Congressional Record publishes “AMENDMENTS SUBMITTED” on May 21, 1998

Volume 144, No. 66 covering the 2nd Session of the 105th Congress (1997 - 1998) was published by the Congressional Record.

The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.

“AMENDMENTS SUBMITTED” mentioning the U.S. Dept of Labor was published in the Senate section on pages S5334-S5341 on May 21, 1998.

The publication is reproduced in full below:

AMENDMENTS SUBMITTED

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NATIONAL TOBACCO POLICY AND YOUTH SMOKING REDUCTION ACT

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SMITH AMENDMENT NO. 2435

(Ordered to lie on the table.)

Mr. SMITH of Oregon submitted an amendment intended to be proposed by him to the bill (S. 1415) to reform and restructure the processes by which tobacco products are manufactured, marketed, and distributed, to prevent the use of tobacco products by minors, to redress the adverse health effects of tobacco use, and for other purposes; as follows:

On page 182, strike lines 11 through 23, and insert the following:

(b) Annual Payments.--Each calendar year beginning after the required payment date under subsection (a)(3) the participating tobacco product manufacturers shall make total payments into the Fund for each calendar year in the following applicable base amounts, subject to adjustment as provided in paragraph (4) and section 403:

(1) For year 1--$14,400,000,000;

(2) For year 2, an amount equal to the product of $1.00 and the total number of units of tobacco products that were sold in the United States in the previous year.

(3) For year 3, an amount equal to the product of $1.50 and the total number of units of tobacco products that were sold in the United States in the previous year.

(4) For year 4, and each subsequent year, an amount equal to the amount paid in the prior year, multiplied by a ratio in which the numerator is the number of units of tobacco products sold in the prior year and the denominator is the number of units of tobacco products sold in the year before the prior year, adjusted in accordance with section 403.

Beginning on page 192, strike line 6 and all that follows through line 23 on page 199, and insert the following:

SEC. 451. ALLOCATION ACCOUNTS.

(a) State Litigation Settlement Account.--

(1) In general.--There is established within the Trust Fund a separate account, to be known as the State Litigation Settlement Account. Of the net revenues credited to the Trust Fund under section 401(b)(1) for each fiscal year, 10 percent of the amounts designated for allocation under the settlement payments shall be allocated to this account. Such amounts shall be reduced by the additional estimated Federal expenditures that will be incurred as a result of State expenditures under section 452, which amounts shall be transferred to the miscellaneous receipts of the Treasury.

(2) Appropriation.--Amounts so calculated are hereby appropriated and available until expended and shall be available to States for grants authorized under this Act.

(3) Distribution formula.--The Secretary of the Treasury shall consult with the National Governors Association, the National Association of Attorneys General, and the National Conference of State Legislators on a formula for the distribution of amounts in the State Litigation Settlement Account and report to the Congress within 90 days after the date of enactment of this Act with recommendations for implementing a distribution formula.

(4) Use of funds.--A State may use amounts received under this subsection as the State determines appropriate, consistent with the other provisions of this Act including smoking cessation and related public health programs.

(5) Funds not available as Medicaid reimbursement.--Funds in the account shall not be available to the Secretary as reimbursement of Medicaid expenditures or considered as Medicaid overpayments for purposes of recoupment.

(b) Health and Health-related Research Allocation Account.--

(1) In general.-- There is established within the trust fund a separate account, to be known as the Health and Health-Related Research Account. Of the net revenues credited to the trust fund under section 401(b)(1), 10 percent shall be allocated to this account.

(2) Authorization of appropriations.--Amounts in the Health and Health-Related Research Account shall be available to the extent and in the amounts provided in advance in appropriations acts, to remain available until expended, only for the following purposes:

(A) For the Centers for Disease Control under section 1991C of the Public Health Service Act, as added by this Act, of the total amounts allocated to this account, not more than 5 percent shall be used for this purpose.

(B) For the National Institutes of Health under section 1991D of the Public Health Service Act, as added by this Act. Of the total amounts allocated to this account, not more than 5 percent shall be used for this purpose.

(1) In general.-- There is established within the trust fund a separate account, to be known as the Farmers Assistance Account. Of the net revenues credited to the trust fund under section 401(b)(1) in each fiscal year 10 percent shall be allocated to this account for the first 10 years after the date of enactment of this Act.

(2) Appropriation.--Amounts allocated to this account are hereby appropriated and shall be available until expended for the purposes of section 1012.

