II

105TH CONGRESS

1ST SESSION S. 1313

To provide market transition assistance to quota owners, tobacco producers,

and communities that are dependent on tobacco production, to phase

out Federal programs that support tobacco production, and for other

purposes.

IN THE SENATE OF THE UNITED STATES

OCTOBER 24, 1997

Mr. LUGAR introduced the following bill; which was read twice and referred

to the Committee on Agriculture, Nutrition, and Forestry

A BILL

To provide market transition assistance to quota owners,

tobacco producers, and communities that are dependent

on tobacco production, to phase out Federal programs

that support tobacco production, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Tobacco Transition Act’’.

6 (b) TABLE OF CONTENTS.—The table of contents of

7 this Act is as follows:

Sec. 1. Short title; table of contents.
2

•S 1313 IS

Sec. 2. Purposes.

Sec. 3. Definitions.

TITLE I—TOBACCO PRODUCTION TRANSITION

Subtitle A—Tobacco Transition Contracts

Sec. 101. Tobacco Transition Account.

Sec. 102. Offer and terms of tobacco transition contracts.

Sec. 103. Elements of contracts.

Sec. 104. Buyout payments to owners.

Sec. 105. Transition payments to producers.

Subtitle B—Rural Economic Assistance Block Grants

Sec. 111. Rural economic assistance block grants.

TITLE II—TOBACCO PRICE SUPPORT AND PRODUCTION

ADJUSTMENT PROGRAMS

Subtitle A—Tobacco Price Support Program

Sec. 201. Interim reform of tobacco price support program.

Sec. 202. Termination of tobacco price support program.

Subtitle B—Tobacco Production Adjustment Programs

Sec. 211. Termination of tobacco production adjustment programs.

TITLE III—FUNDING

Sec. 301. Trust Fund.

Sec. 302. Commodity Credit Corporation.

1 SEC. 2. PURPOSES.

2 The purposes of this Act are—

3 (1) to authorize the use of binding contracts be4 tween the United States and tobacco quota owners

5 and tobacco producers to compensate them for the

6 termination of Federal programs that support the

7 production of tobacco in the United States;

8 (2) to make available to States funds for eco9 nomic assistance initiatives in counties of States that

10 are dependent on the production of tobacco; and
3

•S 1313 IS

1 (3) to terminate Federal programs that support

2 the production of tobacco in the United States.

3 SEC. 3. DEFINITIONS.

4 In this Act:

5 (1) ASSOCIATION.—The term ‘‘association’’

6 means a producer-owned cooperative marketing asso7 ciation that has entered into a loan agreement with

8 the Commodity Credit Corporation to make price

9 support available to producers.

10 (2) BUYOUT PAYMENT.—The term ‘‘buyout

11 payment’’ means a payment made to a quota owner

12 under section 104 in 1 or more installments in ac13 cordance with section 102(c)(1).

14 (3) CONTRACT.—The term ‘‘contract’’ or ‘‘to15 bacco transition contract’’ means a contract entered

16 into under section 102.

17 (4) GOVERNOR.—The term ‘‘Governor’’ means

18 the chief executive officer of a State.

19 (5) LEASE.—The term ‘‘lease’’ means a rental

20 of quota on either a cash rent or crop share basis.

21 (6) MARKETING YEAR.—The term ‘‘marketing

22 year’’ means—

23 (A) in the case of Flue-cured tobacco, the

24 period beginning July 1 and ending the follow25 ing June 30; and
4

•S 1313 IS

1 (B) in the case of each other kind of to2 bacco, the period beginning October 1 and end3 ing the following September 30.

4 (7) OWNER.—The term ‘‘owner’’ means a per5 son who, at the time of entering into a tobacco tran6 sition contract, owns quota provided by the Sec7 retary.

8 (8) PHASEOUT PERIOD.—The term ‘‘phaseout

9 period’’ means the 3-year period consisting of the

10 1999 through 2001 marketing years.

