One Hundred Eleventh Congress of the United States of America
2d Session
Begun and held at the City of Washington on Tuesday, the fifth day of January, two thousand and ten
S. 1147
IN THE SENATE OF THE UNITED STATES
AN ACT
To prevent tobacco smuggling, to ensure the collection of all tobacco taxes, and for other purposes.
Short title; findings; purposes
Short title
This Act may be cited as the
Prevent All Cigarette Trafficking Act
of 2009
or PACT
Act
.
Findings
Congress finds that—
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;
Hezbollah, Hamas, al Qaeda, and other terrorist organizations have profited from trafficking in illegal cigarettes or counterfeit cigarette tax stamps;
terrorist involvement in illicit cigarette trafficking will continue to grow because of the large profits such organizations can earn;
the sale of illegal cigarettes and smokeless tobacco over the Internet, and through mail, fax, or phone orders, makes it cheaper and easier for children to obtain tobacco products;
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;
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;
with rising State and local tobacco tax rates, the incentives for the illegal sale of cigarettes and smokeless tobacco have increased;
the number of active tobacco investigations being conducted by the Bureau of Alcohol, Tobacco, Firearms, and Explosives rose to 452 in 2005;
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
the intrastate sale of illegal cigarettes and smokeless tobacco over the Internet has a substantial effect on interstate commerce.
Purposes
It is the purpose of this Act to—
require Internet and other remote sellers of cigarettes and smokeless tobacco to comply with the same laws that apply to law-abiding tobacco retailers;
create strong disincentives to illegal smuggling of tobacco products;
provide government enforcement officials with more effective enforcement tools to combat tobacco smuggling;
make it more difficult for cigarette and smokeless tobacco traffickers to engage in and profit from their illegal activities;
increase collections of Federal, State, and local excise taxes on cigarettes and smokeless tobacco; and
prevent and reduce youth access to inexpensive cigarettes and smokeless tobacco through illegal Internet or contraband sales.
Collection of State cigarette and smokeless tobacco taxes
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:
Definitions
As used in this Act, the following definitions apply:
Attorney General
The term attorney general, with respect to a State, means the attorney general or other chief law enforcement officer of the State.
Cigarette
In general
The term cigarette—
has the meaning given that term in section 2341 of title 18, United States Code; and
includes roll-your-own tobacco (as defined in section 5702 of the Internal Revenue Code of 1986).
Exception
The term cigarette does not include a cigar (as defined in section 5702 of the Internal Revenue Code of 1986).
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 (regardless of whether 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.
Consumer
The term consumer—
means any person that purchases cigarettes or smokeless tobacco; and
does not include any person lawfully operating as a manufacturer, distributor, wholesaler, or retailer of cigarettes or smokeless tobacco.
Delivery sale
The term delivery sale means any sale of cigarettes or smokeless tobacco to a consumer if—
the consumer submits the order for the 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
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.
Delivery seller
The term delivery seller means a person who makes a delivery sale.
Indian country
The term
Indian country
—
has the meaning given that term 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
includes any other land held by the United States in trust or restricted status for one or more Indian tribes.
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).
Interstate commerce
In general
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.
Into a State, place, or locality
A sale, shipment, or transfer of cigarettes or smokeless tobacco that is made in interstate commerce, as defined in this paragraph, shall be deemed to have been made into the State, place, or locality in which such cigarettes or smokeless tobacco are delivered.
Person
The term person means an individual, corporation, company, association, firm, partnership, society, State government, local government, Indian tribal government, governmental organization of such a government, or joint stock company.
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.
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.
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.
Use
The term use includes the consumption, storage, handling, or disposal of cigarettes or smokeless tobacco.
.
Reports to State tobacco tax administrators
Section 2 of the Jenkins Act (15 U.S.C. 376) is amended—
by striking cigarettes
each
place it appears and inserting cigarettes or smokeless
tobacco
;
in subsection (a)—
in the matter preceding paragraph (1)—
by inserting Contents.—
after
(a)
;
by striking or transfers
and
inserting , transfers, or ships
;
by inserting , locality, or Indian
country of an Indian tribe
after a State
;
by striking to other than a
distributor licensed by or located in such State,
; and
by striking or transfer and
shipment
and inserting , transfer, or shipment
;
in paragraph (1)—
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
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 the person;
;
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
by adding at the end the following:
with respect to each memorandum or invoice filed with a State under paragraph (2), also file copies of the 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.