(d) Medicare Preservation Account.--There is established within the trust fund a separate account, to be known as the Medicare Preservation Account. Of the net revenues credited to the trust fund under section 401(b)(1) in each fiscal year 70 percent, and all of the revenues credited to the trust fund under section 401(b)(3), shall be allocated to this account for the first 10 years after the date of enactment of this Act. Funds credited to this account shall be transferred to the Medicare Hospital Insurance Trust Fund.

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GRAMM (AND OTHERS) AMENDMENT NO. 2436

Mr. GRAMM (for himself, Mr. Domenici, and Mr. Faircloth) proposed an amendment to the motion to recommit proposed by Mr. Gramm to the bill, S. 1415, supra; as follows:

SEC. 1406. RESOLUTION OF AND LIMITATIONS ON CIVIL ACTIONS.

(a) State Attorney General Actions.--

(1) Pending claims.--With respect to a State, to be eligible to receive payments from the State Litigation Settlement Account, the attorney general for such State shall resolve any civil action seeking recovery for expenditures attributable to the treatment of tobacco related illnesses and conditions that have been commenced by the State against a tobacco product manufacturer, distributor, or retailer that is pending on the date of enactment of this Act.

(2) Future actions based on prior conduct.--With respect to a State, to be eligible to receive payments from the State Litigation Settlement Account, the attorney general for such State shall agree that the State will not commence any new tobacco claim after the date of enactment of this Act (other than to enforce the terms of a previous judgment) that is based on the conduct of a participating tobacco product manufacturer, distributor, or retailer that occurred prior to the date of enactment of this Act, seeking recovery for expenditures attributable to the treatment of tobacco induced illnesses and conditions against such a participating tobacco product manufacturer, distributor, or retailer.

(3) Application to local governmental entities.--The requirements described in paragraphs (1) and (2) shall apply to civil actions commenced by or on behalf of local governmental entities for the recovery of costs attributable to tobacco-related illnesses if such localities are within a State whose attorney general has elected to resolve claims under paragraph (1) and enter into the agreement described in paragraph (2). Such provisions shall not apply to those local governmental entities that are within a State whose attorney general has not resolved such claims or entered into such agreements.

(b) State and Local Option for One-Time Opt Out.--

(1) In general.--The Secretary shall establish procedures under which the attorney general of a State may, not later than 1 year after the date of enactment of this Act, elect not to resolve an action described in subsection (a)(1) or not to enter into an agreement under subsection (a)(2). A State whose attorney general makes such an election shall not be eligible to receive payments from the State Litigation Settlement Account. Procedures under this paragraph shall permit such a State to make such an election on a one-time basis.

(2) Extension.--In the case of a State that has secured a judgment against a participating tobacco product manufacturer, distributor, or retailer in an action described in subsection (a)(1) prior to or during the period described in paragraph (1), and such judgment has been appealed by such manufacturer, distributor, or retailer, such period shall be extended during the pendency of the appeal and for an additional period as determined appropriate by the Secretary, not to exceed one year.

(3) Application to certain states.--A State that has resolved a tobacco claim described in subsection (a)(1) with a participating tobacco product manufacturer, distributor, or retailer prior to the date of enactment of this Act may not make an election described in paragraph (1) if, as part of the resolution of such claim, the State agreed that the enactment of any national tobacco settlement legislation would supersede the provisions of the resolution.

(4) Local governmental entity option for one-time opt out.--

(A) In general.--The Secretary shall establish procedures under which the attorney for a local governmental entity which commenced a civil action prior to June 20, 1997, against a participating tobacco product manufacturer, distributor, or retailer seeking recovery for expenditures attributable to the treatment of tobacco related illnesses and conditions, not later that 1 year after the date of enactment of this Act, may elect not to resolve any action described in subsection (a)(3). A local governmental entity whose attorney makes such an election shall not be eligible to receive payments from the State Litigation Settlement Account. Procedures under this paragraph shall permit such a local governmental entity to make such an election on a one-time basis.

(B) Extension.--In the case of a local governmental entity that has secured a judgment against a participating tobacco product manufacturer, distributor, or retailer in a claim described in subsection (a)(3) prior to or during the period described in subparagraph (A), and such judgment has been appealed by such manufacturer, distributor, or retailer, such period shall be extended during the pendency of the appeal and for an additional period as determined appropriate by the Secretary, not to exceed one year.

(C) Application to certain local governmental entities.--A local governmental entity that has resolved a claim described in subsection (a)(3) with a participating tobacco product manufacturer, distributor, or retailer prior to the date of enactment of this Act may not make an election described in subparagraph (A) if, as part of the resolution of such claim, the local governmental entity agreed that the enactment of any national tobacco settlement legislation would supersede the provisions of the resolution.

