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111th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    111-117

======================================================================



 
             PREVENT ALL CIGARETTE TRAFFICKING ACT OF 2009 
                               (PACT ACT)

                                _______
                                

  May 18, 2009.--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

                        [To accompany H.R. 1676]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on the Judiciary, to whom was referred the bill 
(H.R. 1676) 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....................................................     1
Purpose and Summary..............................................    17
Background and Need for the Legislation..........................    17
Hearings.........................................................    19
Committee Consideration..........................................    19
Committee Votes..................................................    19
Committee Oversight Findings.....................................    19
New Budget Authority and Tax Expenditures........................    20
Congressional Budget Office Cost Estimate........................    20
Performance Goals and Objectives.................................    23
Constitutional Authority Statement...............................    24
Advisory on Earmarks.............................................    24
Section-by-Section Analysis......................................    24
Changes in Existing Law Made by the Bill, as Reported............    28

                             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 2009'' 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 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 to the buyer by common carrier, private 
                delivery service, or  other method of  remote delivery, 
                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 1151 of 
                title 18, United States Code, except that within the 
                State of Alaska that term applies only to the 
                Metlakatla Indian Community, Annette Island Reserve; 
                and
                    ``(B) any other land held by the United States in 
                trust or restricted status 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) Into a state, place, or locality.--A sale, shipment, 
        or transfer of cigarettes or smokeless tobacco that is made in 
        interstate commerce, as defined herein, shall be deemed to have 
        been made into the State, place or locality in which such 
        cigarettes or smokeless tobacco are delivered.
            ``(11) 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.
            ``(12) 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.
            ``(13) 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.
            ``(14) 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.
            ``(15) 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.
            ``(16) 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 2009, 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), 
                subsection (b)(2), 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 or, if any such settlement agreement to which 
                the common carrier was a party is terminated or 
                otherwise becomes inactive, is administering and 
                enforcing, on a nationwide basis, policies and 
                practices that are at least as stringent as any such 
                agreement. 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 except that no State may enforce 
                against a common carrier a law prohibiting the delivery 
                of cigarettes or other tobacco products to individual 
                consumers or personal residences without proof that the 
                common carrier was not entitled to an exemption 
                referred to in paragraph (2)(C) of this subsection.
            ``(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) In General.--Chapter 83 of title 18, United States Code, is 
amended by inserting after section 1716D the following:

``Sec. 1716E. Tobacco products as nonmailable

    ``(a) Prohibition.--All cigarettes (as that term is defined in 
section 1 of the Act of October 19, 1949, commonly referred to as the 
Jenkins Act) and smokeless tobacco (as that term is defined in section 
1 of the Act of October 19, 1949, commonly referred to as the Jenkins 
Act) 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 it knows or has 
reasonable cause to believe contains any cigarettes or smokeless 
tobacco made nonmailable by this subsection. For the purposes of 
subsection (a) reasonable cause includes--
            ``(1) a statement on a publicly available website, or an 
        advertisement, by any person that such person will mail matter 
        which is nonmailable under this section in return for payment; 
        and
            ``(2) the placement of the person on the list created under 
        section 2A(e) of the Jenkins Act.
    ``(b) Exceptions.--This section shall not apply to the following:
            ``(1) Cigars.--Cigars (as that term is defined in section 
        5702(a) of the Internal Revenue Code of 1986).
            ``(2) Geographic exception.--Mailings within the State of 
        Alaska or within the State of Hawaii.
            ``(3) 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 apply to all 
        such mailings and which includes the following:
                    ``(A) 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 section and the related 
                final rule.
                    ``(B) 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 that may lawfully receive 
                such product.
                    ``(C) The mailings shall be sent through the Postal 
                Service's systems that provide for the tracking and 
                confirmation of the delivery.
                    ``(D) 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 section 3(d) of the Prevent All 
                Cigarette Trafficking Act of 2008 for a period of at 
                least three years.
                    ``(E) 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.
                    ``(F) 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.
            ``(4) 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:
                    ``(A) The Postal Service shall verify that any 
                person submitting an otherwise nonmailable tobacco 
                product into the mails as authorized by this section is 
                the individual person identified on the return address 
                label of the package and is an adult.
                    ``(B) 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.
                    ``(C) The package shall not weigh more than 10 
                ounces.
                    ``(D) The mailings shall be sent through the Postal 
                Service's systems that provide for the tracking and 
                confirmation of the delivery.
                    ``(E) No package shall be delivered or placed in 
                the possession of any individual person who is not a 
                verified adult. 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.
                    ``(F) No person shall initiate more than ten such 
                mailings in any thirty-day period.
            ``(5) Exception for mailings for consumer testing by 
        manufacturers.--Nothing in this Act shall preclude a legally 
        operating cigarette manufacturer operating on its own or 
        through its legally authorized agent from using the Postal 
        Service to mail cigarettes to verified adult smokers solely for 
        consumer testing purposes, provided that--
                    ``(A) the cigarette manufacturer has a federal 
                permit, in good standing, pursuant to section 5713 of 
                the Internal Revenue Code of 1986;
                    ``(B) any package of cigarettes mailed pursuant to 
                this exception shall contain no more than one carton of 
                cigarettes (200 cigarettes);
                    ``(C) no individual shall receive more than 1 
                package of cigarettes per manufacturer pursuant to this 
                exception in any 30-day period;
                    ``(D) all taxes as required by law on the 
                cigarettes levied by the State and locality of delivery 
                have been paid to the State and locality prior to 
                delivery, and tax stamps or other tax-payment indicia 
                have been affixed to the cigarettes as required by law;
                    ``(E) the recipient has not made any payments of 
                any kind in exchange for receiving the cigarettes;
                    ``(F) the mailings are made pursuant to a final 
                rule that the Postal Service shall issue to establish 
                standards and requirements that apply to all such 
                mailings and that include the following:
                            ``(i) The Postal Service shall verify that 
                        any person submitting a tobacco product into 
                        the mails pursuant to this paragraph is a 
                        manufacturer or an agent legally authorized by 
                        the manufacturer to submit the tobacco product 
                        into the mails on the manufacturer's behalf 
                        permitted to make such mailings pursuant to 
                        this paragraph.
                            ``(ii) The Postal Service shall require the 
                        manufacturer submitting the cigarettes into the 
                        mails pursuant to this paragraph to affirm that 
                        the manufacturer or its legally authorized 
                        agent has verified that the recipient is an 
                        adult established smoker who has not made any 
                        payment for the cigarettes, has formally stated 
                        in writing that he or she wishes to receive 
                        such mailings, and has not withdrawn that 
                        agreement despite being offered the opportunity 
                        to do so by the manufacturer or its legally 
                        authorized agent at least once in every 3-month 
                        period.
                            ``(iii) The Postal Service shall require 
                        the manufacturer or its legally authorized 
                        agent submitting the cigarettes into the mails 
                        pursuant to this paragraph to affirm that the 
                        package contains no more than a single carton 
                        (200) cigarettes on which all taxes levied on 
                        the cigarettes by the State and locality of 
                        delivery have been paid and all related State 
                        tax stamps or other tax-payment indicia have 
                        been applied.
                            ``(iv) The mailings shall be sent through 
                        the Postal Service's systems that provide for 
                        the tracking and confirmation of the delivery 
                        and all related records shall be kept in Postal 
                        Service records and made available to persons 
                        enforcing this section for a period of at least 
                        3 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 
                        the named recipient after verifying that the 
                        recipient is an adult.
                            ``(vi) The Postal Service shall deliver the 
                        mailing only to the named recipient and only 
                        after verifying that the recipient is an adult.
            ``(6) Definition of adult.--For the purposes of paragraphs 
        (3), (4), and (5), the term `adult' means an individual person 
        of at least 21 years of age.
    ``(c) 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.
    ``(d) Additional Penalties.--In addition to any other fines and 
penalties imposed by this chapter for violations of this section, any 
person violating this section shall be subject to an additional civil 
penalty in the amount of 10 times the retail value of the nonmailable 
cigarettes or smokeless tobacco, including all Federal, State, and 
local taxes.
    ``(e) Criminal Penalty.--Whoever knowingly deposits for mailing or 
delivery, or knowingly causes to be delivered by mail, according to the 
direction thereon, or at any place at which it is directed to be 
delivered by the person to whom it is addressed, anything that this 
section declares to be nonmailable matter shall be fined under this 
title, imprisoned not more than 1 year, or both.
    ``(f) Definition.--As used in this section, the term `State' has 
the meaning given that term in section 1716(k).
    ``(g) 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.
    ``(h) 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.''.
    (b) 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 in a civil 
        action in a United States district court obtain appropriate 
        relief with respect to a violation of section 1716E of title 
        18, United States Code. Appropriate relief includes injunctive 
        and equitable relief and damages equal to the amount of unpaid 
        taxes on tobacco products mailed in violation of that section 
        to addressees in that State.
            (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) Nothing in this section shall be construed to prohibit 
        an authorized State official from proceeding in State court on 
        the basis of an alleged violation of any general civil or 
        criminal statute of such State.
            (4) 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.
            (5) 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.
    (c) Clerical Amendment.--The table of sections at the beginning of 
chapter 83 of title 18 is amended by adding after the item relating to 
section 1716D the following new item:

``1716E. Tobacco products as nonmailable.''.