;
in subsection (b)—
by inserting Presumptive Evidence.—
after (b)
;
by striking (1) that
and
inserting that
; and
by striking , and (2)
and
all that follows and inserting a period; and
by adding at the end the following:
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 the 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 the memorandum or invoice except as required for such purposes.
.
Requirements for delivery sales
The Jenkins Act is amended by inserting after section 2 the following:
Delivery sales
In general
With respect to delivery sales into a specific State and place, each delivery seller shall comply with—
the shipping requirements set forth in subsection (b);
the recordkeeping requirements set forth in subsection (c);
all State, local, tribal, and other laws generally applicable to sales of cigarettes or smokeless tobacco as if the delivery sales occurred entirely within the specific State and place, including laws imposing—
excise taxes;
licensing and tax-stamping requirements;
restrictions on sales to minors; and
other payment obligations or legal requirements relating to the sale, distribution, or delivery of cigarettes or smokeless tobacco; and
the tax collection requirements set forth in subsection (d).
Shipping and packaging
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
.
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.
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.
Age verification
In general
A delivery seller who mails or ships tobacco products—
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;
shall use a method of mailing or shipping that requires—
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
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
shall not accept a delivery sale order from a person without—
obtaining the full name, birth date, and residential address of that person; and
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.
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.
Records
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 the State, by the city or town and by zip code, into which the delivery sale is so made.
Record retention
Records of a delivery sale shall be kept as described in paragraph (1) until the end of the 4th full calendar year that begins after the date of the delivery sale.
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 local or tribal taxes on cigarettes or smokeless tobacco, to the attorneys general of the States, to the chief law enforcement officers of the 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.
Delivery
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—
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;
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
any required stamps or other indicia that the excise tax has been paid are properly affixed or applied to the cigarettes or smokeless tobacco.
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.
List of unregistered or noncompliant delivery sellers
In general
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 of the United States pursuant to section 2(a), or that are otherwise not in compliance with this Act, and—
distribute the list to—
the attorney general and tax administrator of every State;
common carriers and other persons that deliver small packages to consumers in interstate commerce, including the United States Postal Service; and
any other person that the Attorney General of the United States determines can promote the effective enforcement of this Act; and
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.
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)—
all names the delivery seller uses or has used in the transaction of its business or on packages delivered to customers;
all addresses from which the delivery seller does or has done business, or ships or has shipped cigarettes or smokeless tobacco;
the website addresses, primary e-mail address, and phone number of the delivery seller; and
any other information that the Attorney General of the United States determines would facilitate compliance with this subsection by recipients of the list.
Updating
The Attorney General of the United States shall update and distribute the list described in subparagraph (A) 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.
State, local, or Tribal additions
The Attorney General of the United States shall include in the list described in subparagraph (A) any noncomplying delivery sellers identified by any State, local, or tribal government under paragraph (6), 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 (6).
Accuracy and completeness of list of noncomplying delivery sellers
In preparing and revising the list described in subparagraph (A), the Attorney General of the United States shall—
use reasonable procedures to ensure maximum possible accuracy and completeness of the records and information relied on for the purpose of determining that a delivery seller is not in compliance with this Act;
not later than 14 days before including a delivery seller on the list, 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 the list, which shall cite the relevant provisions of this Act and the specific reasons for which the delivery seller is being placed on the list;
provide an opportunity to the delivery seller to challenge placement on the list;
investigate each challenge described in clause (iii) by contacting the relevant Federal, State, tribal, and local law enforcement officials, and provide the specific findings and results of the investigation to the delivery seller not later than 30 days after the date on which the challenge is made; and
if the Attorney General of the United States determines that the basis for including a delivery seller on the list is inaccurate, based on incomplete information, or cannot be verified, promptly remove the delivery seller from the list as appropriate and notify each appropriate Federal, State, tribal, and local authority of the determination.
