an acreage limitation program for
a crop of a kind of tobacco announced under subsection (b),
the limitation shall be achieved by applying a uniform
percentage reduction to the crop acreage base for the kind of
tobacco for the crop for active producers of that kind of
tobacco in each traditional tobacco county, as determined by
the Secretary.
``(2) Crop acreage bases.--
``(A) In general.--The crop acreage base for an active
producer of tobacco for a crop of each kind of tobacco shall
equal the number of acres that is equal to--
``(i) in the case of the 2004 crop year, the average of the
acreage planted and considered planted by the active producer
of tobacco to the kind of tobacco for harvest in a
traditional tobacco county in each of the 5 crop years
preceding the crop year, as determined and adjusted by the
Secretary (in consultation with the Tobacco Quality Board and
the applicable Production Board); and
``(ii) in the case of each subsequent crop year, the number
of acres planted and considered planted by the active
producer of tobacco to the kind of tobacco for harvest in a
traditional tobacco county in the preceding crop year, as
determined and adjusted by the Secretary (in consultation
with the Tobacco Quality Board and the applicable Production
Board).
``(B) Maximum crop acreage bases.--
``(i) In general.--The total quantity of acreage devoted to
a kind of tobacco by active producers of tobacco during a
crop year shall not exceed the total quantity of acreage
devoted to the kind of tobacco by active producers during a
crop year determined by the Secretary.
``(ii) Adjustment.--If the active producers of a kind of
tobacco demonstrate to the Secretary that the application of
clause (i) to a crop of a kind of tobacco will result in
unbalanced supply and demand conditions, the Secretary may
adjust the total quantity of acreage that may be devoted to
the kind of tobacco by active producers during the crop year.
``(C) Sale, lease, or transfer of crop acreage bases.--An
active producer of tobacco shall not sell, lease, or transfer
to another person a crop acreage base established for the
active producer of tobacco under this paragraph.
``(D) Reallocation of unused crop acreage bases.--
``(i) County pool.--If an active producer of tobacco with a
crop acreage base for a kind of tobacco elects not to use all
or part of the crop acreage base to continue to produce that
kind of tobacco, the unused crop acreage base shall be placed
in a pool established for the traditional tobacco county for
reallocation by the Secretary to other producers of that kind
of tobacco in the traditional tobacco county that request the
crop acreage base.
``(ii) State pool.--If any crop acreage base for a kind of
tobacco remains after the crop acreage base is made available
to producers of that kind of tobacco in the traditional
tobacco county in a State, the unused crop acreage base shall
be placed in a pool established for the State for
reallocation by the Secretary to other producers of that kind
of tobacco in a traditional tobacco county.
``(iii) New producers.--In reallocating unused crop acreage
bases for a kind of tobacco in a traditional tobacco county
made available under each of clauses (i) and (ii), the
Secretary shall make available to any new producers of that
kind of tobacco in the traditional tobacco county up to 10
percent of the crop acreage bases available for reallocation
for the kind of tobacco in the traditional tobacco county.
``(d) Poundage Limitation Program.--
``(1) In general.--Under a poundage limitation program for
a crop of a kind of tobacco, the Secretary shall achieve the
limitation by applying a uniform percentage adjustment to the
crop poundage base of an active producer of tobacco for the
kind of tobacco in each traditional tobacco county, as
determined by the Secretary.
``(2) Determination of crop poundage bases.--
``(A) 2004 crop year.--The crop poundage base for an active
tobacco producer for the 2004 crop of a kind of tobacco shall
equal the average of the number of pounds of that kind of
tobacco harvested by the active tobacco producer in a
traditional tobacco county and marketed in each of the 5 crop
years preceding the crop year, as determined by the
Secretary.
``(B) Subsequent crop years.--In the case of the 2005 and
subsequent crops of each kind of tobacco, the crop poundage
base for an active tobacco producer of a kind of tobacco
shall equal the number of pounds of that kind of tobacco
harvested by the active tobacco producer in a traditional
tobacco county and marketed in the preceding crop year, as
determined and adjusted by the Secretary.
``(3) Maximum crop poundage bases.--
``(A) In general.--The total number of pounds devoted to a
kind of tobacco by active tobacco producers during a crop
year shall not exceed the total number of pounds devoted to