11 (9) PRICE SUPPORT.—The term ‘‘price sup12 port’’ means a nonrecourse loan provided by the

13 Commodity Credit Corporation through an associa14 tion for the kind of tobacco involved.

15 (10) PRODUCER.—The term ‘‘producer’’ means

16 a person who during at least 3 of the 1993 through

17 1997 crops of tobacco (as determined by the Sec18 retary) that were subject to quota—

19 (A) leased quota;

20 (B) shared in the risk of producing a crop

21 of tobacco; and

22 (C) marketed the tobacco subject to quota.

23 (11) QUOTA.—The term ‘‘quota’’ means the

24 quantity of tobacco produced in the United States,

25 and marketed during a marketing year, that will be
5

•S 1313 IS

1 used in, or exported from, the United States during

2 the marketing year (including an adjustment for

3 stocks), as estimated by the Secretary.

4 (12) SECRETARY.—The term ‘‘Secretary’’

5 means the Secretary of Agriculture.

6 (13) STATE.—The term ‘‘State’’ means each of

7 the several States of the United States, the District

8 of Columbia, the Commonwealth of Puerto Rico, and

9 any other territory or possession of the United

10 States.

11 (14) TOBACCO.—The term ‘‘tobacco’’ means

12 any kind of tobacco for which a marketing quota is

13 in effect or for which a marketing quota is not dis14 approved by producers.

15 (15) TOBACCO TRANSITION ACCOUNT.—The

16 term ‘‘Tobacco Transition Account’’ means the To17 bacco Transition Account established by section

18 101(a).

19 (16) TRANSITION PAYMENT.—The term ‘‘tran20 sition payment’’ means a payment made to a pro21 ducer under section 105 for each of the 1999

22 through 2001 marketing years.

23 (17) TRUST FUND.—The term ‘‘Trust Fund’’

24 means the National Tobacco Settlement Trust Fund

25 established in the Treasury of the United States
6

•S 1313 IS

1 consisting of amounts that are appropriated or cred2 ited to the Trust Fund from the tobacco settlement

3 approved by Congress.

4 (18) UNITED STATES.—The term ‘‘United

5 States’’, when used in a geographical sense, means

6 all of the States.

7 TITLE I—TOBACCO PRODUCTION

8 TRANSITION

9 Subtitle A—Tobacco Transition

10 Contracts

11 SEC. 101. TOBACCO TRANSITION ACCOUNT.

12 (a) ESTABLISHMENT.—There is established in the

13 Trust Fund a Tobacco Transition Account.

14 (b) USE.—Funds appropriated or credited to the To15 bacco Transition Account shall be available for providing

16 buyout payments and transition payments authorized

17 under this subtitle.

18 (c) TERMINATION.—The Tobacco Transition Account

19 terminates effective September 30, 2001.

20 SEC. 102. OFFER AND TERMS OF TOBACCO TRANSITION

21 CONTRACTS.

22 (a) OFFER.—The Secretary shall offer to enter into

23 a tobacco transition contract with each owner and pro24 ducer of tobacco.
7

•S 1313 IS

1 (b) TERMS.—Under the terms of a contract, the

2 owner or producer shall agree, in exchange for a payment

3 made pursuant to section 104 or 105, as applicable, to

4 relinquish the value of quota that is owned or leased.

5 (c) RIGHTS OF OWNERS AND PRODUCERS.—

6 (1) OWNERS.—An owner shall elect to receive a

7 buyout payment in—

8 (A) 1 installment for the kind of tobacco

9 involved, in exchange for permanently foregoing

10 production of tobacco; or

11 (B) 3 equal installments, 1 installment for

12 each of the 1999 through 2001 crops of to13 bacco, in which case the owner shall have the

14 right to continue production of each of those

15 crops.