(1) Addiction and dependence claims barred.--In any civil action to which this title applies, no addiction claim or dependence claim may be filed or maintained against a participating tobacco product manufacturer.

(2) Castano civil actions.--

(A) In general.--The rights and benefits afforded in section 221 of this Act, and the various research activities envisioned by this Act, are provided in settlement of, and shall constitute a remedy for the purpose of determining civil liability as to those addiction or dependence claims asserted in the Castano Civil Actions. The Castano Civil Actions shall be dismissed to the extent that they seek relief in the nature of public programs to assist addicted smokers to overcome their addiction or other publicly available health programs with full reservation of the rights of individual class members to pursue claims not based on addiction or dependency in civil actions in accordance with this Act.

(B) Arbitration.--For purposes of awarding attorneys fees and expenses for those actions subject to this subsection, the matter at issue shall be submitted to arbitration before one panel of arbitrators. In any such arbitration, the arbitration panel shall consist of 3 persons, one of whom shall be chosen by the attorneys of the Castano Plaintiffs' Litigation Committee who were signatories to the Memorandum of Understanding dated June 20, 1997, by and between tobacco product manufacturers, the Attorneys General, and private attorneys, one of whom shall be chosen by the participating tobacco product manufacturers, and one of whom shall be chosen jointly by those 2 arbitrators.

(d) Rules of Construction.--

(1) Post enactment claims.--Nothing in this title shall be construed to limit the ability of a government or person to commence an action against a participating tobacco product manufacturer, distributor, or retailer with respect to a claim that is based on the conduct of such manufacturer, distributor, or retailer that occurred after the date of enactment of this Act.

(2) No limitation on person.--Nothing in this title shall be construed to limit the right of a government (other than a State or local government as provided for under subsection

(a) and (b)) or person to commence any civil claim for past, present, or future conduct by participating tobacco product manufacturers, distributors, or retailers.

(3) Criminal liability.--Nothing in this title shall be construed to limit the criminal liability of a participating tobacco product manufacturer, distributor or retailer or its officers, directors, employees, successors, or assigns.

(e) Definitions.--In this section:

(1) Person.--The term ``person'' means an individual, partnership, corporation, parent corporation or any other business or legal entity or successor in interest of any such person.

(2) Secretary.--The term ``Secretary'' means the Secretary of Health and Human Services.

At the appropriate place, insert:

SEC. ____. ELIMINATION OF MARRIAGE PENALTY.

(a) In General.--Part VII of subchapter B of chapter 1 of the Internal Revenue Code of 1986 (relating to additional itemized deductions for individuals) is amended by redesignating section 222 as section 223 and by inserting after section 221 the following new section:

``SEC. 222. DEDUCTION FOR MARRIED COUPLES TO ELIMINATE THE

MARRIAGE PENALTY.

``(a) In General.--In the case of a joint return under section 6013 for the taxable year, there shall be allowed as a deduction an amount equal to the excess (if any) of--

``(1) the sum of the amounts determined under subparagraphs

(B) and (C) of section 63(c)(2) for such taxable year

(relating to the basic standard deduction for a head of a household and a single individual, respectively), over

``(2) the amount determined under section 63(c)(2)(A) for such taxable year (relating to the basic standard deduction for a joint return).

``(b) Limitation Based on Modified Adjusted Gross Income.--

``(1) In general.--No deduction shall be allowed under subsection (a) if the modified adjusted gross income of the taxpayer for the taxable year exceeds $50,000.

``(2) Modified adjusted gross income.--For purposes of this subsection, the term `modified adjusted gross income' means adjusted gross income determined--

``(A) after application of sections 86, 219, and 469, and

``(B) without regard to sections 135, 137, and 911 or the deduction allowable under this section.

``(3) Cost-of-living adjustment.--In the case of any taxable year beginning in a calendar year after 1999, the

$50,000 amount under paragraph (1) shall be increased by an amount equal to such dollar amount multiplied by the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, except that subparagraph (B) thereof shall be applied by substituting

`calendar year 1998' for `calendar year 1992'. If any amount as adjusted under this paragraph is not a multiple of $5,000, such amount shall be rounded to the next lowest multiple of

$5,000.''

(b) Deduction To Be Above-the-Line.--Section 62(a) of the Internal Revenue Code of 1986 (defining adjusted gross income) is amended by adding after paragraph (17) the following new paragraph:

``(18) Deduction for married couples.--The deduction allowed by section 222.''