the kind of tobacco by active tobacco producers during a crop
year determined by the Secretary.
``(B) Adjustment.--If the active tobacco producers of a
kind of tobacco demonstrate to the Secretary that the
application of paragraph (1) to a crop of a kind of tobacco
will result in unbalanced supply and demand conditions, the
Secretary may adjust the total number of pounds that may be
devoted to the kind of tobacco by active tobacco producers
during the crop year.
``(4) Sale, lease, or transfer of crop poundage bases.--
``(A) Prohibition.--An active producer of tobacco shall not
directly or indirectly sell, lease, or transfer to another
person or other legal entity a crop poundage base established
for an active tobacco producer under this subsection.
``(B) Exception.--If the crop poundage base of an active
producer of tobacco for a type of tobacco covers tobacco that
was produced by the producer in more than 1 traditional
tobacco county, the producer may elect to consolidate the
base in a single traditional tobacco county in which the
producer bore or shared in the risk of producing a crop of
that kind of tobacco for the 2002 crop year.
``(5) Reallocation of unused crop poundage bases.--
``(A) County pool.--If an active producer of tobacco with a
crop poundage base for a kind of tobacco elects not to use
all or part of the crop poundage base, the unused crop
poundage base shall be placed in a pool established for the
traditional tobacco county where the unused crop poundage
base was originally located for reallocation by the Secretary
to other active producers of tobacco of that kind of tobacco
in the traditional tobacco county, in a manner determined by
the Secretary.
``(B) State pool.--If any crop poundage base for a kind of
tobacco remains after the crop poundage base is made
available to producers of that kind of tobacco in the
traditional tobacco county in a State under subparagraph (A),
the unused crop poundage base shall be placed in a pool
established for the State for reallocation by the Secretary
to other producers of that kind of tobacco in traditional
tobacco counties, in a manner determined by the Secretary.
``(C) Traditional growing area pool.--If any crop poundage
base for a kind of tobacco remains after the crop poundage
base is made available to producers of that kind of tobacco
under subparagraphs (A) and (B), the unused crop poundage
base shall be placed in a pool established for reallocation
by the Secretary to other producers of that kind of tobacco
in a traditional tobacco county for that kind of tobacco.
``(D) New producers.--In reallocating unused crop poundage
bases for a kind of tobacco in a traditional tobacco county
made available under any of subparagraphs (A) through (C),
the Secretary shall make available to any new producers of
that kind of tobacco in the traditional tobacco county up to
10 percent of the crop poundage bases available for
reallocation for the kind of tobacco in the traditional
tobacco county.
``(e) Compliance.--
``(1) Loans, purchases, or payments.--An active producer of
tobacco that knowingly produces a kind of tobacco in excess
of the permitted acreage or permitted poundage, as
applicable, for the kind of tobacco, or violates any lease or
transfer requirements of this section, shall be ineligible
for any loans, purchases, or payments for that crop of the
kind of tobacco.
``(2) No carryover.--An active producer of tobacco may not
carry over permitted poundage or permitted acreage, as
applicable, for a crop of a kind of tobacco, that is not
produced by the producer, for production in a subsequent crop
year.
``(3) Penalties.--
``(A) Criminal penalty.--An active producer of tobacco that
violates paragraph (1) shall be fined not more than $100,000
or imprisoned not more than 2 years, or both.
``(B) Civil penalty.--An active producer of tobacco that
violates paragraph (2) shall be subject to a civil penalty in
an amount not to exceed 2 percent of the value of the kind of
tobacco produced by the producer during the applicable crop
year, as determined by the Secretary.
``(C) Additional penalties.--A civil penalty under
subparagraph (B) for a violation shall be in addition to any
criminal penalty under subparagraph (A) for the violation.
``(D) Jurisdiction to prevent and restrain violations.--A
United States district court shall have jurisdiction to
prevent and restrain an active producer of tobacco from
producing a kind of tobacco in excess of the permitted
acreage for the kind of tobacco.
``(4) Compliance with conservation and agricultural
requirements.--As a condition of the establishment of a crop
acreage base or crop poundage base, as applicable, for active
producers of tobacco for a crop of a kind of tobacco, the
active producers of tobacco shall agree, during the crop year
for which the crop acreage base or crop poundage base is
established--