Confidentiality
The list described in subparagraph (A) shall be confidential, and any person receiving the list shall maintain the confidentiality of the list and 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 a listed delivery seller the inclusion of the delivery seller on the list and the resulting effects on any services requested by the listed delivery seller.
Prohibition on delivery
In general
Commencing on the date that is 60 days after the date of the initial distribution or availability of the list described in 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—
the person making the delivery knows or believes in good faith that the item does not include cigarettes or smokeless tobacco;
the delivery is made to a person lawfully engaged in the business of manufacturing, distributing, or selling cigarettes or smokeless tobacco; or
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.
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 described in paragraph (1)(A), 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 the corrections or updates.
Exemptions
In general
Subsection (b)(2) and any requirements or restrictions placed directly on common carriers under this subsection, including subparagraphs (A) and (B) of paragraph (2), shall not apply to a common carrier that—
is subject to a settlement agreement described in subparagraph (B); or
if a settlement agreement described in subparagraph (B) to which the common carrier is a party is terminated or otherwise becomes inactive, is administering and enforcing policies and practices throughout the United States that are at least as stringent as the agreement.
Settlement agreement
A settlement agreement described in this subparagraph—
is a settlement agreement relating to tobacco product deliveries to consumers; and
includes—
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 FedEx Ground Package Systems, Inc. on or about February 3, 2006, if each of those agreements is honored throughout the United States to block illegal deliveries of cigarettes or smokeless tobacco to consumers; and
any other active agreement between a common carrier and a State that operates throughout the United States to ensure that no deliveries of cigarettes or smokeless tobacco shall be made to consumers or 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.
Shipments from persons on list
In general
If a common carrier or other delivery service delays or interrupts the delivery of a package in the possession of the common carrier or delivery service because the common carrier or delivery service determines or has reason to believe that the person ordering the delivery is on a list described in paragraph (1)(A) and that clauses (i), (ii), and (iii) of paragraph (2)(A) do not apply—
the person ordering the delivery shall be obligated to pay—
the common carrier or other delivery service as if the delivery of the package had been timely completed; and
if the package is not deliverable, any reasonable additional fee or charge levied by the common carrier or other delivery service to cover any extra costs and inconvenience and to serve as a disincentive against such noncomplying delivery orders; and
if the package is determined not to be deliverable, the common carrier or other delivery service shall offer to provide the package and its contents to a Federal, State, or local law enforcement agency.
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 delivery interrupted under 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.
Confidentiality
Any person receiving records under subparagraph (B) shall—
use the 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
keep confidential any personal information in the records not otherwise required for such purposes.
Preemption
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—
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 the 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;
requiring that the common carrier or other delivery service obtain a signature from the consumer accepting the delivery;
requiring that the common carrier or other delivery service verify that all applicable taxes have been paid;
requiring that packages delivered by the common carrier or other delivery service contain any particular labels, notice, or markings; or
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.
Relationship to other laws
Except as provided in subparagraph (C), nothing in this paragraph shall be construed to nullify, expand, restrict, or otherwise amend or modify—
section 14501(c)(1) or 41713(b)(4) of title 49, United States Code;
any other restrictions in Federal law on the ability of State, local, or tribal governments to regulate common carriers; or
any provision of State, local, or tribal law regulating common carriers that is described in section 14501(c)(2) or 41713(b)(4)(B) of title 49 of the United States Code.
State laws prohibiting delivery sales
In general
Except as provided in clause (ii), nothing in the Prevent All Cigarette Trafficking Act of 2009, 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.
Exemptions
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 is not exempt under paragraph (3) of this subsection.
State, local, and tribal additions
In general
Any State, local, or tribal government shall provide the Attorney General of the United States with—
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; and
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
a list of common carriers and other persons who make deliveries of cigarettes or smokeless tobacco in or into the State, locality, or tribal land.
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 the government notifies the Attorney General of the United States in writing that the government no longer desires to submit information to supplement the list described in paragraph (1)(A).
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 described in paragraph (1)(A) any persons that are on the list solely because of the prior submissions of the government of the list of the government of noncomplying delivery sellers of cigarettes or smokeless tobacco or a subsequent update or correction by the government.
