To amend title 39, United States Code, to make cigarettes and certain other tobacco products nonmailable, and for other purposes.

I thank the chairman of the subcommittee and the ranking member of the full committee for not only his sponsorship of the legislation, but the great work of him and his staff to try to bring this to the floor. It's kind of a complicated issue.

You know, we accept it as an article of faith that cigarette smoking is down in this country. We believe that because, as you look at the taxes paid in the 50 States and the various cities, there has been a decline. But a lot of information really leads us to believe that that might not be true at all, that all we're really seeing a reduction of is a reduction of the amount of taxes that are getting paid to the various States. And that is because, as both Mr. Smith and Mr. Scott have pointed out, more and more States are levying more and more State taxes on cigarettes. It's almost an easy thing to do. You know, some have commented that State governments are addicted to tobacco taxes. It has gotten to be so much that in New York City, for example, if you are a smoker--which I'm not--you pay an additional $4.25 per pack compared to South Carolina, where you pay an additional 7 cents a pack in State taxes.

Well, what I just described is, in a nutshell, the incentive for smugglers. They can buy cigarettes at a very low tax rate, sell them in a higher tax rate locality and be able to make money on the vig. Well, you might say to yourself, isn't that against the law? It is. It is against the law for anyone to buy cigarettes and not pay the tax of their locality. But there is no way for authorities to know that for sure. But we have some signs and some statistics that show that it's happening in record numbers.

I will give you an example. In just my State of New York, 280 million packs of cigarettes were sold on Native American reservations. In 2006, it's 360 million. If you take the number of residents on Native American reservations and do the math and assume that those cigarettes are being smoked just on the reservation, that would mean 44 cigarettes an hour for every Native American in the country over the age of 18, or basically a cigarette a minute. So that's not happening.

What is really happening is that more and more people are buying cigarettes on the Internet, they're not reporting that they're buying them on these Web sites, which are by and large on Native American lands, and they're not paying taxes on it. And that's what's happened. Now, not only is this a great source of great revenue loss to States-- my home State of New York estimates anywhere from hundreds of millions to as much as a billion dollars of lost revenue--but according to the Government Accountability Office, it might be used, as so many other smuggling operations are, for things more than just illicit activity, but terrorism.

It was found in a GAO investigation that there was a group that was buying cigarettes in North Carolina, smuggling them to Michigan, taking the money that they were making by selling them on the streets of Michigan, and then using the money to fund Hezbollah operations. That was just one investigation, one prosecution.

Now, as I've said earlier, it's already against the law to do many of these things, so why aren't there more prosecutions? Well, right now violations of the Jenkins Act, which is the prosecution that this would be under that say this type of activity is illegal, are misdemeanors. So even if you are a U.S. attorney and you say I really want to crack down on this and you wait outside and you try to do a sting, really the most you can hope for is a misdemeanor prosecution. One of the things this legislation does is makes it a felony.

A second thing that it does is it closes perhaps the largest truck- size loophole in the law, it allows people to buy cigarettes on the Internet. Now, because of the actions of New York, DHL, FedEx, UPS, they all say we no longer are going to allow anyone to transport cigarettes.

The only entity that still transports cigarettes is the United States Postal Service. They have come to Congress and said, if you want to ban us transporting tobacco, you've got to tell us by law. We can't do it. Effectively, that's what this legislation does.

Now, just to make it very clear, if you want to purchase cigarettes online, what is supposed to happen is the Internet carrier is supposed to then take a document, mail it to your home State and say that Anthony Weiner purchased X number of cases, then you're supposed to pay taxes on it. That never happens. States that have done stings know it has never happened and the ATF says it doesn't happen. Now that is going to be required, otherwise, you're not going to be able to do any transporting of tobacco at all. And finally, it requires the same type of age verification that we have for other things on the Internet.

This is a commonsense thing that I think is going to mean that we can really make sure States get the revenues, we can make sure that the black market in tobacco is eliminated, and frankly, we can make sure that the ATF has the tools they need to crack down on this.

This legislation is a long time in coming. It would not have been possible, as I said earlier, if it were not for the help of the ranking minority member of the full committee, the Chair of the subcommittee, the members and the staff who have done a remarkable job; on the full committee side, Perry Apelbaum and Ted Kalo, on the minority side, Sean McLaughlin, the chief of staff and general counsel on the minority side; Ameer Gopalani, who is the counsel on the subcommittee, Jesselyn McCurdy, who is another counsel. And on the minority side, Kimani Little and Caroline Lynch. Also, towards the end, to help us deal with many of the jurisdictional matters that we had, Congressman Waxman and the ranking member of the Government Oversight and Reform Committee, his staff director, Phil Barnett, Naomi Seiler, the counsel, Robin Appleberry, folks who worked very late into the night last night to help to make this happen. Congressman McHugh's staff, who has been very active on this, Rob Taub, his Chief of staff; Joe Dunn, Jonathan Schleifer and Dori Friedberg of my staff. These are all people who helped make this happen.