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 to the buyer by common carrier, private 
                delivery service, or other method of remote delivery, 
                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; CIVIL PENALTY.

    Section 2343(c) of title 18, United States Code, is amended to read 
as follows:
    ``(c)(1) 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--
            ``(A) any records or information required to be maintained 
        by such person under the provisions of law referred to in this 
        chapter; or
            ``(B) any cigarettes or smokeless tobacco kept or stored by 
        such person at such premises.
    ``(2) The district courts of the United States shall have the 
authority in a civil action under this subsection to compel inspections 
authorized by paragraph (1).
    ``(3) Whoever violates paragraph (1), or an order issued under 
paragraph (2), shall be subject to a civil penalty in an amount not to 
exceed $10,000 for each violation.''.

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 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 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 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. ENHANCED CONTRABAND TOBACCO ENFORCEMENT.

    (a) Requirements.--The Director of the Bureau of Alcohol, Tobacco, 
Firearms and Explosives shall--
            (1) create 6 regional contraband tobacco trafficking teams 
        over a 3-year period in New York City, Washington DC, Detroit, 
        Los Angeles, Seattle, and Miami,
            (2) create a new Tobacco Intelligence Center to oversee 
        investigations and monitor and coordinate ongoing 
        investigations and to serve as a nerve center for all on going 
        tobacco diversion investigations in the United States, and 
        where applicable with law enforcement organizations around the 
        world within the Bureau of Alcohol, Tobacco, Firearms, and 
        Explosives,
            (3) establish covert national warehouse for undercover 
        operations, and
            (4) create a computer database that will track and analyze 
        information from retail sellers of tobacco products that sell 
        through the internet, mail order or make other non face to face 
        sales.
    (b) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out subsection (a) $8,500,000 for each of 5 
fiscal years.

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.

SEC. 10. 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 
enacted 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, Firearms, and 
Explosives 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.

                          Purpose and Summary

    H.R. 1676, the Prevent All Cigarette Trafficking Act of 
2009 (``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 making cheaper tax-free cigarettes available, 
including to young people, and undermining tobacco tax policies 
that have been an important funding source for public health 
programs. In addition, cigarette smuggling has played an 
increasing role in financing criminal and terrorist groups.\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\ Within the 
United States, the tax losses to States from cigarette 
trafficking were estimated at $1 billion for 2005--New York 
State alone loses an estimated $500 million annually.\5\
---------------------------------------------------------------------------
    \2\See 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 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\See H.R. 1676, the Prevent All Cigarette Trafficking Act of 2009 
S. Rep. No. 110-153 (2007).
---------------------------------------------------------------------------

 INADEQUACY OF CURRENT LAW FOR COMBATING UNLAWFUL CIGARETTE TRAFFICKING

    Existing Federal statutes applicable to the prosecution of 
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 required 
to 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 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, on a new website. Consequently, 
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 

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

                              THE PACT ACT

    Illegal remote sellers of cigarettes and smokeless tobacco 
have been very successful at eluding traditional enforcement 
measures, by making their cigarette and smokeless tobacco 
deliveries 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

    No hearings were held on this legislation during the 111th 
Congress. However in the 110th Congress, the Committee's 
Subcommittee on Crime, Terrorism, and Homeland Security held 1 
day of hearings on similar legislation, H.R. 4081, the 
``Prevent All Cigarette Trafficking Act of 2007,'' and on 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 April 27, 2009, the Committee met in open session and 
ordered the bill, H.R. 1676, favorably reported, as amended, 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. 1676.

                      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. 1676, 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, May 18, 2009.
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. 1676, the 
``Prevent All Cigarette Trafficking Act of 2009.''
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark 
Grabowicz, who can be reached at 226-2860.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                  Director.

Enclosure

cc:
        Honorable Lamar S. Smith.
        Ranking Member
H.R. 1676--Prevent All Cigarette Trafficking Act of 2009.

                                SUMMARY

    H.R. 1676 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 authorize the appropriation of $8.5 million annually over 
five fiscal years for ATFE to improve the enforcement of laws 
governing the sale of tobacco. In addition, 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. 1676 also would increase penalties, including 
criminal and civil fines, for violations of the laws relating 
to taxation of cigarettes and smokeless tobacco. Finally, the 
bill would prohibit the use of the United States Postal Service 
(USPS) to mail certain tobacco products.
    CBO estimates that implementing H.R. 1676 would cost about 
$160 million over the 2010-2014 period, 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. 1676 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 or 
private-sector mandates ($69 million and $139 million 
respectively, in 2009, adjusted annually for inflation).

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    The estimated budgetary impact of H.R. 1676 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. 1676 could affect direct 
spending and receipts. However, we estimate that any such 
effects would be insignificant.