(defining earned income) is amended by adding at the end the following new subparagraph:

``(C) Marriage penalty reduction.--Solely for purposes of applying subsection (a)(2)(B), earned income for any taxable year shall be reduced by an amount equal to the amount of the deduction allowed to the taxpayer for such taxable year under section 222.''

(d) Clerical Amendment.--The table of sections for part VII of subchapter B of chapter 1 of such Code is amended by striking the item relating to section 222 and inserting the following new items:

``Sec. 222. Deduction for married couples to eliminate the marriage penalty.

``Sec. 223. Cross reference.''

(e) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 1998.

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DURBIN (AND OTHERS) AMENDMENT NO. 2437

Mr. DASCHLE (for Mr. Durbin, for himself, Mr. DeWine, Mr. Wyden, Mr. Chafee, Mr. Harkin, Ms. Collins, Mr. Kennedy, Ms. Snowe, Mr. Daschle, Mr. Conrad, and Mr. Reed) proposed an amendment to amendment No. 2436 proposed by Mr. Gramm to the bill, S. 1415, supra; as follows:

In the amendment strike pages 10 through 13 and insert the following:

Subtitle A--Performance Objectives to Reduce Underage Use

SEC. 201. FINDINGS.

Congress finds the following:

(1) Reductions in the underage use of tobacco products are critically important to the public health.

(2) Achieving this critical public health goal can be substantially furthered by increasing the price of tobacco products to discourage underage use if reduction targets are not achieved and by creating financial incentives for manufacturers to discourage youth from using their tobacco products.

(3) When reduction targets in underage use are not achieved on an industry-wide basis, the price increases that will result from an industry-wide assessment will provide an additional deterrence to youth tobacco use.

(4) Manufacturer-specific incentives that will be imposed if reduction targets are not met by a manufacturer provide a strong incentive for each manufacturer to make all efforts to discourage youth use of its brands and insure the effectiveness of the industry-wide assessments.

SEC. 202. PURPOSES AND GOALS.

(a) Purpose.--It is the purpose of this subtitle to create incentives to achieve reductions in the percentage of children who use tobacco products and to ensure that, in the event that other measures contained in this Act prove to be inadequate to produce substantial reductions in tobacco use by minors, tobacco companies will pay additional assessments. These additional assessments are designed to lower youth tobacco consumption in a variety of ways, including by triggering further increases in the price of tobacco products, by encouraging tobacco companies to work to meet statutory targets for reductions in youth tobacco consumption, and by providing support for further reduction efforts.

(b) Goals.--As part of a comprehensive national tobacco control policy, the Secretary, working in cooperation with State, Tribal, and local governments and the private sector, shall take all actions under this Act necessary to ensure that the required performance objectives for percentage reductions in underage use of tobacco products set forth in this title are achieved.

SEC. 203. ANNUAL PERFORMANCE SURVEYS.

(a) Annual Performance Survey.--Beginning not later than 1999 and annually thereafter the Secretary shall conduct a survey, in accordance with the methodology in subsection

(e)(1), to determine for each type of tobacco product--

(1) the percentage of all children who used such type of tobacco product within the past 30 days; and

(2) the percentage of children who identify each brand of each type of tobacco product as the usual brand of the type smoked or used within the past 30 days.

(b) Use of Product.--A child shall be considered to have used a manufacturer's tobacco product if the child identifies the manufacturer's tobacco product as the usual brand of tobacco product smoked or used by the child within the past 30 days.

(c) Separate Types of Products.--For purposes of this subtitle (except as provided in subsection 205(h)), cigarettes and smokeless tobacco shall be considered separate types of tobacco products.

(d) Confidentiality of data.--The Secretary may conduct a survey relating to tobacco use involving minors. If the information collected in the course of conducting the annual performance survey results in the individual supplying the information, or described in the information, being identifiable, the information may not be used for any purpose other than the purpose for which it was supplied unless that individual (or that individual's guardian) consents to its use for such other purposes. The information may not be published or released in any other form if the individual supplying the information, or described in the information, is identifiable unless that individual (or that individual's guardian) consents to its publication or release in other form.

(e) Methodology.--

(1) In general.--The survey required by subsection (a) shall--

(A) be based on a nationally representative sample of young individuals;

(B) measure use of each type of tobacco product within the past 30 days;

(D) permit the calculation of the actual percentage reductions in underage use of a type of tobacco product (or, in the case of the manufacturer-specific surcharge, the use of a type of the tobacco products of a manufacturer) based on the point estimates of the percentage of young individuals reporting use of a type of tobacco product (or, in the case of the manufacturer-specific surcharge, the use of a type of the tobacco products of a manufacturer) from the annual performance survey.