16 (2) PRODUCERS.—In the case of each of the

17 1999 through 2001 crops for the kind of tobacco in18 volved, a producer who is not an owner during the

19 1998 marketing year for the kind of tobacco in20 volved shall not be subject to any restrictions on the

21 quantity of tobacco produced or marketed.

22 SEC. 103. ELEMENTS OF CONTRACTS.

23 (a) DEADLINES FOR CONTRACTING.—

24 (1) COMMENCEMENT.—To the maximum extent

25 practicable, the Secretary shall commence entering
8

•S 1313 IS

1 into contracts under this subtitle not later than 90

2 days after the date of enactment of this Act.

3 (2) DEADLINE.—The Secretary may not enter

4 into a contract under this subtitle after June 31,

5 1999.

6 (b) DURATION OF CONTRACT.—

7 (1) BEGINNING DATE.—The term of a contract

8 shall begin on the date that is the beginning of the

9 1999 marketing year for the kind of tobacco in10 volved.

11 (2) TERMINATION DATE.—

12 (A) IN GENERAL.—Except as provided in

13 subparagraph (B), the term of a contract shall

14 terminate on the date that is the end of the

15 2001 marketing year for the kind of tobacco in16 volved.

17 (B) EXCEPTION.—In the case of an owner

18 who enters into a contract and elects to receive

19 a buyout payment in 1 installment under sec20 tion 102(c)(1)(A), the contract shall be perma21 nent.

22 (c) TIME FOR PAYMENT.—

23 (1) IN GENERAL.—A buyout payment or transi24 tion payment shall be made not later than the date

25 that is the beginning of the marketing year for the
9

•S 1313 IS

1 kind of tobacco involved for each year of the term

2 of a tobacco transition contract of an owner or pro3 ducer of tobacco.

4 (2) APPLICABILITY.—This subsection shall be

5 applicable to all payments covered by section 102(c).

6 SEC. 104. BUYOUT PAYMENTS TO OWNERS.

7 (a) IN GENERAL.—During the phaseout period, the

8 Secretary shall make buyout payments to owners in ac9 cordance with section 102(c)(1).

10 (b) COMPENSATION FOR LOST VALUE.—The pay11 ment shall constitute compensation for the lost value to

12 the owner of the quota.

13 (c) PAYMENT CALCULATION.—Under this section,

14 the total amount of the buyout payment made to an owner

15 shall be determined by multiplying—

16 (1) $8.00; by

17 (2) the average annual quantity of quota owned

18 by the owner during the 1995 through 1997 crop

19 years.

20 SEC. 105. TRANSITION PAYMENTS TO PRODUCERS.

21 (a) IN GENERAL.—The Secretary shall make transi22 tion payments during each of the 1999 through 2001 mar23 keting years for a kind of tobacco that was subject to a

24 quota to a producer who—
10

•S 1313 IS

1 (1) produced the kind of tobacco during at least

2 3 of the 1993 through 1997 crop years; and

3 (2) entered into a tobacco transition contract.

4 (b) TRANSITION PAYMENTS LIMITED TO LEASED

5 QUOTA.—A producer shall be eligible for transition pay6 ments only for the portion of the production of the pro7 ducer that is subject to quota that is leased during the

8 3 crop years described in subsection (a)(1).

9 (c) COMPENSATION FOR LOST REVENUE.—The pay10 ments shall constitute compensation for the lost revenue

11 incurred by a tobacco producer during each of the 1999

12 through 2001 marketing years for the kind of tobacco in13 volved.

14 (d) ELECTION BY PRODUCER; PRODUCTION.—

15 (1) ELECTION.—The producer may elect which

16 3 of the 1993 through 1997 crop years shall be used

17 for the calculation under subsection (e).

18 (2) PRODUCTION.—The producer shall have the

19 burden of demonstrating to the Secretary the pro20 duction of tobacco for each year of the election.