Deadline to incorporate additions
The Attorney General of the United States shall—
include any delivery seller identified and submitted by a State, local, or tribal government under paragraph (6) 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
distribute any list or update described in subparagraph (A) to any common carrier or other person who makes deliveries of cigarettes or smokeless tobacco that has been identified and submitted by a government pursuant to paragraph (6).
Notice to delivery sellers
Not later than 14 days before including any delivery seller on the initial list described in paragraph (1)(A), or on an update to the list 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 the list or update, with that notice citing the relevant provisions of this Act.
Limitations
In general
Any common carrier or other person making a delivery subject to this subsection shall not be required or otherwise obligated to—
determine whether any list distributed or made available under paragraph (1) is complete, accurate, or up-to-date;
determine whether a person ordering a delivery is in compliance with this Act; or
open or inspect, pursuant to this Act, any package being delivered to determine its contents.
Alternate names
Any common carrier or other person making a delivery subject to this subsection—
shall not be required to make any inquiries or otherwise determine whether a person ordering a delivery is a delivery seller on the list described in paragraph (1)(A) who is using a different name or address in order to evade the related delivery restrictions; and
shall not knowingly deliver any packages to consumers for any delivery seller on the list described in paragraph (1)(A) who the common carrier or other delivery service knows is a delivery seller who is on the list and is using a different name or address to evade the delivery restrictions of paragraph (2).
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—
not making any specific delivery, or any deliveries at all, on behalf of any person on the list described in paragraph (1)(A);
refusing, as a matter of regular practice and procedure, to make 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
delaying or not making a delivery for any person because of reasonable efforts to comply with this Act.
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.
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.
.
Penalties
The Jenkins Act is amended by striking section 3 and inserting the following:
Penalties
Criminal penalties
In general
Except as provided in paragraph (2), whoever knowingly violates this Act shall be imprisoned for not more than 3 years, fined under title 18, United States Code, or both.
Exceptions
Governments
Paragraph (1) shall not apply to a State, local, or tribal government.
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 knowingly—
as consideration for the receipt of, or as consideration for a promise or agreement to pay, anything of pecuniary value; or
for the purpose of assisting a delivery seller to violate, or otherwise evading compliance with, section 2A.
Civil penalties
In general
Except as provided in paragraph (3), whoever violates this Act shall be subject to a civil penalty in an amount not to exceed—
in the case of a delivery seller, the greater of—
$5,000 in the case of the first violation, or $10,000 for any other violation; or
for any violation, 2 percent of the gross sales of cigarettes or smokeless tobacco of the delivery seller during the 1-year period ending on the date of the violation.
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.
Relation to other penalties
A civil penalty imposed 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.
Exceptions
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—
as consideration for the receipt of, or as consideration for a promise or agreement to pay, anything of pecuniary value; or
for the purpose of assisting a delivery seller to violate, or otherwise evading compliance with, section 2A.
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—
the common carrier or independent delivery service has implemented and enforces effective policies and practices for complying with that section; or
the violation consists of an employee of the common carrier or independent delivery service who physically receives and processes orders, picks up packages, processes packages, or makes deliveries, taking actions that are outside the scope of employment of the employee, or that violate the implemented and enforced policies of the common carrier or independent delivery service described in clause (i).
.
Enforcement
The Jenkins Act is amended by striking section 4 and inserting the following:
Enforcement
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 the violations.
Authority of the attorney general
The Attorney General of the United States shall administer and enforce this Act.
State, local, and tribal enforcement
In general
Standing
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, may bring an action in a United States district court to prevent and restrain violations of this Act by any person or to obtain any other appropriate relief from any person for violations of this Act, including civil penalties, money damages, and injunctive or other equitable relief.
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.
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, 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 this Act.
Use of penalties collected
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
Federal Government in enforcing 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 this Act and other laws relating to
contraband tobacco products.
Allocation of funds
Of the amount available to the Attorney General of the United States 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.
Nonexclusivity of remedy
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.
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.
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.
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.
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 an appropriate United States district court to prevent and restrain violations of this Act by any person other than a State, local, or tribal government.
Notice
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.
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.