                                     By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
                                                                     2010   2011   2012   2013   2014  2010-2014
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Enforcement Activities
  Authorization Level                                                   9      9      9      9      9        43
  Estimated Outlays                                                     7      9      9      9      9        41

Inspections
  Estimated Authorization Level                                        18     25     26     27     28       124
  Estimated Outlays                                                    15     24     26     27     28       120

  Total
    Estimated Authorization Level                                      27     34     35     36     37       167
    Estimated Outlays                                                  22     33     35     36     37       161
----------------------------------------------------------------------------------------------------------------
Note: Components may not sum to totals because of rounding.

                           BASIS OF ESTIMATE

    CBO estimates that implementing H.R. 1676 would cost about 
$160 million over the 2010-2014 period. For this estimate, CBO 
assumes that the authorized and necessary amounts will be 
appropriated near the start of each fiscal year and that 
spending will follow historical patterns for similar 
activities. In addition, the bill would have an insignificant 
effect on direct spending and receipts.
Spending Subject to Appropriations
    Enforcement Activities. H.R. 1676 would authorize the 
appropriation of $8.5 million annually over five fiscal years 
for ATFE to improve enforcement of the laws governing the sale 
of tobacco. (CBO assumes that the bill would authorize this 
funding over the 2010-2014 period.) The agency would be 
required to use those funds to form regional enforcement teams, 
establish a tobacco intelligence center and a covert national 
warehouse (for undercover operations), and create a database to 
track and analyze certain retail sales of tobacco products.
    Inspections. H.R. 1676 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 2011, and costs would be adjusted for 
anticipated future inflation.
Revenues and Direct Spending
    Enacting H.R. 1676 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. Criminal and civil fines are recorded in 
the budget as revenues.
    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. (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. 1676 
would not be significant.
    H.R. 1676 would prohibit the use of the Postal Service to 
mail most tobacco products. This could affect revenue and 
spending by the USPS, depending on how the agency decides to 
enforce this provision and regulate the exceptions permitted by 
the bill. The Postal Service attempts to enforce current laws 
on nonmailable matter but inspects a very small fraction of the 
200 billion pieces of mail it delivers each year. CBO expects 
that H.R. 1676 would not lead to a significant increase in 
those inspections and thus implementing the bill would not have 
a significant effect on net USPS spending.

              INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

    H.R. 1676 contains both intergovernmental and private-
sector mandates, as defined in UMRA by imposing new 
requirements on certain sales of tobacco products by private 
and tribal entities and preempting certain State, local, and 
tribal laws. CBO estimates that the costs of complying with the 
requirements in the bill would not exceed the annual thresholds 
established in UMRA for intergovernmental or private-sector 
mandates ($69 million and $139 million, respectively, in 2009, 
adjusted annually for inflation).
Requirements on Delivery Sales of Tobacco
    H.R. 1676 would require delivery sellers of tobacco 
products to comply with certain requirements regarding 
reporting, shipping, record keeping, and collecting taxes. 
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 sellers of 
tobacco from selling cigarettes produced by companies that are 
not in full compliance with the terms of the tobacco settlement 
agreement between States and tobacco manufacturers and sellers. 
Those requirements would be both intergovernmental and private-
sector mandates because tobacco delivery sales are conducted by 
both private-sector and tribal entities.
    H.R. 1676 also would require common carriers and delivery 
services to keep records for five 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.
    According to ATFE and industry sources, most of the 
entities affected by the requirements already perform many of 
the duties required by the bill, and CBO estimates that the 
additional requirements would impose minimal additional costs.
Preemption of State, Local, and Tribal Laws
    The bill also would preempt 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. 
CBO expects that the preemption would impose minimal costs on 
State, local, or tribal governments.
Other Impacts on State, Local, and Tribal Governments
    H.R. 1676 would benefit State, local, and tribal 
governments by expanding their authority to collect cigarette 
taxes through the Jenkins Act. This expanded authority would 
allow State attorneys general or the chief law enforcement 
official of a local or tribal government to file charges in 
U.S. district courts against sellers or deliverers who violate 
this law. The bill also would preserve existing agreements 
between States and tribal governments regarding cigarette 
taxes.

