PACT Act

        [Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 1177 Engrossed in Senate (ES)]

108th CONGRESS
1st Session
S. 1177

_______________________________________________________________________

AN ACT

To prevent tobacco smuggling, to ensure the collection of all tobacco
taxes, and for other purposes.

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Prevent All Cigarette Trafficking
Act'' or ``PACT Act''.

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

(a) Definitions.--Section 1 of the Act of October 19, 1949 (15
U.S.C. 375; commonly referred to as the ``Jenkins Act''), is amended--
(1) by striking paragraphs (1), (2), and (3) and inserting
the following new paragraphs:
``(1) The term `attorney general', with respect to a State,
means the attorney general or other chief law enforcement
officer of the State, or the designee of that officer.
``(2) The term `cigarette' means--
``(A) any roll of tobacco wrapped in paper or in
any substance not containing tobacco which is to be
heated or burned;
``(B) any roll of tobacco wrapped in any substance
containing tobacco that, because of its appearance, the
type of tobacco used in the filler, or its packaging or
labeling, is likely to be offered to, or purchased by,
consumers as a cigarette described in subparagraph (A);
``(C) any roll of tobacco wrapped in any substance
that because of its appearance, the type of tobacco
used in the filler, or its packaging or labeling, is
likely to be offered to, or purchased by, consumers as
a cigarette; or
``(D) loose rolling tobacco that, because of its
appearance, type, packaging, or labeling, is likely to
be offered to, or purchased by, consumers as tobacco
for making cigarettes.
``(3) The term `smokeless tobacco' means any finely cut,
ground, powdered, or leaf tobacco that is intended to be placed
in the oral or nasal cavity or otherwise consumed without being
combusted.'';
(2) in paragraph (5)--
(A) by inserting ``, local, or Tribal'' after ``the
State'';
(B) by striking ``administer the cigarette tax
law'' and inserting ``collect the tobacco tax or
administer the tax law''; and
(C) by inserting ``, locality, or Tribe,
respectively'' after ``a State''.
(3) by striking paragraph (6) and inserting the following
new paragraph (6):
``(6) The term `delivery sale' means any sale of cigarettes
or smokeless tobacco in interstate commerce to a consumer if--
``(A) the consumer submits the order for such sale
by means of a telephone or other method of voice
transmission, the mails, or the Internet or other
online service, or the seller is otherwise not in the
physical presence of the buyer when the request for
purchase or order is made; or
``(B) the cigarettes or smokeless tobacco are
delivered by use of a common carrier, private delivery
service, or the mails, or the seller is not in the
physical presence of the buyer when the buyer obtains
personal possession of the delivered cigarettes or
smokeless tobacco.''; and
(4) by adding at the end the following new paragraphs:
``(8) The term `delivery seller' means a person who makes a
delivery sale.
``(9) The term `common carrier' means any person (other
than a local messenger service or the United States Postal
Service (as defined in section 102 of title 39, United States
Code)) that holds itself out to the general public as a
provider for hire of the transportation by water, land, or air
of merchandise, whether or not the person actually operates the
vessel, vehicle, or aircraft by which the transportation is
provided, between a port or place and a port or place in the
United States.
``(10) The term `interstate commerce' means commerce
between a State and any place outside the State, commerce
between a State and any Indian lands in the State, or commerce
between points in the same State but though any place outside
the State or through any Indian lands.
``(11) The term `person' means an individual, corporation,
company, association, firm, partnership, society, State
government, local government, Indian tribal government,
governmental organization of such government, or joint stock
company.
``(12) The term `State' means a State of the United States,
the District of Columbia, the Commonwealth of Puerto Rico, or
any territory or possession of the United States.
``(13) The term `Indian Country' has the meaning given that
term in section 1151 of title 18, United States Code, except
that within the State of Alaska that term applies only to the
Metlakatla Indian Community, Annette Island Reserve.
``(14) The term `Indian Tribe', `Tribe', or `Tribal' refers
to an Indian tribe as defined in the Indian Self-Determination
and Education Assistance Act (25 U.S.C. 450b(e)) or as listed
pursuant to section 104 of the Federally Recognized Indian
Tribe List Act of 1994 (Public Law 103-454; 25 U.S.C. 479a-1).
``(15) The term `tobacco tax administrator', in the case of
a State, local, or Tribal government, means the official of the
government duly authorized to collect the tobacco tax or
administer the tax law of the government.''.
(b) Reports to State Tobacco Tax Administrators.--Section 2 of that
Act (15 U.S.C. 376) is amended--
(1) by striking ``cigarettes'' each place it appears and
inserting ``cigarettes or smokeless tobacco'';
(2) in subsection (a)--
(A) in the matter preceding paragraph (1)--
(i) by striking ``or transfers'' and
inserting ``, transfers, or ships'';
(ii) by inserting ``, locality, or Indian
Country of an Indian Tribe'' after ``a State'';
and
(iii) by striking ``to other than a
distributor licensed by or located in such
State,'';
(B) in paragraph (1)--
(i) by striking ``administrator of the
State'' and inserting ``administrators of the
State and place''; and
(ii) by striking ``; and'' and inserting
the following: ``, as well as telephone numbers
for each place of business, a principal
electronic mail address, any website addresses,
and the name, address, and telephone number of
an agent in the State authorized to accept
service on behalf of such person;'';
(C) in paragraph (2), by striking ``and the
quantity thereof.'' and inserting ``the quantity
thereof, and the name, address, and phone number of the
person delivering the shipment to the recipient on