(2) Criteria for deeming point estimates correct.--Point estimates under paragraph (1)(D) are deemed conclusively to be correct and accurate for calculating actual percentage reductions in underage use of a type of tobacco product (or, in the case of the manufacturer-specific surcharge, the use of a type of the tobacco products of a manufacturer) for the purpose of measuring compliance with percent reduction targets and calculating surcharges provided that the precision of estimates (based on sampling error) of the percentage of children reporting use of a type of tobacco product (or, in the case of the manufacturer-specific surcharge, the use of a type of the tobacco products of a manufacturer) is such that the 95 percent confidence interval around such point estimates is no more than plus or minus 1 percent.

(3) Survey deemed correct, proper, and accurate.--A survey using the methodology required by this subsection is deemed conclusively to be proper, correct, and accurate for purposes of this Act.

(4) Secretary may adopt different methodology.--The Secretary by notice and comment rulemaking may adopt a survey methodology that is different than the methodology described in paragraph (1) if the different methodology is at least as statistically precise as that methodology.

(f) Additional Measures.--In order to increase the understanding of youth tobacco product use, the Secretary may, for informational purposes only, add additional measures to the survey under subsection (a), conduct periodic or occasional surveys at other times, and conduct surveys of other populations such as young adults. The results of such surveys shall be made available to manufacturers and the public to assist in efforts to reduce youth tobacco use.

(g) Technical Adjustments.--The Secretary may make technical changes in the manner in which surveys are conducted under this section so long as adjustments are made to ensure that the results of such surveys are comparable from year to year.

SEC. 204. PERFORMANCE OBJECTIVES.

(a) Baseline Level.--The baseline level for each type of tobacco product, and for each manufacturer with respect to each type of tobacco product, is the percentage of children determined to have used such tobacco product in the first annual performance survey (in 1999).

(b) Industry-Wide Non-Attainment Assessments.--For the purpose of determining industry-wide non-attainment assessments, the performance objective for the reduction of the percentage of children determined to have used each type of tobacco product is the percentage in subsection (d) as measured from the baseline level for such type of tobacco product.

(c) Performance Objectives for Existing Manufacturers.--Each existing manufacturer shall have as a performance objective the reduction of the percentage of children determined to have used each type of such manufacturer's tobacco products by at least the percentage specified in subsection (d) as measured from the baseline level for such manufacturer for such product.

(d) Required Percentage Reductions.--The reductions required in this subsection are as follows:

(1) In the case of cigarettes--

(A) with respect to the third and fourth annual performance surveys, 20 percent;

(B) with respect to the fifth and sixth annual performance surveys, 40 percent;

(D) with respect to the 10th annual performance survey and each annual performance survey thereafter, 67 percent.

(2) In the case of smokeless tobacco--

(A) with respect to the third and fourth annual performance surveys, 12.5 percent;

(B) with respect to the fifth and sixth annual performance surveys, 25 percent;

(D) with respect to the 10th annual performance survey and each annual performance survey thereafter, 45 percent.

(e) Report on Further Reductions.--The Secretary shall report to Congress by the end of 2006 on the feasibility of further reduction in underage tobacco use.

(f) Performance Objective Relative to the De Minimis Level.--If the percentage of children determined to have used a type of the tobacco products of an existing manufacturer in an annual performance survey is equal to or less than the de minimis level, the manufacturer shall be considered to have achieved the applicable performance objective.

(g) Performance Objectives for New Manufacturers.--Each new manufacturer shall have as its performance objective maintaining the percentage of children determined to have used each type of such manufacturer's tobacco products in each annual performance survey at a level equal to or less than the de minimis level for that year.

(h) De Minimis Level.--The de minimis level shall be 1 percent of children for the applicable year.

SEC. 205. MEASURES TO HELP ACHIEVE THE PERFORMANCE

OBJECTIVES.

(a) Annual Determination.--Beginning in 2001, and annually thereafter, the Secretary shall, based on the annual performance surveys conducted under section 203, determine if the performance objectives for each type of tobacco product under section 204 has been achieved and if each manufacturer has achieved the applicable performance objective under section 204. The Secretary shall publish in the Federal Register such determinations and any appropriate additional information regarding actions taken under this section.