21 (e) PAYMENT CALCULATION.—Under this section,

22 each of the 3 transition payments made to a producer for

23 the kind of tobacco involved shall be determined by mul24 tiplying—

25 (1) 40 cents; by
11

•S 1313 IS

1 (2) the average quantity of the kind of tobacco

2 produced by the producer during the 3 crop years

3 elected by the producer under subsection (d).

4 Subtitle B—Rural Economic

5 Assistance Block Grants

6 SEC. 111. RURAL ECONOMIC ASSISTANCE BLOCK GRANTS.

7 (a) IN GENERAL.—For each of fiscal years 1999

8 through 2001, the Secretary shall use funds in the To9 bacco Transition Account to provide block grants to to10 bacco-growing States to assist areas of such a State that

11 are economically dependent on the production of tobacco.

12 (b) FUNDING.—To carry out this section, there shall

13 be credited to the Tobacco Transition Account, from the

14 Trust Fund, $100,000,000 for each of fiscal years 1999

15 through 2001.

16 (c) PAYMENTS BY SECRETARY TO TOBACCO-GROW17 ING STATES.—

18 (1) IN GENERAL.—The Secretary shall use the

19 amount available for a fiscal year under subsection

20 (b) to make block grant payments to the Governors

21 of tobacco-growing States.

22 (2) AMOUNT.—The amount of a block grant

23 paid to a tobacco-growing State shall be based on—
12

•S 1313 IS

1 (A) the number of counties in the State in

2 which tobacco production is a significant part of

3 the county’s economy; and

4 (B) the level of economic dependence of

5 the county on tobacco production.

6 (d) GRANTS BY STATES TO ASSIST TOBACCO-GROW7 ING AREAS.—

8 (1) IN GENERAL.—A Governor of a tobacco9 growing State shall use the amount of the block

10 grant to the State under subsection (c) to make

11 grants to counties or other public or private entities

12 in the State to assist areas that are dependent on

13 the production of tobacco, as determined by the Gov14 ernor.

15 (2) AMOUNT.—The amount of a grant paid to

16 a county or other entity to assist an area shall be

17 based on (as determined by the Secretary)—

18 (A) the ratio of gross tobacco sales receipts

19 in the area to the total farm income in the area;

20 and

21 (B) the ratio of all tobacco related receipts

22 in the area to the total income in the area.

23 (3) USE OF GRANTS.—A county or other entity

24 that receives a grant under this subsection shall use

25 the grant in a manner determined appropriate by
13

•S 1313 IS

1 the county or entity (with the approval of the State)

2 to assist producers and other persons who are eco3 nomically dependent on the production of tobacco,

4 including use for—

5 (A) on-farm diversification and alternatives

6 to the production of tobacco and risk manage7 ment; and

8 (B) off-farm activities such as development

9 of non-tobacco related jobs.

10 (e) TERMINATION OF AUTHORITY.—The authority

11 provided by this section terminates October 1, 2001.

12 TITLE II—TOBACCO PRICE SUP13 PORT AND PRODUCTION AD14 JUSTMENT PROGRAMS

15 Subtitle A—Tobacco Price Support

16 Program

17 SEC. 201. INTERIM REFORM OF TOBACCO PRICE SUPPORT

18 PROGRAM.

19 (a) PRICE SUPPORT RATES.—Section 106 of the Ag20 ricultural Act of 1949 (7 U.S.C. 1445) is amended—

21 (1) by striking subsection (a) and inserting the

22 following:

23 ‘‘(a) IN GENERAL.—The price support rate for each

24 kind of tobacco for which quotas have been approved shall

25 be reduced by—
14

•S 1313 IS

1 ‘‘(1) for the 1999 crop, 25 percent from the

2 1998 support rate for the kind of tobacco involved;

3 ‘‘(2) for the 2000 crop, 10 percent from the

4 1999 support rate for the kind of tobacco involved;

5 and

6 ‘‘(3) for the 2001 crop, 10 percent from the

7 2000 support rate for the kind of tobacco involved.’’;

8 (2) by striking subsections (b) and (f); and

9 (3) by redesignating subsections (c), (d), and

10 (g) as subsections (b), (c), and (d), respectively.