                         ESTIMATE PREPARED BY:

Federal Costs: Mark Grabowicz
Impact on State, Local, and Tribal Governments: Melissa Merrell
Impact on the Private Sector: Jacob Kuipers

                         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. 
1676 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. 1676 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 2009'' 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 illegal 
sale of tobacco products. It notes that Hezbollah, Hamas, al 
Qaeda, and other terrorist and criminal organizations have 
profited from trafficking in illegal cigarettes or counterfeit 
cigarette tax stamps. And it notes that protections against 
Internet sales of tobacco to minors are also needed.
    Section 1(c) sets forth the purposes of this Act. These 
include providing the government with more tools to combat 
tobacco smuggling, increasing collection of tobacco product tax 
revenue, and preventing access by minors 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 definitions section of the existing 
Jenkins Act. It redefines the term ``cigarette'' to include 
``roll-your-own'' tobacco. It adds a definition of ``delivery 
sale'' to ensure that the Jenkins Act covers all remote 
sellers, whether they conduct sales by telephone, fax, 
Internet, or through the mail.
    This subsection also adds definitions for ``Attorney 
General,'' ``common carrier,'' ``consumer,'' ``delivery sale,'' 
``delivery seller,'' ``Indian country,'' ``Indian tribe,'' 
``interstate commerce,'' and ``smokeless tobacco.'' It 
redefines the term ``person'' to include State, local, and 
Indian tribal governments, and it expands the definition of 
``use'' to include the consumption, storage, handling, or 
disposal of smokeless tobacco, in addition to cigarettes. This 
subsection also amends the definition of ``tobacco tax 
administrator'' to include local or tribal officials duly 
authorized to collect and administer the tobacco tax, in 
addition to State officials.
    Section (2)(b) enhances the existing reporting requirements 
under the Jenkins Act, under which interstate sellers of 
tobacco products must register with each State's tobacco tax 
officials and report all sales into that State. Subsection (b) 
expands the scope of the reporting requirements to apply to 
smokeless tobacco products, and to shipment as well as 
transfer, and to require reporting to tax officials in relevant 
localities or Indian country, and to the U.S. Attorney General, 
as well as State officials. It also requires vendors to provide 
additional identifying information, so that law enforcement 
officials can locate them for inspection and enforcement 
purposes.
    Subsection (c) adds a new section 2A to the Jenkins Act, to 
provide for stronger enforcement of the bill's new requirements 
for Internet and other remote sellers, defined as ``delivery 
sellers'' under the bill, by requiring them to comply with 
three basic requirements.
    First, a delivery seller must comply with new shipping 
requirements. There must be a label on the outside of the 
package indicating that it contains cigarettes or smokeless 
tobacco, to give notice to a common carrier or other delivery 
service. The weight of any single sale or delivery cannot 
exceed 10 pounds. And the delivery seller must verify that the 
purchaser is of legal age to purchase tobacco products in the 
place of purchase.
    Second, delivery sellers are required to keep records of 
all delivery sales, for at least 4 years. These records must be 
made available to State, local, tribal and Federal officials 
for enforcement purposes.
    Third, delivery sellers must comply with all State, local, 
tribal and other laws applicable to the sale, distribution, or 
delivery of tobacco products, including payment of excise 
taxes, licensing and stamping requirements, and restrictions on 
sales to minors. The delivery seller must pay all applicable 
excise taxes and affix all required stamps or other indicia to 
the cigarettes or smokeless tobacco in advance of completing 
the sale or delivery.
    The new section 2A would direct the Attorney General of the 
United States to compile, and update periodically, a list of 
delivery sellers who have not registered with the Attorney 
General as required, or are otherwise not in compliance with 
the Jenkins Act. The list would be compiled with the input of 
Federal law enforcement officials and the attorney general, tax 
administrator, or chief law enforcement official of 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 
on the list.
    The bill clarifies that a common carrier will not be 
penalized under section 14101(a) of Title 49, United States 
Code, for not completing the delivery of a package for a 
delivery seller on the non-compliance list or because of 
reasonable efforts to comply with the Jenkins Act. The bill 
preempts State, local, and tribal laws regulating the delivery 
of cigarettes or smokeless tobacco to consumers that impose 
obligations on common carriers or delivery services that are 
duplicative of, or inconsistent with, the new obligations 
imposed under the Jenkins Act as amended by the bill.
    Subsection 2(d) of the bill replaces Section 3 of the 
Jenkins Act to enhance criminal and civil penalties. Criminal 
violations of the Jenkins Act are made a felony, punishable by 
up to 3 years in prison and a commensurate fine. The new 
section 3 clarifies that State, local, and tribal governments 
are not subject to criminal penalties, and that common carriers 
and independent delivery services are subject to criminal 
penalties only if the violation was committed intentionally, 
either for economic gain or to assist a delivery seller in a 
violation.
    Under the civil penalties, delivery sellers who violate the 
Jenkins Act will be fined the greater of $5,000 for a first 
violation and $10,000 for any subsequent violation, or 2 