behalf of the delivery seller, with all invoice or
memoranda information relating to specific customers to
be organized by city or town and by zip code; and'';
and
(D) by adding at the end the following new
paragraph:
``(3) with respect to each memorandum or invoice filed with
a State under paragraph (2), also file copies of such
memorandum or invoice with the tobacco tax administrators and
chief law enforcement officers of the local governments and
Indian Tribes operating within the borders of the State that
apply their own local or Tribal taxes on cigarettes or
smokeless tobacco.''; and
(3) in subsection (b)--
(A) by striking ``(1)''; and
(B) by striking ``, and (2)'' and all that follows
and inserting a period.
(c) Requirements for Delivery Sales.--That Act is further amended
by inserting after section 2 the following new section:
``Sec. 2A. (a) With respect to delivery sales into a specific State
and place, each delivery seller shall comply with--
``(1) the shipping requirements set forth in subsection
(b);
``(2) the recordkeeping requirements set forth in
subsection (c);
``(3) all State, local, Tribal, and other laws generally
applicable to sales of cigarettes or smokeless tobacco as if
such delivery sales occurred entirely within the specific State
and place, including laws imposing--
``(A) excise taxes;
``(B) licensing and tax-stamping requirements; and
``(C) other payment obligations or legal
requirements relating to the sale, distribution, or
delivery of cigarettes or smokeless tobacco; and
``(4) the tax collection requirements set forth in
subsection (d).
``(b)(1) Each delivery seller shall include on the bill of lading
included with the shipping package containing cigarettes or smokeless
tobacco sold pursuant to such order a clear and conspicuous statement
providing as follows: `CIGARETTES/SMOKELESS TOBACCO: FEDERAL LAW
REQUIRES THE PAYMENT OF ALL APPLICABLE EXCISE TAXES, AND COMPLIANCE
WITH APPLICABLE LICENSING AND TAX-STAMPING OBLIGATIONS'.
``(2) Any shipping package described in paragraph (1) that is not
labeled in accordance with that paragraph shall be treated as non-
deliverable matter by a common carrier or the United States Postal
Service if the common carrier or the United States Postal Service, as
the case may be, knows or should know the contents of the package.
``(c)(1) Each delivery seller shall keep a record of all delivery
sales so made, including all of the information described in section
2(a)(2), organized by the State, and within such State, by the city or
town and by zip code, into which such delivery sales are so made.
``(2) Records of delivery sales shall be kept under paragraph (1)
in the year in which made and for the next four years.
``(3) Records kept under paragraph (1) shall be made available to
tobacco tax administrators of the States, to local governments and
Indian Tribes that apply their own local or Tribal taxes on cigarettes
or smokeless tobacco, to the attorneys general of the States, to the
chief law enforcement officers of such local governments and Indian
Tribes, and to the Attorney General of the United States in order to
ensure the compliance of persons making delivery sales with the
requirements of this Act.
``(d)(1) Except as provided in paragraph (2), no cigarettes or
smokeless tobacco may be delivered pursuant to a delivery sale in
interstate commerce unless in advance of the delivery--
``(A) any cigarette or smokeless tobacco excise tax that is
imposed by the State in which the cigarettes or smokeless
tobacco are to be delivered has been paid to the State;
``(B) any cigarette or smokeless tobacco excise tax that is
imposed by the local government of the place in which the
cigarette or smokeless tobacco are to be delivered has been
paid to the local government; and
``(C) any required stamps or other indicia that such excise
tax has been paid are properly affixed or applied to the
cigarettes or smokeless tobacco.
``(2) Paragraph (1) does not apply to a delivery sale of smokeless
tobacco if the law of the State or local government of the place where
the smokeless tobacco is to be delivered requires or otherwise provides
that delivery sellers collect the excise tax from the consumer and
remit the excise tax to the State or local government, and the delivery
seller complies with the requirement.
``(e)(1) Each State, and each local government or Indian Tribal
government that levies a tax subject to subsection (a)(3), may compile
a list of delivery sellers who are in compliance with this Act with
respect to such State, locality, or Indian Tribe. If a State, local
government, or Indian Tribe posts a list pursuant to this subsection
that specifically refers to this subsection, no common carrier or other
person may knowingly deliver cigarettes or smokeless tobacco to
consumers in such State or locality or in the Indian Country of such
Indian Tribe unless the delivery seller is on the list at the time of
delivery.
``(2)(A) Each State, and each local government or Indian Tribal
government that levies a tax subject to subsection (a)(3), may compile
a list of delivery sellers who are not in compliance with this Act with
respect to such State, locality, or Indian Tribe.
``(B) A State, locality, or Indian Tribal government may provide
such a list to a common carrier, the United States Postal Service, or
other person. Such a list shall be confidential, and a common carrier,
the United States Postal Service, or other person that receives such a
list shall maintain the confidentiality of such list.
``(C) If a State, local government, or Indian Tribal government
provides such a list pursuant to this subsection that specifically
refers to this subsection, no common carrier, the United States Postal
Service, or other person may knowingly deliver any item to a consumer
in such State or locality or in the Indian Country of such Indian Tribe
for a delivery seller on such list unless the common carrier, the
United States Postal Service, or person in good faith determines that
the item does not include cigarettes or smokeless tobacco.
``(f) For purposes of this Act, a delivery sale shall be deemed to
have occurred in the State and place where the buyer obtains personal
