< Back to S. 3035 (107th Congress, 2001–2002)

Text of the Eliminating Profiteering through Illegal Cigarette Sales Act

This bill was introduced on October 2, 2002, in a previous session of Congress, but was not enacted. The text of the bill below is as of Oct 2, 2002 (Introduced).

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S 3035 IS

107th CONGRESS

2d Session

S. 3035

To prohibit the sale of tobacco products through the Internet or other indirect means to underage individuals, to ensure the collection of all cigarette taxes, and for other purposes.

IN THE SENATE OF THE UNITED STATES

October 2, 2002

Mr. HUTCHINSON introduced the following bill; which was read twice and referred to the Committee on the Judiciary


A BILL

To prohibit the sale of tobacco products through the Internet or other indirect means to underage individuals, to ensure the collection of all cigarette taxes, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ‘Eliminating Profiteering through Illegal Cigarette Sales Act’ or ‘EPICS Act’.

SEC. 2. UNLAWFUL ACTS REGARDING SALE OF TOBACCO PRODUCTS TO UNDERAGE INDIVIDUALS.

    (a) IN GENERAL- It shall be unlawful for any person who is in the business of selling tobacco products, and who advertises such products through the Internet or any other means, to sell a tobacco product to an individual under the legal age (according to State law) to purchase tobacco products if pursuant to the sale the person mails the product or ships the product by carrier in or affecting interstate commerce.

    (b) PROCEDURES TO PROTECT AGAINST SALES TO UNDERAGE INDIVIDUALS- It shall be unlawful for any person in the business of selling tobacco products to take an order for a tobacco product, other than from a person who is in the business of selling tobacco products, through the mail, or through any telecommunications means (including by telephone, facsimile, or the Internet), if in providing for the sale or delivery of the product pursuant to the order the person mails the product, or ships the product by carrier in or affecting interstate commerce, and the person fails to comply with each of the following procedures:

      (1) Before mailing or shipping the product, the person receives from the individual who places the order the following:

        (A) A copy of a valid government-issued document (whether an operator’s permit or otherwise) that provides the name, address, and date of birth of the individual.

        (B) A signed statement in writing from the individual providing a certification of the individual that--

          (i) such document and information correctly identifies the individual and correctly states the address and date of birth of the individual;

          (ii) the individual understands that forging another person’s signature to the statement is illegal; and

          (iii) the individual understands that tobacco sales to minors are illegal and that tobacco purchases by minors may be illegal under applicable State law.

      (2) Before mailing or shipping the product, the person--

        (A) verifies the information received from the individual under paragraph (1) against a commercially available database; and

        (B) sends a letter to the individual requesting--

          (i) confirmation of the order; and

          (ii) that the individual reply immediately (to a specified toll-free phone number or e-mail address) if the individual did not submit the order.

      (3) In the case of an order for a product pursuant to an advertisement on the Internet, the person receives payment by credit card or check for the order before mailing or shipping the product.

      (4) Unless the person is identified as a member of the Armed Forces by the document issued by the Department of Defense identifying individuals as members of the Armed Forces, the person provides for the mailing or shipping of the product to the name and address provided on the government-issued document received under paragraph (1).

      (5)(A) The person employs a method of mailing or shipping the product requiring that the individual purchasing the product--

        (i) be the addressee;

        (ii) personally sign for delivery of the package; and

        (iii) if the individual appears to the carrier making the delivery to be under 27 years of age, take delivery of the package only after producing valid, government-issued identification that--

          (I) bears a photograph of the individual;

          (II) indicates that the individual is not under the legal age to purchase cigarettes; and

          (III) indicates that the individual is not younger than the age indicated on the government-issued document received under paragraph (1).

      (B) The bill of lading clearly states the requirements in subparagraph (A) and specifies that Federal law requires compliance with the requirements.

      (6) The person notifies the carrier for the mailing or shipping, in writing, of the age of the addressee as indicated by the government-issued document received under paragraph (1).

    (c) ADVERTISING THROUGH INTERNET; PROMINENT WARNING LABELS- It shall be unlawful for any person in the business of selling tobacco products to advertise tobacco products for sale through an Internet website to a person other than a person who is in the business of selling tobacco products unless such website contains, on the part of each website page relating to sale of such products that is immediately visible when accessed, prominent and clearly legible warning labels as follows:

      (1) A warning label stating that sales of tobacco products to persons under 18 years of age are illegal in all States except Alabama, Alaska, and Utah, where sales of tobacco products to person under 19 years of age are illegal.