Now, I would say, before I yield back, as with so many things, this is a relatively easy fix that we were able to work in a bipartisan fashion to make happen. None of this is worth anything unless the folks on the other side of this building finally start to legislate, finally start to take some of these things that passed by overwhelming margins, things like the COPS bill we passed in our committee, and others, that we've managed to cross the partisan divide and do good government. And I would hope that my colleagues in the Senate at some point awaken and decide to start passing some of this legislation. If they do that, it would be greatly appreciated.

I also want to point out that, to all of the groups that have been so active in trying to make this a reality, and it's a disparate bunch, Altria--I guess previously Phillip Morris--Sara and John--I can't read their last name--the Campaign for Tobacco-Free Kids, National Association of Attorneys General, the American Wholesale Marketers, New York State Association of Wholesale Marketers--Artie Katz with them, these are disparate groups who don't agree on very much. And we have worked out a bill that I think passes not only bipartisan muster, but has enlightened elements of the industry involved.

And I should make one final point. There is a good deal of byplay going on in the 50 States about the rights of Native Americans dealing with their State governments. We say very clearly in this legislation, we are not seeking to litigate that at this time. There are two contradictory Supreme Court decisions that are out there, there are many different interpretations. We make it very clear here that what we're seeking to do is to empower the Federal authorities to operate where they're allowed to, the State authorities only to operate where they are. But I think that because of the support of the National Association of Attorneys General, folks like my State and the active advocacy of organizations and journalists like those at the New York Post, who have been beating the drum on this, we are going to finally get this done.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 4081) to prevent tobacco smuggling, to ensure the collection of all tobacco taxes, and for other purposes, as amended.

Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days to revise and extend their remarks and include extraneous material on the bill under consideration.

I yield myself such time as I may consume.

Mr. Speaker, the Prevent All Cigarette Trafficking Act, or PACT Act, introduced by the gentleman from New York (Mr. Weiner), strengthens our law enforcement capabilities against the illegal smuggling of tobacco products.

Every year, billions of cigarettes are illegally smuggled across State lines. This fraudulent activity not only harms the public health but deprives State and local governments of sorely needed tax revenues.

In fact, tax evasion is a chief motivator for cigarette smuggling. Buying cigarettes in a State where the cigarette tax is low and selling them in a State where the cigarette tax is high allows the trafficker to sell the cigarettes at a discount and still turn an illicit profit.

States lose $1 billion in uncollected taxes each year as a result of illegal cigarette smuggling. The illicit profit also helps finance other criminal activity which creates a revenue stream for organized crime.

Because of the scope and interstate nature of this activity, States cannot adequately address it on their own. It has long been recognized as a Federal concern.

With the existing Federal statutes, the Jenkins Act, which requires reporting interstate cigarette sales to tax officials in the buyer's State, and the Contraband Cigarette Trafficking Act, which prohibits knowingly dealing in contraband cigarettes or smokeless tobacco, those two statutes are simply not up to the task in the Internet age.

The Internet, in particular, makes it possible for today's tobacco smugglers to be even more mobile and invisible and to operate with near impunity. Even when the smugglers can be identified and pursued, they can simply shut down operations and quickly reappear under a new name and Web site.

The PACT Act addresses the shortcomings in the current law by targeting the delivery systems for illegal Internet tobacco sales: the postal system and commercial delivery services.

With limited exceptions, sending tobacco products through the United States mail will be criminally prohibited. And vendors using commercial delivery services for retail sales will be required to notify the tax authorities in the receiving State, conspicuously label all tobacco products, verify the purchaser's age, and keep careful records of all sales.

The bill raises cigarette trafficking from a misdemeanor to a felony. And it authorizes the Bureau of Alcohol, Tobacco, Firearms and Explosives to inspect the premises and files of sellers of significant quantities of cigarettes or smokeless tobacco.

H.R. 4081 enjoys support from a diverse spectrum of entities, including the National Association of Convenience Stores, Altria--the parent company of Phillip Morris--the Campaign for Tobacco-Free Kids, the American Wholesale Marketers Association, and the National Association of Attorneys General, among others.

I commend my colleague, Mr. Weiner, for his leadership on this important legislation. I also commend the chairman of the Judiciary Committee, Mr. Conyers, and the ranking member, Mr. Smith, for their leadership in making this a bipartisan effort.

I also want to thank the other committees whose jurisdiction has touched on this bill for working with us to bring it to the floor today.

I urge my colleagues to support this important legislation.

House of Representatives, Committee on Transportation

and Infrastructure,

Washington, DC, September 8, 2008.

Hon. John Conyers, Jr.,

Chairman, Committee on the Judiciary, House of

Representatives, Washington, DC.

