[House Report 110-836]
[From the U.S. Government Publishing Office]
110th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 110-836
======================================================================
PREVENT ALL CIGARETTE TRAFFICKING ACT OF 2008 OR PACT ACT
_______
September 9, 2008.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Conyers, from the Committee on the Judiciary, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 4081]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the bill
(H.R. 4081) to prevent tobacco smuggling, to ensure the
collection of all tobacco taxes, and for other purposes, having
considered the same, reports favorably thereon with an
amendment and recommends that the bill as amended do pass.
CONTENTS
Page
The Amendment.................................................... 2
Purpose and Summary.............................................. 16
Background and Need for the Legislation.......................... 16
Hearings......................................................... 18
Committee Consideration.......................................... 18
Committee Votes.................................................. 18
Committee Oversight Findings..................................... 18
New Budget Authority and Tax Expenditures........................ 18
Congressional Budget Office Cost Estimate........................ 18
Performance Goals and Objectives................................. 22
Constitutional Authority Statement............................... 22
Advisory on Earmarks............................................. 22
Section-by-Section Analysis...................................... 22
Changes in Existing Law Made by the Bill, as Reported............ 26
Dissenting Views................................................. 45
The Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; FINDINGS; PURPOSES.
(a) Short Title.--This Act may be cited as the ``Prevent All
Cigarette Trafficking Act of 2008'' or ``PACT Act''.
(b) Findings.--Congress finds that--
(1) the sale of illegal cigarettes and smokeless tobacco
products significantly reduces Federal, State, and local
government revenues, with Internet sales alone accounting for
billions of dollars of lost Federal, State, and local tobacco
tax revenue each year;
(2) Hezbollah, Hamas, al Qaeda, and other terrorist
organizations have profited from trafficking in illegal
cigarettes or counterfeit cigarette tax stamps;
(3) terrorist involvement in illicit cigarette trafficking
will continue to grow because of the large profits such
organizations can earn;
(4) the sale of illegal cigarettes and smokeless tobacco over
the Internet, and through mail, fax, or phone orders, make it
cheaper and easier for children to obtain tobacco products;
(5) the majority of Internet and other remote sales of
cigarettes and smokeless tobacco are being made without
adequate precautions to protect against sales to children,
without the payment of applicable taxes, and without complying
with the nominal registration and reporting requirements in
existing Federal law;
(6) unfair competition from illegal sales of cigarettes and
smokeless tobacco is taking billions of dollars of sales away
from law-abiding retailers throughout the United States;
(7) with rising State and local tobacco tax rates, the
incentives for the illegal sale of cigarettes and smokeless
tobacco have increased;
(8) the number of active tobacco investigations being
conducted by the Bureau of Alcohol, Tobacco, Firearms, and
Explosives rose to 452 in 2005;
(9) the number of Internet vendors in the United States and
in foreign countries that sell cigarettes and smokeless tobacco
to buyers in the United States has increased from only about 40
in 2000 to more than 500 in 2005; and
(10) the intrastate sale of illegal cigarettes and smokeless
tobacco over the Internet has a substantial effect on
interstate commerce.
(c) Purposes.--It is the purpose of this Act to--
(1) require Internet and other remote sellers of cigarettes
and smokeless tobacco to comply with the same laws that apply
to law-abiding tobacco retailers;
(2) create strong disincentives to illegal smuggling of
tobacco products;
(3) provide government enforcement officials with more
effective enforcement tools to combat tobacco smuggling;
(4) make it more difficult for cigarette and smokeless
tobacco traffickers to engage in and profit from their illegal
activities;
(5) increase collections of Federal, State, and local excise
taxes on cigarettes and smokeless tobacco; and
(6) prevent and reduce youth access to inexpensive cigarettes
and smokeless tobacco through illegal Internet or contraband
sales.
SEC. 2. COLLECTION OF STATE CIGARETTE AND SMOKELESS TOBACCO TAXES.
(a) Definitions.--The Act of October 19, 1949 (15 U.S.C. 375 et seq.;
commonly referred to as the ``Jenkins Act'') (referred to in this Act
as the ``Jenkins Act''), is amended by striking the first section and
inserting the following:
``SECTION 1. DEFINITIONS.
``As used in this Act, the following definitions apply:
``(1) Attorney general.--The term `attorney general', with
respect to a State, means the attorney general or other chief
law enforcement officer of the State, or the designee of that
officer.
``(2) Cigarette.--
``(A) In general.--For purposes of this Act, the term
`cigarette' shall--
``(i) have the same meaning given that term
in section 2341 of title 18, United States
Code; and
``(ii) include `roll-your-own tobacco' (as
that term is defined in section 5702 of the
Internal Revenue Code of 1986).
``(B) Exception.--For purposes of this Act, the term
`cigarette' does not include a `cigar', as that term is
defined in section 5702 of the Internal Revenue Code of
1986.
``(3) Common carrier.--The term `common carrier' means any
person (other than a local messenger service or the United
States Postal Service) that holds itself out to the general
public as a provider for hire of the transportation by water,
land, or air of merchandise, whether or not the person actually
operates the vessel, vehicle, or aircraft by which the
transportation is provided, between a port or place and a port
or place in the United States.
``(4) Consumer.--The term `consumer' means any person that
purchases cigarettes or smokeless tobacco, but does not include
any person lawfully operating as a manufacturer, distributor,
wholesaler, or retailer of cigarettes or smokeless tobacco.
``(5) Delivery sale.--The term `delivery sale' means any sale
of cigarettes or smokeless tobacco to a consumer if--
``(A) the consumer submits the order for such sale by
means of a telephone or other method of voice
transmission, the mails, or the Internet or other
online service, or the seller is otherwise not in the
physical presence of the buyer when the request for
purchase or order is made; or
``(B) the cigarettes or smokeless tobacco are
delivered by use of a common carrier, private delivery
service, or the mails, or the seller is not in the
physical presence of the buyer when the buyer obtains
possession of the cigarettes or smokeless tobacco.
``(6) Delivery seller.--The term `delivery seller' means a
person who makes a delivery sale.
``(7) Indian country.--The term `Indian country' means--
``(A) Indian country as defined in section 1151of
title 18, United States Code, except that within the
State of Alaska that term applies only to the
Metlakatla Indian Community, Annette Island Reserve;
and
``(B) any other land held by the United States in
trust for one or more Indian tribes.
``(8) Indian tribe.--The term `Indian tribe', `tribe', or
`tribal' refers to an Indian tribe as defined in section 4(e)
of the Indian Self-Determination and Education Assistance Act
(25 U.S.C. 450b(e)) or as listed pursuant to section 104 of the
Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C.
479a-1).
``(9) Interstate commerce.--The term `interstate commerce'
means commerce between a State and any place outside the State,
commerce between a State and any Indian country in the State,
or commerce between points in the same State but through any
place outside the State or through any Indian country.
``(10) Person.--The term `person' means an individual,
corporation, company, association, firm, partnership, society,
State government, local government, Indian tribal government,
governmental organization of such government, or joint stock
company.
``(11) State.--The term `State' means each of the several
States of the United States, the District of Columbia, the
Commonwealth of Puerto Rico, or any territory or possession of
the United States.
``(12) Smokeless tobacco.--The term `smokeless tobacco' means
any finely cut, ground, powdered, or leaf tobacco, or other
product containing tobacco, that is intended to be placed in
the oral or nasal cavity or otherwise consumed without being
combusted.
``(13) Tobacco tax administrator.--The term `tobacco tax
administrator' means the State, local, or tribal official duly
authorized to collect the tobacco tax or administer the tax law
of a State, locality, or tribe, respectively.
``(14) Tribal enterprise.--The term `tribal enterprise' means
any business enterprise, incorporated or unincorporated under
federal or tribal law, of an Indian tribe or group of Indian
tribe.
``(15) Use.--The term `use', in addition to its ordinary
meaning, means the consumption, storage, handling, or disposal
of cigarettes or smokeless tobacco.''.
(b) Reports to State Tobacco Tax Administrators.--Section 2 of the
Jenkins Act (15 U.S.C. 376) is amended--
(1) by striking ``cigarettes'' each place it appears and
inserting ``cigarettes or smokeless tobacco'';
(2) in subsection (a)--
(A) in the matter preceding paragraph (1)--
(i) by inserting ``Contents.--'' after
``(a)''
(ii) by striking ``or transfers'' and
inserting ``, transfers, or ships'';
(iii) by inserting ``, locality, or Indian
country of an Indian tribe'' after ``a State'';
(iv) by striking ``to other than a
distributor licensed by or located in such
State,''; and
(v) by striking ``or transfer and shipment''
and inserting ``, transfer, or shipment'';
(B) in paragraph (1)--
(i) by striking ``with the tobacco tax
administrator of the State'' and inserting
``with the Attorney General of the United
States and with the tobacco tax administrators
of the State and place''; and
(ii) by striking ``; and'' and inserting the
following: ``, as well as telephone numbers for
each place of business, a principal electronic
mail address, any website addresses, and the
name, address, and telephone number of an agent
in the State authorized to accept service on
behalf of such person;'';
(C) in paragraph (2), by striking ``and the quantity
thereof.'' and inserting ``the quantity thereof, and
the name, address, and phone number of the person
delivering the shipment to the recipient on behalf of
the delivery seller, with all invoice or memoranda
information relating to specific customers to be
organized by city or town and by zip code; and''; and
(D) by adding at the end the following:
``(3) with respect to each memorandum or invoice filed with a
State under paragraph (2), also file copies of such memorandum
or invoice with the tobacco tax administrators and chief law
enforcement officers of the local governments and Indian tribes
operating within the borders of the State that apply their own
local or tribal taxes on cigarettes or smokeless tobacco.'';
(3) in subsection (b)--
(A) by inserting ``Presumptive Evidence.--'' after
``(b)'';
(B) by striking ``(1) that'' and inserting ``that'';
and
(C) by striking ``, and (2)'' and all that follows
and inserting a period; and
(4) by adding at the end the following:
``(c) Use of Information.--A tobacco tax administrator or chief law
enforcement officer who receives a memorandum or invoice under
paragraph (2) or (3) of subsection (a) shall use such memorandum or
invoice solely for the purposes of the enforcement of this Act and the
collection of any taxes owed on related sales of cigarettes and
smokeless tobacco, and shall keep confidential any personal information
in such memorandum or invoice not otherwise required for such
purposes.''.
(c) Requirements for Delivery Sales.--The Jenkins Act is amended by
inserting after section 2 the following:
``SEC. 2A. DELIVERY SALES.
``(a) In General.--With respect to delivery sales into a specific
State and place, each delivery seller shall comply with--
``(1) the shipping requirements set forth in subsection (b);
``(2) the recordkeeping requirements set forth in subsection
(c);
``(3) all State, local, tribal, and other laws generally
applicable to sales of cigarettes or smokeless tobacco as if
such delivery sales occurred entirely within the specific State
and place, including laws imposing--
``(A) excise taxes;
``(B) licensing and tax-stamping requirements;
``(C) restrictions on sales to minors; and
``(D) other payment obligations or legal requirements
relating to the sale, distribution, or delivery of
cigarettes or smokeless tobacco; and
``(4) the tax collection requirements set forth in subsection
(d).
``(b) Shipping and Packaging.--
``(1) Required statement.--For any shipping package
containing cigarettes or smokeless tobacco, the delivery seller
shall include on the bill of lading, if any, and on the outside
of the shipping package, on the same surface as the delivery
address, a clear and conspicuous statement providing as
follows: `CIGARETTES/SMOKELESS TOBACCO: FEDERAL LAW REQUIRES
THE PAYMENT OF ALL APPLICABLE EXCISE TAXES, AND COMPLIANCE WITH
APPLICABLE LICENSING AND TAX-STAMPING OBLIGATIONS'.
``(2) Failure to label.--Any shipping package described in
paragraph (1) that is not labeled in accordance with that
paragraph shall be treated as nondeliverable matter by a common
carrier or other delivery service, if the common carrier or
other delivery service knows or should know the package
contains cigarettes or smokeless tobacco. If a common carrier
or other delivery service believes a package is being submitted
for delivery in violation of paragraph (1), it may require the
person submitting the package for delivery to establish that it
is not being sent in violation of paragraph (1) before
accepting the package for delivery. Nothing in this paragraph
shall require the common carrier or other delivery service to
open any package to determine its contents.
``(3) Weight restriction.--A delivery seller shall not sell,
offer for sale, deliver, or cause to be delivered in any single
sale or single delivery any cigarettes or smokeless tobacco
weighing more than 10 pounds.
``(4) Age verification.--
``(A) In general.--Notwithstanding any other
provision of law, a delivery seller who mails or ships
tobacco products--
``(i) shall not sell, deliver, or cause to be
delivered any tobacco products to a person
under the minimum age required for the legal
sale or purchase of tobacco products, as
determined by the applicable law at the place
of delivery;
``(ii) shall use a method of mailing or
shipping that requires--
``(I) the purchaser placing the
delivery sale order, or an adult who is
at least the minimum age required for
the legal sale or purchase of tobacco
products, as determined by the
applicable law at the place of
delivery, to sign to accept delivery of
the shipping container at the delivery
address; and
``(II) the person who signs to accept
delivery of the shipping container to
provide proof, in the form of a valid,
government-issued identification
bearing a photograph of the individual,
that the person is at least the minimum
age required for the legal sale or
purchase of tobacco products, as
determined by the applicable law at the
place of delivery; and
``(iii) shall not accept a delivery sale
order from a person without--
``(I) obtaining the full name, birth
date, and residential address of that
person; and
``(II) verifying the information
provided in subclause (I), through the
use of a commercially available
database or aggregate of databases,
consisting primarily of data from
government sources, that are regularly
used by government and businesses for
the purpose of age and identity
verification and authentication, to
ensure that the purchaser is at least
the minimum age required for the legal
sale or purchase of tobacco products,
as determined by the applicable law at
the place of delivery.
``(B) Limitation.--No database being used for age and
identity verification under subparagraph (A)(iii) shall
be in the possession or under the control of the
delivery seller, or be subject to any changes or
supplementation by the delivery seller.
``(c) Records.--
``(1) In general.--Each delivery seller shall keep a record
of any delivery sale, including all of the information
described in section 2(a)(2), organized by the State, and
within such State, by the city or town and by zip code, into
which such delivery sale is so made.
``(2) Record retention.--Records of a delivery sale shall be
kept as described in paragraph (1) in the year in which the
delivery sale is made and for the next 4 years.
``(3) Access for officials.--Records kept under paragraph (1)
shall be made available to tobacco tax administrators of the
States, to local governments and Indian tribes that apply their
own local or tribal taxes on cigarettes or smokeless tobacco,
to the attorneys general of the States, to the chief law
enforcement officers of such local governments and Indian
tribes, and to the Attorney General of the United States in
order to ensure the compliance of persons making delivery sales
with the requirements of this Act.