      (2) A warning label described--

        (A) in the case of cigarettes, in subsections (a)(1) and (b)(2) of section 4 of the Federal Cigarette Labeling and Advertising Act (15 U.S.C. 1333); and

        (B) in the case of smokeless tobacco products, in subsections (a)(1) and (b)(1) of section 3 of the Federal Comprehensive Smokeless Tobacco Health Education Act of 1986 (15 U.S.C. 4402).

    (d) ADVERTISING THROUGH INTERNET; ACCESS- It shall be unlawful for any person in the business of selling tobacco products to advertise such products for sale through an Internet website unless access to the website (other than a nonselling website home page) is provided only to individuals who provide to the person the information described in subparagraphs (A) and (B) of subsection (b)(1) and whose information is verified according to the procedures described in subsection (b)(2).

    (e) RULE OF CONSTRUCTION REGARDING COMMON CARRIERS- This Act may not be construed as imposing liability upon any common carrier, or officers or employees thereof, when acting within the scope of business of the common carrier.

SEC. 3. FEDERAL TRADE COMMISSION.

    (a) CIVIL ENFORCEMENT- For purposes of the enforcement of section 2 by the Federal Trade Commission, a violation of a provision of subsection (a) or (b) of such section shall be deemed to be an unfair or deceptive act or practice in or affecting commerce within the meaning of the Federal Trade Commission Act, and the procedures under section 5(b) of such Act shall apply with respect to such a violation.

    (b) REGULATIONS- Not later than 90 days after the date of the enactment of this Act, the Commission shall promulgate a final rule for carrying out this Act.

    (c) INFORMATION REGARDING STATE LAWS ON MINIMUM PURCHASE-AGE- The Commission shall post on the Internet site of the Commission information that, by State, provides the minimum age at which it is legal under State law to purchase tobacco products in the State.

SEC. 4. CRIMINAL PENALTIES.

    (a) IN GENERAL-

      (1) FIRST VIOLATION- Except as provided in paragraph (2), any person who violates a provision of subsection (a) or (b) of section 2 shall be fined not more than $1,000.

      (2) SUBSEQUENT VIOLATIONS- In the case of a second or subsequent violation by a person of a provision of subsection (a) or (b) of section 2, the person shall be fined not less than $1,000 and not more than $5,000.

      (3) RULE OF CONSTRUCTION- This subsection does not apply to a violation of a provision of subsection (a) or (b) of section 2 if any provision of subsection (b) of this section applies to such violation.

    (b) KNOWING VIOLATIONS-

      (1) FIRST VIOLATION- Except as provided in paragraph (2), any person who knowingly violates a provision of subsection (a) or (b) of section 2 shall be fined in accordance with title 18, United States Code, imprisoned not more than two years, or both.

      (2) SUBSEQUENT VIOLATIONS- In the case of a second or subsequent knowing violation by a person of a provision of subsection (a) or (b) of section 2, the person shall be fined in accordance with title 18, United States Code, imprisoned not more than five years, or both.

SEC. 5. FEDERAL CIVIL ACTIONS BY STATE ATTORNEYS GENERAL AND CERTAIN OTHER INDIVIDUALS.

    (a) INJUNCTIVE RELIEF- A State, through its State attorney general, on behalf of residents of the State, or any person who holds a permit under section 5712 of the Internal Revenue Code of 1986, may bring in an appropriate district court of the United States a civil action to restrain violations by a person of any provision of subsection (a) or (b) of section 2, including obtaining a preliminary or permanent injunction or other order against the person.

    (b) COORDINATION WITH COMMISSION- Before bringing a civil action under subsection (a), a State attorney general or any such person shall provide to the Federal Trade Commission written notice of the intent of the State attorney general or such person to bring the action.

    (c) FEDERAL JURISDICTION-

      (1) IN GENERAL- The district courts of the United States shall have jurisdiction over any civil action under subsection (a).

      (2) VENUE- A civil action under subsection (a) may be brought only in accordance with section 1391 of title 28, United States Code, or in the district in which the recipient of the tobacco products resides or is found.

    (d) REQUIREMENTS FOR INJUNCTIONS AND ORDERS-

      (1) IN GENERAL- In any civil action under subsection (a), upon a proper showing by the State attorney general or person bringing the action involved, the court may issue a preliminary or permanent injunction or other order to restrain a violation of a provision of subsection (a) or (b) of section 2.

      (2) NOTICE- No preliminary injunction or permanent injunction or other order may be issued under paragraph (1) without notice to the adverse party and an opportunity for a hearing.

      (3) FORM AND SCOPE OF ORDER- Any preliminary or permanent injunction or other order entered in a civil action under subsection (a) shall--

        (A) set forth the reasons for the issuance of the order;

        (B) be specific in its terms;

        (C) describe in reasonable detail, and not by reference to the complaint or other document, the act or acts sought to be restrained; and

        (D) be binding upon--

          (i) the parties to the action and the officers, agents, employees, and attorneys of those parties; and

          (ii) persons in active concert or participation with the parties to the action who receive actual notice of the order by personal service or otherwise.