percent of the gross sales of cigarettes or smokeless tobacco 
sold during the 1 year period ending on the date of the 
violation. A delivery service is not subject to civil liability 
if it has implemented effective policies and practices for 
compliance.
    Section 2(e) of the bill authorizes State, local, and 
tribal law enforcement officials to enforce the Jenkins Act in 
Federal court, for injunctive or other equitable relief or 
money damages, to better enable them to reach out-of-State 
cigarette traffickers, which is difficult in State court under 
State law. This subsection also permits States, localities, and 
tribes to provide evidence of Jenkins Act violations to the 
Attorney General for enforcement purposes.
    Subsection 2(e) also establishes a PACT Anti-Trafficking 
Fund in the Treasury. Fifty percent of penalties collected by 
the Federal Government through PACT enforcement efforts would 
be transferred into the fund, available to the Attorney General 
for use in connection with enforcement of the Jenkins Act and 
other tobacco product anti-contraband laws. Of that amount, 
fifty percent of those funds must be made available to the 
Department of Justice agencies and offices responsible for the 
investigations leading to the collection of the penalty.
    Sec. 3. Treatment of Cigarettes and Smokeless Tobacco as 
Non-mailable Matter. Section 3 of the bill amends 18 U.S.C. 
1716 to add cigarettes and smokeless tobacco to the list of 
materials, including alcohol, poisons, weapons, and other 
materials, that are non-mailable matter. This would make it 
illegal for delivery sellers to deposit tobacco products in the 
U.S. mails, and it 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. A delivery seller who violates this prohibition is 
subject to a fine of as much as ten times the retail value of 
the cigarettes or smokeless tobacco in question, in addition to 
any unpaid taxes, as well as imprisonment of up to 1 year. 
There is an exception for mailing cigarettes for purposes of 
consumer testing.
    Sec. 4. Compliance with Model Statute or Qualifying 
Statute. In 1998, 46 States, Puerto Rico, the U.S. Virgin 
Islands, American Samoa, the Northern Mariana Islands, Guam, 
the District of Columbia, the Brown & Williamson Tobacco 
Corporation, Lorillard Tobacco Company, Philip Morris 
Incorporated, R.J. Reynolds Tobacco Company, Commonwealth 
Tobacco, and Liggett & Myers entered into what is called the 
Master Settlement Agreement (MSA). The MSA imposed a variety of 
restrictions on the advertising, marketing, and promotion of 
cigarettes. In addition to evading taxes, an important way in 
which illicit cigarette traffickers are able to raise money and 
compete with legitimate sellers is to evade compliance with the 
Model Statute, which requires manufacturers who are not party 
to the MSA to pay money into an escrow fund. Section 4 of the 
bill makes it a felony for a manufacturer or importer to sell 
or deliver tobacco products into a State that is a party to the 
MSA if the cigarettes or smokeless tobacco are produced by a 
manufacturer that is not complying with the Model statute or 
Qualifying Statute enacted by a State.
    Section 4(b) of the bill authorizes State, local, and 
tribal law enforcement officials, acting through their 
attorneys general, to bring suit in U.S. district court for 
violations of subsection (a), and to recover attorneys fees 
from persons found to have willfully and knowingly violated it.
    Sec. 5. Inspection by Bureau of Alcohol, Tobacco, Firearms, 
and Explosives of Records of certain cigarette and smokeless 
tobacco sellers. Section 5 authorizes 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. The inspection 
authority is enforceable in Federal court, with failure to 
comply subject to a fine up to $10,000.
    Sec. 6. Exclusions Regarding Indian Tribes and Tribal 
Matters. Section 6 of the bill preserves: (1) agreements, 
compacts, or other intergovernmental arrangements between 
Indian tribes and States or local governments relating to the 
collection of taxes on cigarettes or smokeless tobacco; (2) 
limitations under existing Federal law, including Federal 
common law and treaties, on State, local and tribal tax and 
regulatory authority with respect to sale, use, or distribution 
of cigarettes and smokeless tobacco by or to Indian tribes or 
tribal members in Indian country; (3) tribal sovereignty as 
against State and local government jurisdiction; and (4) 
existing authorities for coordination of law enforcement 
efforts.
    Sec. 7. Enhanced Contraband Tobacco Enforcement. Section 7 
directs the Bureau of Alcohol , Tobacco, and Firearms to create 
six regional contraband tobacco trafficking teams in New York 
City, Washington, D.C., Detroit, Los Angeles, Seattle, and 
Miami; a Tobacco Intelligence Center to oversee smuggling 
investigations; a covert national warehouse for undercover 
operations; and a computer database to track information 
regarding Internet, mail, and other tobacco sales not made in 
person. $8,500,000 is authorized for each of the first five 
fiscal years for these purposes.
    Sec. 8 Effective Date. Section 8 provides that section 5 of 
the bill, dealing with Bureau of Alcohol, Tobacco, Firearms, 
and Explosives authority, takes effect on the date of 
enactment, and that all sections of the bill PACT Act takes 
effect ninety days after the date of enactment.
    Sec. 9. Severability. Section 9 provides that the 
invalidation of any provision of the bill or its application to 
any person or circumstance will not affect other provisions of 
the bill, or the bill's application to any other person or 
circumstance.
    Sec. 10. Sense of Congress Concerning the Precedential 
Effect of this Act. Section 10 expresses the sense of Congress 
that the bill responds to unique problems, and is not 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.