``(d) Delivery.--
``(1) In general.--Except as provided in paragraph (2), no
delivery seller may sell or deliver to any consumer, or tender
to any common carrier or other delivery service, any cigarettes
or smokeless tobacco pursuant to a delivery sale unless, in
advance of the sale, delivery, or tender--
``(A) any cigarette or smokeless tobacco excise tax
that is imposed by the State in which the cigarettes or
smokeless tobacco are to be delivered has been paid to
the State;
``(B) any cigarette or smokeless tobacco excise tax
that is imposed by the local government of the place in
which the cigarettes or smokeless tobacco are to be
delivered has been paid to the local government; and
``(C) any required stamps or other indicia that such
excise tax has been paid are properly affixed or
applied to the cigarettes or smokeless tobacco.
``(2) Exception.--Paragraph (1) does not apply to a delivery
sale of smokeless tobacco if the law of the State or local
government of the place where the smokeless tobacco is to be
delivered requires or otherwise provides that delivery sellers
collect the excise tax from the consumer and remit the excise
tax to the State or local government, and the delivery seller
complies with the requirement.
``(e) List of Unregistered or Noncompliant Delivery Sellers.--
``(1) In general.--
``(A) Initial list.--Not later than 90 days after
this subsection goes into effect under the Prevent All
Cigarette Trafficking Act of 2008, the Attorney General
of the United States shall compile a list of delivery
sellers of cigarettes or smokeless tobacco that have
not registered with the Attorney General, pursuant to
section 2(a) or that are otherwise not in compliance
with this Act, and--
``(i) distribute the list to--
``(I) the attorney general and tax
administrator of every State;
``(II) common carriers and other
persons that deliver small packages to
consumers in interstate commerce,
including the United States Postal
Service; and
``(III) at the discretion of the
Attorney General of the United States,
to any other persons; and
``(ii) publicize and make the list available
to any other person engaged in the business of
interstate deliveries or who delivers
cigarettes or smokeless tobacco in or into any
State.
``(B) List contents.--To the extent known, the
Attorney General of the United States shall include,
for each delivery seller on the list described in
subparagraph (A)--
``(i) all names the delivery seller uses in
the transaction of its business or on packages
delivered to customers;
``(ii) all addresses from which the delivery
seller does business or ships cigarettes or
smokeless tobacco;
``(iii) the website addresses, primary e-mail
address, and phone number of the delivery
seller; and
``(iv) any other information that the
Attorney General determines would facilitate
compliance with this subsection by recipients
of the list.
``(C) Updating.--The Attorney General of the United
States shall update and distribute the list at least
once every 4 months, and may distribute the list and
any updates by regular mail, electronic mail, or any
other reasonable means, or by providing recipients with
access to the list through a nonpublic website that the
Attorney General of the United States regularly
updates.
``(D) State, local, or tribal additions.--The
Attorney General of the United States shall include in
the list under subparagraph (A) any noncomplying
delivery sellers identified by any State, local, or
tribal government under paragraph (5), and shall
distribute the list to the attorney general or chief
law enforcement official and the tax administrator of
any government submitting any such information and to
any common carriers or other persons who deliver small
packages to consumers identified by any government
pursuant to paragraph (5).
``(E) Accuracy and completeness of list of
noncomplying delivery sellers.--In preparing and
revising the list required by subparagraph (A), the
Attorney General shall--
``(i) use reasonable procedures to ensure
maximum possible accuracy and completeness of
the records and information relied on for the
purpose of determining that such delivery
seller is noncomplying;
``(ii) not later than 14 days prior to
including any delivery seller on the list under
paragraph (1), make a reasonable attempt to
send notice to the delivery seller by letter,
electronic mail, or other means that the
delivery seller is being placed on such list or
update, with that notice citing the relevant
provisions of this Act and the specific reasons
for being placed on such list;
``(iii) provide an opportunity to such
delivery seller to challenge placement on such
list;
``(iv) investigate each such challenge by
contacting the relevant Federal, State, tribal,
and local law enforcement officials, and
provide the specific findings and results of
such investigation to such delivery seller not
later than 30 days after the challenge is made;
and
``(v) upon finding that any placement is
inaccurate, incomplete, or cannot be verified,
promptly delete such delivery seller from the
list as appropriate and notify each appropriate
Federal, State, tribal, and local authority of
such finding.
``(F) Confidentiality.--The list distributed pursuant
to subparagraph (A) shall be confidential, and any
person receiving the list shall maintain the
confidentiality of the list but may deliver the list,
for enforcement purposes, to any government official or
to any common carrier or other person that delivers
tobacco products or small packages to consumers.
Nothing in this section shall prohibit a common
carrier, the United States Postal Service, or any other
person receiving the list from discussing with the
listed delivery sellers the delivery sellers' inclusion
on the list and the resulting effects on any services
requested by such listed delivery seller.
``(2) Prohibition on delivery.--
``(A) In general.--Commencing on the date that is 60
days after the date of the initial distribution or
availability of the list under paragraph (1)(A), no
person who receives the list under paragraph (1), and
no person who delivers cigarettes or smokeless tobacco
to consumers, shall knowingly complete, cause to be
completed, or complete its portion of a delivery of any
package for any person whose name and address are on
the list, unless--
``(i) the person making the delivery knows or
believes in good faith that the item does not
include cigarettes or smokeless tobacco;
``(ii) the delivery is made to a person
lawfully engaged in the business of
manufacturing, distributing, or selling
cigarettes or smokeless tobacco; or
``(iii) the package being delivered weighs
more than 100 pounds and the person making the
delivery does not know or have reasonable cause
to believe that the package contains cigarettes
or smokeless tobacco.
``(B) Implementation of updates.--Commencing on the
date that is 30 days after the date of the distribution
or availability of any updates or corrections to the
list under paragraph (1), all recipients and all common
carriers or other persons that deliver cigarettes or
smokeless tobacco to consumers shall be subject to
subparagraph (A) in regard to such corrections or
updates.
``(C) Exemptions.--Subparagraphs (A) and (B), and any
other requirements or restrictions placed directly on
common carriers elsewhere in this subsection, shall not
apply to a common carrier that is subject to a
settlement agreement relating to tobacco product
deliveries to consumers. For the purposes of this
section, `settlement agreement' shall be defined to
include the Assurance of Discontinuance entered into by
the Attorney General of New York and DHL Holdings USA,
Inc. and DHL Express (USA), Inc. on or about July 1,
2005, the Assurance of Discontinuance entered into by
the Attorney General of New York and United Parcel
Service, Inc. on or about October 21, 2005, and the
Assurance of Compliance entered into by the Attorney
General of New York and Federal Express Corporation and
Fed Ex Ground package Systems, Inc. on or about
February 3, 2006, so long as each is honored
nationwide to block illegal deliveries of cigarettes or
smokeless tobacco to consumers, and also includes any
other active agreement between a common carrier and the
states that operates nationwide to ensure that no
deliveries of cigarettes and smokeless tobacco shall be
made to consumers for illegally operating Internet or
mail-order sellers and that any such deliveries to
consumers shall not be made to minors or without
payment to the states and localities where the
consumers are located of all taxes on the tobacco
products.
``(3) Shipments from persons on list.--
``(A) In general.--In the event that a common carrier
or other delivery service delays or interrupts the
delivery of a package it has in its possession because
it determines or has reason to believe that the person
ordering the delivery is on a list distributed under
paragraph (1)--
``(i) the person ordering the delivery shall
be obligated to pay--
``(I) the common carrier or other
delivery service as if the delivery of
the package had been timely completed;
and
``(II) if the package is not
deliverable, any reasonable additional
fee or charge levied by the common
carrier or other delivery service to
cover its extra costs and inconvenience
and to serve as a disincentive against
such noncomplying delivery orders; and
``(ii) if the package is determined not to be
deliverable, the common carrier or other
delivery service shall, in its discretion,
either provide the package and its contents to
a Federal, State, or local law enforcement
agency or destroy the package and its contents.
``(B) Records.--A common carrier or other delivery
service shall maintain, for a period of 5 years, any
records kept in the ordinary course of business
relating to any deliveries interrupted pursuant to this
paragraph and provide that information, upon request,
to the Attorney General of the United States or to the
attorney general or chief law enforcement official or
tax administrator of any State, local, or tribal
government.
``(C) Confidentiality.--Any person receiving records
under subparagraph (B) shall use such records solely
for the purposes of the enforcement of this Act and the
collection of any taxes owed on related sales of
cigarettes and smokeless tobacco, and the person
receiving records under subparagraph (B) shall keep
confidential any personal information in such records
not otherwise required for such purposes.
``(4) Preemption.--
``(A) In general.--No State, local, or tribal
government, nor any political authority of 2 or more
State, local, or tribal governments, may enact or
enforce any law or regulation relating to delivery
sales that restricts deliveries of cigarettes or
smokeless tobacco to consumers by common carriers or
other delivery services on behalf of delivery sellers
by--
``(i) requiring that the common carrier or
other delivery service verify the age or
identity of the consumer accepting the delivery
by requiring the person who signs to accept
delivery of the shipping container to provide
proof, in the form of a valid, government-
issued identification bearing a photograph of
the individual, that such person is at least
the minimum age required for the legal sale or
purchase of tobacco products, as determined by
either State or local law at the place of
delivery;
``(ii) requiring that the common carrier or
other delivery service obtain a signature from
the consumer accepting the delivery;
``(iii) requiring that the common carrier or
other delivery service verify that all
applicable taxes have been paid;
``(iv) requiring that packages delivered by
the common carrier or other delivery service
contain any particular labels, notice, or
markings; or
``(v) prohibiting common carriers or other
delivery services from making deliveries on the
basis of whether the delivery seller is or is
not identified on any list of delivery sellers
maintained and distributed by any entity other
than the Federal Government.
``(B) Relationship to other laws.--Except as provided
in subparagraph (C), nothing in this paragraph shall be
construed to prohibit, expand, restrict, or otherwise
amend or modify--
``(i) section 14501(c)(1) or 41713(b)(4) of
title 49, United States Code;
``(ii) any other restrictions in Federal law
on the ability of State, local, or tribal
governments to regulate common carriers; or
``(iii) any provision of State, local, or
tribal law regulating common carriers that
falls within the provisions of sections
14501(c)(2) or 41713(b)(4)(B) of title 49 of
the United States Code.
``(C) State laws prohibiting delivery sales.--Nothing
in the Prevent All Cigarette Trafficking Act of 2008,
the amendments made by that Act, or in any other
Federal statute shall be construed to preempt,
supersede, or otherwise limit or restrict State laws
prohibiting the delivery sale, or the shipment or
delivery pursuant to a delivery sale, of cigarettes or
other tobacco products to individual consumers or
personal residences.
``(5) State, local, and tribal additions.--
``(A) In general.--Any State, local, or tribal
government shall provide the Attorney General of the
United States with--
``(i) all known names, addresses, website
addresses, and other primary contact
information of any delivery seller that offers
for sale or makes sales of cigarettes or
smokeless tobacco in or into the State,
locality, or tribal land but has failed to
register with or make reports to the respective
tax administrator, as required by this Act, or
that has been found in a legal proceeding to
have otherwise failed to comply with this Act;
and
``(ii) a list of common carriers and other
persons who make deliveries of cigarettes or
smokeless tobacco in or into the State,
locality, or tribal lands.
``(B) Updates.--Any government providing a list to
the Attorney General of the United States under
subparagraph (A) shall also provide updates and
corrections every 4 months until such time as such
government notifies the Attorney General of the United
States in writing that such government no longer
desires to submit such information to supplement the
list maintained and distributed by the Attorney General
of the United States under paragraph (1).
``(C) Removal after withdrawal.--Upon receiving
written notice that a government no longer desires to
submit information under subparagraph (A), the Attorney
General of the United States shall remove from the list
under paragraph (1) any persons that are on the list
solely because of such government's prior submissions
of its list of noncomplying delivery sellers of
cigarettes or smokeless tobacco or its subsequent
updates and corrections.
``(6) Deadline to incorporate additions.--The Attorney
General of the United States shall--
``(A) include any delivery seller identified and
submitted by a State, local, or tribal government under
paragraph (5) in any list or update that is distributed
or made available under paragraph (1) on or after the
date that is 30 days after the date on which the
information is received by the Attorney General of the
United States; and
``(B) distribute any such list or update to any
common carrier or other person who makes deliveries of
cigarettes or smokeless tobacco that has been
identified and submitted by another government,
pursuant to paragraph (5).
``(7) Notice to delivery sellers.--Not later than 14 days
prior to including any delivery seller on the initial list
distributed or made available under paragraph (1), or on any
subsequent list or update for the first time, the Attorney
General of the United States shall make a reasonable attempt to
send notice to the delivery seller by letter, electronic mail,
or other means that the delivery seller is being placed on such
list or update, with that notice citing the relevant provisions
of this Act.
``(8) Limitations.--
``(A) In general.--Any common carrier or other person
making a delivery subject to this subsection shall not
be required or otherwise obligated to--
``(i) determine whether any list distributed
or made available under paragraph (1) is
complete, accurate, or up-to-date;
``(ii) determine whether a person ordering a
delivery is in compliance with this Act; or
``(iii) open or inspect, pursuant to this
Act, any package being delivered to determine
its contents.
``(B) Alternate names.--Any common carrier or other
person making a delivery subject to this subsection
shall not be required or otherwise obligated to make
any inquiries or otherwise determine whether a person
ordering a delivery is a delivery seller on the list
under paragraph (1) who is using a different name or
address in order to evade the related delivery
restrictions, but shall not knowingly deliver any
packages to consumers for any such delivery seller who
the common carrier or other delivery service knows is a
delivery seller who is on the list under paragraph (1)
but is using a different name or address to evade the
delivery restrictions of paragraph (2).
``(C) Penalties.--Any common carrier or person in the
business of delivering packages on behalf of other
persons shall not be subject to any penalty under
section 14101(a) of title 49, United States Code, or
any other provision of law for--
``(i) not making any specific delivery, or
any deliveries at all, on behalf of any person
on the list under paragraph (1);
``(ii) not, as a matter of regular practice
and procedure, making any deliveries, or any
deliveries in certain States, of any cigarettes
or smokeless tobacco for any person or for any
person not in the business of manufacturing,
distributing, or selling cigarettes or
smokeless tobacco; or
``(iii) delaying or not making a delivery for
any person because of reasonable efforts to
comply with this Act.
``(D) Other limits.--Section 2 and subsections (a),
(b), (c), and (d) of this section shall not be
interpreted to impose any responsibilities,
requirements, or liability on common carriers.
``(f) Presumption.--For purposes of this Act, a delivery sale shall
be deemed to have occurred in the State and place where the buyer
obtains personal possession of the cigarettes or smokeless tobacco, and
a delivery pursuant to a delivery sale is deemed to have been initiated
or ordered by the delivery seller.''.
(d) Penalties.--The Jenkins Act is amended by striking section 3 and
inserting the following:
``SEC. 3. PENALTIES.
``(a) Criminal Penalties.--
``(1) In general.--Except as provided in paragraph (2),
whoever violates any provision of this Act shall be guilty of a
felony and shall be imprisoned not more than 3 years, fined
under title 18, United States Code, or both.
``(2) Exceptions.--
``(A) Governments.--Paragraph (1) shall not apply to
a State, local, or tribal government.
``(B) Delivery violations.--A common carrier or
independent delivery service, or employee of a common
carrier or independent delivery service, shall be
subject to criminal penalties under paragraph (1) for a
violation of section 2A(e) only if the violation is
committed intentionally--
``(i) as consideration for the receipt of, or
as consideration for a promise or agreement to
pay, anything of pecuniary value; or
``(ii) for the purpose of assisting a
delivery seller to violate, or otherwise
evading compliance with, section 2A.