possession of the cigarettes or smokeless tobacco, and a delivery
pursuant to a delivery sale is deemed to have been initiated or ordered
by the delivery seller.''.
(d) Penalties.--Section 3 of that Act (15 U.S.C. 377) is amended--
(1) by inserting ``(a)'' before ``Whoever'';
(2) in subsection (a), as so designated--
(A) by inserting ``(except for a State, local, or
Tribal government)'' after ``this Act''; and
(B) by striking ``shall be guilty of a misdemeanor
and shall be fined not more than $1,000, or imprisoned
not more than 6 months'' and inserting ``shall be
guilty of a felony, fined under subchapter C of chapter
227 of title 18, United States Code, imprisoned not
more than three years, or both''; and
(3) by adding at the end the following new subsection:
``(b)(1) Whoever violates any provision of this Act shall be
subject to a civil penalty in an amount not to exceed the greater of--
``(A) $5,000 in the case of the first violation, or $10,000
for any other violation; or
``(B) for any violation, 2 percent of the gross sales of
cigarettes or smokeless tobacco of such person during the one-
year period ending on the date of the violation.
``(2) A civil penalty under paragraph (1) for a violation of this
Act is in addition to any criminal penalty under subsection (a) for the
violation.''.
(e) Enforcement.--Section 4 of that Act (15 U.S.C. 378) is
amended--
(1) by inserting ``(a)'' before ``The United States
district courts'';
(2) in subsection (a), as so designated, by inserting
before the period the following: ``, and to provide other
appropriate injunctive or equitable relief, including money
damages, for such violations''; and
(3) by adding at the end the following new subsections:
``(b) The Attorney General of the United States shall administer
and enforce the provisions of this Act.
``(c)(1)(A) A State, through its attorney general (or a designee
thereof), or a local government or Indian Tribe that levies a tax
subject to section 2A(a)(3), through its chief law enforcement officer
(or a designee thereof), may bring an action in the United States
district courts to prevent and restrain violations of this Act by any
person (or by any person controlling such person) or to obtain any
other appropriate relief from any person (or from any person
controlling such person) for violations of this Act, including civil
penalties, money damages, and injunctive or other equitable relief.
``(B) Nothing in this Act shall be deemed to abrogate or constitute
a waiver of any sovereign immunity of a State or local government or
Indian Tribe against any unconsented lawsuit under this Act, or
otherwise to restrict, expand, or modify any sovereign immunity of a
State or local government or Indian Tribe.
``(2) A State, through its attorney general, or a local government
or Indian Tribe that levies a tax subject to section 2A(a)(3), through
its chief law enforcement officer (or a designee thereof), may provide
evidence of a violation of this Act by any person not subject to State,
local, or Tribal government enforcement actions for violations of this
Act to the Attorney General of the United States or a United State
Attorney, who shall take appropriate actions to enforce the provisions
of this Act.
``(3)(A) Notwithstanding any other provision of law and subject to
subparagraph (B), an amount equal to 50 percent of any criminal and
civil penalties collected by the United States Government in enforcing
the provisions of this Act shall be available to the Department of
Justice for purposes of enforcing the provisions of this Act and other
laws relating to contraband tobacco products.
``(B) Of the amount available to the Department under subparagraph
(A), not less than 50 percent shall be made available only to the
agencies and offices within the Department that were responsible for
the enforcement actions in which the penalties concerned were imposed.
``(4) The remedies available under this subsection are in addition
to any other remedies available under Federal, State, local, Tribal, or
other law.
``(5) Nothing in this Act shall be construed to expand, restrict,
or otherwise modify any right of an authorized State official to
proceed in State court, or take other enforcement actions, on the basis
of an alleged violation of State or other law.
``(6) Nothing in this Act shall be construed to expand, restrict,
or otherwise modify any right of an authorized Indian Tribal government
official to proceed in Tribal court, or take other enforcement actions,
on the basis of an alleged violation of Tribal law.
``(7) Nothing in this Act shall be construed to expand, restrict,
or otherwise modify any right of an authorized local government
official to proceed in State court, or take other enforcement actions,
on the basis of an alleged violation of local or other law.
``(d) Any person who holds a permit under section 5712 of the
Internal Revenue Code of 1986 may bring an action in the United States
district courts to prevent and restrain violations of this Act by any
person (or by any person controlling such person) other than a State,
local, or Tribal government.
``(e)(1) Any person who commences a civil action under subsection
(d) shall inform the Attorney General of the United States of the
action.
``(2) It is the sense of Congress that any attorney general of a
State, or chief law enforcement officer of a locality or Tribe, who
commences a civil action under this section should inform the Attorney
General of the United States of the action.
``(f)(1) The Attorney General of the United States shall make
available to the public, by posting such information on the Internet
and by other means, information about all enforcement actions
undertaken by the Attorney General or United States Attorneys, or
reported to the Attorney General, under this section, including
information on the resolution of such actions and, in particular,
information on how the Attorney General and the United States Attorney
have responded to referrals of evidence of violations pursuant to
subsection (b)(2).
``(2) The Attorney General shall submit to Congress each year a
report containing the information described in paragraph (1).''.