         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

                   (Commony known as the Jenkins Act)

    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 to the buyer by common carrier, 
                private delivery service, or other method of 
                remote delivery, 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 
                1151 of title 18, United States Code, except 
                that within the State of Alaska that term 
                applies only to the Metlakatla Indian 
                Community, Annette Island Reserve; and
                    (B) any other land held by the United 
                States in trust or restricted status 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) Into a state, place, or locality.--A sale, 
        shipment, or transfer of cigarettes or smokeless 
        tobacco that is made in interstate commerce, as defined 
        herein, shall be deemed to have been made into the 
        State, place or locality in which such cigarettes or 
        smokeless tobacco are delivered.
            (11) 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.
            (12) 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.
            (13) 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.
            (14) 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.
            (15) 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.
            (16) 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] 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. 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. 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 
                2009, 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), 
                subsection (b)(2), 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 or, if any such 
                settlement agreement to which the common 
                carrier was a party is terminated or otherwise 
                becomes inactive, is administering and 
                enforcing, on a nationwide basis, policies and 
                practices that are at least as stringent as any 
                such agreement. 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 
                except that no State may enforce against a 
                common carrier a law prohibiting the delivery 
                of cigarettes or other tobacco products to 
                individual consumers or personal residences 
                without proof that the common carrier was not 
                entitled to an exemption referred to in 
                paragraph (2)(C) of this subsection.
            (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. 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).

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                              ----------                              


                      TITLE 18, UNITED STATES CODE



           *       *       *       *       *       *       *
PART I--CRIMES

           *       *       *       *       *       *       *


                       CHAPTER 83--POSTAL SERVICE

Sec.
1691.    Laws governing postal savings.
     * * * * * * *
1716E. Tobacco products as nonmailable.