``(b) Civil Penalties.--
``(1) In general.--Except as provided in paragraph (3),
whoever violates any provision of this Act shall be subject to
a civil penalty in an amount not to exceed--
``(A) in the case of a delivery seller, the greater
of--
``(i) $5,000 in the case of the first
violation, or $10,000 for any other violation;
or
``(ii) for any violation, 2 percent of the
gross sales of cigarettes or smokeless tobacco
of such person during the 1-year period ending
on the date of the violation.
``(B) in the case of a common carrier or other
delivery service, $2,500 in the case of a first
violation, or $5,000 for any violation within 1 year of
a prior violation.
``(2) Relation to other penalties.--A civil penalty under
paragraph (1) for a violation of this Act shall be imposed in
addition to any criminal penalty under subsection (a) and any
other damages, equitable relief, or injunctive relief awarded
by the court, including the payment of any unpaid taxes to the
appropriate Federal, State, local, or tribal governments.
``(3) Exceptions.--
``(A) Delivery violations.--An employee of a common
carrier or independent delivery service shall be
subject to civil penalties under paragraph (1) for a
violation of section 2A(e) only if the violation is
committed intentionally--
``(i) as consideration for the receipt of, or
as consideration for a promise or agreement to
pay, anything of pecuniary value; or
``(ii) for the purpose of assisting a
delivery seller to violate, or otherwise
evading compliance with, section 2A.
``(B) Other limitations.--No common carrier or
independent delivery service shall be subject to civil
penalties under paragraph (1) for a violation of
section 2A(e) if--
``(i) the common carrier or independent
delivery service has implemented and enforces
effective policies and practices for complying
with that section; or
``(ii) an employee of the common carrier or
independent delivery service who physically
receives and processes orders, picks up
packages, processes packages, or makes
deliveries, takes actions that are outside the
scope of employment of the employee in the
course of the violation, or that violate the
implemented and enforced policies of the common
carrier or independent delivery service
described in clause (i).''.
(e) Enforcement.--The Jenkins Act is amended by striking section 4
and inserting the following:
``SEC. 4. ENFORCEMENT.
``(a) In General.--The United States district courts shall have
jurisdiction to prevent and restrain violations of this Act and to
provide other appropriate injunctive or equitable relief, including
money damages, for such violations.
``(b) Authority of the Attorney General.--The Attorney General of the
United States shall administer and enforce the provisions of this Act.
``(c) State, Local, and Tribal Enforcement.--
``(1) In general.--
``(A) Standing.--A State, through its attorney
general (or a designee thereof), or a local government
or Indian tribe that levies a tax subject to section
2A(a)(3), through its chief law enforcement officer (or
a designee thereof), may bring an action in a United
States district court to prevent and restrain
violations of this Act by any person (or by any person
controlling such person) or to obtain any other
appropriate relief from any person (or from any person
controlling such person) for violations of this Act,
including civil penalties, money damages, and
injunctive or other equitable relief.
``(B) Sovereign immunity.--Nothing in this Act shall
be deemed to abrogate or constitute a waiver of any
sovereign immunity of a State or local government or
Indian tribe against any unconsented lawsuit under this
Act, or otherwise to restrict, expand, or modify any
sovereign immunity of a State or local government or
Indian tribe.
``(2) Provision of information.--A State, through its
attorney general, or a local government or Indian tribe that
levies a tax subject to section 2A(a)(3), through its chief law
enforcement officer (or a designee thereof), may provide
evidence of a violation of this Act by any person not subject
to State, local, or tribal government enforcement actions for
violations of this Act to the Attorney General of the United
States or a United States attorney, who shall take appropriate
actions to enforce the provisions of this Act.
``(3) Use of penalties collected.--
``(A) In general.--There is established a separate
account in the Treasury known as the `PACT Anti-
Trafficking Fund'. Notwithstanding any other provision
of law and subject to subparagraph (B), an amount equal
to 50 percent of any criminal and civil penalties
collected by the United States Government in enforcing
the provisions of this Act shall be transferred into
the PACT Anti-Trafficking Fund and shall be available
to the Attorney General of the United States for
purposes of enforcing the provisions of this Act and
other laws relating to contraband tobacco products.
``(B) Allocation of funds.--Of the amount available
to the Attorney General under subparagraph (A), not
less than 50 percent shall be made available only to
the agencies and offices within the Department of
Justice that were responsible for the enforcement
actions in which the penalties concerned were imposed
or for any underlying investigations.
``(4) Nonexclusivity of remedy.--
``(A) In general.--The remedies available under this
section and section 3 are in addition to any other
remedies available under Federal, State, local, tribal,
or other law.
``(B) State court proceedings.--Nothing in this Act
shall be construed to expand, restrict, or otherwise
modify any right of an authorized State official to
proceed in State court, or take other enforcement
actions, on the basis of an alleged violation of State
or other law.
``(C) Tribal court proceedings.--Nothing in this Act
shall be construed to expand, restrict, or otherwise
modify any right of an authorized Indian tribal
government official to proceed in tribal court, or take
other enforcement actions, on the basis of an alleged
violation of tribal law.
``(D) Local government enforcement.--Nothing in this
Act shall be construed to expand, restrict, or
otherwise modify any right of an authorized local
government official to proceed in State court, or take
other enforcement actions, on the basis of an alleged
violation of local or other law.
``(d) Persons Dealing in Tobacco Products.--Any person who holds a
permit under section 5712 of the Internal Revenue Code of 1986
(regarding permitting of manufacturers and importers of tobacco
products and export warehouse proprietors) may bring an action in a
United States district court to prevent and restrain violations of this
Act by any person (or by any person controlling such person) other than
a State, local, or tribal government.
``(e) Notice.--
``(1) Persons dealing in tobacco products.--Any person who
commences a civil action under subsection (d) shall inform the
Attorney General of the United States of the action.
``(2) State, local, and tribal actions.--It is the sense of
Congress that the attorney general of any State, or chief law
enforcement officer of any locality or tribe, that commences a
civil action under this section should inform the Attorney
General of the United States of the action.
``(f) Public Notice.--
``(1) In general.--The Attorney General of the United States
shall make available to the public, by posting such information
on the Internet and by other appropriate means, information
regarding all enforcement actions undertaken by the Attorney
General or United States attorneys, or reported to the Attorney
General, under this section, including information regarding
the resolution of such actions and how the Attorney General and
the United States attorney have responded to referrals of
evidence of violations pursuant to subsection (c)(2).
``(2) Reports to congress.--The Attorney General shall submit
to Congress each year a report containing the information
described in paragraph (1).''.
SEC. 3. TREATMENT OF CIGARETTES AND SMOKELESS TOBACCO AS NONMAILABLE
MATTER.
(a) Section 1716 of title 18, United States Code, is amended--
(1) by redesignating subsections (j) and (k) as subsections
(k) and (l), respectively; and
(2) by inserting after subsection (i) the following:
``(j) Tobacco Products.--
``(1) Prohibition.--All cigarettes (as that term is defined
in section 2341 of this title) and smokeless tobacco (as that
term is defined in section 2341 of this title) are nonmailable
and shall not be deposited in or carried through the mails. The
United States Postal Service shall not accept for delivery or
transmit through the mails any package that is knows, or has
reasonable cause to believe, contains any cigarettes or
smokeless tobacco made nonmailable by this subsection.
``(2) Reasonable cause to believe.--For purposes of this
section, notification to the United States Postal Service by
the Attorney General, a United States attorney, a State
attorney general, or a local government or Indian tribe that
levies an excise tax on tobacco products that an individual or
entity is regularly engaged in the business of transmitting
cigarettes or smokeless tobacco made nonmailable by this
section shall constitute reasonable cause to believe that any
packages presented to the United States Postal Service by such
individual or entity contain nonmailable cigarettes or
smokeless tobacco.
``(3) Exceptions.--This subsection shall not apply to the
following:
``(A) Cigars.--Cigars (as that term is defined in
section 5702(a) of the Internal Revenue Code of 1986).
``(B) Geographic exception.--Mailings within any
State that is not contiguous with at least 1 other
State of the United States.
``(C) Business purposes.--Tobacco products mailed
only for business purposes between legally operating
businesses that have all applicable State and Federal
government licenses or permits and are engaged in
tobacco product manufacturing, distribution, wholesale,
export, import, testing, investigation or research or
for regulatory purposes between any such businesses and
State or Federal Government regulatory agencies, if the
Postal Service issues a final rule establishing the
standards and requirements that applies to all such
mailings and which includes the following:
``(i) The Postal Service shall verify that
any person submitting an otherwise nonmailable
tobacco product into the mails as authorized by
this paragraph is a business or government
agency permitted to make such mailings pursuant
to this subsection and the related final rule.
``(ii) The Postal Service shall ensure that
any recipient of an otherwise nonmailable
tobacco product sent through the mails pursuant
to this paragraph is a business or government
agency.
``(iii) The mailings shall be sent through
the Postal Service's systems that provide for
the tracking and confirmation of the delivery.
``(iv) The identities of the business or
government entity submitting the mailing
containing otherwise nonmailable tobacco
products for delivery and the business or
government entity receiving the mailing shall
be clearly set forth on the package and such
information shall be kept in Postal Service
records and made available to the Postal
Service, the Attorney General, and to persons
eligible to bring enforcement actions pursuant
to subsection (j)(7) for a period of at least
three years.
``(v) The mailings shall be marked with a
Postal Service label or marking that makes it
clear to Postal Service employees that it is a
permitted mailing of otherwise nonmailable
tobacco products that may be delivered only to
a permitted government agency or business and
may not be delivered to any residence or
individual person.
``(vi) The mailings shall be delivered only
to verified adult employees of the recipient
businesses or government agencies who shall be
required to sign for the mailing.
``(D) Certain individuals.--Tobacco products mailed
by individual adult people for noncommercial,
nonbusiness and non-money making purposes, including
the return of a damaged or unacceptable tobacco product
to its manufacturer, if the Postal Service issues a
final rule establishing the standards and requirements
that applies to all such mailings and which includes
the following:
``(i) The Postal Service shall verify that
any person submitting an otherwise nonmailable
tobacco product into the mails as authorized by
this subsection is the individual person
identified on the return address label of the
package and is an adult.
``(ii) For mailings to individual persons the
Postal Service shall require the person
submitting the otherwise nonmailable tobacco
product into the mails as authorized by this
subsection to affirm that the recipient is an
adult.
``(iii) The package shall not weigh more than
10 ounces.
``(iv) The mailings shall be sent through the
Postal Service's systems that provide for the
tracking and confirmation of the delivery.
``(v) No package shall be delivered or placed
in the possession of any individual person who
is not a verified adult and, for mailings to
individual persons. The Postal Service shall
deliver the package only to the verified adult
recipient at the recipient address or transfer
it for delivery to an Air/Army Postal Office
(APO) or Fleet Postal Office (FPO) number
designated in the recipient address.
``(vi) No person shall initiate more than ten
such mailings in any thirty-day period.
``(E) Definition of adult.--For the purposes of
subparagraphs (C) and (D), the term `adult' means an
individual person of at least the minimum age required
for the legal sale or purchase of tobacco products as
determined by the applicable law at the place the
individual person is located.
``(4) Packaging exceptions inapplicable.--Subsection (b) of
this section shall not apply to any tobacco product made
nonmailable by paragraph (2) of this subsection.
``(5) Seizure and forfeiture.--Any cigarettes or smokeless
tobacco made nonmailable by this subsection that are deposited
in the mails shall be subject to seizure and forfeiture,
pursuant to the procedures set forth in chapter 46 of this
title. Any tobacco products so seized and forfeited shall
either be destroyed or retained by Government officials for the
detection or prosecution of crimes or related investigations
and then destroyed.
``(6) Additional penalties.--In addition to any other fines
and penalties imposed by this chapter for violations of this
section, any person violating this subsection shall be subject
to an additional penalty in the amount of 10 times the retail
value of the nonmailable cigarettes or smokeless tobacco,
including all Federal, State, and local taxes.''.
(b) Use of Penalties.--There is established a separate account in the
Treasury of the United States, to be known as the ``PACT Postal Service
Fund''. Notwithstanding any other provision of law, an amount equal to
50 percent of any criminal and civil fines or monetary penalties
collected by the United States Government in enforcing the provisions
of this subsection shall be transferred into the PACT Postal Service
Fund and shall be available to the Postmaster General for the purpose
of enforcing the provisions of this subsection.
(c) Coordination of Efforts.--In the enforcement of this section, the
Postal Service shall cooperate and coordinate its efforts with related
enforcement activities of any other Federal agency or of any State,
local, or tribal government, whenever appropriate.
(d) Actions by State, Local or Tribal Governments Relating to Certain
Tobacco Products.--
(1) A State, through its attorney general (or a designee
thereof), or a local government or Indian tribe that levies an
excise tax on tobacco products, through its chief law
enforcement officer (or a designee thereof), may bring a civil
action in a United States district court to prevent and
restrain any person (or any person controlling such person or
aiding and abet-ting such person) or to obtain damages,
penalties, including the penalties specified in paragraph (6),
injunctive or other equitable relief from any such person (or
from any person either controlling such person or aiding and
abetting such person) who violates paragraph (1) by depositing
nonmailable tobacco products into the mails for commercial,
business, or money-making purposes.
(2) Nothing in this section shall be deemed to abrogate or
constitute a waiver of any sovereign immunity of a State or
local government or Indian tribe against any unconsented
lawsuit under paragraph (1), or otherwise to restrict, expand,
or modify any sovereign immunity of a State or local government
or Indian tribe.
(3) A State, through its attorney general, or a local
government or Indian tribe that levies an excise tax on tobacco
products, through its chief law enforcement officer (or a
designee thereof), may provide evidence of a violation of
paragraph (1) for commercial, business or money-making purposes
by any person not subject to State, local, or tribal government
enforcement actions for violations of paragraph (1) to the
Attorney General of the United States or a United States
attorney, who shall take appropriate actions to enforce the
provisions of this subsection.
(4) The remedies available under this subsection are in
addition to any other remedies available under Federal, State,
local, tribal, or other law. Nothing in this subsection shall
be construed to expand, restrict, or otherwise modify any right
of an authorized State, local, or tribal government official to
proceed in a State, tribal, or other appropriate court, or take
other enforcement actions, on the basis of an alleged violation
of State, local, tribal, or other law.
SEC. 4. COMPLIANCE WITH MODEL STATUTE OR QUALIFYING STATUTE.
(a) In General.--A Tobacco Product Manufacturer or importer may not
sell in, deliver to, or place for delivery sale, or cause to be sold
in, delivered to, or placed for delivery sale in a State that is a
party to the Master Settlement Agreement, any cigarette manufactured by
a Tobacco Product Manufacturer that is not in full compliance with the
terms of the Model Statute or Qualifying Statute enacted by such State
requiring funds to be placed into a qualified escrow account under
specified conditions, or any regulations promulgated pursuant to such
statute.
(b) Jurisdiction To Prevent and Restrain Violations.--
(1) In general.--The United States district courts shall have
jurisdiction to prevent and restrain violations of subsection
(a) in accordance with this subsection.