[[Page S8264]]

``(A) to comply with applicable conservation requirements
under subtitle B of title XII of the Food Security Act of
1985 (16 U.S.C. 3811 et seq.);
``(B) to comply with applicable wetland protection
requirements under subtitle C of title XII of the Act (16
U.S.C. 3821 et seq.);
``(C) to use the land of the active producer of tobacco, in
a quantity equal to the crop acreage base for an agricultural
or conserving use, and not for a nonagricultural commercial
or industrial use, as determined by the Secretary; and
``(D) to effectively control noxious weeds and otherwise
maintain the land in accordance with sound agricultural
practices, as determined by the Secretary, if the
agricultural or conserving use involves the noncultivation of
any portion of the land referred to in subparagraph (C).

``CHAPTER 3--TOBACCO COMMUNITY ECONOMIC DEVELOPMENT GRANTS

``SEC. 380O. TOBACCO COMMUNITY ECONOMIC DEVELOPMENT GRANTS.

``(a) In General.--The Secretary shall make grants to
eligible States in accordance with this section to pay the
cost of carrying out economic development initiatives in
impacted communities.
``(b) Application.--To be eligible to receive payments
under this section, an eligible State shall prepare and
submit to the Secretary an application at such time, in such
manner, and containing such information as the Secretary may
require, including--
``(1) a description of the activities that the eligible
State will carry out using amounts received under the grant;
and
``(2) a description of the State department of agriculture
that will administer amounts received under the grant.
``(c) Amount of Grant.--From the amounts available to carry
out this section, the Secretary shall allot--
``(1) $20,000,000 to the State of Maryland;
``(2) $14,000,000 to the State of Pennsylvania; and
``(3) $50,000,000 to the State of South Carolina; and
``(4) 50,000,000 to the State of North Carolina.
``(d) Payments.--An eligible State that has an application
approved by the Secretary under subsection (b) shall be
entitled to a payment under this section, in 5 equal
installments, in an amount that is equal to its allotment
under subsection (c).
``(e) Use of Funds.--Amounts received by an eligible State
under this section shall be used to carry out economic
development activities in impacted communities of the
eligible State, as determined by the eligible State.
``(f) Termination Date.--The authority provided by this
section terminates on September 30, 2008.

``CHAPTER 4--COMPETITIVE GRANTS FOR TOBACCO RESEARCH

``SEC. 380Q. COMPETITIVE GRANTS FOR TOBACCO RESEARCH.

``(a) In General.--Notwithstanding any other provision of
law, the Secretary shall make competitive grants under
section 406 of the Agricultural Research, Extension, and
Education Reform Act of 1998 (7 U.S.C. 7626) to colleges and
universities located in eligible States to conduct research--
``(1) to assist tobacco producers to diversify crops or
implement other means to reduce or eliminate the reliance of
the producers on the production of tobacco or to promote
alternative uses of tobacco or enhance the quality of tobacco
produced in the United States; and
``(2) to foster and facilitate development, evaluation, and
implementation of economically viable new agricultural
technologies and enterprises for rural communities.
``(b) Grant Distribution.--In making grants under this
section, the Secretary shall provide for an equitable
distribution of the grants based on the volume of each kind
of tobacco that is produced in each eligible State, as
determined by the Secretary
``(c) Termination Date.--The authority provided by this
section terminates on September 30, 2008.

``CHAPTER 5--FUNDING

``SEC. 380S. TOBACCO TRUST FUND.