    (e) ADDITIONAL REMEDIES-

      (1) IN GENERAL- A remedy under subsection (a) is in addition to any other remedies provided by law.

      (2) STATE COURT PROCEEDINGS- Nothing in this section may be construed to prohibit an authorized State official from proceeding in State court on the basis of an alleged violation of any State law.

SEC. 6. COLLECTION OF STATE CIGARETTE TAXES.

    (a) DEFINITIONS- Section 1 of the Act of October 19, 1949 (15 U.S.C. 375), is amended--

      (1) in paragraph (1), by inserting ‘and other legal entities’ after ‘individuals’;

      (2) by striking paragraph (3);

      (3) by redesignating paragraphs (4) through (7) as paragraphs (3) through (6), respectively; and

      (4) by adding at the end the following new paragraphs:

      ‘(7) The term ‘delivery sale’ means any sale of cigarettes to a consumer (other than a sale to a consumer for purposes of resale) 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

        ‘(B) the cigarettes are delivered by use of the mails or other delivery service.

      ‘(8) The term ‘sale to a consumer for purposes of resale’ does not include a sale of cigarettes to a natural person who does not conduct business as a distributor or retailer of cigarettes in the jurisdiction in which such person resides.’.

    (b) REPORTS TO STATE TOBACCO TAX ADMINISTRATORS- Section 2 of that Act (15 U.S.C. 376) is amended--

      (1) in subsection (a)--

        (A) by striking ‘or transfers’ and inserting ‘, transfers, or ships’; and

        (B) by striking ‘to other than a distributor licensed by or located in such State,’; and

      (2) in subsection (b)--

        (A) by striking ‘(1)’; and

        (B) by striking ‘, and (2)’ and all that follows and inserting a period.

    (c) REQUIREMENTS FOR DELIVERY SALES- That Act is further amended by inserting after section 2 the following new section:

    ‘SEC. 2A. (a) Each person making a delivery sale into a State shall comply with--

      ‘(1) the shipping requirements set forth in subsection (b); and

      ‘(2) all laws of the State generally applicable to sales of cigarettes that occur entirely within the State, including laws imposing--

        ‘(A) excise taxes;

        ‘(B) sales taxes;

        ‘(C) licensing and tax-stamping requirements; and

        ‘(D) escrow or other payment obligations.

    ‘(b)(1) Each person who takes a delivery sale order shall include on the bill of lading included with the shipping package containing cigarettes sold pursuant to such order a clear and conspicuous statement providing as follows: ‘CIGARETTES: FEDERAL LAW REQUIRES THE PAYMENT OF ALL APPLICABLE EXCISE AND SALES TAXES, AND COMPLIANCE WITH APPLICABLE LICENSING, TAX-STAMPING, AND ESCROW PAYMENT OBLIGATIONS’.

    ‘(2) Any shipping package described in paragraph (1) that is not labeled in accordance with that paragraph shall be treated as nonmailable matter under section 3001 of title 39, United States Code.

    ‘(c) Each State shall have the authority to require any person making a delivery sale of cigarettes into such State to collect or pay the taxes referred to in subsection (a)(2) and to comply with any other requirements described in that subsection.’.

    (d) PENALTIES- Section 3 of that Act (15 U.S.C. 377) is amended to read as follows:

    ‘SEC. 3. (a) Except as provided in subsection (b), whoever violates a provision of section 2 or 2A shall be fined not more than $1,000, imprisoned not more than 6 months, or both, in the case of the first violation, and fined not more than $5,000, imprisoned not more than 6 months, or both, in the case of any subsequent violation.

    ‘(b) Whoever knowingly violates a provision of section 2 or 2A shall be fined in accordance with title 18, United States Code, imprisoned not more than 2 years, or both.’.

    (e) INJUNCTIONS- Section 4 of that Act (15 U.S.C. 378) is amended--

      (1) by inserting ‘(a)’ before ‘The United States district courts’; and

      (2) by adding at the end the following new subsections:

    ‘(b)(1) A State, through its attorney general, or any person who holds a permit under section 5712 of the Internal Revenue Code of 1986, may bring an action in the United States district courts to prevent and restrain violations of this Act by any person (or by any person controlling such person).

    ‘(2) 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 State law.

    ‘(c) The Secretary of the Treasury shall administer the provisions of this Act, and shall have concurrent authority with the Attorney General to enforce the provisions of this Act.’.

SEC. 7. TREATMENT OF CIGARETTES AS NONMAILABLE MATTER.