(b) Industry-Wide Non-Attainment Assessments.--

(1) Industry-wide non-attainment percentage.--The Secretary shall determine the industry-wide non-attainment percentage, if any, for cigarettes and for smokeless tobacco for each calendar year.

(2) Non-attainment assessment for cigarettes.--For each calendar year in which the performance objective under section 204(b) is not attained for cigarettes, the Secretary shall assess a surcharge on cigarette manufacturers as follows:

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If the non-attainment percentage is: The surcharge is:

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Not more than 5 percentage points $40,000,000 multiplied by the non-attainment

percentage

More than 5 but not more than 20 percentage points $200,000,000, plus $120,000,000 multiplied by

the non-attainment percentage in excess of 5

but not in excess of 20 percentage points

More than 20 percentage points $2,000,000,000

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(3) Non-attainment assessment for smokeless tobacco.--For each year in which the performance objective under section 204(b) is not attained for smokeless tobacco, the Secretary shall assess a surcharge on smokeless tobacco product manufacturers as follows:

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If the non-attainment percentage is: The surcharge is:

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Not more than 5 percentage points $4,000,000 multiplied by the non-attainment

percentage

More than 5 but not more than 20 percentage points $20,000,000, plus $12,000,000 multiplied by

the non-attainment percentage in excess of 5

but not in excess of 20 percentage points

More than 20 percentage points $200,000,000

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(4) Strict liability; joint and several liability.--Liability for any surcharge imposed under this subsection shall be--

(A) strict liability; and

(B) joint and several liability--

(i) among all cigarette manufacturers for surcharges imposed under paragraph (2); and

(ii) among all smokeless tobacco manufacturers for surcharges imposed under paragraph (3).

(5) Surcharge liability among manufacturers.--A tobacco product manufacturer shall be liable under this subsection to one or more other manufacturers if the plaintiff tobacco product manufacturer establishes by a preponderance of the evidence that the defendant tobacco product manufacturer, through its acts or omissions, was responsible for a disproportionate share of the non-attainment surcharge as compared to the responsibility of the plaintiff manufacturer.

(6) Exemptions for small manufacturers.--

(A) Allocation by market share.--The Secretary shall allocate the assessments under this subsection according to each manufacturer's share of the domestic cigarette or domestic smokeless tobacco market, as appropriate, in the year for which the surcharge is being assessed, based on actual Federal excise tax payments.

(B) Exemption.--In any year in which a surcharge is being assessed, the Secretary shall exempt from payment any tobacco product manufacturer with less than 1 percent of the domestic market share for a specific category of tobacco product unless the Secretary finds that the manufacturer's products are used by underage individuals at a rate equal to or greater than the manufacturer's total market share for the type of tobacco product.

(1) In general.--If the Secretary determines that the required percentage reduction in use of a type of tobacco product has not been achieved by a manufacturer for a year, the Secretary shall impose a surcharge on such manufacturer under this paragraph.

(2) Cigarettes.--For each calendar year in which a cigarette manufacturer fails to achieve the performance objective under section 204(c), the Secretary shall assess a surcharge on that manufacturer in an amount equal to the manufacturer's share of youth incidence for cigarettes multiplied by the following surcharge level:

----------------------------------------------------------------------------------------------------------------If the non-attainment percentage for the manufacturer is: The surcharge level is:

----------------------------------------------------------------------------------------------------------------

Not more than 5 percentage points $80,000,000 multiplied by the non-attainment

percentage

More than 5 but not more than 24.1 percentage points $400,000,000, plus $240,000,000 multiplied by

the non-attainment percentage in excess of 5

but not in excess of 24.1 percentage points

More than 24.1 percentage points $5,000,000,000

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(3) Smokeless tobacco.--For each calendar year in which a smokeless tobacco product manufacturer fails to achieve the performance objective under section 204(c), the Secretary shall assess a surcharge on that manufacturer in an amount equal to the manufacturer's share of youth incidence for smokeless tobacco products multiplied by the following surcharge level:

----------------------------------------------------------------------------------------------------------------If the non-attainment percentage for the manufacturer is: The surcharge level is:

----------------------------------------------------------------------------------------------------------------

Not more than 5 percentage points $8,000,000 multiplied by the non-attainment

percentage

More than 5 but not more than 24.1 percentage points $40,000,000, plus $24,000,000 multiplied by

the non-attainment percentage in excess of 5

but not in excess of 24.1 percentage points

More than 24.1 percentage points $500,000,000

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(4) Manufacturer's share of youth incidence.--For purposes of this subsection, the them ``manufacturer's share of youth incidence'' means--

(A) for cigarettes, the percentage of all youth smokers determined to have used that manufacturer's cigarettes; and

(B) for smokeless tobacco products, the percentage of all youth users of smokeless tobacco products determined to have used that manufacturer's smokeless tobacco products.