(2) Initiation of action.--A State, through its attorney
general, may bring an action in the United States district
courts to prevent and restrain violations of subsection (a) by
any person (or by any person controlling such person).
(3) Attorney fees.--In any action under paragraph (2), a
State, through its attorney general, shall be entitled to
reasonable attorney fees from a person found to have willfully
and knowingly violated subsection (a).
(4) Nonexclusivity of remedies.--The remedy available under
paragraph (2) is in addition to any other remedies available
under Federal, State, or other law. No provision of this Act or
any other Federal law shall be held or construed to prohibit or
preempt the Master Settlement Agreement, the Model Statute (as
defined in the Master Settlement Agreement), any legislation
amending or complementary to the Model Statute in effect as of
June 1, 2006, or any legislation substantially similar to such
existing, amending, or complementary legislation hereinafter
enacted.
(5) Other enforcement actions.--Nothing in this subsection
shall be construed to prohibit an authorized State official
from proceeding in State court or taking other enforcement
actions on the basis of an alleged violation of State or other
law.
(6) Authority of the attorney general.--The Attorney General
of the United States may administer and enforce subsection (a).
(c) Definitions.--In this section the following definitions apply:
(1) Delivery sale.--The term ``delivery sale'' means any sale
of cigarettes or smokeless tobacco to a consumer if--
(A) the consumer submits the order for such sale by
means of a telephone or other method of voice
transmission, the mails, or the Internet or other
online service, or the seller is otherwise not in the
physical presence of the buyer when the request for
purchase or order is made; or
(B) the cigarettes or smokeless tobacco are delivered
by use of a common carrier, private delivery service,
or the mails, or the seller is not in the physical
presence of the buyer when the buyer obtains possession
of the cigarettes or smokeless tobacco.
(2) Importer.--The term ``importer'' means each of the
following:
(A) Shipping or consigning.--Any person in the United
States to whom nontaxpaid tobacco products manufactured
in a foreign country, Puerto Rico, the Virgin Islands,
or a possession of the United States are shipped or
consigned.
(B) Manufacturing warehouses.--Any person who removes
cigars or cigarettes for sale or consumption in the
United States from a customs-bonded manufacturing
warehouse.
(C) Unlawful importing.--Any person who smuggles or
otherwise unlawfully brings tobacco products into the
United States.
(3) Master settlement agreement.--The term ``Master
Settlement Agreement'' means the agreement executed November
23, 1998, between the attorneys general of 46 States, the
District of Columbia, the Commonwealth of Puerto Rico, and 4
territories of the United States and certain tobacco
manufacturers.
(4) Model statute; qualifying statute.--The terms ``Model
Statute'' and ``Qualifying Statute'' means a statute as defined
in section IX(d)(2)(e) of the Master Settlement Agreement.
(5) Tobacco product manufacturer.--The term ``Tobacco Product
Manufacturer'' has the meaning given that term in section
II(uu) of the Master Settlement Agreement.
SEC. 5. INSPECTION BY BUREAU OF ALCOHOL, TOBACCO, FIREARMS, AND
EXPLOSIVES OF RECORDS OF CERTAIN CIGARETTE AND
SMOKELESS TOBACCO SELLERS; CRIMINAL PENALTY.
(a) Recordkeeping, Reporting, and Inspection.--Section 2343(c) of
title 18, United States Code, is amended to read as follows:
``(c) Any officer of the Bureau of Alcohol, Tobacco, Firearms, and
Explosives may, during normal business hours, enter the premises of any
person described in subsection (a) or (b) for the purposes of
inspecting--
``(1) any records or information required to be maintained by
such person under the provisions of law referred to in this
chapter; or
``(2) any cigarettes or smokeless tobacco kept or stored by
such person at such premises.''.
(b) Penalties.--Section 2344(b) of title 18, United States Code, is
amended to read as follows:
``(b) Whoever knowingly violates any rule or regulation promulgated
under section 2343 or 2346 or violates section 2342(b) shall be fined
under this title or imprisoned not more than three years, or both.''.
SEC. 6. EXCLUSIONS REGARDING INDIAN TRIBES AND TRIBAL MATTERS.
(a) In General.--Nothing in this Act or the amendments made by this
Act is intended nor shall be construed to affect, amend, or modify--
(1) any agreements, compacts, or other intergovernmental
arrangements between any State or local government and any
government of an Indian tribe (as that term is defined in
section 4(e) of the Indian Self-Determination and Education
Assistance Act (25 U.S.C. 450b(e)) relating to the collection
of taxes on cigarettes or smokeless tobacco sold in Indian
country;
(2) any State laws that authorize or otherwise pertain to any
such intergovernmental arrangements or create special rules or
procedures for the collection of State, local, or tribal taxes
on cigarettes or smokeless tobacco sold in Indian country;
(3) any limitations under existing Federal or State law,
including Federal common law and treaties, on State, local, and
tribal tax and regulatory authority with respect to the sale,
use, or distribution of cigarettes and smokeless tobacco by or
to Indian tribes, tribal members, tribal enterprises, or in
Indian country;
(4) any existing Federal law, including Federal common law
and treaties, regarding State jurisdiction, or lack thereof,
over any tribe, tribal members, tribal enterprises, tribal
reservations, or other lands held by the United States in trust
for one or more Indian tribes; and
(5) any existing State or local government authority to bring
enforcement actions against persons located in Indian country.
(b) Coordination of Law Enforcement.--Nothing in this Act or the
amendments made by this Act shall be construed to inhibit or otherwise
affect any coordinated law enforcement effort by 1 or more States or
other jurisdictions, including Indian tribes, through interstate
compact or otherwise, that--
(1) provides for the administration of tobacco product laws
or laws pertaining to interstate sales or other sales of
tobacco products;
(2) provides for the seizure of tobacco products or other
property related to a violation of such laws; or
(3) establishes cooperative programs for the administration
of such laws.
(c) Treatment of State and Local Governments.--Nothing in this Act or
the amendments made by this Act is intended, and shall not be construed
to, authorize, deputize, or commission States or local governments as
instrumentalities of the United States.
(d) Enforcement Within Indian Country.--Nothing in this Act or the
amendments made by this Act is intended to prohibit, limit, or restrict
enforcement by the Attorney General of the United States of the
provisions herein within Indian country.
(e) Ambiguity.--Any ambiguity between the language of this section or
its application and any other provision of this Act shall be resolved
in favor of this section.
SEC. 7. SENSE OF CONGRESS CONCERNING THE PRECEDENTIAL EFFECT OF THIS
ACT.
It is the sense of Congress that unique harms are associated with
online cigarette sales, including problems with verifying the ages of
consumers in the digital market and the long-term health problems
associated with the use of certain tobacco products. This Act was
introduced recognizing the longstanding interest of Congress in urging
compliance with States' laws regulating remote sales of certain tobacco
products to citizens of those States, including the passage of the
Jenkins Act over 50 years ago, which established reporting requirements
for out-of-State companies that sell certain tobacco products to
citizens of the taxing States, and which gave authority to the
Department of Justice and the Bureau of Alcohol, Tobacco and Firearms
to enforce the Jenkins Act. In light of the unique harms and
circumstances surrounding the online sale of certain tobacco products,
this Act is intended to help collect cigarette excise taxes, to stop
tobacco sales to underage youth, and to help the States enforce their
laws that target the online sales of certain tobacco products only.
This Act is in no way meant to create a precedent regarding the
collection of State sales or use taxes by, or the validity of efforts
to impose other types of taxes on, out-of-State entities that do not
have a physical presence within the taxing State.
SEC. 8. EFFECTIVE DATE.
(a) In General.--Except as provided in subsection (b), this Act shall
take effect on the date that is 90 days after the date of enactment of
this Act.
(b) BATFE Authority.--Section 5 shall take effect on the date of
enactment of this Act.
SEC. 9. SEVERABILITY.
If any provision of this, or an amendment made by this Act or the
application thereof to any person or circumstance is held invalid, the
remainder of the Act and the application of it to any other person or
circumstance shall not be affected thereby.
Purpose and Summary
H.R. 4081, the Prevent All Cigarette Trafficking Act of
2007 (``PACT Act''), will help prevent tobacco smuggling and
ensure the collection of tobacco taxes. This legislation will
combat unlawful cigarette trafficking by updating existing
anti-trafficking laws and introducing new tools to combat
illegal remote sales, such as those conducted over the
Internet.
Background and Need for the Legislation
OVERVIEW OF THE PROBLEM
Every year, tens of billions of cigarettes flow into the
lucrative black market for tobacco products and are trafficked
throughout the world. This smuggling seriously harms public
health by undermining tobacco tax policies and making tax-free
cigarettes available to young people who might otherwise not
obtain them. Cigarette smuggling also helps finance criminal
activity, as well as reducing government revenue that is an
increasingly important funding source for public health
programs.\1\
---------------------------------------------------------------------------
\1\Campaign for Tobacco-Free Kids, International Resource Center,
available at http://tobaccofreecenter.org.
---------------------------------------------------------------------------
Organized tobacco smuggling generally involves the
diversion of large consignments of cigarettes onto the black
market while the product is in transit. It is estimated that
the illicit worldwide trade in cigarettes accounts for
approximately 11 percent of all cigarettes sold.\2\ By
diverting cigarettes while they are in the wholesale
distribution chain, large-scale smugglers generally avoid all
taxes.\3\ Estimates of worldwide tax loss to governments are
between $40 billion and $50 billion per year.\4\ In fact,
cigarette smuggling is depleting State and local treasuries in
the United States. The tax losses to States from cigarette
trafficking were estimated at $1 billion for 2005. New York
State alone loses approximately $500 million annually.\5\
---------------------------------------------------------------------------
\2\See H.R. 4081, the Prevent All Cigarette Trafficking Act of
2007, and H.R. 5689, the Smuggled Tobacco Prevention Act of 2008:
Hearing Before the Subcomm. on Crime, Terrorism, and Homeland Security
of the H. Comm. on the Judiciary, 110th Cong. (2008) (testimony of
William Hoover, Assistant Director for Field Operations, Bureau of
Alcohol, Tobacco, Firearms and Explosives).
\3\Campaign for Tobacco-Free Kids, International Resource Center,
available at http://tobaccofreecenter.org.
\4\See H.R. 4081, the Prevent All Cigarette Trafficking Act of
2007, and H.R. 5689, the Smuggled Tobacco Prevention Act of 2008:
Hearing Before the Subcomm. on Crime, Terrorism, and Homeland Security
of the H. Comm. on the Judiciary, 110th Cong. (2008) (testimony of
William Hoover, Assistant Director for Field Operations, Bureau of
Alcohol, Tobacco, Firearms and Explosives).
\5\Id.
---------------------------------------------------------------------------
Unfortunately, tobacco smuggling appears to be an
increasing problem in the United States. The U.S. Bureau of
Alcohol, Tobacco, Firearms and Explosives (``ATF'') states that
the number of ATF tobacco smuggling investigations has
increased from ten in 1998 to 425 in fiscal year 2005.\6\
---------------------------------------------------------------------------
\6\S. Rep. No. 110-153 (2007).
---------------------------------------------------------------------------
INADEQUACY OF CURRENT LAW FOR COMBATING UNLAWFUL CIGARETTE TRAFFICKING
Existing Federal statutes available for prosecuting tobacco
smugglers include the Jenkins Act\7\ and the Contraband
Cigarette Trafficking Act.\8\ The Jenkins Act prohibits anyone
from selling and shipping cigarettes across a State line to a
buyer, other than to a licensed distributor, without reporting
the sale to tax officials in the buyer's State. The Contraband
Cigarette Trafficking Act prohibits anyone from knowingly
shipping, transporting, receiving, possessing, selling,
distributing, or purchasing contraband cigarettes or contraband
smokeless tobacco. It also prohibits any person from knowingly
making any false statement with respect to information it
requires be kept in the records of anyone who ships, sells, or
distributes in excess of 10,000 cigarettes in any single
transaction.\9\
---------------------------------------------------------------------------
\7\15 U.S.C. Sec. 375.
\8\18 U.S.C. Sec. 2342.
\9\The threshold was originally 60,000 in a transaction, but was
amended to 10,000 in 2006.
---------------------------------------------------------------------------
Unfortunately, these existing laws are inadequate in the
Internet Age. The Internet, in particular, makes it possible
for today's illegal tobacco vendors to be mobile and invisible,
and to operate with near impunity. Even when they can be
identified and pursued, they can often quickly shut down
operations and reappear under a new name and website. Internet-
based unlawful tobacco trafficking has resulted in an estimated
loss of billions of dollars in tax revenue.\10\
---------------------------------------------------------------------------
\10\Internet Cigarette Sales: Limited Compliance and Enforcement of
the Jenkins Act Result in Loss of State Tax Revenue, U.S. Government
Accountability Office, May 1, 2003, at http://www.gao.gov/docdblite/
details.php?rptno=GAO-03-714T>
---------------------------------------------------------------------------
THE PACT ACT
As illegal vendors can easily elude traditional enforcement
actions, one option can be to focus aggressively on the point
of delivery. Illegal remote sellers of cigarettes and smokeless
tobacco have, to date, been very successful by making their
cigarette and smokeless tobacco deliveries to their customers
by mail. To combat this problem, the PACT Act makes cigarettes
and smokeless tobacco a non-mailable matter through the U.S.
Postal Service. Moreover, under the bill, Internet sellers are
required to verify the purchaser's age and identity through
easily accessible databases, and distributors are also required
under the Act to use a method of delivery that requires the
person accepting delivery to verify their age and to sign for
delivery.
Hearings
The Committee's Subcommittee on Crime, Terrorism, and
Homeland Security held 1 day of hearings on H.R. 4081, the
``Prevent All Cigarette Trafficking Act of 2007,'' and a
related bill, H.R. 5689, the ``Smuggled Tobacco Prevention Act
of 2008,'' on May 1, 2008. Testimony was received from
Representative Anthony Weiner (D-NY); Representative Dale E.
Kildee (D-MI); Arian Melendez, Chairman, Reno-Sparks Indian
Colony; Matthew L. Myers, President, Campaign for Tobacco-Free
Kids; Steve Rosenthal, New York State Association of Wholesale
Marketers; John Colledge, Independent Consultant; and David
Lapp, Chief Counsel, Tobacco Enforcement Unit, Office of the
Attorney General of Maryland.
Committee Consideration
On July 16, 2008, the Committee met in open session and
ordered the bill, H.R. 4081, favorably reported with an
amendment, by voice vote, a quorum being present.
Committee Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that there
were no recorded votes during the Committee's consideration of
H.R. 4081.
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill, H.R. 4081, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 25, 2008.
Hon. John Conyers, Jr., Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 4081, the Prevent
All Cigarette Trafficking Act of 2007.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Mark
Grabowicz (for Federal costs), who can be reached at 226-2860,
Melissa Merrell (for the State, local, and tribal impact), who
can be reached at 225-3220, and Jacob Kuipers (for the private-
sector impact), who can be reached at 226-2940.
Sincerely,
Peter R. Orszag,
Director.
Enclosure
cc:
Honorable Lamar S. Smith.
Ranking Member
H.R. 4081--Prevent All Cigarette Trafficking Act of 2007.