    Section 1716 of title 18, United States Code, is amended--

      (1) by redesignating subsection (j) as subsection (k); and

      (2) by inserting after subsection (i) the following new subsection (j):

    ‘(j) All cigarettes (as that term is defined in section 2341(1) of this title) are nonmailable and shall not be deposited in or carried through the mails.’.

SEC. 8. PENAL PROVISIONS REGARDING TRAFFICKING IN CONTRABAND CIGARETTES.

    (a) THRESHOLD QUANTITY FOR TREATMENT AS CONTRABAND- (1) Section 2341(2) of title 18, United States Code, is amended by striking ‘60,000 cigarettes’ and inserting ‘2,000 cigarettes’.

    (2) Section 2342(b) of that title is amended by striking ‘60,000’ and inserting ‘2,000’.

    (3) Section 2343 of that title is amended--

      (A) in subsection (a), by striking ‘60,000’ and inserting ‘2,000’; and

      (B) in subsection (b), by striking ‘60,000’ and inserting ‘2,000’.

    (b) RECORDKEEPING, REPORTING, AND INSPECTION- Section 2343 of that title, as amended by subsection (a)(3) of this section, is further amended--

      (1) in subsection (a)--

        (A) in the matter preceding paragraph (1), by striking ‘only--’ and inserting ‘such information as the Secretary considers appropriate for purposes of enforcement of this chapter, including--’; and

        (B) in the flush matter following paragraph (3), by striking the second sentence;

      (2) by redesignating subsection (b) as subsection (c);

      (3) by inserting after subsection (a) the following new subsection (b):

    ‘(b) Any person who engages in a delivery sale, and who ships, sells, distributes, or receives any quantity in excess of 10,000 cigarettes within a single month, shall submit to the Secretary, pursuant to rules or regulations prescribed by the Secretary, a report that sets forth the following:

      ‘(1) The person’s beginning and ending inventory of cigarettes (in total) for such month.

      ‘(2) The total quantity of cigarettes that the person received within such month from each other person (itemized by name and address).

      ‘(3) The total quantity of cigarettes that the person distributed within such month to each person (itemized by name and address) other than a retail purchaser.’; and

      (4) by adding at the end the following new subsection:

    ‘(d) In this section, the term ‘delivery sale’ means any sale of cigarettes to a consumer (other than a sale to a consumer for purposes of resale) if--

      ‘(1) 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

      ‘(2) the cigarettes are delivered by use of the mails or other delivery service.’.

    (c) DISPOSAL OF FORFEITED CIGARETTES- Section 2344(c) of that title is amended by striking ‘seizure and forfeiture,’ and all that follows and inserting ‘seizure and forfeiture, and any cigarettes so seized and forfeited shall be destroyed and not resold.’.

    (d) ENFORCEMENT- Section 2346 of that title is amended--

      (1) by inserting ‘(a)’ before ‘The Secretary’; and

      (2) by adding at the end the following new subsection:

    ‘(b) A State, through its attorney general, or any person who holds a permit under section 5712 of the Internal Revenue Code of 1986, may bring an action in the United States district courts to prevent and restrain violations of this chapter by any person (or by any person controlling such person).’.

    (e) CONFORMING AND CLERICAL AMENDMENTS- (1) The section heading for section 2343 of that title is amended to read as follows:

‘Sec. 2343. Recordkeeping, reporting, and inspection’.

    (2) The table of sections at the beginning of chapter 114 of that title is amended by striking the item relating to section 2343 and inserting the following new item:

      ‘2343. Recordkeeping, reporting, and inspection.’.

SEC. 9. DEFINITIONS.

    In this Act:

      (1) STATE- The term ‘State’ means each of the several States, the District of Columbia, the Commonwealth of Puerto Rico, American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the Virgin Islands.

      (2) STATE ATTORNEY GENERAL- The term ‘State attorney general’ means the attorney general or other chief law enforcement officer of a State, or the designee thereof.

      (3) TOBACCO PRODUCT- The term ‘tobacco product’ means any product made or derived from tobacco that is intended for human consumption, including cigarettes, smokeless tobacco, pipe tobacco, and the product known as bidi.

SEC. 10. EFFECTIVE DATE.

    (a) IN GENERAL- Except as provided in subsection (b), this Act shall take effect 90 days after the date of the enactment of this Act.

    (b) RULEMAKING- The authority of the Federal Trade Commission to commence rulemaking under section 3(b) shall be effective on the date of the enactment of this Act.

    (c) UNLAWFUL ACTS- Section 2 shall apply to sales of tobacco products occurring on or after the effective date of this Act without regard to whether a final rule has been promulgated under section 3(b) as of that date.