(5) De minimis levels.--If a manufacturer is a new manufacturer or the manufacturer's baseline level for a type of tobacco product is less than the de minimis level, the non-attainment percentage (for purposes of paragraph (2) or

(3)) shall be equal to the number of percentage points by which the percentage of children who used the manufacturer's tobacco products of the applicable type exceeds the de minimis level.

(d) Surcharges To Be Adjusted for Inflation.--

(1) In general.--Beginning with the fourth calendar year after the date of enactment of this Act, each dollar amount in the tables in subsections (b)(2), (b)(3), (c)(2), and

(c)(3) shall be increased by the inflation adjustment.

(2) Inflation adjustment.--For purposes of paragraph (1), the inflation adjustment for any calendar year is the percentage (if any) by which--

(A) the CPI for the preceding calendar year; exceeds

(B) the CPI for the calendar year 1998.

(3) CPI.--For purposes of paragraph (2), the CPI for any calendar year is the average of the Consumer Price Index for all-urban consumers published by the Department of Labor.

(4) Rounding.--If any increase determined under paragraph

(1) is not a multiple of $1,000, the increase shall be rounded to the nearest multiple of $1,000.

(e) Method of Surcharge Assessment.--The Secretary shall assess a surcharge for a specific calendar year on or before May 1 of the subsequent calendar year. Surcharge payments shall be paid on or before July 1 of the year in which they are assessed. The Secretary may establish, by regulation, interest at a rate up to 3 times the prevailing prime rate at the time the surcharge is assessed, and additional charges in an amount up to 3 times the surcharge, for late payment of the surcharge.

(f) Business Expense Deduction.--In order to maximize the financial deterrent effect of the assessments and surcharges established in this section, any such payment shall not be deductible as an ordinary and necessary business expense or otherwise under the Internal Revenue Code of 1986.

(g) Procedures.--In assessing price increase assessments and enforcing other measures under this section, the Secretary shall have in place procedures to take into account the effect that the margin of error of the annual performance survey may have on the amounts assessed to or measures required of such manufacturers.

(h) Other Products.--The Secretary shall promulgate regulations establishing performance objectives for the reduction of the use by children of other products made or derived from tobacco and intended for human consumption if significant percentages of children use or begin to use such products and the inclusion of such products as types of tobacco products under this subtitle would help protect the public health. Such regulations shall contain provisions, consistent with the provisions in this subtitle applicable to cigarettes and smokeless tobacco, for the application of assessments and surcharges to achieve reductions in the percentage of children who use such products.

(i) Appeal Rights.--The amount of any surcharge is committed to the sound discretion of the Secretary and shall be subject to judicial review by the United States Court of Appeals for the District of Columbia Circuit, based on the arbitrary and capricious standard of section 706(2)(A) of title 5, United States Code. Notwithstanding any other provisions of law, no court shall have authority to stay any surcharge payments due the Secretary under this Act pending judicial review.

(j) Responsibility for Agents.--In any action brought under this subsection, a tobacco product manufacturer shall be held responsible for any act or omission of its attorneys, advertising agencies, or other agents that contributed to that manufacturer's responsibility for the surcharge assessed under this section.

SEC. 206. DEFINITIONS.

In this subtitle:

(1) Children.--The term ``children'' means individuals who are 12 years of age or older and under the age of 18.

(2) Cigarette manufacturers.--The term ``cigarette manufacturers'' means manufacturers of cigarettes sold in the United States.

(3) Existing manufacturer.--The term ``existing manufacturer'' means a manufacturer which manufactured a tobacco product on or before the date of the enactment of this title.

(4) New manufacturer.--The term ``new manufacturer'' means a manufacturer which begins to manufacture a type of tobacco product after the date of the enactment of this title.

(5) Non-attainment percentage.--The term ``non-attainment percentage'' means the number of percentage points yielded--

(A) for a calendar year in which the percent incidence of underage use of the applicable type of tobacco product is less than the baseline level, by subtracting--

(i) the percentage by which the percent incidence of underage use of the applicable type of tobacco product in that year is less than the baseline level, from

(ii) the required percentage reduction applicable in that year; and

(B) for a calendar year in which the percent incidence of underage use of the applicable type of tobacco product is greater than the baseline level, adding--

(i) the percentage by which the percent incidence of underage use of the applicable type of tobacco product in that year is greater than the baseline level; and

(ii) the required percentage reduction applicable in that year.