SUMMARY
H.R. 4081 would require individuals and businesses that
make interstate sales of cigarettes or smokeless tobacco to
comply with State tax laws and register with the Bureau of
Alcohol, Tobacco, Firearms, and Explosives (ATFE). The bill
would permit ATFE to inspect the premises of anyone who
distributes or sells more than 10,000 cigarettes or 500 cans or
packages of smokeless tobacco in a month via telephone, the
mail, or the Internet. H.R. 4081 also would increase penalties,
including criminal and civil fines, for violations of the laws
relating to taxation of cigarettes and smokeless tobacco.
CBO estimates that implementing H.R. 4081 would cost about
$120 million over the 2009-2013 period for ATFE to enforce the
bill's provisions, assuming appropriation of the necessary
amounts. Enacting the bill could affect direct spending and
receipts, but we estimate that any such effects would not be
significant.
H.R. 4081 would impose both intergovernmental and private-
sector mandates, as defined in the Unfunded Mandates Reform Act
(UMRA), on certain tobacco sellers, common carriers, and
individuals. The bill also would preempt certain State, local,
and tribal laws regulating the delivery of tobacco products.
CBO expects that the direct costs to comply with those mandates
would not be significant and would not exceed the annual
thresholds established in UMRA for intergovernmental and
private-sector mandates ($68 million and $136 million
respectively in 2008, adjusted annually for inflation).
ESTIMATED COST TO THE FEDERAL GOVERNMENT
The estimated budgetary impact of H.R. 4081 is shown in the
following table. The costs of this legislation fall within
budget function 750 (administration of justice). In addition to
the costs shown below, enacting H.R. 4081 could affect direct
spending and receipts. However, we estimate that any such
effects would be insignificant.
By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
2008 2009 2010 2011 2012 2013 2009-2013
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level 0 18 25 26 27 28 124
Estimated Outlays 0 15 24 26 27 28 120
----------------------------------------------------------------------------------------------------------------
BASIS OF ESTIMATE
CBO estimates that implementing H.R. 4081 would increase
ATFE's operating costs by about $120 million over the 2009-2013
period. For this estimate, CBO assumes that the necessary
amounts will be appropriated near the start of each fiscal year
and that spending will follow historical patterns for similar
activities conducted by ATFE. In addition, the bill would have
an insignificant effect on direct spending and receipts.
Spending Subject to Appropriation
H.R. 4081 would permit ATFE to inspect the premises of
businesses that distribute or sell more than 10,000 cigarettes
or 500 cans or packages of smokeless tobacco each month via
telephone, the mail, or the Internet. Under the bill, the
agency expects that it would need to conduct inspections of
about 7,500 businesses each year. ATFE anticipates that it
would need to hire about 130 new employees, including
inspectors, agents, auditors, and support personnel, to carry
out inspections and any subsequent investigations into illegal
activity. Once fully phased in, CBO estimates that the costs of
additional employees under the bill would reach $25 million
annually, including salaries, benefits, training, equipment,
upgraded computer systems, and support costs. For this
estimate, we assume that the new positions would be fully
staffed by fiscal year 2010.
Direct Spending and Revenues
Enacting H.R. 4081 could increase collections of civil and
criminal fines for violations of the bill's provisions relating
to the sale of cigarettes and smokeless tobacco. CBO expects
that any additional collections would not be significant
because of the relatively small number of additional cases
likely to be affected. The receipt of criminal and civil fines
is recorded as additional revenue.
Under the bill's provisions, some of those fines would not
be available for spending, some would be deposited in the Crime
Victims fund and later spent, and others would be deposited in
new funds established by the bill and later spent from those
funds. (Deposits into one of those new funds would be spent by
the U.S. Postal Service and thus would be classified as off-
budget.) CBO estimates that spending of fines collected under
H.R. 4081 would not be significant.
INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT
H.R. 4081 contains both intergovernmental and private-
sector mandates as defined in UMRA. It would impose new
requirements related to certain sales of tobacco products by
private and tribal entities and preempt certain State, local,
and tribal laws. According to ATFE and industry sources, most
of the entities affected by the requirements already perform
many of the duties that would be imposed by this bill, and CBO
estimates that the additional requirements would impose minimal
costs. CBO expects that the preemption would impose minimal
costs on State, local, or tribal governments. Consequently, CBO
estimates that the total direct costs to comply with the
requirements of the bill would fall well below the annual
thresholds established in UMRA for intergovernmental and
private-sector mandates ($68 million and $136 million
respectively in 2008, adjusted annually for inflation).
Requirements Related to Delivery Sales of Tobacco. H.R.
4081 would require delivery sellers of tobacco products to
comply with certain requirements regarding reporting, shipping,
record keeping, and tax collection. Delivery sellers include
those businesses that sell or deliver tobacco products
purchased online, by catalog, or by phone. The bill also would
prohibit importers and interstate tobacco sellers from selling
certain types of cigarettes that are not in full compliance
with the terms of the tobacco settlement agreement between
States and tobacco manufacturers and sellers. The requirements
would be both intergovernmental and private-sector mandates
because tobacco delivery sales are conducted by both private-
sector and tribal entities.
H.R. 4081 also would require common carriers and delivery
services to keep records for 5 years of any business relating
to a delivery that has been interrupted because the carrier or
service determines or has reason to believe that the person
ordering the delivery is in violation of this act. In addition,
the bill would affect individuals who currently send or receive
tobacco products in the mail by prohibiting the mailing of such
tobacco products in the continental United States through the
U.S. Postal Service. Information from industry experts
indicates that most companies that ship tobacco products,
including two tribal governments, rarely use the Postal Service
to distribute their products.
Preemption of State, Local, and Tribal Laws. The bill also
would preempt certain State, local, and tribal laws that
require common carriers and delivery services to verify the age
and require the signature of the individual accepting a tobacco
delivery or place other restrictions on those services.
Other Impacts on State, Local, and Tribal Governments
H.R. 4081 would benefit State governments by expanding
their authority to enforce cigarette tax collection through the
Jenkins Act. This expanded authority would allow State
attorneys general to file charges in U.S. district courts
against sellers or deliverers who violate this law. This bill
also would preserve existing agreements between States and
tribal governments regarding cigarette taxes.
PREVIOUS CBO ESTIMATE
On July 20, 2007, CBO transmitted a cost estimate for S.
1027, the Prevent All Cigarette Trafficking Act of 2007, as
ordered reported by the Senate Committee on the Judiciary on
May 17, 2007. The two bills are similar, and the cost estimates
are identical.
ESTIMATE PREPARED BY:
Federal Spending: Mark Grabowicz (226-2860)
Impact on State, Local, and Tribal Governments: Melissa Merrell
(225-3220)
Impact on the Private Sector: Jacob Kuipers (226-2940)
ESTIMATE APPROVED BY:
Theresa Gullo
Deputy Assistant Director for Budget Analysis
Performance Goals and Objectives
The Committee states, pursuant to clause 3(c)(4) of rule
XIII of the Rules of the House of Representatives, that H.R.
4081 strengthens and updates existing cigarette trafficking
laws to ensure the collection of tobacco taxes and introduces
new law enforcement tools to combat illegal remote sales of
cigarettes, such as those conducted over the Internet.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in article I, section 8, clause 3 of the
Constitution.
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 4081 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(d), 9(e), or 9(f) of Rule XXI.
Section-by-Section Analysis
The following discussion describes the bill as reported by
the Committee.
Sec. 1. Short Title; Findings; Purposes. Section 1(a) sets
forth the short title of the bill as the ``Prevent All
Cigarette Trafficking Act of 2007'' or ``PACT Act.''
Section 1(b) sets forth certain findings. It notes, for
example, that federal, State, and local governments are losing
billions of dollars in tax revenue each year due to the sale of
illegal tobacco products.
Section 1(c) sets forth the purposes of the bill. These
include, for instance, that the legislation is intended to
provide the government with more tools to combat tobacco
smuggling, increase collections on lost tax revenue, and
prevent youth access to tobacco products.
Sec. 2. Collection of State Cigarette and Smokeless Tobacco
Taxes. Section 2(a) sets forth various definitions. Subsection
(a) replaces the entire definition section of the Jenkins Act.
It adds a definition of ``delivery sale'' to ensure that the
provisions of the Jenkins Act apply to all remote sellers,
whether they conduct sales by telephone, fax, Internet, or
mail. The provision also expands the definition of ``use'' to
include the consumption, storage, handling, or disposal of
smokeless tobacco, in addition to cigarettes. In addition,
subsection (a) amends the Act's definition of ``tobacco tax
administrator'' to include local or tribal officials duly
authorized to collect and administer the tobacco tax in
addition to the State official.
Subsection (b) enhances the existing reporting requirements
under the Jenkins Act. While current law requires sellers to
file reports with the tobacco tax administrator of a State,
locality, or tribal government, this subsection would also
require sellers to file these reports with the Attorney General
of the United States. It also requires vendors to provide
additional identifying information in these reports to ensure
that law enforcement officials can locate them for inspection
and enforcement purposes.
Subsection (c) adds a new section to the Jenkins Act to
provide for stronger enforcement of the Act's requirements
against illegal Internet and other remote sellers, defined as
``delivery sellers'' under the bill, by requiring them to
comply with specified requirements.
First, a delivery seller must comply with the shipping
requirements outlined in the PACT Act. For example, the
delivery seller would have to place a label on the outside of
all packages to indicate that it contains cigarettes or
smokeless tobacco, to provide notice to a common carrier or
other delivery service. This subsection also prohibits a
delivery seller from selling tobacco products to a person under
the minimum age required for the legal sale or purchase of
tobacco at the place of delivery, and requires a delivery
seller to ensure that its customers are of legal age to
purchase tobacco.
Second, delivery sellers would be required to keep records
of all delivery sales made, for at least 4 years. These records
would have to be made available to State, local, tribal, and
Federal officials for enforcement purposes.
Third, the subsection prohibits delivery sellers from
selling or delivering cigarettes or smokeless tobacco into a
State or locality unless the seller has paid all applicable
excise taxes and affixed all required stamps or other indicia
to the cigarettes or smokeless tobacco in advance of completing
the sale or delivery.
In addition, this subsection would authorize the Attorney
General of the United States to compile a list of unauthorized
delivery sellers. The list would include any delivery seller
who has not registered with the Attorney General, as required
under the Jenkins Act, or has failed to comply with the
requirements of the Jenkins Act or the PACT Act. The list would
be compiled with the input of Federal law enforcement
officials, as well as the State attorney general, tax
administrator, or chief law enforcement official in each State,
local or tribal government that levies a tobacco tax. Both the
initial list and any updates would be distributed to these tax
and law enforcement officials, and to all common carriers and
other delivery services, including the United States Postal
Service. The bill would prohibit any common carrier from
knowingly completing the delivery of any package for a person
whose name and other identifying information is included on the
list.
The subsection provides due process procedures for those
sellers who have been incorrectly placed on the list of
prohibited delivery sellers. For example, the subsection
requires that the Attorney General ensure maximum possible
accuracy and completeness of the list, and that individuals be
given the right to challenge placement on the list, with the
Attorney General required to investigate any such challenge and
provide the results to the individual in question. If the
Attorney General finds that the placement is inaccurate or
flawed, the individual must be removed from the list, and all
of the appropriate authorities specified in the bill must be
notified.
Finally, the subsection provides a limited exception from
these requirements for a common carrier with an active
settlement agreement with a State, honored nationwide, to block
deliveries of cigarettes and smokeless tobacco or shipments
where applicable taxes have not been paid. The three major
common carriers--United Parcel Service, FedEx, and DHL--all
have such agreements with the New York State Attorney General's
office. At the May 1, 2008, hearing on the bill, the Crime,
Terrorism, and Homeland Security Subcommittee received
testimony that these agreements were effective at stopping the
illegal shipment of cigarettes. To consumers.
Subsection (2)(d) replaces section 3 of the Jenkins Act to
enhance existing penalties and provide for punishment of any
violation of the new requirements added to the Jenkins Act by
the PACT Act. The subsection would place two limitations on the
applicable criminal penalties. First, it clarifies that State,
local and tribal governments are not subject to criminal
penalties. Second, it provides that common carriers,
independent delivery services, and their employees are subject
to criminal penalties only if the violation was committed
intentionally, either for economic gain or to assist a delivery
seller in violating the Act.
Subsection (2)(e) of the bill includes new authorities for
State, local, and tribal law enforcement officials. Currently,
the ability of State and local law enforcement officials to
reach out-of-State cigarette traffickers through enforcement
actions in their own State courts is limited. To extend the
reach of these officials, this subsection provides jurisdiction
to U.S. district courts to prevent and restrain violations of
this Act, as well as to award injunctive or equitable relief,
including money damages, for such violations.
Subsection (2)(e) also establishes a PACT Anti-Trafficking
Fund in the U.S. Treasury. Fifty percent of penalties collected
by the Federal Government through PACT enforcement efforts
would be transferred into the PACT Anti-Trafficking Fund and
made available to the Attorney General for use in connection
with enforcement of the Jenkins Act and other tobacco product
anti-contraband laws.
Sec. 3. Treatment of Cigarettes and Smokeless Tobacco as
Nonmailable Matter. Section 1716 of Title 18, United States
Code, provides that alcohol, poisons, weapons, and other
specified materials must be treated as nonmailable matter by
the United States Postal Service. Section 3 of the bill amends
that section to add cigarettes and smokeless tobacco to the
list of nonmailable matter. This would make it illegal for
delivery sellers to deposit tobacco products in the U.S. mails,
and would prohibit the U.S. Postal Service from accepting for
delivery, or delivering, packages its employees know or have
reason to believe contain cigarettes or smokeless tobacco.
This section of the bill allows for limited instances of
allowable mailings through the U.S. Postal Service. For
example, it allows for returns of damaged tobacco products by
adult consumers and business mailings to government testing
facilities.
Sec. 4. Compliance with Model Statute or Qualifying
Statute. In 1998, 46 States, along with Puerto Rico, the U.S.
Virgin Islands, American Samoa, the Northern Mariana Islands,
Guam, and the District of Columbia, entered into an agreement
known as the Master Settlement Agreement (MSA) with the Brown &
Williamson Tobacco Corporation, Lorillard Tobacco Company,
Philip Morris Incorporated, R.J. Reynolds Tobacco Company,
Commonwealth Tobacco, and Liggett & Myers. The MSA imposed a
variety of restrictions on the advertising, marketing, and
promotion of cigarettes.
In addition to avoiding taxes, an important way in which
cigarette traffickers are able to raise money and compete with
legitimate sellers is to avoid compliance with State escrow
statutes, which require manufacturers that are not parties to
the MSA to pay money into an escrow fund. Subsection (a)
addresses this loophole by prohibiting tobacco manufacturers
that do not pay funds into the State escrow accounts from
selling or delivering for sale cigarettes in States that are a
party to the MSA.
Subsection (b) provides that U.S. district courts have
jurisdiction to prevent and restrain violations of this
section. It allows States, through their attorneys general, to
bring suit in U.S. district courts for violations of the
compliance provisions of this section and to recover attorney's
fees from persons found to have willfully and knowingly
violated this section.