``(a) Establishment.--There is established in the Commodity
Credit Corporation a revolving trust fund to be used in
carrying out this subtitle (referred to in this section as
the `Fund'), consisting of--
``(1) such amounts as are deposited in the Fund under
subsection (b);
``(2) such amounts as are necessary from the Commodity
Credit Corporation; and
``(3) any interest earned on investment of amounts in the
Fund under subsection (d).
``(b) Deposits.--Revenues from assessments collected under
section 380T shall be deposited in the Fund.
``(c) Expenditures.--
``(1) In general.--Subject to paragraphs (2) and (3) and
notwithstanding any other provision of law, in addition to
any other funds that may be available, the Secretary may use
from the Fund such amounts as the Secretary determines are
necessary--
``(A) to make payments to tobacco quota holders and
traditional producers under chapter 1;
``(B) to pay necessary expenses of the Tobacco Quality
Board and Production Boards and to carry out the acreage
limitation program under chapter 2;
``(C) to make tobacco community economic development grants
under chapter 3, in an amount equal to $16,800,000 for each
of fiscal years 2004 through 2008;
``(D) to make competitive grants for tobacco research under
chapter 4, in an amount equal to $12,000,000 for each of
fiscal years 2004 through 2008;
``(E) to make grants to each association that has entered
into a loan agreement with the Commodity Credit Corporation
under section 106A or 106B of the Agricultural Act of 1949 (7
U.S.C. 1445-1, 1445-2) (as in effect before the effective
date of this subtitle) to assist the association to
transition to alternative methods of marketing tobacco in
accordance with a plan approved by the Secretary, with the
grants allocated on the basis of the proportion of tobacco
marketed by each association, in an amount not to exceed
$1,000,000 for each association for each kind of tobacco for
each of fiscal years 2004 through 2008;
``(F) to make payments to appropriate tobacco warehouse
associations, as determined by the Secretary, in an amount
not to exceed $500,000 for each of fiscal years 2004 through
2008;
``(G) to pay administrative costs incurred by the Secretary
in carrying out this subtitle; and
``(H) to reimburse the Commodity Credit Corporation for
costs incurred by the Commodity Credit Corporation under
paragraph (2).
``(2) Expenditures by commodity credit corporation.--
``(A) In general.--Subject to subparagraph (B) and
notwithstanding any other provision of law, the Secretary
shall use funds of the Commodity Credit Corporation to make
payments under paragraph (1).
``(B) Reimbursement to commodity credit corporation.--Not
later than January 1, 2013, the Commodity Credit Corporation
shall be reimbursed in full, with interest, for all funds of
the Commodity Credit Corporation expended under subparagraph
(A).
``(3) Administrative expenses.--
``(A) In general.--An amount not to exceed $20,000,000 for
each fiscal year of the amounts in the Fund shall be
available to pay the administrative expenses necessary to
carry out this subtitle.
``(B) Termination date.--The authority provided by this
paragraph terminates on September 30, 2013.
``(d) Investment of Amounts.--
``(1) In general.--The Commodity Credit Corporation shall
invest such portion of the Fund as is not, in the judgment of
the Commodity Credit Corporation, required to meet current
withdrawals.
``(2) Interest-bearing obligations.--Investments may be
made only in interest-bearing obligations of the United
States.
``(3) Acquisition of obligations.--For the purpose of
investments under paragraph (1), obligations may be
acquired--
``(A) on original issue at the issue price; or
``(B) by purchase of outstanding obligations at the market
price.
``(4) Sale of obligations.--Any obligation acquired by the
Fund may be sold by the Commodity Credit Corporation at the
market price.
``(5) Credits to fund.--The interest on, and the proceeds
from the sale or redemption of, any obligations held in the
Fund shall be credited to and form a part of the Fund.
``(e) Administration.--In administering the Fund, the
Secretary shall make payments, reimburse agencies of the
Department, and accept deposits without regard to limitations
on total amounts of allotments and fund transfers under
section 11 of the Commodity Credit Corporation Charter Act
(15 U.S.C. 714i).

``SEC. 380T. ASSESSMENTS.

``(a) Definition of Gross Domestic Volume.--In this
section, the term `gross domestic volume' means the volume of
tobacco products--
``(1) removed (as defined by section 5702 of the Internal
Revenue Code of 1986); and
``(2) not exempt from tax under chapter 52 of the Internal
Revenue Code of 1986 at the time of their removal under that
chapter or the Harmonized Tariff Schedule of the United
States (19 U.S.C. 1202).
``(b) Assessments.--The Secretary, acting through the
Commodity Credit Corporation, shall impose quarterly
assessments, calculated in accordance with this section, on
each tobacco product manufacturer and tobacco product
importer that sells tobacco products in domestic commerce in
the United States.
``(c) Tobacco Trust Fund.--Assessments collected under this
section shall be deposited in the Tobacco Trust Fund.
``(d) Assessment for Each Class of Tobacco Product.--
``(1) Allocation by class of tobacco products.--The
percentage of the total amount to be assessed against, and
paid by, the manufacturers and importers of each class of
tobacco product in each applicable fiscal year shall be--
``(A) for cigarette manufacturers and importers, 99.409
percent;
``(B) for snuff manufacturers and importers, 0.428 percent;
``(C) for chewing tobacco manufacturers and importers,
0.098 percent;
``(D) for pipe tobacco manufacturers and importers, 0.021
percent; and
``(E) for roll-your-own tobacco manufacturers and
importers, 0.044 percent.
``(2) Adjustment.--The Secretary shall adjust the
percentage of the total amount to be assessed against, as
determined under paragraph (1), and paid by, the
manufacturers

[[Page S8265]]