Public notice
In general
The Attorney General of the United States shall make available to the public, by posting information on the Internet and by other appropriate means, information regarding all enforcement actions brought by the United States, or reported to the Attorney General of the United States, under this section, including information regarding the resolution of the enforcement actions and how the Attorney General of the United States has responded to referrals of evidence of violations pursuant to subsection (c)(2).
Reports to Congress
Not later than 1 year after the date of enactment of the Prevent All Cigarette Trafficking Act of 2009, and every year thereafter until the date that is 5 years after such date of enactment, the Attorney General of the United States shall submit to Congress a report containing the information described in paragraph (1).
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Treatment of cigarettes and smokeless tobacco as nonmailable matter
In general
Chapter 83 of title 18, United States Code, is amended by inserting after section 1716D the following:
Tobacco products as nonmailable
Prohibition
In general
All cigarettes and smokeless tobacco (as those terms are 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 paragraph.
Reasonable cause
For the purposes of this subsection reasonable cause includes—
a statement on a publicly available website, or an advertisement, by any person that the person will mail matter which is nonmailable under this section in return for payment; or
the fact that the person is on the list created under section 2A(e) of the Jenkins Act.
Exceptions
Cigars
Subsection (a) shall not apply to cigars (as defined in section 5702(a) of the Internal Revenue Code of 1986).
Geographic exception
Subsection (a) shall not apply to mailings within the State of Alaska or within the State of Hawaii.
Business purposes
In general
Subsection (a) shall not apply to 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 business described in clause (i) and an agency of the Federal Government or a State government.
Rules
In general
Not later than 180 days after the date of enactment of the Prevent All Cigarette Trafficking Act of 2009, the Postmaster General shall issue a final rule which shall establish the standards and requirements that apply to all mailings described in subparagraph (A).
Contents
The final rule issued under clause (i) shall require—
the United States Postal Service to verify that any person submitting an otherwise nonmailable tobacco product into the mails as authorized under this paragraph is a business or government agency permitted to make a mailing under this paragraph;
the United States Postal Service to ensure that any recipient of an otherwise nonmailable tobacco product sent through the mails under this paragraph is a business or government agency that may lawfully receive the product;
that any mailing described in subparagraph (A) shall be sent through the systems of the United States Postal Service that provide for the tracking and confirmation of the delivery;
that the identity of the business or government entity submitting the mailing containing otherwise nonmailable tobacco products for delivery and the identity of the business or government entity receiving the mailing are clearly set forth on the package;
the United States Postal Service to maintain identifying information described in subclause (IV) during the 3-year period beginning on the date of the mailing and make the information available to the Postal Service, the Attorney General of the United States, and to persons eligible to bring enforcement actions under section 3(d) of the Prevent All Cigarette Trafficking Act of 2009;
that any mailing described in subparagraph (A) be marked with a United States Postal Service label or marking that makes it clear to employees of the United States Postal Service 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; and
that any mailing described in subparagraph (A) be delivered only to a verified employee of the recipient business or government agency, who is not a minor and who shall be required to sign for the mailing.
Definition
In this paragraph, the term minor means an individual who is less than the minimum age required for the legal sale or purchase of tobacco products as determined by applicable law at the place the individual is located.
Certain individuals
In general
Subsection (a) shall not apply to tobacco products mailed by individuals who are not minors for noncommercial purposes, including the return of a damaged or unacceptable tobacco product to the manufacturer.
Rules
In general
Not later than 180 days after the date of enactment of the Prevent All Cigarette Trafficking Act of 2009, the Postmaster General shall issue a final rule which shall establish the standards and requirements that apply to all mailings described in subparagraph (A).
Contents
The final rule issued under clause (i) shall require—
the United States Postal Service to verify that any person submitting an otherwise nonmailable tobacco product into the mails as authorized under this paragraph is the individual identified on the return address label of the package and is not a minor;
for a mailing to an individual, the United States Postal Service to require the person submitting the otherwise nonmailable tobacco product into the mails as authorized by this paragraph to affirm that the recipient is not a minor;
that any package mailed under this paragraph shall weigh not more than 10 ounces;
that any mailing described in subparagraph (A) shall be sent through the systems of the United States Postal Service that provide for the tracking and confirmation of the delivery;
that a mailing described in subparagraph (A) shall not be delivered or placed in the possession of any individual who has not been verified as not being a minor;
for a mailing described in subparagraph (A) to an individual, that the United States Postal Service shall deliver the package only to a recipient who is verified not to be a minor at the recipient address or transfer it for delivery to an Air/Army Postal Office or Fleet Postal Office number designated in the recipient address; and
that no person may initiate more than 10 mailings described in subparagraph (A) during any 30-day period.