Sec. 5. Inspection by Bureau of Alcohol, Tobacco, Firearms,
and Explosives of Records of Certain Cigarette and Smokeless
Tobacco Sellers. Section 5 of the bill amends the Contraband
Cigarette Trafficking Act by authorizing the Bureau of Alcohol,
Tobacco, Firearms, and Explosives to inspect the premises and
records of delivery sellers who transfer more than ten thousand
cigarettes or more than five hundred single-unit cans or
packages of smokeless tobacco in a single month.
Sec. 6. Exclusions Regarding Indian Tribes and Tribal
Matters. Section 6(a)(1) provides that nothing in the PACT Act
is intended to affect, amend, or modify any agreements,
compacts, or other intergovernmental arrangements between an
Indian tribe and any State or local government relating to the
collection of taxes on cigarettes or smokeless tobacco.
Section 6(a)(3) clarifies that nothing in the PACT Act
should be construed to affect, amend, or modify limitations
under existing Federal law, including Federal common law and
treaties on State, local, and tribal tax and regulatory
authority with respect to the sale, use or distribution of
cigarettes and smokeless tobacco by or to Indian tribes or
tribal members in Indian country.
Sections 6(a)(4) and 6(a)(5) clarify that the bill does not
have any impact on the current state of law regarding Tribal
sovereignty. The Committee intends that the terms ``Indian
country'' and ``tribal enterprise'' as used in section 6 are to
be interpreted broadly. For example, the term ``tribal
enterprise'' encompasses different types of business entities
owned by one or more tribes. ``Indian country'' includes, among
other things, Indian lands and cultural centers held in trust.
These various entities benefit from the same jurisdictional
status as the tribe or tribes that own them.
Sec. 7. Sense of Congress Concerning the Precedential
Effect of this Act. Section 7 of the bill expresses the sense
of the Congress that unique harms are associated with online
cigarette sales and that this bill is not intended to create a
precedent regarding the collection of other State sales or use
taxes by out-of-State entities that do not have a physical
presence within the taxing State.
Sec. 8. Effective Date. Section 8 of the bill provides that
Section 5, dealing with Bureau of Alcohol, Tobacco, Firearms,
and Explosives authority, takes effect on the date of
enactment, and that other provisions of the bill take effect
ninety days after that date.
Sec. 9. Severability. Section 8 provides that the
invalidation of any provision of the bill or its application
will not affect other provisions of the bill, or their
application to any other person or circumstance.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, existing law in which no change
is proposed is shown in roman):
ACT OF OCTOBER 19, 1949
(Commonly known as the ``Jenkins Act'')
AN ACT to assist States in collecting sales and use taxes on
cigarettes.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled, [That for
the purposes of this Act--
[(1) The term ``person'' includes corporations,
companies, associations, firms, partnerships,
societies, and joint stock companies, as well as
individuals.
[(2) The term ``cigarette'' means any roll for
smoking made wholly or in part of tobacco, irrespective
of size or shape and whether or not such tobacco is
flavored, adulterated, or mixed with any other
ingredient, the wrapper or cover of which is made of
paper or any other substance or material except
tobacco.
[(3) The term ``distributor licensed by or located in
such State'' means--
[(A) in the case of any State which by State
statute or regulation authorizes the
distribution of cigarettes at wholesale or
retail, any person so authorized, or
[(B) in the case of any other State, any
person located in such State who distributes
cigarettes at wholesale or retail;
but such term in no case includes a person who
acquires cigarettes for purposes other than resale.
[(4) The term ``use'' in addition to its ordinary
meaning, means the consumption, storage, handling, or
disposal of cigarettes.
[(5) The term ``tobacco tax administratior'' means
the State official duly authorized to administer the
cigarette tax law of a State.
[(6) The term ``State'' includes the District of
Columbia, Alaska, Hawaii, and the Commonwealth of
Puerto Rico.
[(7) The term ``transfers for profit'' means any
transfer for profit or other disposition for profit,
including any transfer or disposition by an agent to
his principal in connection with which the agent
receives anything of value.]
SECTION. 1. DEFINITIONS.
As used in this Act, the following definitions apply:
(1) Attorney general.--The term ``attorney general'',
with respect to a State, means the attorney general or
other chief law enforcement officer of the State, or
the designee of that officer.
(2) Cigarette.--
(A) In general.--For purposes of this Act,
the term ``cigarette'' shall--
(i) have the same meaning given that
term in section 2341 of title 18,
United States Code; and
(ii) include ``roll-your-own
tobacco'' (as that term is defined in
section 5702 of the Internal Revenue
Code of 1986).
(B) Exception.--For purposes of this Act, the
term ``cigarette'' does not include a
``cigar'', as that term is defined in section
5702 of the Internal Revenue Code of 1986.
(3) Common carrier.--The term ``common carrier''
means any person (other than a local messenger service
or the United States Postal Service) that holds itself
out to the general public as a provider for hire of the
transportation by water, land, or air of merchandise,
whether or not the person actually operates the vessel,
vehicle, or aircraft by which the transportation is
provided, between a port or place and a port or place
in the United States.
(4) Consumer.--The term ``consumer'' means any person
that purchases cigarettes or smokeless tobacco, but
does not include any person lawfully operating as a
manufacturer, distributor, wholesaler, or retailer of
cigarettes or smokeless tobacco.
(5) Delivery sale.--The term ``delivery sale'' means
any sale of cigarettes or smokeless tobacco to a
consumer if--
(A) the consumer submits the order for such
sale by means of a telephone or other method of
voice transmission, the mails, or the Internet
or other online service, or the seller is
otherwise not in the physical presence of the
buyer when the request for purchase or order is
made; or
(B) the cigarettes or smokeless tobacco are
delivered by use of a common carrier, private
delivery service, or the mails, or the seller
is not in the physical presence of the buyer
when the buyer obtains possession of the
cigarettes or smokeless tobacco.
(6) Delivery seller.--The term ``delivery seller''
means a person who makes a delivery sale.
(7) Indian country.--The term ``Indian country''
means--
(A) Indian country as defined in section
1151of title 18, United States Code, except
that within the State of Alaska that term
applies only to the Metlakatla Indian
Community, Annette Island Reserve; and
(B) any other land held by the United States
in trust for one or more Indian tribes.
(8) Indian tribe.--The term ``Indian tribe'',
``tribe'', or ``tribal'' refers to an Indian tribe as
defined in section 4(e) of the Indian Self-
Determination and Education Assistance Act (25 U.S.C.
450b(e)) or as listed pursuant to section 104 of the
Federally Recognized Indian Tribe List Act of 1994 (25
U.S.C. 479a-1).
(9) Interstate commerce.--The term ``interstate
commerce'' means commerce between a State and any place
outside the State, commerce between a State and any
Indian country in the State, or commerce between points
in the same State but through any place outside the
State or through any Indian country.
(10) Person.--The term ``person'' means an
individual, corporation, company, association, firm,
partnership, society, State government, local
government, Indian tribal government, governmental
organization of such government, or joint stock
company.
(11) State.--The term ``State'' means each of the
several States of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, or any
territory or possession of the United States.
(12) Smokeless tobacco.--The term ``smokeless
tobacco'' means any finely cut, ground, powdered, or
leaf tobacco, or other product containing tobacco, that
is intended to be placed in the oral or nasal cavity or
otherwise consumed without being combusted.
(13) Tobacco tax administrator.--The term ``tobacco
tax administrator'' means the State, local, or tribal
official duly authorized to collect the tobacco tax or
administer the tax law of a State, locality, or tribe,
respectively.
(14) Tribal enterprise.--The term ``tribal
enterprise'' means any business enterprise,
incorporated or unincorporated under federal or tribal
law, of an Indian tribe or group of Indian tribe.
(15) Use.--The term ``use'', in addition to its
ordinary meaning, means the consumption, storage,
handling, or disposal of cigarettes or smokeless
tobacco.
Sec. 2. (a) Contents.--Any person who sells [or transfers],
transfers, or ships for profit [cigarettes] cigarettes or
smokeless tobacco in interstate commerce, whereby such
[cigarettes] cigarettes or smokeless tobacco are shipped into a
State, locality, or Indian country of an Indian tribe taxing
the sale or use of [cigarettes] cigarettes or smokeless
tobacco, [to other than a distributor licensed by or located in
such State,] or who advertises or offers [cigarettes]
cigarettes or smokeless tobacco for such a sale [or transfer
and shipment], transfer, or shipment, shall--
(1) first file [with the tobacco tax administrator of
the State] with the Attorney General of the United
States and with the tobacco tax administrators of the
State and place into which such shipment is made or in
which such advertisement trade name (if any), and the
address of his principal place of business and of any
other place of business[; and], as well as telephone
numbers for each place of business, a principal
electronic mail address, any website addresses, and the
name, address, and telephone number of an agent in the
State authorized to accept service on behalf of such
person;
(2) not later than the 10th day of each calendar
month, file with the tobacco tax administrator of the
State into which such shipment is made, a memorandum or
a copy of the invoice covering each and every shipment
of [cigarettes] cigarettes or smokeless tobacco made
during the previous calendar month into such State; the
memorandum or invoice in each case to include the name
and address of the person to whom the shipment was
made, the brand, [and the quantity thereof.] the
quantity thereof, and the name, address, and phone
number of the person delivering the shipment to the
recipient on behalf of the delivery seller, with all
invoice or memoranda information relating to specific
customers to be organized by city or town and by zip
code; and
(3) with respect to each memorandum or invoice filed
with a State under paragraph (2), also file copies of
such memorandum or invoice with the tobacco tax
administrators and chief law enforcement officers of
the local governments and Indian tribes operating
within the borders of the State that apply their own
local or tribal taxes on cigarettes or smokeless
tobacco.
(b) Presumptive Evidence.--The fact that any person ships or
delivers for shipment any [cigarettes] cigarettes or smokeless
tobacco shall, if such shipment is into a State in which such
person has filed a statement with the tobacco tax administrator
under subsection (a)(1) of this section, be presumptive
evidence [(1)] that such [cigarettes] cigarettes or smokeless
tobacco were sold, or transferred for profit, by such person[,
and (2) that such sale or transfer was to other than a
distributor licensed by or located in such State].
(c) Use of Information.--A tobacco tax administrator or chief
law enforcement officer who receives a memorandum or invoice
under paragraph (2) or (3) of subsection (a) shall use such
memorandum or invoice solely for the purposes of the
enforcement of this Act and the collection of any taxes owed on
related sales of cigarettes and smokeless tobacco, and shall
keep confidential any personal information in such memorandum
or invoice not otherwise required for such purposes.
SEC. 2A. DELIVERY SALES.
(a) In General.--With respect to delivery sales into a
specific State and place, each delivery seller shall comply
with--
(1) the shipping requirements set forth in subsection
(b);
(2) the recordkeeping requirements set forth in
subsection (c);
(3) all State, local, tribal, and other laws
generally applicable to sales of cigarettes or
smokeless tobacco as if such delivery sales occurred
entirely within the specific State and place, including
laws imposing--
(A) excise taxes;
(B) licensing and tax-stamping requirements;
(C) restrictions on sales to minors; and
(D) other payment obligations or legal
requirements relating to the sale,
distribution, or delivery of cigarettes or
smokeless tobacco; and
(4) the tax collection requirements set forth in
subsection (d).
(b) Shipping and Packaging.--
(1) Required statement.--For any shipping package
containing cigarettes or smokeless tobacco, the
delivery seller shall include on the bill of lading, if
any, and on the outside of the shipping package, on the
same surface as the delivery address, a clear and
conspicuous statement providing as follows:
``CIGARETTES/SMOKELESS TOBACCO: FEDERAL LAW REQUIRES
THE PAYMENT OF ALL APPLICABLE EXCISE TAXES, AND
COMPLIANCE WITH APPLICABLE LICENSING AND TAX-STAMPING
OBLIGATIONS''.
(2) Failure to label.--Any shipping package described
in paragraph (1) that is not labeled in accordance with
that paragraph shall be treated as nondeliverable
matter by a common carrier or other delivery service,
if the common carrier or other delivery service knows
or should know the package contains cigarettes or
smokeless tobacco. If a common carrier or other
delivery service believes a package is being submitted
for delivery in violation of paragraph (1), it may
require the person submitting the package for delivery
to establish that it is not being sent in violation of
paragraph (1) before accepting the package for
delivery. Nothing in this paragraph shall require the
common carrier or other delivery service to open any
package to determine its contents.
(3) Weight restriction.--A delivery seller shall not
sell, offer for sale, deliver, or cause to be delivered
in any single sale or single delivery any cigarettes or
smokeless tobacco weighing more than 10 pounds.
(4) Age verification.--
(A) In general.--Notwithstanding any other
provision of law, a delivery seller who mails
or ships tobacco products--
(i) shall not sell, deliver, or cause
to be delivered any tobacco products to
a person under the minimum age required
for the legal sale or purchase of
tobacco products, as determined by the
applicable law at the place of
delivery;
(ii) shall use a method of mailing or
shipping that requires--
(I) the purchaser placing the
delivery sale order, or an
adult who is at least the
minimum age required for the
legal sale or purchase of
tobacco products, as determined
by the applicable law at the
place of delivery, to sign to
accept delivery of the shipping
container at the delivery
address; and
(II) the person who signs to
accept delivery of the shipping
container to provide proof, in
the form of a valid,
government-issued
identification bearing a
photograph of the individual,
that the person is at least the
minimum age required for the
legal sale or purchase of
tobacco products, as determined
by the applicable law at the
place of delivery; and
(iii) shall not accept a delivery
sale order from a person without--
(I) obtaining the full name,
birth date, and residential
address of that person; and
(II) verifying the
information provided in
subclause (I), through the use
of a commercially available
database or aggregate of
databases, consisting primarily
of data from government
sources, that are regularly
used by government and
businesses for the purpose of
age and identity verification
and authentication, to ensure
that the purchaser is at least
the minimum age required for
the legal sale or purchase of
tobacco products, as determined
by the applicable law at the
place of delivery.
(B) Limitation.--No database being used for
age and identity verification under
subparagraph (A)(iii) shall be in the
possession or under the control of the delivery
seller, or be subject to any changes or
supplementation by the delivery seller.
(c) Records.--
(1) In general.--Each delivery seller shall keep a
record of any delivery sale, including all of the
information described in section 2(a)(2), organized by
the State, and within such State, by the city or town
and by zip code, into which such delivery sale is so
made.
(2) Record retention.--Records of a delivery sale
shall be kept as described in paragraph (1) in the year
in which the delivery sale is made and for the next 4
years.
(3) Access for officials.--Records kept under
paragraph (1) shall be made available to tobacco tax
administrators of the States, to local governments and
Indian tribes that apply their own local or tribal
taxes on cigarettes or smokeless tobacco, to the
attorneys general of the States, to the chief law
enforcement officers of such local governments and
Indian tribes, and to the Attorney General of the
United States in order to ensure the compliance of
persons making delivery sales with the requirements of
this Act.