and importers of each class of tobacco product in each
applicable fiscal year by multiplying the percentage of the
total amount to be assessed, as determined under paragraph
(1), by a fraction--
``(A) the numerator of which is the total volume of
domestic sales of that class of tobacco product during the
preceding applicable fiscal year; and
``(B) the denominator of which is the total volume of
domestic sales of that class of tobacco product during fiscal
year 2003.
``(3) Total assessment.--
``(A) In general.--The total amount to be assessed against
all manufacturers and importers of all classes of tobacco
product in each applicable fiscal year shall be equal to the
amount required to carry out this subtitle during the
applicable fiscal year, as determined by the Secretary.
``(B) Additional amount.--
``(i) In general.--If the amount to be assessed after the
application of paragraphs (1) and (2) is insufficient to
carry out this subtitle during the applicable fiscal year,
the Secretary may assess such additional amount as the
Secretary determines to be necessary to carry out this
subtitle during the applicable fiscal year.
``(ii) Allocation.--The additional amount shall be
allocated to the manufacturers and importers of each class of
tobacco product in the same manner and based on the same
percentages applied in determining the total amount to be
assessed under paragraph (1), as adjusted under paragraph (2)
during the applicable fiscal year.
``(4) Notification of assessments.--
``(A) In general.--The Secretary shall notify all
manufacturers and importers of tobacco products of the amount
of the assessment for each quarterly payment period.
``(B) Contents.--The notice for a quarterly payment period
shall describe gross domestic sales and market shares for the
quarterly payment period and conform with the requirements of
subsection (i).
``(5) Timing of assessment payments.--
``(A) In general.--Assessments shall be collected at the
end of each calendar year quarter.
``(B) Base period quarter.--The assessment for a calendar
year quarter shall correspond to the base period quarter that
ended at the end of the preceding calendar year quarter.
``(C) Amounts.--Subject to subparagraph (D), beginning with
the calendar quarter ending on December 31 of each applicable
fiscal year, the payments over 4 calendar quarters shall be
sufficient to cover--
``(i) the payments required under chapter 1 on November 1
of that same applicable fiscal year; and
``(ii) other expenditures from the Tobacco Trust Fund
required under section 380S during the base quarter periods
corresponding to those 4 calendar quarters.
``(D) Special rule.--In the case of payments required under
chapter 1 that are due on September 30, 2004, the assessments
shall be paid on that same date and correspond to the first
base period of 6 months.
``(e) Allocation of Assessment Within Each Class of Tobacco
Product.--
``(1) In general.--The assessment for each class of tobacco
product shall be allocated on a pro rata basis among
manufacturers and importers based on each manufacturer's or
importer's share of gross domestic volume.
``(2) Limitation.--No manufacturer or importer shall be
required to pay an assessment that is based on a share that
is in excess of the manufacturer's or importer's share of
domestic volume.
``(f) Allocation of Total Assessments by Market Share.--The
amount of the assessment for each class of tobacco product to
be paid by each manufacturer or importer of the class of
tobacco product under subsection (b) shall be determined for
each quarterly payment period by multiplying--
``(1) the market share of the manufacturer or importer, as
calculated with respect to that payment period, of the class
of tobacco product; by
``(2) the total amount of the assessment for that quarterly
payment period under subsection (d), for the class of tobacco
product.
``(g) Determination of Volume of Domestic Sales.--
``(1) In general.--The calculation of the volume of
domestic sales of a class of tobacco product by a
manufacturer or importer, and by all manufacturers and
importers as a group, shall be made by the Secretary based on
information provided by the manufacturers and importers
pursuant to subsection (h), as well as any other relevant
information provided to or obtained by the Secretary.
``(2) Gross domestic volume.--The volume of domestic sales
shall be calculated based on gross domestic volume.
``(3) Measurement.--For purposes of the calculations under
this subsection and the certifications under subsection (h)
by the Secretary, the volumes of domestic sales shall be
measured by--
``(A) in the case of cigarettes, the numbers of cigarettes;
and
``(B) in the case of other classes of tobacco products, in
terms of number of pounds, or fraction thereof, of those
products.
``(h) Measurement of Volume of Domestic Sales.--
``(1) In general.--Each manufacturer and importer of
tobacco products shall submit to the Secretary a certified
copy of each of the returns or forms described by paragraph
(2) that are required to be filed with a Federal Government
agency on the same date that those returns or forms are
filed, or required to be filed, with the agency.
``(2) Returns and forms.--The returns and forms described
by this paragraph are those returns and forms that relate
to--
``(A) the removal of tobacco products into domestic
commerce (as defined by section 5702 of the Internal Revenue
Code of 1986); and
``(B) the payment of the taxes imposed under charter 52 of
the Internal Revenue Code of 1986, including AFT Form 5000.24
and United States Customs Form 7501 under currently
applicable regulations.
``(3) Penalties.--
``(A) In general.--Any person that knowingly fails to
provide information required under this subsection or that
provides false information under this subsection shall be
subject to the penalties described in section 1003 of title
18, United States Code.
``(B) Additional civil penalty.--In addition, the Secretary
may assess against the person a civil penalty in an amount
not to exceed 2 percent of the value of the kind of tobacco
products manufactured or imported by the person during the
applicable fiscal year, as determined by the Secretary.
``(i) Assessment Notification; Content.--
``(1) In general.--The Secretary shall provide each
manufacturer or importer subject to an assessment under
subsection (b) with written notice setting forth the amount
to be assessed against the manufacturer or importer for the
applicable quarterly period.
``(2) Deadline.--The notice for a quarterly period shall be
provided not later than 30 days before the date payment is
due under subsection (d)(5).
``(3) Contents.--The notice shall include the following
information with respect to the quarterly period used by the
Secretary in calculating the amount:
``(A) The total combined assessment for all manufacturers
and importers of tobacco products.
``(B) The total assessment with respect to the class of
tobacco products manufactured or imported by the manufacturer
or importer.
``(C) Any adjustments to the percentage allocations among
the classes of tobacco products made pursuant to subsection
(d)(2).
``(D) The volume of gross sales of the applicable class of
tobacco product treated as made by the manufacturer or
importer for purposes of calculating the manufacturer's or
importer's market share under subsection (f).
``(E) The total volume of gross sales of the applicable
class of tobacco product that the Secretary treated as made
by all manufacturers and importers for purposes of
calculating the manufacturer's or importer's market share
under subsection (f).
``(F) The manufacturer's or importer's market share of the
applicable class of tobacco product as determined by the
Secretary under subsection (f).
``(G) The market share, as determined by the Secretary
under subsection (f), of each other manufacturer and
importer, for each applicable class of tobacco product.
``(j) Challenge to Assessment.--
``(1) Appeal to secretary.--A manufacturer or importer
subject to this section may contest an assessment imposed on
the person under this section by notifying the Secretary not
later than 10 business days after receiving the assessment
notification required by subsection (i).
``(2) Escrow.--The manufacturer and importer may place into
escrow, in accordance with rules promulgated by the
Secretary, only the portion of the assessment being
challenged in good faith pending final determination of the
assessment under this subsection.
``(3) Information.--The Secretary shall by regulation
establish a procedure under which a person contesting an
assessment under this subsection may present information to
the Secretary to demonstrate that the assessment is
incorrect, including information to demonstrate the
following:
``(A) The total combined assessment imposed by the
Secretary on all manufacturers and importers is excessive.
``(B) The Secretary's allocation of the total assessment
among the classes of tobacco products is incorrect.
``(C) The total volume of gross domestic sales of all
manufacturers and importers of the relevant class of tobacco
product calculated by the Secretary under subsection (f) is
incorrect.
``(D) The level of gross domestic sales attributed to the
person by the Secretary for purposes of calculating the
person's market share under subsection (f) exceeds the
person's actual domestic sales of that class of tobacco
product.
``(E) The amount of the assessment attributed to the person
by the Secretary exceeds the person's pro rata share based on
the person's share of gross domestic sales.
``(4) Challenge.--
``(A) In general.--In challenging an assessment under this
subsection, the manufacturer or importer may use any
information that is available, including third party data on
industry or individual company sales volumes.
``(B) Incorrect determination.--The information may
constitute evidence sufficient to establish that the
Secretary's initial determination was incorrect, in which
event the assessment shall be revised so that the
manufacturer or importer is required only to pay the amount
correctly determined.