Definition
In this paragraph, the term minor means an individual who is less than the minimum age required for the legal sale or purchase of tobacco products as determined by applicable law at the place the individual is located.
Exception for mailings for consumer testing by manufacturers
In general
Subject to subparagraph (B), subsection (a) shall not preclude a legally operating cigarette manufacturer or a legally authorized agent of a legally operating cigarette manufacturer from using the United States Postal Service to mail cigarettes to verified adult smoker solely for consumer testing purposes, if—
the cigarette manufacturer has a permit, in good standing, issued under section 5713 of the Internal Revenue Code of 1986;
the package of cigarettes mailed under this paragraph contains not more than 12 packs of cigarettes (240 cigarettes);
the recipient does not receive more than 1 package of cigarettes from any 1 cigarette manufacturer under this paragraph during any 30-day period;
all taxes on the cigarettes mailed under this paragraph levied by the State and locality of delivery are paid to the State and locality before delivery, and tax stamps or other tax-payment indicia are affixed to the cigarettes as required by law; and
the recipient has not made any payments of any kind in exchange for receiving the cigarettes;
the recipient is paid a fee by the manufacturer or agent of the manufacturer for participation in consumer product tests; and
the recipient, in connection with the tests, evaluates the cigarettes and provides feedback to the manufacturer or agent.
Limitations
Subparagraph (A) shall not—
permit a mailing of cigarettes to an individual located in any State that prohibits the delivery or shipment of cigarettes to individuals in the State, or preempt, limit, or otherwise affect any related State laws; or
permit a manufacturer, directly or through a legally authorized agent, to mail cigarettes in any calendar year in a total amount greater than 1 percent of the total cigarette sales of the manufacturer in the United States during the calendar year before the date of the mailing.
Rules
In general
Not later than 180 days after the date of enactment of the Prevent All Cigarette Trafficking Act of 2009, the Postmaster General shall issue a final rule which shall establish the standards and requirements that apply to all mailings described in subparagraph (A).
Contents
The final rule issued under clause (i) shall require—
the United States Postal Service to verify that any person submitting a tobacco product into the mails under this paragraph is a legally operating cigarette manufacturer permitted to make a mailing under this paragraph, or an agent legally authorized by the legally operating cigarette manufacturer to submit the tobacco product into the mails on behalf of the manufacturer;
the legally operating cigarette manufacturer submitting the cigarettes into the mails under this paragraph to affirm that—
the manufacturer or the legally authorized agent of the manufacturer has verified that the recipient is an adult established smoker;
the recipient has not made any payment for the cigarettes;
the recipient has signed a written statement that is in effect indicating that the recipient wishes to receive the mailings; and
the manufacturer or the legally authorized agent of the manufacturer has offered the opportunity for the recipient to withdraw the written statement described in item (cc) not less frequently than once in every 3-month period;
the legally operating cigarette manufacturer or the legally authorized agent of the manufacturer submitting the cigarettes into the mails under this paragraph to affirm that any package mailed under this paragraph contains not more than 12 packs of cigarettes (240 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;
that any mailing described in subparagraph (A) shall be sent through the systems of the United States Postal Service that provide for the tracking and confirmation of the delivery;
the United States Postal Service to maintain records relating to a mailing described in subparagraph (A) during the 3-year period beginning on the date of the mailing and make the information available to persons enforcing this section;
that any mailing described in subparagraph (A) be marked with a United States Postal Service label or marking that makes it clear to employees of the United States Postal Service 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; and
the United States Postal Service shall deliver a mailing described in subparagraph (A) only to the named recipient and only after verifying that the recipient is an adult.
Definitions
In this paragraph—
the term adult means an individual who is not less than 21 years of age; and
the term consumer testing means testing limited to formal data collection and analysis for the specific purpose of evaluating the product for quality assurance and benchmarking purposes of cigarette brands or sub-brands among existing adult smokers.