(d) Delivery.--
(1) In general.--Except as provided in paragraph (2),
no delivery seller may sell or deliver to any consumer,
or tender to any common carrier or other delivery
service, any cigarettes or smokeless tobacco pursuant
to a delivery sale unless, in advance of the sale,
delivery, or tender--
(A) any cigarette or smokeless tobacco excise
tax that is imposed by the State in which the
cigarettes or smokeless tobacco are to be
delivered has been paid to the State;
(B) any cigarette or smokeless tobacco excise
tax that is imposed by the local government of
the place in which the cigarettes or smokeless
tobacco are to be delivered has been paid to
the local government; and
(C) any required stamps or other indicia that
such excise tax has been paid are properly
affixed or applied to the cigarettes or
smokeless tobacco.
(2) Exception.--Paragraph (1) does not apply to a
delivery sale of smokeless tobacco if the law of the
State or local government of the place where the
smokeless tobacco is to be delivered requires or
otherwise provides that delivery sellers collect the
excise tax from the consumer and remit the excise tax
to the State or local government, and the delivery
seller complies with the requirement.
(e) List of Unregistered or Noncompliant Delivery Sellers.--
(1) In general.--
(A) Initial list.--Not later than 90 days
after this subsection goes into effect under
the Prevent All Cigarette Trafficking Act of
2008, the Attorney General of the United States
shall compile a list of delivery sellers of
cigarettes or smokeless tobacco that have not
registered with the Attorney General, pursuant
to section 2(a) or that are otherwise not in
compliance with this Act, and--
(i) distribute the list to--
(I) the attorney general and
tax administrator of every
State;
(II) common carriers and
other persons that deliver
small packages to consumers in
interstate commerce, including
the United States Postal
Service; and
(III) at the discretion of
the Attorney General of the
United States, to any other
persons; and
(ii) publicize and make the list
available to any other person engaged
in the business of interstate
deliveries or who delivers cigarettes
or smokeless tobacco in or into any
State.
(B) List contents.--To the extent known, the
Attorney General of the United States shall
include, for each delivery seller on the list
described in subparagraph (A)--
(i) all names the delivery seller
uses in the transaction of its business
or on packages delivered to customers;
(ii) all addresses from which the
delivery seller does business or ships
cigarettes or smokeless tobacco;
(iii) the website addresses, primary
e-mail address, and phone number of the
delivery seller; and
(iv) any other information that the
Attorney General determines would
facilitate compliance with this
subsection by recipients of the list.
(C) Updating.--The Attorney General of the
United States shall update and distribute the
list at least once every 4 months, and may
distribute the list and any updates by regular
mail, electronic mail, or any other reasonable
means, or by providing recipients with access
to the list through a nonpublic website that
the Attorney General of the United States
regularly updates.
(D) State, local, or tribal additions.--The
Attorney General of the United States shall
include in the list under subparagraph (A) any
noncomplying delivery sellers identified by any
State, local, or tribal government under
paragraph (5), and shall distribute the list to
the attorney general or chief law enforcement
official and the tax administrator of any
government submitting any such information and
to any common carriers or other persons who
deliver small packages to consumers identified
by any government pursuant to paragraph (5).
(E) Accuracy and completeness of list of
noncomplying delivery sellers.--In preparing
and revising the list required by subparagraph
(A), the Attorney General shall--
(i) use reasonable procedures to
ensure maximum possible accuracy and
completeness of the records and
information relied on for the purpose
of determining that such delivery
seller is noncomplying;
(ii) not later than 14 days prior to
including any delivery seller on the
list under paragraph (1), make a
reasonable attempt to send notice to
the delivery seller by letter,
electronic mail, or other means that
the delivery seller is being placed on
such list or update, with that notice
citing the relevant provisions of this
Act and the specific reasons for being
placed on such list;
(iii) provide an opportunity to such
delivery seller to challenge placement
on such list;
(iv) investigate each such challenge
by contacting the relevant Federal,
State, tribal, and local law
enforcement officials, and provide the
specific findings and results of such
investigation to such delivery seller
not later than 30 days after the
challenge is made; and
(v) upon finding that any placement
is inaccurate, incomplete, or cannot be
verified, promptly delete such delivery
seller from the list as appropriate and
notify each appropriate Federal, State,
tribal, and local authority of such
finding.
(F) Confidentiality.--The list distributed
pursuant to subparagraph (A) shall be
confidential, and any person receiving the list
shall maintain the confidentiality of the list
but may deliver the list, for enforcement
purposes, to any government official or to any
common carrier or other person that delivers
tobacco products or small packages to
consumers. Nothing in this section shall
prohibit a common carrier, the United States
Postal Service, or any other person receiving
the list from discussing with the listed
delivery sellers the delivery sellers'
inclusion on the list and the resulting effects
on any services requested by such listed
delivery seller.
(2) Prohibition on delivery.--
(A) In general.--Commencing on the date that
is 60 days after the date of the initial
distribution or availability of the list under
paragraph (1)(A), no person who receives the
list under paragraph (1), and no person who
delivers cigarettes or smokeless tobacco to
consumers, shall knowingly complete, cause to
be completed, or complete its portion of a
delivery of any package for any person whose
name and address are on the list, unless--
(i) the person making the delivery
knows or believes in good faith that
the item does not include cigarettes or
smokeless tobacco;
(ii) the delivery is made to a person
lawfully engaged in the business of
manufacturing, distributing, or selling
cigarettes or smokeless tobacco; or
(iii) the package being delivered
weighs more than 100 pounds and the
person making the delivery does not
know or have reasonable cause to
believe that the package contains
cigarettes or smokeless tobacco.
(B) Implementation of updates.--Commencing on
the date that is 30 days after the date of the
distribution or availability of any updates or
corrections to the list under paragraph (1),
all recipients and all common carriers or other
persons that deliver cigarettes or smokeless
tobacco to consumers shall be subject to
subparagraph (A) in regard to such corrections
or updates.
(C) Exemptions.--Subparagraphs (A) and (B),
and any other requirements or restrictions
placed directly on common carriers elsewhere in
this subsection, shall not apply to a common
carrier that is subject to a settlement
agreement relating to tobacco product
deliveries to consumers. For the purposes of
this section, ``settlement agreement'' shall be
defined to include the Assurance of
Discontinuance entered into by the Attorney
General of New York and DHL Holdings USA, Inc.
and DHL Express (USA), Inc. on or about July 1,
2005, the Assurance of Discontinuance entered
into by the Attorney General of New York and
United Parcel Service, Inc. on or about October
21, 2005, and the Assurance of Compliance
entered into by the Attorney General of New
York and Federal Express Corporation and Fed Ex
Ground package Systems, Inc. on or about
February 3, 2006, so long as each is honored
nationwide to block illegal deliveries of
cigarettes or smokeless tobacco to consumers,
and also includes any other active agreement
between a common carrier and the states that
operates nationwide to ensure that no
deliveries of cigarettes and smokeless tobacco
shall be made to consumers for illegally
operating Internet or mail-order sellers and
that any such deliveries to consumers shall not
be made to minors or without payment to the
states and localities where the consumers are
located of all taxes on the tobacco products.
(3) Shipments from persons on list.--
(A) In general.--In the event that a common
carrier or other delivery service delays or
interrupts the delivery of a package it has in
its possession because it determines or has
reason to believe that the person ordering the
delivery is on a list distributed under
paragraph (1)--
(i) the person ordering the delivery
shall be obligated to pay--
(I) the common carrier or
other delivery service as if
the delivery of the package had
been timely completed; and
(II) if the package is not
deliverable, any reasonable
additional fee or charge levied
by the common carrier or other
delivery service to cover its
extra costs and inconvenience
and to serve as a disincentive
against such noncomplying
delivery orders; and
(ii) if the package is determined not
to be deliverable, the common carrier
or other delivery service shall, in its
discretion, either provide the package
and its contents to a Federal, State,
or local law enforcement agency or
destroy the package and its contents.
(B) Records.--A common carrier or other
delivery service shall maintain, for a period
of 5 years, any records kept in the ordinary
course of business relating to any deliveries
interrupted pursuant to this paragraph and
provide that information, upon request, to the
Attorney General of the United States or to the
attorney general or chief law enforcement
official or tax administrator of any State,
local, or tribal government.
(C) Confidentiality.--Any person receiving
records under subparagraph (B) shall use such
records solely for the purposes of the
enforcement of this Act and the collection of
any taxes owed on related sales of cigarettes
and smokeless tobacco, and the person receiving
records under subparagraph (B) shall keep
confidential any personal information in such
records not otherwise required for such
purposes.
(4) Preemption.--
(A) In general.--No State, local, or tribal
government, nor any political authority of 2 or
more State, local, or tribal governments, may
enact or enforce any law or regulation relating
to delivery sales that restricts deliveries of
cigarettes or smokeless tobacco to consumers by
common carriers or other delivery services on
behalf of delivery sellers by--
(i) requiring that the common carrier
or other delivery service verify the
age or identity of the consumer
accepting the delivery by requiring the
person who signs to accept delivery of
the shipping container to provide
proof, in the form of a valid,
government-issued identification
bearing a photograph of the individual,
that such person is at least the
minimum age required for the legal sale
or purchase of tobacco products, as
determined by either State or local law
at the place of delivery;
(ii) requiring that the common
carrier or other delivery service
obtain a signature from the consumer
accepting the delivery;
(iii) requiring that the common
carrier or other delivery service
verify that all applicable taxes have
been paid;
(iv) requiring that packages
delivered by the common carrier or
other delivery service contain any
particular labels, notice, or markings;
or
(v) prohibiting common carriers or
other delivery services from making
deliveries on the basis of whether the
delivery seller is or is not identified
on any list of delivery sellers
maintained and distributed by any
entity other than the Federal
Government.
(B) Relationship to other laws.--Except as
provided in subparagraph (C), nothing in this
paragraph shall be construed to prohibit,
expand, restrict, or otherwise amend or
modify--
(i) section 14501(c)(1) or
41713(b)(4) of title 49, United States
Code;
(ii) any other restrictions in
Federal law on the ability of State,
local, or tribal governments to
regulate common carriers; or
(iii) any provision of State, local,
or tribal law regulating common
carriers that falls within the
provisions of sections 14501(c)(2) or
41713(b)(4)(B) of title 49 of the
United States Code.
(C) State laws prohibiting delivery sales.--
Nothing in the Prevent All Cigarette
Trafficking Act of 2008, the amendments made by
that Act, or in any other Federal statute shall
be construed to preempt, supersede, or
otherwise limit or restrict State laws
prohibiting the delivery sale, or the shipment
or delivery pursuant to a delivery sale, of
cigarettes or other tobacco products to
individual consumers or personal residences.
(5) State, local, and tribal additions.--
(A) In general.--Any State, local, or tribal
government shall provide the Attorney General
of the United States with--
(i) all known names, addresses,
website addresses, and other primary
contact information of any delivery
seller that offers for sale or makes
sales of cigarettes or smokeless
tobacco in or into the State, locality,
or tribal land but has failed to
register with or make reports to the
respective tax administrator, as
required by this Act, or that has been
found in a legal proceeding to have
otherwise failed to comply with this
Act; and
(ii) a list of common carriers and
other persons who make deliveries of
cigarettes or smokeless tobacco in or
into the State, locality, or tribal
lands.
(B) Updates.--Any government providing a list
to the Attorney General of the United States
under subparagraph (A) shall also provide
updates and corrections every 4 months until
such time as such government notifies the
Attorney General of the United States in
writing that such government no longer desires
to submit such information to supplement the
list maintained and distributed by the Attorney
General of the United States under paragraph
(1).
(C) Removal after withdrawal.--Upon receiving
written notice that a government no longer
desires to submit information under
subparagraph (A), the Attorney General of the
United States shall remove from the list under
paragraph (1) any persons that are on the list
solely because of such government's prior
submissions of its list of noncomplying
delivery sellers of cigarettes or smokeless
tobacco or its subsequent updates and
corrections.
(6) Deadline to incorporate additions.--The Attorney
General of the United States shall--
(A) include any delivery seller identified
and submitted by a State, local, or tribal
government under paragraph (5) in any list or
update that is distributed or made available
under paragraph (1) on or after the date that
is 30 days after the date on which the
information is received by the Attorney General
of the United States; and
(B) distribute any such list or update to any
common carrier or other person who makes
deliveries of cigarettes or smokeless tobacco
that has been identified and submitted by
another government, pursuant to paragraph (5).
(7) Notice to delivery sellers.--Not later than 14
days prior to including any delivery seller on the
initial list distributed or made available under
paragraph (1), or on any subsequent list or update for
the first time, the Attorney General of the United
States shall make a reasonable attempt to send notice
to the delivery seller by letter, electronic mail, or
other means that the delivery seller is being placed on
such list or update, with that notice citing the
relevant provisions of this Act.
(8) Limitations.--
(A) In general.--Any common carrier or other
person making a delivery subject to this
subsection shall not be required or otherwise
obligated to--
(i) determine whether any list
distributed or made available under
paragraph (1) is complete, accurate, or
up-to-date;
(ii) determine whether a person
ordering a delivery is in compliance
with this Act; or
(iii) open or inspect, pursuant to
this Act, any package being delivered
to determine its contents.
(B) Alternate names.--Any common carrier or
other person making a delivery subject to this
subsection shall not be required or otherwise
obligated to make any inquiries or otherwise
determine whether a person ordering a delivery
is a delivery seller on the list under
paragraph (1) who is using a different name or
address in order to evade the related delivery
restrictions, but shall not knowingly deliver
any packages to consumers for any such delivery
seller who the common carrier or other delivery
service knows is a delivery seller who is on
the list under paragraph (1) but is using a
different name or address to evade the delivery
restrictions of paragraph (2).
(C) Penalties.--Any common carrier or person
in the business of delivering packages on
behalf of other persons shall not be subject to
any penalty under section 14101(a) of title 49,
United States Code, or any other provision of
law for--
(i) not making any specific delivery,
or any deliveries at all, on behalf of
any person on the list under paragraph
(1);
(ii) not, as a matter of regular
practice and procedure, making any
deliveries, or any deliveries in
certain States, of any cigarettes or
smokeless tobacco for any person or for
any person not in the business of
manufacturing, distributing, or selling
cigarettes or smokeless tobacco; or
(iii) delaying or not making a
delivery for any person because of
reasonable efforts to comply with this
Act.
(D) Other limits.--Section 2 and subsections
(a), (b), (c), and (d) of this section shall
not be interpreted to impose any
responsibilities, requirements, or liability on
common carriers.
(f) Presumption.--For purposes of this Act, a delivery sale
shall be deemed to have occurred in the State and place where
the buyer obtains personal possession of the cigarettes or
smokeless tobacco, and a delivery pursuant to a delivery sale
is deemed to have been initiated or ordered by the delivery
seller.
[Sec. 3. Whoever violates any provision of this Act shall be
guilty of a misdemeanor and shall be fined not more than
$1,000, or imprisoned not more than 6 months, or both.
[Sec. 4. The United States district courts shall have
jurisdiction to prevent and restrain violations of this Act.]
SEC. 3. PENALTIES.
(a) Criminal Penalties.--
(1) In general.--Except as provided in paragraph (2),
whoever violates any provision of this Act shall be
guilty of a felony and shall be imprisoned not more
than 3 years, fined under title 18, United States Code,
or both.
(2) Exceptions.--
(A) Governments.--Paragraph (1) shall not
apply to a State, local, or tribal government.