[[Page S8266]]

``(5) Time for review.--Not later than 30 days after
receiving notice from a manufacturer or importer under
paragraph (2), the Secretary shall--
``(A) decide whether the information provided to the
Secretary pursuant to that paragraph, and any other
information that the Secretary determines, is appropriate is
sufficient to establish that the original assessment was
incorrect; and
``(B) make any revisions necessary to ensure that each
manufacturer and importer pays only its correct pro rata
share of total gross domestic volume from all sources.
``(6) Immediate payment of undisputed amounts.--The
regulations promulgated by the Secretary under paragraph (2)
shall provide for the immediate payment by a manufacturer or
importer challenging an assessment of that portion of the
assessment that is not in dispute.
``(7) Judicial review.--
``(A) In general.--Any manufacturer or importer aggrieved
by a determination of the Secretary with respect to the
amount of any assessment may seek review of the determination
in the United States District Court for the District of
Columbia or for the district in which the manufacturer or
importer resides or has its principal place of business at
any time following exhaustion of the administrative remedies
under this subsection.
``(B) Time limits.--Administrative remedies shall be deemed
exhausted if no decision by the Secretary is made within the
time limits established under paragraph (5).
``(C) Excessive assessments.--The court shall restrain
collection of the excessive portion of any assessment or
order a refund of excessive assessments already paid, along
with interest calculated at the rate prescribed in section
3717 of title 31, United States Code, if it finds that the
Secretary's determination is not supported by a preponderance
of the information available to the Secretary.
``(8) Regulations.--Not later than 180 days after the date
of enactment of this subtitle, the Secretary shall promulgate
regulations to implement this subsection (in accordance with
section 301 of the Tobacco Market Transition Act of 2004).
``(k) Use of Qualified Financial Institutions.--The
Secretary may use qualified financial institutions to manage
assets, make payments, and otherwise carry out this subtitle.
``(l) Termination Date.--The authority provided by this
section terminates on September 30, 2013.