Dear Chairman Conyers: I write to you regarding H.R. 4081,

the ``Prevent All Cigarette Trafficking Act of 2008''.

H.R. 4081 contains provisions that fall within the

jurisdiction of the Committee on Transportation and

Infrastructure. I recognize and appreciate your desire to

bring this legislation before the House in an expeditious

manner and, accordingly, I will not seek a sequential

referral of the bill. However, I agree to waive consideration

of this bill with the mutual understanding that my decision

to forego a sequential referral of the bill does not waive,

reduce, or otherwise affect the jurisdiction of the Committee

on Transportation and Infrastructure over H.R. 4081.

Further, the Committee on Transportation and Infrastructure

reserves the right to seek the appointment of conferees

during any House-Senate conference convened on this

legislation on provisions of the bill that are within the

Committee's jurisdiction. I ask for your commitment to

support any request by the Committee on Transportation and

Infrastructure for the appointment of conferees on H.R. 4081

or similar legislation.

Please place a copy of this letter and your response

acknowledging the Committee on Transportation and

Infrastructure's jurisdictional interest in the Congressional

Record during consideration of the measure on the House

Floor.

I look forward to working with you as we prepare to pass

this important legislation.

Sincerely,

James L. Oberstar,

Chairman.

Mr. Speaker, I yield such time as he may consume to the gentleman from New York (Mr. Weiner), who is a distinguished member of the Judiciary Committee and sponsor of the legislation.

Mr. Speaker, I thank the gentleman from New York for his hard work on this bill. He mentioned many others that have been working on this. He has worked so well; he had broad bipartisan support. So I hope it will be the pleasure of the House to pass the bill.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I am an original cosponsor of H.R. 4081, the Prevent All Cigarette Trafficking (PACT) Act. And I want to thank Congressman Weiner from New York for working hard to bring this legislation to the floor today.

This bipartisan bill will help combat cigarette trafficking, which is a growing problem in America. Combating cigarette trafficking is an issue both Congress and the manufacturers want to address together.

Taxes on cigarettes vary greatly from State to State. This difference in tax rates creates a market for criminals and organized crime syndicates to purchase cigarettes from one State and smuggle them to another State to resell them below market value and without paying local taxes.

The PACT Act closes loopholes in current tobacco trafficking laws and provides law enforcement officials with ways to combat the deceptive methods being used by cigarette traffickers to distribute their products. First, the legislation strengthens the Jenkins Act, a long- standing law that requires vendors who sell cigarettes to out-of-State buyers to report these sales to the buyer's State tobacco tax administrator. The PACT Act makes it a Federal felony for anyone to sell cigarettes by telephone, the mail, or the Internet and not comply with all relevant State tax laws.

The PACT Act requires Internet cigarette sellers to verify the purchaser's age and identity through easily accessible databases. This measure protects children and ensures that they cannot anonymously purchase cigarettes from the Internet.

The PACT Act also empowers the Attorney General to compile a list of delivery sellers who fail to comply with State tax laws. Any seller who lands on that list will be prohibited from using the U.S. Postal Service or common carriers like FedEx or DHL to deliver their products.

The PACT Act creates reasonable procedures to ensure that the Attorney General's list of noncompliant tobacco delivery sellers is both accurate and complete.

In summary, Mr. Speaker, the PACT Act prevents the loss of tax revenue, combats cigarette smuggling, and limits children's access to cigarettes; all worthy goals.

I urge my colleagues to support this bill.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I rise in support of H.R. 4081 because of the important difference it will make in reducing young people's access to cigarettes.

The tobacco industry has long targeted the nation's youth. As this Committee learned in 1998 when I released documents from inside the board room of RJR, tobacco executives had an explicit strategy of hooking our children to create lifelong, addicted consumers.

Recently, states have begun to fight back with stronger laws to prevent teenagers from buying tobacco products. These laws require photo IDs to be shown at the point of purchase.

But these efforts haven't been successful in addressing the traffic of cigarettes through our newest, and least controlled, market: the internet.

Today, a young person anywhere in the country can go online and find a site that sells cigarettes. He or she can find a site that doesn't require any kind of meaningful age verification. And then the teenager can order cigarettes and have them delivered right to his or her home.

Despite the efforts of public health advocates, the flow of cigarettes to minors--and the evasion of state and local taxes-- continues.

The majority of online cigarettes are shipped through the U.S. mails. So I am particularly supportive of this bill's inclusion of a provision to make cigarettes, smokeless tobacco, and roll-your-own tobacco nonmailable products.

The bill has incorporated important provisions from H.R. 2932, a bill on tobacco nonmailability introduced by Congressman McHugh.

I thank Congressman McHugh and Congressman Weiner for their leadership on this

important issue, and look forward to ongoing collaboration in reducing smoking among America's youth.