           *       *       *       *       *       *       *


Sec. 1716E. Tobacco products as nonmailable

    (a) Prohibition.--All cigarettes (as that term is defined 
in section 1 of the Act of October 19, 1949, commonly referred 
to as the Jenkins Act) and smokeless tobacco (as that term is 
defined in section 1 of the Act of October 19, 1949, commonly 
referred to as the Jenkins Act) 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 it knows or has reasonable 
cause to believe contains any cigarettes or smokeless tobacco 
made nonmailable by this subsection. For the purposes of 
subsection (a) reasonable cause includes--
            (1) a statement on a publicly available website, or 
        an advertisement, by any person that such person will 
        mail matter which is nonmailable under this section in 
        return for payment; and
            (2) the placement of the person on the list created 
        under section 2A(e) of the Jenkins Act.
    (b) Exceptions.--This section shall not apply to the 
following:
            (1) Cigars.--Cigars (as that term is defined in 
        section 5702(a) of the Internal Revenue Code of 1986).
            (2) Geographic exception.--Mailings within the 
        State of Alaska or within the State of Hawaii.
            (3) 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 apply to all such 
        mailings and which includes the following:
                    (A) 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 section and the related final rule.
                    (B) 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 that may lawfully receive such product.
                    (C) The mailings shall be sent through the 
                Postal Service's systems that provide for the 
                tracking and confirmation of the delivery.
                    (D) 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 section 3(d) of the Prevent All Cigarette 
                Trafficking Act of 2008 for a period of at 
                least three years.
                    (E) 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.
                    (F) 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.
            (4) 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:
                    (A) The Postal Service shall verify that 
                any person submitting an otherwise nonmailable 
                tobacco product into the mails as authorized by 
                this section is the individual person 
                identified on the return address label of the 
                package and is an adult.
                    (B) 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.
                    (C) The package shall not weigh more than 
                10 ounces.
                    (D) The mailings shall be sent through the 
                Postal Service's systems that provide for the 
                tracking and confirmation of the delivery.
                    (E) No package shall be delivered or placed 
                in the possession of any individual person who 
                is not a verified adult. 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.
                    (F) No person shall initiate more than ten 
                such mailings in any thirty-day period.
            (5) Exception for mailings for consumer testing by 
        manufacturers.--Nothing in this Act shall preclude a 
        legally operating cigarette manufacturer operating on 
        its own or through its legally authorized agent from 
        using the Postal Service to mail cigarettes to verified 
        adult smokers solely for consumer testing purposes, 
        provided that--
                    (A) the cigarette manufacturer has a 
                federal permit, in good standing, pursuant to 
                section 5713 of the Internal Revenue Code of 
                1986;
                    (B) any package of cigarettes mailed 
                pursuant to this exception shall contain no 
                more than one carton of cigarettes (200 
                cigarettes);
                    (C) no individual shall receive more than 1 
                package of cigarettes per manufacturer pursuant 
                to this exception in any 30-day period;
                    (D) all taxes as required by law on the 
                cigarettes levied by the State and locality of 
                delivery have been paid to the State and 
                locality prior to delivery, and tax stamps or 
                other tax-payment indicia have been affixed to 
                the cigarettes as required by law;
                    (E) the recipient has not made any payments 
                of any kind in exchange for receiving the 
                cigarettes;
                    (F) the mailings are made pursuant to a 
                final rule that the Postal Service shall issue 
                to establish standards and requirements that 
                apply to all such mailings and that include the 
                following:
                            (i) The Postal Service shall verify 
                        that any person submitting a tobacco 
                        product into the mails pursuant to this 
                        paragraph is a manufacturer or an agent 
                        legally authorized by the manufacturer 
                        to submit the tobacco product into the 
                        mails on the manufacturer's behalf 
                        permitted to make such mailings 
                        pursuant to this paragraph.
                            (ii) The Postal Service shall 
                        require the manufacturer submitting the 
                        cigarettes into the mails pursuant to 
                        this paragraph to affirm that the 
                        manufacturer or its legally authorized 
                        agent has verified that the recipient 
                        is an adult established smoker who has 
                        not made any payment for the 
                        cigarettes, has formally stated in 
                        writing that he or she wishes to 
                        receive such mailings, and has not 
                        withdrawn that agreement despite being 
                        offered the opportunity to do so by the 
                        manufacturer or its legally authorized 
                        agent at least once in every 3-month 
                        period.
                            (iii) The Postal Service shall 
                        require the manufacturer or its legally 
                        authorized agent submitting the 
                        cigarettes into the mails pursuant to 
                        this paragraph to affirm that the 
                        package contains no more than a single 
                        carton (200) cigarettes on which all 
                        taxes levied on the cigarettes by the 
                        State and locality of delivery have 
                        been paid and all related State tax 
                        stamps or other tax-payment indicia 
                        have been applied.
                            (iv) The mailings shall be sent 
                        through the Postal Service's systems 
                        that provide for the tracking and 
                        confirmation of the delivery and all 
                        related records shall be kept in Postal 
                        Service records and made available to 
                        persons enforcing this section for a 
                        period of at least 3 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 the named recipient after 
                        verifying that the recipient is an 
                        adult.
                            (vi) The Postal Service shall 
                        deliver the mailing only to the named 
                        recipient and only after verifying that 
                        the recipient is an adult.
            (6) Definition of adult.--For the purposes of 
        paragraphs (3), (4), and (5), the term ``adult'' means 
        an individual person of at least 21 years of age.
    (c) 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.
    (d) Additional Penalties.--In addition to any other fines 
and penalties imposed by this chapter for violations of this 
section, any person violating this section shall be subject to 
an additional civil penalty in the amount of 10 times the 
retail value of the nonmailable cigarettes or smokeless 
tobacco, including all Federal, State, and local taxes.
    (e) Criminal Penalty.--Whoever knowingly deposits for 
mailing or delivery, or knowingly causes to be delivered by 
mail, according to the direction thereon, or at any place at 
which it is directed to be delivered by the person to whom it 
is addressed, anything that this section declares to be 
nonmailable matter shall be fined under this title, imprisoned 
not more than 1 year, or both.
    (f) Definition.--As used in this section, the term 
``State'' has the meaning given that term in section 1716(k).
    (g) 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.
    (h) 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.

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CHAPTER 114--TRAFFICKING IN CONTRABAND CIGARETTES AND SMOKELESS TOBACCO

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Sec. 2343. Recordkeeping, reporting, and inspection

    (a)  * * *

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    [(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)(1) 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--
            (A) any records or information required to be 
        maintained by such person under the provisions of law 
        referred to in this chapter; or
            (B) any cigarettes or smokeless tobacco kept or 
        stored by such person at such premises.
    (2) The district courts of the United States shall have the 
authority in a civil action under this subsection to compel 
inspections authorized by paragraph (1).
    (3) Whoever violates paragraph (1), or an order issued 
under paragraph (2), shall be subject to a civil penalty in an 
amount not to exceed $10,000 for each violation.

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