(6) Smokeless tobacco product manufacturers.--The term

``smokeless tobacco product manufacturers'' means manufacturers of smokeless tobacco products sold in the United States.

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DURBIN (AND OTHERS) AMENDMENT NO. 2438

Mr. DASCHLE (for Mr. Durbin, for himself, Mr. DeWine, Mr. Wyden, Mr. Chafee, Mr. Harkin, Ms. Collins, Mr. Kennedy, Ms. Snowe, Mr. Daschle, Mr. Conrad, and Mr. Reed) proposed an amendment to amendment No. 2437 proposed by Mr. Durbin to the bill, S. 1415, supra; as follows:

In the Amendment strike all after ``Subtitle'' and insert the following:

In title II, strike subtitle A and insert the following:

Subtitle A--Performance Objectives to Reduce Underage Use

SEC. 201. FINDINGS.

Congress finds the following:

(1) Reductions in the underage use of tobacco products are critically important to the public health.

SEC. 202. PURPOSES AND GOALS.

SEC. 203. ANNUAL PERFORMANCE SURVEYS.

(a) Annual Performance Survey.--Beginning not later than 1999 and annually thereafter the Secretary shall conduct a survey, in accordance with the methodology in subsection

(e)(1), to determine for each type of tobacco product--

(1) the percentage of all children who used such type of tobacco product within the past 30 days; and

(2) the percentage of children who identify each brand of each type of tobacco product as the usual brand of the type smoked or used within the past 30 days.

(c) Separate Types of Products.--For purposes of this subtitle (except as provided in subsection 205(h)), cigarettes and smokeless tobacco shall be considered separate types of tobacco products.

(e) Methodology.--

(1) In general.--The survey required by subsection (a) shall--

(A) be based on a nationally representative sample of young individuals;

(B) measure use of each type of tobacco product within the past 30 days;

(3) Survey deemed correct, proper, and accurate.--A survey using the methodology required by this subsection is deemed conclusively to be proper, correct, and accurate for purposes of this Act.

SEC. 204. PERFORMANCE OBJECTIVES.

(d) Required Percentage Reductions.--The reductions required in this subsection are as follows:

(1) In the case of cigarettes--

(A) with respect to the third and fourth annual performance surveys, 20 percent;

(B) with respect to the fifth and sixth annual performance surveys, 40 percent;

(D) with respect to the 10th annual performance survey and each annual performance survey thereafter, 67 percent.

(2) In the case of smokeless tobacco--

(A) with respect to the third and fourth annual performance surveys, 12.5 percent;

(B) with respect to the fifth and sixth annual performance surveys, 25 percent;

(D) with respect to the 10th annual performance survey and each annual performance survey thereafter, 45 percent.

(e) Report on Further Reductions.--The Secretary shall report to Congress by the end of 2006 on the feasibility of further reduction in underage tobacco use.

(h) De Minimis Level.--The de minimis level shall be 1 percent of children for the applicable year.

SEC. 205. MEASURES TO HELP ACHIEVE THE PERFORMANCE

OBJECTIVES.

(b) Industry-Wide Non-Attainment Assessments.--

(1) Industry-wide non-attainment percentage.--The Secretary shall determine the industry-wide non-attainment percentage, if any, for cigarettes and for smokeless tobacco for each calendar year.

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If the non-attainment percentage is: The surcharge is:

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Not more than 5 percentage points $40,000,000 multiplied by the non-attainment

percentage

More than 5 but not more than 20 percentage points $200,000,000, plus $120,000,000 multiplied by

the non-attainment percentage in excess of 5

but not in excess of 20 percentage points

More than 20 percentage points $2,000,000,000

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If the non-attainment percentage is: The surcharge is:

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Not more than 5 percentage points $4,000,000 multiplied by the non-attainment

percentage

More than 5 but not more than 20 percentage points $20,000,000, plus $12,000,000 multiplied by

the non-attainment percentage in excess of 5

but not in excess of 20 percentage points

More than 20 percentage points $200,000,000

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(4) Strict liability; joint and several liability.--Liability for any surcharge imposed under this subsection shall be--

(A) strict liability; and

(B) joint and several liability--

(i) among all cigarette manufacturers for surcharges imposed under paragraph (2); and

(ii) among all smokeless tobacco manufacturers for surcharges imposed under paragraph (3).

(6) Exemptions for small manufacturers.--

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If the non-attainment percentage for the manufacturer is: The surcharge level is: