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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1566 Introduced in House (IH)]

108th CONGRESS
  1st Session
                                H. R. 1566

 To replace the existing Federal price support and quota programs for 
  flue-cured and burley tobacco with a licensing program designed to 
 assist the actual producers of flue-cured and burley tobacco, and for 
                            other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             April 2, 2003

  Mr. Coble introduced the following bill; which was referred to the 
                        Committee on Agriculture

_______________________________________________________________________

                                 A BILL

 
 To replace the existing Federal price support and quota programs for 
  flue-cured and burley tobacco with a licensing program designed to 
 assist the actual producers of flue-cured and burley tobacco, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Phase III 
Implementation Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings and Purpose.
                  TITLE I--TOBACCO PRODUCTION LICENSES

Sec. 101. Definitions of historic tobacco producer and licensed tobacco 
                            producer.
Sec. 102. National estimate of tobacco production levels.
Sec. 103. National tobacco marketing factor.
Sec. 104. Issuance of tobacco production licenses.
Sec. 105. Annual authorized tobacco production under tobacco production 
                            licenses.
Sec. 106. Termination of flue-cured and burley quota programs.
Sec. 107. Program Referenda.
Sec. 108. Effective date.
              TITLE II--TOBACCO COST OF PRODUCTION SUPPORT

Sec. 201. Tobacco Cost of Production Calculation.
Sec. 202. Effective date.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--Congress finds the following:
            (1) Tobacco production is conducted extensively in a number 
        of States and generates significant income in local communities 
        in these States, which have historically relied on such 
        production for economic vitality.
            (2) Tobacco products manufactured from tobacco grown in 
        these States are transported in interstate commerce.
            (3) Domestic trends affecting tobacco production have had a 
        disproportionately harsh impact on small family farms and on 
        their communities.
            (4) The Federal tobacco program has become inefficient and 
        has operated to keep a significant portion of tobacco 
        production rights in the hands of individuals who are not 
        directly involved in tobacco production.
            (5) The continuation of a Federal tobacco supply management 
        program is in the best interests of family farm operations that 
        seek to continue to produce tobacco leaf.
            (6) Any efforts to assist flue-cured and burley tobacco 
        growers in making a transition to a stable future economic 
        environment must include modernization of the Federal tobacco 
        program.
    (b) Purpose.--It is the purpose of this Act to modernize the 
Federal supply management program for flue-cured and burley tobacco 
producers by shifting tobacco leaf production rights into the hands of 
active flue-cured and burley tobacco growers.

                  TITLE I--TOBACCO PRODUCTION LICENSES

SEC. 101. DEFINITIONS OF HISTORIC TOBACCO PRODUCER AND LICENSED TOBACCO 
              PRODUCER.

    In this title:
            (1) The term ``historic tobacco producer'' means an owner, 
        operator, landlord, tenant, or sharecropper who bore, 
        individually or collectively, the risk of producing a crop of 
        flue-cured or burley tobacco on a farm for the 2003 crop year.
            (2) The term ``licensed tobacco producer'' means an owner, 
        operator, landlord, tenant, or sharecropper who holds a license 
        issued under this title--
                    (A) to plant a crop of flue-cured or burley tobacco 
                on a farm in a specified county for the 2004 or a 
                subsequent crop year; and
                    (B) to harvest and market an authorized quantity of 
                flue-cured or burley tobacco.

SEC. 102. NATIONAL ESTIMATE OF TOBACCO PRODUCTION LEVELS.

    (a) Annual Calculation.--
            (1) For the 2004 and each subsequent crop of flue-cured and 
        burley tobacco, the Secretary of Agriculture shall determine 
        and announce the national estimate for each type of flue-cured 
        and burley tobacco, as calculated under this section, that the 
        Secretary estimates will be utilized during the marketing year.
            (2) Not later than December 15 of each calendar year with 
        respect to flue-cured tobacco, and February 1 of each year with 
        respect to burley tobacco, the Secretary shall announce the 
        national estimate.
            (3) The national estimate of flue-cured or burley tobacco 
        for any marketing year shall be the quantity of flue-cured or 
        burley tobacco, as determined by the Secretary, that is not 
        more than 103 percent nor less than 97 percent of the total 
        of--
                    (A) the aggregate of quantities of flue-cured or 
                burley tobacco that domestic manufacturers of 
                cigarettes estimate the manufacturers intend to 
                purchase on the United States auction markets or from 
                producers during the marketing year, as compiled and 
                determined under subsection (b);
                    (B) the average annual quantity of flue-cured or 
                burley tobacco exported from the United States during 
                the 3 marketing years immediately preceding the 
                marketing year for which the determination is being 
                made; and
                    (C) the quantity, if any, of flue-cured or burley 
                tobacco that the Secretary, in the discretion of the 
                Secretary, determines is necessary to increase or 
                decrease the inventories of the producer-owned 
                cooperative marketing associations that have entered 
                into loan agreements with the Commodity Credit 
                Corporation to make price support available to 
                producers of flue-cured or burley tobacco to establish 
                or maintain such inventories, in the aggregate, at the 
                reserve supply level for flue-cured or burley tobacco.
    (b) Manufacturer Purchase Estimates.--Not later than December 1 of 
each calendar year with respect to flue-cured tobacco, and January 15 
of each calendar year with respect to burley tobacco, each domestic 
manufacturer of cigarettes shall submit to the Secretary of Agriculture 
a statement, by kind, of the quantity of flue-cured tobacco and burley 
tobacco that the manufacturer intends to purchase, directly or 
indirectly, on the United States auction markets or from licensed 
tobacco producers during the next marketing year.
    (c) Failure To Submit, or Under-Purchase of, Purchase Intentions.--
            (1) A domestic manufacturer of cigarettes shall be subject 
        to the penalty under paragraph (2) if such manufacturer fails 
        to--
                    (A) submit to the Secretary of Agriculture purchase 
                intentions as required under subsection (b) for a 
                marketing year, but subsequently purchases tobacco on 
                the United States auction markets or from licensed 
                tobacco producers during that marketing year, or
                    (B) purchase during a marketing year, on the United 
                States auction markets, from licensed tobacco 
                producers, or from inventories of tobacco of the 
                producer-owned cooperative marketing associations that 
                have entered into loan agreements with the Commodity 
                Credit Corporation to make price support available to 
                producers of flue-cured and burley tobacco, a quantity 
                of flue-cured or burley tobacco equal to at least 
                ninety percent of the quantity submitted under 
                subsection (b).
            (2) The amount of any penalty to be imposed on a 
        manufacturer under this section shall be determined by 
        multiplying--
                    (A) twice the per pound assessment (as determined 
                under Section 106A or 106B of the Agricultural Act of 
                1949 (7 U.S.C. 1445-1 or 1445-2)) for the kind of 
                tobacco involved; by
                    (B) the quantity--
                            (i) of purchases described in paragraph 
                        (1)(A); or
                            (ii) by which the purchases by such 
                        manufacturer described in paragraph (1)(B) are 
                        less than ninety percent of the quantity of 
                        intended purchases of such kind of tobacco (as 
                        that quantity may be reduced under paragraph 
                        (3)).
            (3) If the quantity of flue-cured or burley tobacco 
        marketed during a marketing year on United States auction 
        markets (including tobacco consigned to a producer association 
        for a price support advance) or directly from licensed tobacco 
        producers is less than the national estimate for that kind of 
        tobacco for that marketing year, the quantity of intended 
        purchases of each domestic manufacturer of cigarettes, for 
        purposes of this subsection, shall be reduced by a percentage 
        equal to the percentage by which the total quantity marketed is 
        less than the national estimate for that kind of tobacco for 
        the marketing year.
    (d) Enforcement.--The Secretary of Agriculture may enforce 
subsection (c) in the courts of the United States.
    (e) Reserve Supply Level.--
            (1) The reserve supply level for flue-cured tobacco under 
        subparagraph (a)(3)(C) shall be the greater of--
                    (A) 60,000,000 pounds (farm sales weight); or
                    (B) 10 percent of the national estimate for flue-
                cured tobacco for the marketing year immediately 
                preceding the marketing year for which the level is 
                being determined (or for the 2004 crop of flue-cured 
                tobacco, 10 percent of the national marketing quota for 
                the 2003 marketing year).
            (2) The reserve supply level for burley tobacco under 
        subparagraph (a)(3)(C) shall be the greater of--
                    (A) 50,000,000 pounds (farm sales weight); or
                    (B) 15 percent of the national estimate for burley 
                tobacco for the marketing year immediately preceding 
                the marketing year for which the level is being 
                determined (or for the 2004 crop of burley tobacco, 15 
                percent of the national marketing quota for the 2003 
                marketing year).

SEC. 103. NATIONAL TOBACCO MARKETING FACTOR.

    (a) 2004 Crop.--For the 2004 crop, the national marketing factor 
for flue-cured or burley tobacco shall be the ratio of the national 
estimate determined under section 102(a) to the national marketing 
quota for the 2003 marketing year.
    (b) Subsequent Crops.--For the 2005 and subsequent crops, the 
national marketing factor for flue-cured or burley tobacco for a crop 
year shall be the ratio of--
            (1) the national estimate determined under section 102(a); 
        to
            (2) the sum of the quantity of flue-cured or burley tobacco 
        that is authorized to be produced pursuant to a tobacco 
        production license for the immediately preceding year for all 
        farms for which tobacco production licenses will be determined 
        for such succeeding marketing year.

SEC. 104. ISSUANCE OF TOBACCO PRODUCTION LICENSES.

    (a) Initial Issuance to Historic Tobacco Producers.--
            (1) Issuance.--
                    (A) Issuance required.--As soon as practicable 
                after the date of the enactment of this Act, the 
                Secretary of Agriculture shall issue to each historic 
                tobacco producer a tobacco production license for the 
                purpose of ensuring sufficient production of flue-cured 
                and burley tobacco to satisfy the national estimate 
                determined under section 102.
                    (B) Exception.--The Secretary shall not issue a 
                tobacco production license to an historic tobacco 
                producer with respect to flue-cured or burley tobacco 
                if the historic tobacco producer does not certify to 
                the Secretary that such producer intends to produce 
                such type of tobacco during the 2004 crop year.
            (2) Tobacco production history.--
                    (A) The tobacco production license issued to an 
                historic tobacco producer under paragraph (1) shall 
                specify the tobacco production history of the producer 
                for each type of tobacco for each county in which the 
                producer bore, individually or collectively, the risk 
                of producing a crop of tobacco on a farm in the county 
                for the 2003 crop year.
                    (B) In the case of an historic tobacco producer who 
                bore 100 percent of the risk of producing a type of 
                tobacco on a farm for the 2003 crop year, the tobacco 
                production history of the historic tobacco producer for 
                that type of tobacco in a county shall be equal to the 
                2003 marketing and effective quota of that type tobacco 
                produced by the producer in the county for commercial 
                use during the 2003 crop year.
                    (C) In the case of an historic tobacco producer who 
                bore less than 100 percent of the risk of production, 
                the Secretary of Agriculture shall adjust the tobacco 
                production history to reflect the percentage of risk 
                that was borne by the producer.
                    (D) The Secretary of Agriculture shall authorize a 
                production level under each tobacco production license 
                for the 2004 crop determined by multiplying the tobacco 
                production history by the national marketing factor for 
                the 2004 crop.
            (3) Adjustment authority.--An historic tobacco producer may 
        petition the Secretary of Agriculture to increase the tobacco 
        production history determined under paragraph (2) for the 
        producer for flue-cured or burley tobacco on the grounds that 
        the producer's 2003 production under-represents the producer's 
        historic production of that type of tobacco.
            (4) Consolidation of counties.--If the initial issuance of 
        a tobacco production license to an historic tobacco producer 
        for flue-cured or burley tobacco would result in the producer 
        receiving a license for that type of tobacco for more than one 
        county, the producer may elect to consolidate the licenses in a 
        single county in which the producer bore or shared in the risk 
        of producing a crop of that type of tobacco for the 2003 crop 
        year. The option to make this election shall be provided only 
        once.
    (b) Subsequent Issuance.--
            (1) In general.--If a tobacco production license is 
        surrendered or revoked, the Secretary of Agriculture shall 
        transfer the license and the corresponding tobacco production 
        history to beginning tobacco producers or licensed tobacco 
        producers in the following order of preference:
                    (A) Producers in the same county as the county in 
                which the tobacco production history was derived.
                    (B) Producers in the same State.
                    (C) Producers in counties in other States in which 
                licensed tobacco producers are operating.
            (2) Reservation for beginning producers.--In all instances 
        specified in subparagraphs (A), (B), and (C) of paragraph (1), 
        the Secretary shall reserve for beginning tobacco producers at 
        least five percent of the tobacco production history 
        surrendered or revoked under this section.
            (3) Producers who forgo tobacco production license.--The 
        tobacco production history of an historic tobacco producer who 
        does not certify to the Secretary that such producer intends to 
        produce such type of tobacco during the 2004 crop year shall 
        also be available to the Secretary for distribution as provided 
        in paragraph (1).
    (c) Limitations on Use of License.--
            (1) In general.--A tobacco production license specifying a 
        particular type of tobacco and the county in which that type of 
        tobacco may be grown may not be used as the basis to grow a 
        different type of tobacco or to grow that type of tobacco in a 
        different county.
            (2) Revocation.--Any use of a tobacco production license 
        contrary to this subsection shall result in the revocation of 
        the license.
    (d) Limitations on Sale, Lease, or Transfer of License.--
            (1) Sale prohibited.--A tobacco production license and the 
        corresponding tobacco production history may not be sold or 
        leased.
            (2) Transfer under limited circumstances.--A licensed 
        tobacco producer may not transfer a tobacco production license 
        and the corresponding tobacco production history unless--
                    (A) in the case of a licensed tobacco producer who 
                is in a partnership, the transfer is among the 
                partners; or
                    (B) in the case of a licensed tobacco producer who 
                is an individual, the transfer is made to the spouse, 
                parent, brother, sister, or natural or adopted child of 
the licensed tobacco producer.
            (3) Right of survivorship.--In the case of the death of a 
        person to whom a license has been issued under this section, 
        the license shall transfer to the surviving spouse of the 
        person or, if there is no surviving spouse, to the direct 
        descendants of the person.
            (4) Hardship.--In the case of the death of a person to whom 
        a license has been issued under this section and whose 
        descendants are temporarily unable to produce a crop of 
        tobacco, the Secretary may hold the license in the name of the 
        descendants for a period of not more than 18 months, at the 
        discretion of the Secretary.
            (5) Lifetime transfer.--A person that is eligible to obtain 
        a license under this section may at any time transfer all or 
        part of the license to the person's spouse or direct 
        descendants that are actively engaged in the production of 
        tobacco.
            (6) Revocation.--Any sale, lease, or transfer of a tobacco 
        production license or the corresponding tobacco production 
        history contrary to this subsection shall result in the 
        revocation of the license.
    (e) Surrender or Revocation of License for Non-Use.--
            (1) Surrender.--A licensed tobacco producer may surrender a 
        tobacco production license and the corresponding tobacco 
        production history to the Secretary of Agriculture at any time.
            (2) Revocation.--The Secretary of Agriculture shall revoke 
        the tobacco production license and the corresponding tobacco 
        production history of a licensed tobacco producer if the 
        licensed tobacco producer--
                    (A) fails to share, individually or collectively, 
                in 100 percent of the risk of producing a crop of 
                tobacco of the type specified in the tobacco production 
                license for any year; or
                    (B) fails to produce at least 75 percent of the 
                quantity of that type of tobacco specified in the 
                tobacco production license for two out of three years, 
                unless that Secretary determines the failure was due to 
                damaging weather or related condition.

SEC. 105. ANNUAL AUTHORIZED TOBACCO PRODUCTION UNDER TOBACCO PRODUCTION 
              LICENSES.

    (a) Notification of Licensed Tobacco Producers.--As soon as 
practicable after preparing the national estimate required by section 
102 for flue-cured or burley tobacco for a marketing year, the 
Secretary of Agriculture shall notify each licensed tobacco producer of 
that type of tobacco of the authorized quantity of tobacco that the 
producer may produce in a county in the corresponding crop year under 
the tobacco production license.
    (b) Determination of Authorized Production Levels.--For the 2005 
and subsequent marketing years, the authorized tobacco production level 
for a licensed tobacco producer for flue-cured or burley tobacco in a 
county for a crop year is equal to the product of--
            (1) the production level authorized for such tobacco 
        production license during the immediately preceding marketing 
        year; and
            (2) the national tobacco marketing factor for that year 
        determined by the Secretary of Agriculture under section 103.
    (c) Excess Production.--Except as provided in subsection (e), if a 
licensed tobacco producer harvests and markets tobacco in excess of the 
quantity specified in the producer's tobacco production license or any 
other person produces tobacco without a tobacco production license, the 
licensed tobacco producer or other person shall be liable for a civil 
penalty up to an amount determined by multiplying--
            (1) the quantity of tobacco involved in the violation; by
            (2) price support rate for the type of tobacco involved in 
        effect under section 106 of the Agriculture Act of 1949 at the 
        time of the violation.
    (d) Enforcement.--The Secretary of Agriculture may enforce 
subsection (c) in the courts of the United States.
    (e) Limited Authority to Exceed License.--If the Secretary 
determines that the actual production of flue-cured or burley tobacco 
for a crop year will be less than 80 percent of the production 
authorized under all licenses issued for that type of tobacco, the 
Secretary may authorize a licensed tobacco producer of that type of 
tobacco to harvest and market tobacco in excess of the quantity 
specified in the producer's tobacco production license. The Secretary 
shall establish a mechanism under which a licensed tobacco producer may 
apply for the authority to exceed the quantity specified in the 
producer's license.

SEC. 106. TERMINATION OF FLUE-CURED AND BURLEY QUOTA PROGRAMS.

    Section 312 of the Agricultural Adjustment Act of 1938 (7 U.S.C. 
1312) is amended by adding after subsection (c):
    ``(d) Inapplicability to 2004 and Subsequent Crop Years of Burley 
and Flue-Cured Tobacco.--The provisions of this section and sections 
317 and 319 of this Act are not applicable to 2004 and subsequent crop 
years of burley and flue-cured tobacco.''.

SEC. 107. PROGRAM REFERENDA.

    (a) Initial Referendum.--
            (1) Referendum required.--Within sixty days after the 
        enactment of this Act, the Secretary shall conduct a 
        referendum, by type of tobacco, among the licensees engaged in 
        the production of flue-cured or burley tobacco to determine 
        whether the licensees engaged in the production of that kind of 
        tobacco are in favor of continuing the operation of the program 
        established under this Act with respect to that kind of 
        tobacco.
            (2) Process and results.--If more than one-half of the 
        licensees voting in a referendum conducted under paragraph (1) 
        with respect to flue-cured or burley tobacco oppose the 
        continuation of the program, the Secretary shall announce the 
        result and shall conduct a second referendum with respect to 
        that kind of tobacco one year later. If more than one-half of 
        the licensees voting in the second referendum also oppose the 
        continuation of the program, the Secretary shall announce the 
        result and the program shall cease to be in effect for that 
        kind of tobacco.
    (b) Subsequent Referenda.--
            (1) Referendum initiated by secretary.--The Secretary may 
        conduct subsequent referenda from time to time as the Secretary 
        considers appropriate to determine whether producers are in 
        favor of continuing the program established under this Act, the 
        use of licenses, limitations on license transfer, or any other 
        aspect of the program.
            (2) Referendum initiated by licensees.--If at least one-
        third of the licensees engaged in the production of flue-cured 
        or burley tobacco request a referendum under this subsection, 
        the Secretary shall conduct a referendum among the licensees 
        engaged in the production of that kind of tobacco to determine 
        whether the licensees are in favor of continuing the operation 
        of the program established under this Act with respect to that 
        kind of tobacco.
            (3) Process and results.--If more than one-half of the 
        licensees voting in a referendum conducted under paragraph (1) 
        or (2) with respect to flue-cured or burley tobacco oppose the 
        continuation of the program, the Secretary shall announce the 
        result and shall conduct a second referendum with respect to 
        that kind of tobacco one year later. If more than one-half of 
        the licensees voting in the second referendum also oppose the 
        continuation of the program, the Secretary shall announce the 
        result and the program shall cease to be in effect for that 
        kind of tobacco.

SEC. 108. EFFECTIVE DATE.

    This title and the amendments made by this title shall apply with 
respect to the 2004 and subsequent flue-cured and burley tobacco crops.

              TITLE II--TOBACCO COST OF PRODUCTION SUPPORT

SEC. 201. TOBACCO COST OF PRODUCTION CALCULATION.

    (a) Adjustment to Flue-Cured and Burley Tobacco Support Levels.--
Section 106 of the Agricultural Act of 1949 (7 U.S.C. 1445) is amended 
by adding at the end thereof the following:
    ``(h) Special Support Level.--
            ``(1) Support rate; applicability.--Notwithstanding the 
        foregoing provisions of this section, for the 2004 and each 
        subsequent crop of flue-cured and burley tobacco for which 
        tobacco production licenses are in effect or have not been 
        disapproved by producers under title I of the Phase III 
        Implementation Act, the support level shall be the level in 
        cents per pound equal to the cost of production.
            ``(2) Cost of production basis.--For purposes of paragraph 
        (1), the cost of production for tobacco producers shall include 
        items representing general, variable costs of producing 
        tobacco, as determined by the Secretary, but shall not include 
        the cost of land, risk, overhead, management, administration of 
        production licenses, marketing contributions or assessments, 
        and other costs not directly related to the production of 
        tobacco.''.
    (b) Amendment to Quota Tobacco Definition.--
            (1) Section 106A(a)(7) of the Agricultural Act of 1949 (7 
        U.S.C. 1445-1(a)(7)) is amended by striking the period at the 
        end of the paragraph and inserting ``, and shall include any 
        kind of tobacco for which tobacco production licenses are in 
        effect or for which tobacco production licenses are not 
        disapproved by producers under title I of the Phase III 
        Implementation Act.''.
            (2) Section 106B(a)(5) of the Agricultural Act of 1949 (7 
        U.S.C. 1445-2(a)(5)) is amended by striking the period at the 
        end of the paragraph and inserting ``, and shall include any 
        kind of tobacco for which tobacco production licenses are in 
        effect or for which tobacco production licenses are not 
        disapproved by producers under title I of the Phase III 
        Implementation Act.''

SEC. 202. EFFECTIVE DATE.

    This title and the amendments made by this title shall apply with 
respect to the 2004 and subsequent flue-cured and burley tobacco crops.
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