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

Section 1716 of title 18, United States Code, is amended--
(1) by redesignating subsections (j) and (k) as subsections
(k) and (l), respectively; and
(2) by inserting after subsection (i) the following new
subsection (j):
``(j)(1) Except as provided in paragraph (2), the transmission in
the mails of any tobacco product, including cigarettes (as that term is
defined in section 1(2) of the Act of October 19, 1949 (15 U.S.C. 375;
commonly referred to as the `Jenkins Act')) and smokeless tobacco (as
that term is defined in section 1(3) of that Act), is prohibited, and
tobacco products are nonmailable and shall not be deposited in or
carried through the mails.
``(2) Paragraph (1) shall apply only to States that are contiguous
with at least one other State of the United States.''.

SEC. 4. PENAL PROVISIONS REGARDING TRAFFICKING IN CONTRABAND CIGARETTES
OR SMOKELESS TOBACCO.

(a) Threshold Quantity for Treatment as Contraband Cigarettes.--(1)
Section 2341(2) of title 18, United States Code, is amended by striking
``60,000 cigarettes'' and inserting ``10,000 cigarettes''.
(2) Section 2342(b) of that title is amended by striking ``60,000''
and inserting ``10,000''.
(3) Section 2343 of that title is amended--
(A) in subsection (a), by striking ``60,000'' and inserting
``10,000''; and
(B) in subsection (b), by striking ``60,000'' and inserting
``10,000''.
(b) Contraband Smokeless Tobacco.--(1) Section 2341 of that title
is amended--
(A) in paragraph (4), by striking ``and'' at the end;
(B) in paragraph (5), by striking the period at the end and
inserting a semicolon; and
(C) by adding at the end the following new paragraphs:
``(6) the term `smokeless tobacco' means any finely cut,
ground, powdered, or leaf tobacco that is intended to be placed
in the oral or nasal cavity or otherwise consumed without being
combusted;
``(7) the term `contraband smokeless tobacco' means a
quantity in excess of 500 single-unit consumer-sized cans or
packages of smokeless tobacco, or their equivalent, that are in
the possession of any person other than--
``(A) a person holding a permit issued pursuant to
chapter 52 of the Internal Revenue Code of 1986 as
manufacturer of tobacco products or as an export
warehouse proprietor, a person operating a customs
bonded warehouse pursuant to section 311 or 555 of the
Tariff Act of 1930 (19 U.S.C. 1311, 1555), or an agent
of such person;
``(B) a common carrier transporting such smokeless
tobacco under a proper bill of lading or freight bill
which states the quantity, source, and designation of
such smokeless tobacco;
``(C) a person who--
``(i) is licensed or otherwise authorized
by the State where such smokeless tobacco is
found to engage in the business of selling or
distributing tobacco products or, for smokeless
tobacco found in Indian Country, is licensed or
otherwise authorized by the Tribal government
of such Indian Country to account for and pay
smokeless tobacco taxes imposed by the Tribal
government; and
``(ii) has complied with the accounting,
tax, and payment requirements relating to such
license or authorization with respect to such
smokeless tobacco; or
``(D) an officer, employee, or agent of the United
States or a State or a Tribe, or any department,
agency, or instrumentality of the United States, a
State (including any political subdivision of a State),
or a Tribe (including any political subdivision of a
Tribe), having possession of such smokeless tobacco in
connection with the performance of official duties;''.
(2) Section 2342(a) of that title is amended by inserting ``or
contraband smokeless tobacco'' after ``contraband cigarettes''.
(3) Section 2343(a) of that title is amended by inserting ``, or
any quantity of smokeless tobacco in excess of 500 single-unit
consumer-sized cans or packages,'' before ``in a single transaction''.
(4) Section 2344(c) of that title is amended by inserting ``or
contraband smokeless tobacco'' after ``contraband cigarettes''.
(5) Section 2345 of that title is amended by inserting ``or
smokeless tobacco'' after ``cigarettes'' each place it appears.
(c) Additional Definitional Matters.--Section 2341 of such title is
further amended--
(1) in paragraph (2), as amended by subsection (a)(1) of
this section--
(A) in the matter preceding subparagraph (A), by
striking ``State cigarette taxes in the State where
such cigarettes are found, if the State'' and inserting
``State, local, or Tribal cigarette taxes in the State,
locality, or Indian Country where such cigarettes are
found, if the State, local or Tribal government'';
(B) in subparagraph (C)(i), by inserting before the
semicolon the following: ``, or, for cigarettes found
in Indian County, is licensed or otherwise authorized
by the Tribal government of such Indian Country to
account for and pay cigarette taxes imposed by the
Tribal government''; and
(C) in subparagraph (D)--
(i) by inserting ``or a Tribe'' after ``a
State'' the first place it appears; and
(ii) by striking ``or a State (or any
political subdivision of a State)'' and
inserting ``, a State (or any political
subdivision of a State), or a Tribe (including
any political subdivision of a Tribe)'';
(2) in paragraph (3), by inserting before the semicolon the
following: ``, or, for a carrier making a delivery entirely
within Indian Country, under equivalent operating authority
from the Indian Tribal government of such Indian Country''; and
(3) by adding at the end the following new paragraphs:
``(8) the term `Indian Country' has the meaning given that
term in section 1151 of title 18, United States Code, except
that within the State of Alaska that term applies only to the
Metlakatla Indian Community, Annette Island Reserve; and
``(9) the term `Indian Tribe', `Tribe', or `Tribal' refers
to an Indian tribe as defined in the Indian Self-Determination
and Education Assistance Act (25 U.S.C. 450b(e)) or as listed
pursuant to section 104 of the Federally Recognized Indian
Tribe List Act of 1994 (Public Law 103-454; 25 U.S.C. 479a-
1).''.
(d) Recordkeeping, Reporting, and Inspection.--Section 2343 of that
title, as amended by this section, is further amended--
(1) in subsection (a)--
(A) in the matter preceding paragraph (1), by
striking ``only--'' and inserting ``such information as
the Attorney General considers appropriate for purposes
of enforcement of this chapter, including--''; and
(B) in the flush matter following paragraph (3), by
striking the second sentence;
(2) by redesignating subsection (b) as subsection (c);
(3) by inserting after subsection (a) the following new
subsection (b):
``(b) Any person who engages in a delivery sale, and who ships,
sells, or distributes any quantity in excess of 10,000 cigarettes, or
any quantity in excess of 500 single-unit consumer-sized cans or
packages of smokeless tobacco, or their equivalent, within a single
month, shall submit to the Attorney General, pursuant to rules or
regulations prescribed by the Attorney General, a report that sets
forth the following:
``(1) The person's beginning and ending inventory of
cigarettes and cans or packages of smokeless tobacco (in total)
for such month.
``(2) The total quantity of cigarettes and cans or packages
of smokeless tobacco that the person received within such month
from each other person (itemized by name and address).
``(3) The total quantity of cigarettes and cans or packages
of smokeless tobacco that the person distributed within such
month to each person (itemized by name and address) other than
a retail purchaser.''; and
(4) by adding at the end the following new subsections:
``(d) Any report required to be submitted under this chapter to the
Attorney General shall also be submitted to the Secretary of the
Treasury and to the attorneys general and the tax administrators of the
States from where the shipments, deliveries, or distributions both
originated and concluded, and to the chief law enforcement officer and
tax administrator of the Tribe for shipments, deliveries or
distributions that originated or concluded on the Indian Country of the
Indian Tribe.
``(e) In this section, the term `delivery sale' means any sale of
cigarettes or smokeless tobacco in interstate commerce to a consumer
if--
``(A) the consumer submits the order for such sale
by means of a telephone or other method of voice
transmission, the mails, or the Internet or other
online service, or by any other means where the
consumer is not in the same physical location as the
seller when the purchase or offer of sale is made; or
``(B) the cigarettes or smokeless tobacco are
delivered by use of the mails, common carrier, private
delivery service, or any other means where the consumer
is not in the same physical location as the seller when
the consumer obtains physical possession of the
cigarettes or smokeless tobacco.
``(f) In this section, the term `interstate commerce' means
commerce between a State and any place outside the State, commerce
between a State and any Indian lands in the State, or commerce between
points in the same State but through any place outside the State or
though any Indian lands.''.
(e) Disposal or Use of Forfeited Cigarettes and Smokeless
Tobacco.--Section 2344(c) of that title, as amended by this section, is
further amended by striking ``seizure and forfeiture,'' and all that
follows and inserting ``seizure and forfeiture, and any cigarettes or
smokeless tobacco so seized and forfeited shall be either--
``(1) destroyed and not resold; or
``(2) used for undercover investigative operations for the
detection and prosecution of crimes, and then destroyed and not
resold.''.
(f) Effect on State, Local, and Tribal Law.--Section 2345 of that
title is amended--
(1) in subsection (a), by striking ``a State to enact and
enforce'' and inserting ``a State, local government, or Tribe
to enact and enforce its own''; and
(2) in subsection (b), by striking ``of States, through
interstate compact or otherwise, to provide for the
administration of State'' and inserting ``of State, local, or
Tribal governments, through interstate compact or otherwise, to
provide for the administration of State, local, or Tribal''.
(g) Enforcement.--Section 2346 of that title is amended--
(1) by inserting ``(a)'' before ``The Attorney General'';
and
(2) by adding at the end the following new subsection:
``(b)(1) A State, through its attorney general, a local government
or Indian Tribe, through its chief law enforcement officer (or a
designee thereof), or any person who holds a permit under section 5712
of the Internal Revenue Code of 1986, may bring an action in the United
States district courts to prevent and restrain violations of this
chapter by any person (or by any person controlling such person),
except that any person who holds a permit under section 5712 of the
Internal Revenue Code of 1986 may not bring such an action against a
State, local, or Tribal government.
``(2) A State, through its attorney general, or a local government
or Indian Tribe, through its chief law enforcement officer (or a
designee thereof), may in a civil action under paragraph (1) also
obtain any other appropriate relief for violations of this chapter from
any person (or by any person controlling such person), including civil
penalties, money damages, and injunctive or other equitable relief.
Nothing in this chapter shall be deemed to abrogate or constitute a
waiver of any sovereign immunity of a State or local government or
Indian Tribe against any unconsented lawsuit under this chapter, or
otherwise to restrict, expand, or modify any sovereign immunity of a
State or local government or Indian Tribe.
``(3) The remedies under paragraphs (1) and (2) are an addition to
any other remedies under Federal, State, local, Tribal, or other law.
``(4) Nothing in this chapter shall be construed to expand,
restrict, or otherwise modify any right of an authorized State official
to proceed in State court, or take other enforcement actions, on the
basis of an alleged violation of State or other law.
``(5) Nothing in this chapter shall be construed to expand,
restrict, or otherwise modify any right of an authorized Indian Tribal
government official to proceed in Tribal court, or take other
enforcement actions, on the basis of an alleged violation of Tribal
law.
``(6) Nothing in this chapter shall be construed to expand,
restrict, or otherwise modify any right of an authorized local
government official to proceed in State court, or take other
enforcement actions, on the basis of an alleged violation of local or
other law.''.
(h) Conforming and Clerical Amendments.--(1) The section heading
for section 2343 of that title is amended to read as follows:
``Sec. 2343. Recordkeeping, reporting, and inspection''.
(2) The section heading for section 2345 of such title is amended
to read as follows:
``Sec. 2345. Effect on State, Tribal, and local law''.
(3) The table of sections at the beginning of chapter 114 of that
title is amended--
(A) by striking the item relating to section 2343 and
inserting the following new item:

``2343. Recordkeeping, reporting, and inspection.'';
and
(B) by striking the item relating to section 2345 and
insert the following new item:

``2345. Effect on State, Tribal, and local law.''.
(4)(A) The heading for chapter 114 of that title is amended to read
as follows:

``CHAPTER 114--TRAFFICKING IN CONTRABAND CIGARETTES AND SMOKELESS
TOBACCO''.

(B) The table of chapters at the beginning of part I of that title
is amended by striking the item relating to section 114 and inserting
the following new item:

``114. Trafficking in contraband cigarettes and smokeless       2341''.
tobacco.

SEC. 5. COMPLIANCE WITH MODEL STATUTE OR QUALIFYING STATUTE.

(a) In General.--A Tobacco Product Manufacturer or importer may not
sell in, deliver to, or place for delivery sale, or cause to be sold
in, delivered to, or placed for delivery sale in, a State that is a
party to the Master Settlement Agreement any cigarette manufactured by
a Tobacco Product Manufacturer that is not in full compliance with the
terms of the Model Statute or Qualifying Statute enacted by such State
requiring funds to be placed into a qualified escrow account under
specified conditions, or any regulations promulgated pursuant to such
terms.
(b) Jurisdiction to Prevent and Restrain Violations.--(1) The
United States district courts shall have jurisdiction to prevent and
restrain violations of subsection (a) in accordance with this
subsection.
(2) A State, through its attorney general, may bring an action in
the United States district courts to prevent and restrain violations of
subsection (a) by any person (or by any person controlling such
person).
(3) In any action under paragraph (2), a State, through its
attorney general, shall be entitled to reasonable attorney fees from a
person found to have willfully and knowingly violated subsection (a).
(4) The remedy available under paragraph (2) is in addition to any
other remedies available under Federal, State, or other law.
(5) Nothing in this subsection shall be construed to prohibit an
authorized State official from proceeding in State court or taking
other enforcement actions on the basis of an alleged violation of State
or other law.
(6) The Attorney General may administer and enforce subsection (a).
(c) Definitions.--In this section:
(1) Master settlement agreement.-- The term ``Master
Settlement Agreement'' means the agreement executed November
23, 1998, by the Attorneys General of 46 States, the District
of Columbia, the Commonwealth of Puerto Rico, and four
Territories of the United States, on the one hand, and certain
tobacco manufacturers on the other hand.
(2) Tobacco product manufacturer.--The term ``Tobacco
Product Manufacturer'' has the meaning given that term in
section II(uu) of the Master Settlement Agreement.
(3) Importer.--The term ``importer'' means each of the
following:
(A) Any person in the United States to whom non-
tax-paid tobacco products manufactured in a foreign
country, Puerto Rico, the Virgin Islands, or a
possession of the United States are shipped or
consigned.
(B) Any person who removes cigars or cigarettes for
sale or consumption in the United States from a customs
bonded manufacturing warehouse.
(C) Any person who smuggles or otherwise unlawfully
brings tobacco products into the United States.
(4) Model statute; qualifying statute.--The terms ``Model
Statute'' and ``Qualifying Statute'' means a statute as defined
in section IX(d)(2)(e) of the Master Settlement Agreement.
(5) Delivery sale.--The term ``delivery sale'' means any
sale of cigarettes or smokeless tobacco in interstate commerce
to a consumer if--
(A) the consumer submits the order for such sale by
means of a telephone or other method of voice
transmission, the mails, or the Internet or other
online service, or the seller is otherwise not in the
physical presence of the buyer when the request for
purchase or order is made; or
(B) the cigarettes or smokeless tobacco are
delivered by use of a common carrier, private delivery
service, or the mails, or the seller is not in the
physical presence of the buyer when the buyer obtains
personal possession of the delivered cigarettes or
smokeless tobacco.
(6) Interstate commerce.--The term ``interstate commerce''
means commerce between a State and any place outside the State,
commerce between a State and any Indian lands in the State, or
commerce between points in the same State but through any place
outside the State or through any Indian lands.

SEC. 6. UNDERCOVER CRIMINAL INVESTIGATIONS OF THE BUREAU OF ALCOHOL,
TOBACCO, FIREARMS, AND EXPLOSIVES.

(a) In General.--(1) Commencing as of the date of the enactment of
this Act and without fiscal year limitation, the authorities in section
102(b) of the Department of Justice and Related Agencies Appropriations
Act, 1993 (title I of Public Law 102-395; 106 Stat. 1838) shall be
available to the Bureau of Alcohol, Tobacco, Firearms, and Explosives
for undercover investigative operations of the Bureau which are
necessary for the detection and prosecution of crimes against the
United States.
(2) For purposes of the exercise of the authorities referred to in
paragraph (1) by the Bureau, a reference in such section 102(b) to the
Federal Bureau of Investigation shall be deemed to be a reference to
the Bureau of Alcohol, Tobacco, Firearms, and Explosives, and a
reference to the Director of the Federal Bureau of Investigation shall
be deemed to be a reference to the Director of the Bureau of Alcohol,
Tobacco, Firearms, and Explosives.
(b) Limitations in Appropriations Acts.--The exercise of the
authorities referred to in subsection (a)(1) by the Bureau of Alcohol,
Tobacco, Firearms, and Explosives shall be subject to the provisions of
appropriations Acts.

SEC. 7. INSPECTION BY BUREAU OF ALCOHOL, TOBACCO, FIREARMS, AND
EXPLOSIVES OF RECORDS OF CERTAIN CIGARETTE AND SMOKELESS
TOBACCO SELLERS.

(a) In General.--Any officer of the Bureau of Alcohol, Tobacco,
Firearms, and Explosives may, during normal business hours, enter the
premises of any person described in subsection (b) for the purposes of
inspecting--
(1) any records or information required to be maintained by
such person under the provisions of law referred to in
subsection (d); or
(2) any cigarettes or smokeless tobacco kept or stored by
such person at such premises.
(b) Covered Persons.--A person described in this subsection is any
person who engages in a delivery sale, and who ships, sells,
distributes, or receives any quantity in excess of 10,000 cigarettes,
or any quantity in excess of 500 single-unit consumer-sized cans or
packages of smokeless tobacco, within a single month.
(c) Relief.--(1) The district courts of the United States shall
have the authority in a civil action under this subsection to compel
inspections authorized by subsection (a).
(2) Whoever violates subsection (a) or an order issued pursuant to
paragraph (1) shall be subject to a civil penalty in an amount not to
exceed $10,000 for each violation.
(d) Covered Provisions of Law.--The provisions of law referred to
in this subsection are as follows:
(1) The Act of October 19, 1949 (15 U.S.C. 375; commonly
referred to as the ``Jenkins Act'').
(2) Chapter 114 of title 18, United States Code.
(3) This Act.
(e) Delivery Sale Defined.--In this section, the term ``delivery
sale'' has the meaning given that term in 2343(e)(1) of title 18,
United States Code, as amended by section 4(b)(3) of this Act.

SEC. 8. COMPLIANCE WITH TARIFF ACT OF 1930.

(a) Inapplicability of Exemptions from Requirements for Entry of
Certain Cigarettes.--Subsection (b)(1) of section 802 of the Tariff Act
of 1930 (19 U.S.C. 1681a) is amended by adding at the end the following
new sentence: ``The preceding sentence shall not apply to any
cigarettes sold in connection with a delivery sale (as that term is
defined in section 1 of the Act of October 19, 1949 (15 U.S.C. 375;
commonly referred to as the `Jenkins Act')).''.
(b) State and Tribal Access to Customs Certifications.--Section 802
of that Act is further amended by adding at the end the following new
subsection:
``(d) State and Tribal Access to Customs Certifications.--A State,
through its attorney general, and an Indian tribe (as that term is
defined in the Indian Self-Determination and Education Assistance Act
(25 U.S.C. 450b(e)) through its chief law enforcement officer, shall be
entitled to obtain copies of any certification required pursuant to
subsection (c) directly--
``(1) upon request to the agency of the United States
responsible for collecting such certification; or
``(2) upon request to the importer, manufacturer, or
authorized official of such importer or manufacturer.''.
(c) Enforcement Provisions.--Section 803 of such Act (19 U.S.C.
1681b) is amended--
(1) in subsection (b)--
(A) in the first sentence--
(i) by inserting ``any of'' before ``the
United States'' the first and second places it
appears; and
(ii) by inserting before the period the
following: ``, to any State in which such
tobacco product, cigarette papers, or tube was
imported, or to the Indian Tribe of any Indian
Country (as that term is defined in section
1151 of title 18, United States Code) in which
such tobacco product, cigarette papers, or tube
was imported''; and
(B) in the second sentence, by inserting ``, or to
any State or Indian Tribe,'' after ``the United
States''; and
(2) by adding at the end the following new subsection:
``(c) Actions by States and Others.--
``(1) In general.--Any person who holds a permit under
section 5712 of the Internal Revenue Code of 1986 may bring an
action in the United States district courts to prevent and
restrain violations of this title by any person (or by any
person controlling such person), other than by a State, local,
or Tribal government.
``(2) Relief for state, local, and tribal governments.--A
State, through its attorney general, or a local government or
Tribe through its chief law enforcement officer (or a designee
thereof), may in a civil action under this title to prevent and
restrain violations of this title by any person (or by any
person controlling such person) or to obtain any other
appropriate relief for violations of this title by any person
(or from any person controlling such person), including civil
penalties, money damages, and injunctive or other equitable
relief.
``(3) Construction generally.--
``(A) In general.--Nothing in this subsection shall
be deemed to abrogate or constitute a waiver of any
sovereign immunity of a State or local government or
Indian Tribe against any unconsented lawsuit under this
title or to otherwise restrict, expand, of modify any
sovereign immunity of a State local government or
Indian Tribe.
``(B) Construction with other relief.--The remedies
available under this subsection are in addition to any
other remedies available under Federal, State, local,
Tribal, or other law.
``(4) Construction with forfeiture provisions.--Nothing in
this subsection shall be construed to require a State or Indian
Tribe to first bring an action pursuant to paragraph (1) when
pursuing relief under subsection (b).
``(d) Construction with Other Authorities.--
``(1) State authorities.--Nothing in this title shall be
construed to expand, restrict, or otherwise modify the right of
an authorized State official from proceeding in State court, or
taking other enforcement actions, on the basis of alleged
violation of State or other law.
``(2) Tribal authorities.--Nothing in this title shall be
construed to expand, restrict, or otherwise modify the right of
an authorized Indian Tribal government official from proceeding
in Tribal court, or taking other enforcement actions, on the
basis of alleged violation of Tribal law.
(d) Inclusion of Smokeless Tobacco.--(1) Sections 802 and 803(a) of
such Act are further amended by inserting ``or smokeless tobacco
products'' after ``cigarettes'' each place it appears.
(2) Section 802 of such Act is further amended--
(A) in subsection (a)--
(i) in paragraph (1), by inserting ``or section 4
of the Comprehensive Smokeless Tobacco Health Education
Act of 1986 (15 U.S.C. 4403), respectively'' after
``section 7 of the Federal Cigarette Labeling and
Advertising Act (15 U.S.C. 1335a)'';
(ii) in paragraph (2), by inserting ``or section 3
of the Comprehensive Smokeless Tobacco Health Education
Act of 1986 (15 U.S.C. 4402), respectively,'' after
``section 4 of the Federal Cigarette Labeling and
Advertising Act (15 U.S.C. 1333)''; and
(iii) in paragraph (3), by inserting ``or section
3(c) of the Comprehensive Smokeless Tobacco Health
Education Act of 1986 (15 U.S.C. 4402(c)),
respectively,'' after ``section 4(c) of the Federal
Cigarette Labeling and Advertising Act (15 U.S.C.
1333(c))'';
(B) in subsection (b)--
(i) in the paragraph caption of paragraph (1), by
inserting ``or smokeless tobacco'' after
``cigarettes''; and
(ii) in the paragraph caption of paragraphs (2) and
(3), by inserting ``or smokeless tobacco'' after
``Cigarettes''; and
(C) in subsection (c)--
(i) in the subsection caption, by inserting ``or
Smokeless Tobacco'' after ``Cigarette'';
(ii) in paragraph (1), by inserting ``or section 4
of the Comprehensive Smokeless Tobacco Health Education
Act of 1986 (15 U.S.C. 4403), respectively'' after
``section 7 of the Federal Cigarette Labeling and
Advertising Act (15 U.S.C. 1335a)'';
(iii) in paragraph (2)(A), ``or section 3 of the
Comprehensive Smokeless Tobacco Health Education Act of
1986 (15 U.S.C. 4402), respectively,'' after ``section
4 of the Federal Cigarette Labeling and Advertising Act
(15 U.S.C. 1333)''; and
(iv) in paragraph (2)(B), by inserting ``or section
3(c) of the Comprehensive Smokeless Tobacco Health
Education Act of 1986 (15 U.S.C. 4402(c)),
respectively'' after ``section 4(c) of the Federal
Cigarette Labeling and Advertising Act (15 U.S.C.
1333(c))''.
(3) Section 803(c) of such Act, as amended by subsection (b)(1) of
this section, is further amended by inserting ``, or any smokeless
tobacco product,'' after ``or tube'' the first place it appears.
(4)(A) The heading of title VIII of such Act is amended by
inserting ``AND SMOKELESS TOBACCO'' after ``CIGARETTES''.
(B) The heading of section 802 of such Act is amended by inserting
``AND SMOKELESS TOBACCO'' after ``CIGARETTES''.