``SEC. 380U. COMMODITY CREDIT CORPORATION.

The Secretary shall use the funds, facilities, and
authorities of the Commodity Credit Corporation to carry out
this subtitle, to remain available until expended.

``SEC. 380V. TRANSITION PROVISIONS.

``(a) Tobacco Stocks.--
``(1) In general.--To provide for the orderly disposition
of quota tobacco held by an association that has entered into
a loan agreement with the Commodity Credit Corporation under
section 106A or 106B of the Agricultural Act of 1949 (7
U.S.C. 1445-1, 1445-2) (referred to in this section as an
`association'), loan pool stocks for each kind of tobacco
held by the association shall be disposed of in accordance
with this subsection.
``(2) Associations.--For each kind of tobacco held by an
association, the proportion of loan pool stocks for each kind
of tobacco held by the association that shall be transferred
to the association shall be equal to--
``(A) the amount of funds held by the association in the No
Net Cost Tobacco Fund and the No Net Cost Tobacco Account
established under sections 106A and 106B of the Agricultural
Act of 1949 (7 U.S.C. 1445-1, 1445-2), respectively, for the
kind of tobacco; divided by
``(B) the average list price per pound for the kind of
tobacco, as determined by the Secretary.
``(3) Commodity credit corporation.--Any loan pool stocks
of a kind of tobacco of an association that are not disposed
of in accordance with paragraph (2) shall be--
``(A) transferred by the association to the Commodity
Credit Corporation; and
``(B) disposed of in a manner determined by the Secretary.
``(b) No Net Cost Funds.--
``(1) In general.--Any funds in the No Net Cost Tobacco
Fund or the No Net Cost Tobacco Account of an association
established under sections 106A and 106B of the Agricultural
Act of 1949 (7 U.S.C. 1445-1, 1445-2), respectively, that
remain after the application of subsection (a) and sections
106A and 106B of the Agricultural Act of 1949 (7 U.S.C. 1445,
1445-1) (as in effect before the effective date of this
subtitle) shall be transferred to the association for
distribution to traditional producers of tobacco in
accordance with a plan approved by the Secretary.
``(2) Associations with no loan pool stocks.--In the case
of an association that does not hold any loan pool stocks
that are covered by subsection (a)(2), any funds in the No
Net Cost Tobacco Fund or the No Net Cost Tobacco Account of
the association established under sections 106A and 106B of
the Agricultural Act of 1949 (7 U.S.C. 1445-1, 1445-2),
respectively, shall be transferred to the association for
distribution to traditional producers of tobacco in
accordance with a plan approved by the Secretary.
``(c) Reimbursement to Commodity Credit Corporation.--There
shall be transferred from the Tobacco Trust Fund to each No
Net Cost Tobacco Fund or the No Net Cost Tobacco Account of
an association established under sections 106A and 106B of
the Agricultural Act of 1949 (7 U.S.C. 1445-1, 1445-2),
respectively, such amounts as the Secretary determines will
be adequate to reimburse the Commodity Credit Corporation for
any net losses that the Corporation may sustain under its
loan agreements with the association.''.

SEC. __52. TOBACCO INSURANCE RESEARCH AND DEVELOPMENT.

