Reduction in Tobacco Use and Regulation of Tobacco Products in Indian Country Act of 1998

Reduction in Tobacco Use and Regulation of Tobacco Products in Indian Country Act of 1998 - Makes the provisions of any Act enacted to effect the national tobacco settlement agreement of June 20, 1997, applicable to the manufacture, distribution, or sale of tobacco or tobacco products within the boundaries of Indian reservations or on lands within the jurisdiction of an Indian tribe or organization, with exceptions for religious or traditional uses.

Makes Indian tribes or organizations that engage in the manufacture of tobacco products subject to liability for any fee payments levied on other manufacturers for purposes of any tobacco trust fund. Subjects tribes or organizations that do not pay to surcharges applicable to nonparticipating manufacturers under Acts effecting the settlement.

Requires the Secretary of Health and Human Services to promulgate regulations to waive requirements of the Federal Food, Drug, and Cosmetic Act (FDCA) with respect to tobacco products manufactured, distributed, or sold on Indian reservations or lands, as appropriate to comply with this Act. Provides that responsibility for enforcing such regulations with respect to tobacco-related activities that take place on Indian reservations or lands shall vest in: (1) the Indian tribe or organization involved; (2) the State within which the lands of the tribe or organization are located pursuant to a voluntary cooperative agreement; or (3) the Secretary.

Directs the Secretary to: (1) provide assistance to Indian tribes or organizations for meeting and enforcing requirements under such regulations, subject to eligibility requirements; and (2) implement and enforce such regulations on behalf of tribes or organizations that are unwilling or unqualified to do so.

Applies requirements of the FDCA or any Act effecting the settlement with respect to licensing of tobacco retailers to retailers on Indian reservations or lands. Directs the Secretary to: (1) promulgate regulations to authorize Indian tribes or organizations to implement tobacco product licensing programs on Indian reservations or lands; and (2) implement such requirements on behalf of unqualified tribes or organizations. Requires the terms and standards contained in the model State law in any Act effecting the settlement to constitute the minimum Federal regulations that tribes or organizations must enact to assume responsibility for licensing and regulation or tobacco-related activities.

Requires the Secretary to award grants to Indian tribes or organizations with approved anti-smoking plans. Reduces the public health payment otherwise payable to the State in which the service areas of such tribes or organizations are located by the amount of such grants. Requires grants to be used to reimburse tribes for smoking-related health expenditures.

Makes amounts available from the tobacco trust fund for the Indian Health Service and Indian tribes and organizations for reducing tobacco consumption, promoting smoking cessation, and funding related activities.