(B) Delivery violations.--A common carrier or
independent delivery service, or employee of a
common carrier or independent delivery service,
shall be subject to criminal penalties under
paragraph (1) for a violation of section 2A(e)
only if the violation is committed
intentionally--
(i) as consideration for the receipt
of, or as consideration for a promise
or agreement to pay, anything of
pecuniary value; or
(ii) for the purpose of assisting a
delivery seller to violate, or
otherwise evading compliance with,
section 2A.
(b) Civil Penalties.--
(1) In general.--Except as provided in paragraph (3),
whoever violates any provision of this Act shall be
subject to a civil penalty in an amount not to exceed--
(A) in the case of a delivery seller, the
greater of--
(i) $5,000 in the case of the first
violation, or $10,000 for any other
violation; or
(ii) for any violation, 2 percent of
the gross sales of cigarettes or
smokeless tobacco of such person during
the 1-year period ending on the date of
the violation.
(B) in the case of a common carrier or other
delivery service, $2,500 in the case of a first
violation, or $5,000 for any violation within 1
year of a prior violation.
(2) Relation to other penalties.--A civil penalty
under paragraph (1) for a violation of this Act shall
be imposed in addition to any criminal penalty under
subsection (a) and any other damages, equitable relief,
or injunctive relief awarded by the court, including
the payment of any unpaid taxes to the appropriate
Federal, State, local, or tribal governments.
(3) Exceptions.--
(A) Delivery violations.--An employee of a
common carrier or independent delivery service
shall be subject to civil penalties under
paragraph (1) for a violation of section 2A(e)
only if the violation is committed
intentionally--
(i) as consideration for the receipt
of, or as consideration for a promise
or agreement to pay, anything of
pecuniary value; or
(ii) for the purpose of assisting a
delivery seller to violate, or
otherwise evading compliance with,
section 2A.
(B) Other limitations.--No common carrier or
independent delivery service shall be subject
to civil penalties under paragraph (1) for a
violation of section 2A(e) if--
(i) the common carrier or independent
delivery service has implemented and
enforces effective policies and
practices for complying with that
section; or
(ii) an employee of the common
carrier or independent delivery service
who physically receives and processes
orders, picks up packages, processes
packages, or makes deliveries, takes
actions that are outside the scope of
employment of the employee in the
course of the violation, or that
violate the implemented and enforced
policies of the common carrier or
independent delivery service described
in clause (i).
SEC. 4. ENFORCEMENT.
(a) In General.--The United States district courts shall have
jurisdiction to prevent and restrain violations of this Act and
to provide other appropriate injunctive or equitable relief,
including money damages, for such violations.
(b) Authority of the Attorney General.--The Attorney General
of the United States shall administer and enforce the
provisions of this Act.
(c) State, Local, and Tribal Enforcement.--
(1) In general.--
(A) Standing.--A State, through its attorney
general (or a designee thereof), or a local
government or Indian tribe that levies a tax
subject to section 2A(a)(3), through its chief
law enforcement officer (or a designee
thereof), may bring an action in a United
States district court to prevent and restrain
violations of this Act by any person (or by any
person controlling such person) or to obtain
any other appropriate relief from any person
(or from any person controlling such person)
for violations of this Act, including civil
penalties, money damages, and injunctive or
other equitable relief.
(B) Sovereign immunity.--Nothing in this Act
shall be deemed to abrogate or constitute a
waiver of any sovereign immunity of a State or
local government or Indian tribe against any
unconsented lawsuit under this Act, or
otherwise to restrict, expand, or modify any
sovereign immunity of a State or local
government or Indian tribe.
(2) Provision of information.--A State, through its
attorney general, or a local government or Indian tribe
that levies a tax subject to section 2A(a)(3), through
its chief law enforcement officer (or a designee
thereof), may provide evidence of a violation of this
Act by any person not subject to State, local, or
tribal government enforcement actions for violations of
this Act to the Attorney General of the United States
or a United States attorney, who shall take appropriate
actions to enforce the provisions of this Act.
(3) Use of penalties collected.--
(A) In general.--There is established a
separate account in the Treasury known as the
``PACT Anti-Trafficking Fund''. Notwithstanding
any other provision of law and subject to
subparagraph (B), an amount equal to 50 percent
of any criminal and civil penalties collected
by the United States Government in enforcing
the provisions of this Act shall be transferred
into the PACT Anti-Trafficking Fund and shall
be available to the Attorney General of the
United States for purposes of enforcing the
provisions of this Act and other laws relating
to contraband tobacco products.
(B) Allocation of funds.--Of the amount
available to the Attorney General under
subparagraph (A), not less than 50 percent
shall be made available only to the agencies
and offices within the Department of Justice
that were responsible for the enforcement
actions in which the penalties concerned were
imposed or for any underlying investigations.
(4) Nonexclusivity of remedy.--
(A) In general.--The remedies available under
this section and section 3 are in addition to
any other remedies available under Federal,
State, local, tribal, or other law.
(B) State court proceedings.--Nothing in this
Act shall be construed to expand, restrict, or
otherwise modify any right of an authorized
State official to proceed in State court, or
take other enforcement actions, on the basis of
an alleged violation of State or other law.
(C) Tribal court proceedings.--Nothing in
this Act shall be construed to expand,
restrict, or otherwise modify any right of an
authorized Indian tribal government official to
proceed in tribal court, or take other
enforcement actions, on the basis of an alleged
violation of tribal law.
(D) Local government enforcement.--Nothing in
this Act shall be construed to expand,
restrict, or otherwise modify any right of an
authorized local government official to proceed
in State court, or take other enforcement
actions, on the basis of an alleged violation
of local or other law.
(d) Persons Dealing in Tobacco Products.--Any person who
holds a permit under section 5712 of the Internal Revenue Code
of 1986 (regarding permitting of manufacturers and importers of
tobacco products and export warehouse proprietors) may bring an
action in a United States district court to prevent and
restrain violations of this Act by any person (or by any person
controlling such person) other than a State, local, or tribal
government.
(e) Notice.--
(1) Persons dealing in tobacco products.--Any person
who commences a civil action under subsection (d) shall
inform the Attorney General of the United States of the
action.
(2) State, local, and tribal actions.--It is the
sense of Congress that the attorney general of any
State, or chief law enforcement officer of any locality
or tribe, that commences a civil action under this
section should inform the Attorney General of the
United States of the action.
(f) Public Notice.--
(1) In general.--The Attorney General of the United
States shall make available to the public, by posting
such information on the Internet and by other
appropriate means, information regarding all
enforcement actions undertaken by the Attorney General
or United States attorneys, or reported to the Attorney
General, under this section, including information
regarding the resolution of such actions and how the
Attorney General and the United States attorney have
responded to referrals of evidence of violations
pursuant to subsection (c)(2).
(2) Reports to congress.--The Attorney General shall
submit to Congress each year a report containing the
information described in paragraph (1).
----------
TITLE 18, UNITED STATES CODE
* * * * * * *
PART I--CRIMES
* * * * * * *
CHAPTER 83--POSTAL SERVICE
* * * * * * *
Sec. 1716. Injurious articles as nonmailable
(a) * * *
* * * * * * *
(j) Tobacco Products.--
(1) Prohibition.--All cigarettes (as that term is
defined in section 2341 of this title) and smokeless
tobacco (as that term is defined in section 2341 of
this title) are nonmailable and shall not be deposited
in or carried through the mails. The United States
Postal Service shall not accept for delivery or
transmit through the mails any package that is knows,
or has reasonable cause to believe, contains any
cigarettes or smokeless tobacco made nonmailable by
this subsection.
(2) Reasonable cause to believe.--For purposes of
this section, notification to the United States Postal
Service by the Attorney General, a United States
attorney, a State attorney general, or a local
government or Indian tribe that levies an excise tax on
tobacco products that an individual or entity is
regularly engaged in the business of transmitting
cigarettes or smokeless tobacco made nonmailable by
this section shall constitute reasonable cause to
believe that any packages presented to the United
States Postal Service by such individual or entity
contain nonmailable cigarettes or smokeless tobacco.
(3) Exceptions.--This subsection shall not apply to
the following:
(A) Cigars.--Cigars (as that term is defined
in section 5702(a) of the Internal Revenue Code
of 1986).
(B) Geographic exception.--Mailings within
any State that is not contiguous with at least
1 other State of the United States.
(C) Business purposes.--Tobacco products
mailed only for business purposes between
legally operating businesses that have all
applicable State and Federal government
licenses or permits and are engaged in tobacco
product manufacturing, distribution, wholesale,
export, import, testing, investigation or
research or for regulatory purposes between any
such businesses and State or Federal Government
regulatory agencies, if the Postal Service
issues a final rule establishing the standards
and requirements that applies to all such
mailings and which includes the following:
(i) The Postal Service shall verify
that any person submitting an otherwise
nonmailable tobacco product into the
mails as authorized by this paragraph
is a business or government agency
permitted to make such mailings
pursuant to this subsection and the
related final rule.
(ii) The Postal Service shall ensure
that any recipient of an otherwise
nonmailable tobacco product sent
through the mails pursuant to this
paragraph is a business or government
agency.
(iii) The mailings shall be sent
through the Postal Service's systems
that provide for the tracking and
confirmation of the delivery.
(iv) The identities of the business
or government entity submitting the
mailing containing otherwise
nonmailable tobacco products for
delivery and the business or government
entity receiving the mailing shall be
clearly set forth on the package and
such information shall be kept in
Postal Service records and made
available to the Postal Service, the
Attorney General,A and to persons
eligible to bring enforcement actions
pursuant to subsection (j)(7) for a
period of at least three years.
(v) The mailings shall be marked with
a Postal Service label or marking that
makes it clear to Postal Service
employees that it is a permitted
mailing of otherwise nonmailable
tobacco products that may be delivered
only to a permitted government agency
or business and may not be delivered to
any residence or individual person.
(vi) The mailings shall be delivered
only to verified adult employees of the
recipient businesses or government
agencies who shall be required to sign
for the mailing.
(D) Certain individuals.--Tobacco products
mailed by individual adult people for
noncommercial, nonbusiness and non-money making
purposes, including the return of a damaged or
unacceptable tobacco product to its
manufacturer, if the Postal Service issues a
final rule establishing the standards and
requirements that applies to all such mailings
and which includes the following:
(i) The Postal Service shall verify
that any person submitting an otherwise
nonmailable tobacco product into the
mails as authorized by this subsection
is the individual person identified on
the return address label of the package
and is an adult.
(ii) For mailings to individual
persons the Postal Service shall
require the person submitting the
otherwise nonmailable tobacco product
into the mails as authorized by this
subsection to affirm that the recipient
is an adult.
(iii) The package shall not weigh
more than 10 ounces.
(iv) The mailings shall be sent
through the Postal Service's systems
that provide for the tracking and
confirmation of the delivery.
(v) No package shall be delivered or
placed in the possession of any
individual person who is not a verified
adult and, for mailings to individual
persons. The Postal Service shall
deliver the package only to the
verified adult recipient at the
recipient address or transfer it for
delivery to an Air/Army Postal Office
(APO) or Fleet Postal Office (FPO)
number designated in the recipient
address.
(vi) No person shall initiate more
than ten such mailings in any thirty-
day period.
(E) Definition of adult.--For the purposes of
subparagraphs (C) and (D), the term ``adult''
means an individual person of at least the
minimum age required for the legal sale or
purchase of tobacco products as determined by
the applicable law at the place the individual
person is located.
(4) Packaging exceptions inapplicable.--Subsection
(b) of this section shall not apply to any tobacco
product made nonmailable by paragraph (2) of this
subsection.
(5) Seizure and forfeiture.--Any cigarettes or
smokeless tobacco made nonmailable by this subsection
that are deposited in the mails shall be subject to
seizure and forfeiture, pursuant to the procedures set
forth in chapter 46 of this title. Any tobacco products
so seized and forfeited shall either be destroyed or
retained by Government officials for the detection or
prosecution of crimes or related investigations and
then destroyed.
(6) Additional penalties.--In addition to any other
fines and penalties imposed by this chapter for
violations of this section, any person violating this
subsection shall be subject to an additional penalty in
the amount of 10 times the retail value of the
nonmailable cigarettes or smokeless tobacco, including
all Federal, State, and local taxes.
[(j)] (k)(1) * * *
* * * * * * *
[(k)] (l) For purposes of this section, the term ``State''
includes a State of the United States, the District of
Columbia, and any commonwealth, territory, or possession of the
United States.
* * * * * * *
CHAPTER 114--TRAFFICKING IN CONTRABAND CIGARETTES AND SMOKELESS TOBACCO
* * * * * * *
Sec. 2343. Recordkeeping, reporting, and inspection
(a) * * *
* * * * * * *
[(c) Upon the consent of any person who ships, sells, or
distributes any quantity of cigarettes in excess of 10,000 in a
single transaction, or pursuant to a duly issued search
warrant, the Attorney General may enter the premises (including
places of storage) of such person for the purpose of inspecting
any records or information required to be maintained by such
person under this chapter, and any cigarettes kept or stored by
such person at such premises.]
(c) Any officer of the Bureau of Alcohol, Tobacco, Firearms,
and Explosives may, during normal business hours, enter the
premises of any person described in subsection (a) or (b) for
the purposes of inspecting--
(1) any records or information required to be
maintained by such person under the provisions of law
referred to in this chapter; or
(2) any cigarettes or smokeless tobacco kept or
stored by such person at such premises.
* * * * * * *
Sec. 2344. Penalties
(a) * * *
[(b) Whoever knowingly violates any rule or regulation
promulgated under section 2343(a) or 2346 of this title or
violates section 2342(b) of this title shall be fined under
this title or imprisoned not more than three years, or both.]
(b) Whoever knowingly violates any rule or regulation
promulgated under section 2343 or 2346 or violates section
2342(b) shall be fined under this title or imprisoned not more
than three years, or both.
* * * * * * *
DISSENTING VIEWS
While I support the overall objectives of H.R. 4081--
preventing the illegal sale of cigarettes--I have serious
concerns that legitimate and legal business practices will be
unintentionally affected by the current language of the bill.
H.R. 4081 provides several exceptions for sending
cigarettes through the mail for various non-commercial uses.
For example, it permits a tobacco company to use the mail to
send tobacco products to a third party for testing purposes.
Consumers are also permitted to return defective or damaged
tobacco products through the mail.
Unfortunately, H.R. 4081 is lacking one more exception: the
mailing of products for consumer testing purposes. Like any
other consumer product, tobacco products are test marketed, and
tobacco companies should continue to have the right to use the
mail for such purposes. No sales are involved by such mailings,
no business transactions occur, and no profits are made.
Therefore, this exemption should be included in the current
list of exemptions for non-commercial purposes.
In the 109th Congress we amended the Contraband Cigarette
Trafficking Act (CCTA) to address cigarette smuggling schemes
that were linked by the Justice Department to organizations
funneling funds to terrorist groups around the world. One
particular smuggling operation involved contraband cigarettes
from North Carolina. When we amended the CCTA in the 109th
Congress, it was supported by all stakeholders and was limited
to cigarette smuggling. Unfortunately, H.R. 4081 has not
garnered universal support from stakeholders because it would
outlaw consumer testing which is a legitimate and legal
business practice that is not in any way linked to the sale of
counterfeit cigarettes.
Howard Coble.