SEC. 9. EXCLUSIONS REGARDING INDIAN TRIBES AND TRIBAL MATTERS.

(a) In General.--Nothing in this Act or the amendments made by this
Act is intended nor shall be construed to affect, amend, or modify--
(1) any agreements, compacts, or other intergovernmental
arrangements between any State or local government and any
government of an Indian tribe (as that term is defined in the
Indian Self-Determination and Education Assistance Act (25
U.S.C. 450b(e)) relating to the collection of taxes on
cigarettes or smokeless tobacco sold in Indian Country (as that
term is defined section 1151 of title 18, United States Code);
(2) any State laws that authorize or otherwise pertain to
any such intergovernmental arrangements or create special rules
or procedures for the collection of State, local, or tribal
taxes on cigarettes or smokeless tobacco sold in Indian
Country;
(3) any limitations under existing Federal law, including
Federal common law and treaties, on State, local, and tribal
tax and regulatory authority with respect to the sale, use, or
distribution of cigarettes and smokeless tobacco by or to
Indian Tribes or tribal members or in Indian Country;
(4) any existing Federal law, including Federal common law
and treaties, regarding State jurisdiction, or lack thereof,
over any Tribe, tribal members or tribal reservations; and
(5) any existing State or local government authority to
bring enforcement actions against persons located in Indian
Country.
(b) Coordination of Law Enforcement.--Nothing in this Act or the
amendments made by this Act shall be construed to inhibit or otherwise
affect any coordinated law enforcement effort by 1 or more States or
other jurisdictions, including Indian Tribes, through interstate
compact or otherwise, that--
(1) provides for the administration of tobacco product laws
or laws pertaining to interstate sales or other sales of
tobacco products;
(2) provides for the seizure of tobacco products or other
property related to a violation of such laws; or
(3) establishes cooperative programs for the administration
of such laws.
(c) Treatment of State and Local Governments.--Notwithstanding any
other provision of this Act, the provisions of this Act are not
intended and shall not be construed to authorize, deputize, or
commission States or local governments as instrumentalities of the
United States.
(d) Enforcement within Indian Country.--Nothing in this Act or the
amendments made by this Act is intended to prohibit, limit, or restrict
enforcement by the Attorney General of the United States of the
provisions herein within Indian Country.
(e) Ambiguity.--Any ambiguity between the language of this section
or its application, and any other provision of this Act shall be
resolved in favor of this section.

SEC. 10. EFFECTIVE DATE.

(a) In General.--Except as provided in subsection (b), this Act
shall take effect 90 days after the date of the enactment of this Act.
(b) BATFE Authority.--
(1) In general.--Sections 6 and 7 shall take effect on the
date of the enactment of this Act.
(2) Definition.--For purposes of section 7, the definition
of delivery sale in section 2343(e)(1) of title 18, United
States Code, as amended by section 4(b)(3) of this Act, shall
take effect on the date of the enactment of this Act.

Passed the Senate December 9, 2003.

Attest:

Secretary.
108th CONGRESS

1st Session

S. 1177

_______________________________________________________________________

AN ACT

To prevent tobacco smuggling, to ensure the collection of all tobacco
taxes, and for other purposes.