(a) In General.--Section 522(b)(1) of the Federal Crop
Insurance Act (7 U.S.C. 1522(b)(1)) is amended--
(1) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), respectively, and indenting appropriately;
(2) by striking ``The Corporation'' and inserting the
following--
``(A) In general.--The''; and
(3) by adding at the end the following:
``(B) Tobacco research and development.--Subject to the
availability of funds under subsection (e)(5), the
Corporation shall provide a payment to reimburse an applicant
for research and development costs directly related to a
policy that is--
``(i) submitted to the Board and approved by the Board
under section 508(h) for reinsurance;
``(ii) if applicable, offered for sale to producers; and
``(iii) addresses risk in the production of tobacco.''.
(b) Assessments.--Section 522(e) of the Federal Crop
Insurance Act (7 U.S.C. 1522(e)) is amended by adding at the
end the following:
``(5) Tobacco assessment.--
``(A) In general.--Effective for each marketing year for a
kind of tobacco for which a commodity-specific plan of
insurance is offered under this Act, subject to subparagraphs
(B) through (D), each producer and purchaser of that kind of
tobacco shall remit to the Insurance Fund established under
section 516(c) a nonrefundable marketing assessment in an
amount determined by the Secretary pursuant to subparagraphs
(B) and (C).
``(B) Total amount.--The total amount of producer and
purchaser assessments for a kind of tobacco collected under
this paragraph shall be equal to the amount that is necessary
to carry out subsection (b)(1)(B).
``(C) Administration.--Producer and purchaser assessments
for a kind of tobacco under this paragraph--
``(ii) shall be determined in such a manner that producers
and purchasers share equally, to the maximum extent
practicable, in paying assessments required under this
paragraph; and
``(ii) shall not exceed 5 cents per pound.
``(D) Termination.--Effective beginning with the 2010 crop
of each kind of tobacco, the Secretary may terminate the
collection of assessments for that kind of tobacco if the
Secretary determines that further research and development
under subsection (b)(1)(B) would not be productive.''.
(c) Insurance Fund.--Section 516(c)(1) of the Federal Crop
Insurance Act (7 U.S.C. 1516(c)(1)) is amended by inserting
``assessments for tobacco research made available under
section 522(e)(5),'' after ``under subsection (a)(2),''.

SEC. __53. CONFORMING AMENDMENTS.

Section 320B(c)(1) of the Agricultural Adjustment Act of
1938 (7 U.S.C. 1314h(c)(1)) is amended--
(1) by inserting ``(A)'' after ``(1)'';
(2) by striking ``by'' at the end and inserting ``or''; and
(3) by adding at the end the following:
``(B) in the case of the 2003 marketing year, the price
support rate for the kind of tobacco involved in effect under
section 106 of the Agricultural Act of 1949 (7 U.S.C. 1445)
at the time of the violation; by''.

CHAPTER 3--IMPLEMENTATION

SEC. __61. REGULATIONS.

(a) In General.--The Secretary of Agriculture may
promulgate such regulations as are necessary to implement
this subtitle and the amendments made by this subtitle.
(b) Procedure.--The promulgation of the regulations and
administration of this subtitle and the amendments made by
this subtitle shall be made without regard to--
(1) the notice and comment provisions of section 553 of
title 5, United States Code;
(2) the Statement of Policy of the Secretary of Agriculture
effective July 24, 1971 (36 Fed. Reg. 13804), relating to
notices of proposed rulemaking and public participation in
rulemaking; and
(3) chapter 35 of title 44, United States Code (commonly
known as the ``Paperwork Reduction Act'').
(c) Congressional Review of Agency Rulemaking.--In carrying
out this section, the Secretary shall use the authority
provided under section 808 of title 5, United States Code.

SEC. __62. EFFECTIVE DATE.

This subtitle and the amendments made by this subtitle
shall apply to the 2004 and subsequent crops of each kind of
tobacco.
______

SA 3564. Mr. ROBERTS (for himself and Mr. Rockefeller) submitted an
amendment intended to be proposed by him to the bill S. 2386, to
authorize appropriations for fiscal year 2005 for intelligence and
intelligence-related activities of the United States Government, the
Intelligence Community Management Account, and the Central Intelligence
Agency Retirement and

[[Page S8267]]

Disability System, and for other purposes; which was ordered to lie on
the table; as follows:

On page 9, line 16, add at the end the following: ``Such
funds shall remain available until September 30, 2005.''.
On page 19, strike lines 7 through 15 and insert the
following:
``(1) In general.--The Director may establish and
administer a nonofficial cover employee retirement system for
designated employees (and the spouse, former spouses, and
survivors of such designated employees). A des-
On page 21, strike line 18 and all that follows through
page 22, line 1, and insert the following:
``(iii) in the case of a designated employee who
participated in an employee investment retirement system
established under paragraph (1) and is converted to coverage
under subchapter III of chapter 84 of title 5, United States
Code, the Director may transmit any or all amounts of that
designated employee in that employee investment retirement
system (or similar
On page 22, strike line 24 and all that follows through
page 23, line 5, and insert the following:
``(1) In general.--The Director may establish and
administer a nonofficial cover employee health insurance
program for designated employees (and the family of such
designated employees). A designated employee
On page 25, strike lines 6 through 12 and insert the
following:
``(1) In general.--The Director may establish and
administer a nonofficial cover employee life insurance
program for designated employees (and the family of such
designated employees). A designated employee may not
On page 27, line 8, strike ``(B)(iii)'' and insert
``(B)(iv)''.

____________________