Federal Government agencies
An agency of the Federal Government involved in the consumer testing of tobacco products solely for public health purposes may mail cigarettes under the same requirements, restrictions, and rules and procedures that apply to consumer testing mailings of cigarettes by manufacturers under paragraph (5), except that the agency shall not be required to pay the recipients for participating in the consumer testing.
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 seized and forfeited under this subsection shall be destroyed or retained by the Federal Government for the detection or prosecution of crimes or related investigations and then destroyed.
Additional penalties
In addition to any other fines and penalties under this title for violations of this section, any person violating this section shall be subject to an additional civil penalty in the amount equal to 10 times the retail value of the nonmailable cigarettes or smokeless tobacco, including all Federal, State, and local taxes.
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 is nonmailable matter under this section shall be fined under this title, imprisoned not more than 1 year, or both.
Use of penalties
There is established a separate account in
the Treasury, to be known as the PACT Postal Service Fund
.
Notwithstanding any other provision of law, an amount equal to 50 percent of
any criminal fines, civil penalties, or other monetary penalties collected by
the Federal Government in enforcing this section shall be transferred into the
PACT Postal Service Fund and shall be available to the Postmaster General for
the purpose of enforcing this subsection.
Coordination of efforts
The Postmaster General shall cooperate and coordinate efforts to enforce this section with related enforcement activities of any other Federal agency or agency of any State, local, or tribal government, whenever appropriate.
Actions by State, local, or tribal governments relating to certain tobacco products
In general
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, may in a civil action in a United States district court obtain appropriate relief with respect to a violation of this section. Appropriate relief includes injunctive and equitable relief and damages equal to the amount of unpaid taxes on tobacco products mailed in violation of this section to addressees in that State, locality, or tribal land.
Sovereign immunity
Nothing in this subsection 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.
Attorney General referral
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, may provide evidence of a violation of this section for commercial purposes by any person not subject to State, local, or tribal government enforcement actions for violations of this section to the Attorney General of the United States, who shall take appropriate actions to enforce this section.
Nonexclusivity of remedies
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.
Other enforcement actions
Nothing in this subsection 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 the State.
Definition
In this section, the term State has the meaning given that term in section 1716(k).
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Clerical amendment
The table of sections for chapter 83 of title 18 is amended by inserting after the item relating to section 1716D the following:
1716E. Tobacco products as nonmailable.
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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:
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—
any records or information required to be maintained by the person under this chapter; or
any cigarettes or smokeless tobacco kept or stored by the person at the premises.
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).
Whoever denies access to an officer under paragraph (1), or who fails to comply with an order issued under paragraph (2), shall be subject to a civil penalty in an amount not to exceed $10,000.
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Exclusions regarding Indian Tribes and Tribal matters
In general
Nothing in this Act or the amendments made by this Act shall be construed to amend, modify, or otherwise affect—
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;
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;
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;
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; or
any State or local government authority to bring enforcement actions against persons located in Indian country.
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—
provides for the administration of tobacco product laws or laws pertaining to interstate sales or other sales of tobacco products;
provides for the seizure of tobacco products or other property related to a violation of such laws; or
establishes cooperative programs for the administration of such laws.
Treatment of State and local governments
Nothing in this Act or the amendments made by this Act shall be construed to authorize, deputize, or commission States or local governments as instrumentalities of the United States.
Enforcement within Indian Country
Nothing in this Act or the amendments made by this Act shall prohibit, limit, or restrict enforcement by the Attorney General of the United States of this Act or an amendment made by this Act within Indian country.
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.
Definitions
In this section—
the term Indian country has the meaning given that term in section 1 of the Jenkins Act, as amended by this Act; and
the term tribal enterprise
means any business enterprise, regardless of whether incorporated or
unincorporated under Federal or tribal law, of an Indian tribe or group of
Indian tribes.
Effective date
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.
BATFE authority
The amendments made by section 4 shall take effect on the date of enactment of this Act.
Severability
If any provision of this Act, or any 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 the Act to any other person or circumstance shall not be affected thereby.
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.
Speaker of the House of Representatives
Vice President of the United States and President of the Senate