11 (b) BUDGET DEFICIT ASSESSMENT.—Section 106 of

12 the Agricultural Act of 1949 (7 U.S.C. 1445) (as amended

13 by subsection (a)(3)) is amended by striking subsection

14 (d) and inserting the following:

15 ‘‘(d) TOBACCO TRANSITION PAYMENT.—Effective

16 only for the 1998 crop of tobacco, the Secretary of the

17 Treasury shall transfer from the Tobacco Transition Ac18 count of the National Tobacco Settlement Trust Fund an

19 amount equal to the product obtained by multiplying—

20 ‘‘(1) the amount per pound equal to 2 percent

21 of the national price support level for each kind of

22 tobacco for which price support is made available

23 under this Act; and
15

•S 1313 IS

1 ‘‘(2) the total quantity of the kind of tobacco

2 that is produced or purchased in, or imported into,

3 the United States.’’.

4 (c) NO NET COST TOBACCO FUND AND ACCOUNT.—

5 (1) NO NET COST TOBACCO FUND.—Section

6 106A of the Agricultural Act of 1949 (7 U.S.C.

7 1445–1) is amended to read as follows:

8 ‘‘SEC. 106A. NO NET COST TOBACCO FUND.

9 ‘‘(a) DEFINITIONS.—In this section:

10 ‘‘(1) ASSOCIATION.—The term ‘association’

11 means a producer-owned cooperative marketing asso12 ciation that has entered into a loan agreement with

13 the Corporation to make price support available to

14 producers of a kind of tobacco.

15 ‘‘(2) CORPORATION.—The term ‘Corporation’

16 means the Commodity Credit Corporation, an agen17 cy and instrumentality of the United States within

18 the Department of Agriculture through which the

19 Secretary makes price support available to produc20 ers.

21 ‘‘(3) NET GAINS.—The term ‘net gains’ means

22 the amount by which the total proceeds obtained

23 from the sale by an association of a crop of quota

24 tobacco pledged to the Corporation for a price sup25 port loan exceeds the principal amount of the price
16

•S 1313 IS

1 support loan made by the Corporation to the asso2 ciation on the crop, plus interest, charges, and costs

3 of administering the price support program.

4 ‘‘(4) NO NET COST TOBACCO FUND.—The term

5 ‘No Net Cost Tobacco Fund’ means the capital ac6 count established within each association under this

7 section.

8 ‘‘(5) PURCHASER.—The term ‘purchaser’

9 means any person who purchases in the United

10 States, either directly or indirectly for the account of

11 the person or another person, Flue-cured or burley

12 quota tobacco.

13 ‘‘(6) QUOTA TOBACCO.—The term ‘quota to14 bacco’ means any kind of tobacco for which market15 ing quotas are in effect or for which marketing

16 quotas are not disapproved by producers.

17 ‘‘(7) TRUST FUND.—The term ‘Trust Fund’

18 means the National Tobacco Settlement Trust Fund

19 established in the Treasury of the United States

20 consisting of amounts that are appropriated or cred21 ited to the Trust Fund from the tobacco settlement

22 approved by Congress.

23 ‘‘(b) PRICE SUPPORT PROGRAM; LOANS.—The Sec24 retary—
17

•S 1313 IS

1 ‘‘(1) may carry out the tobacco price support

2 program through the Corporation; and

3 ‘‘(2) shall, except as otherwise provided by this

4 section, continue to make price support available to

5 producers through loans to associations that, under

6 agreements with the Corporation, agree to make

7 loan advances to producers.

8 ‘‘(c) ESTABLISHMENT OF FUND.—

9 ‘‘(1) IN GENERAL.—Each association shall es10 tablish within the association a No Net Cost To11 bacco Fund.

12 ‘‘(2) AMOUNT.—There shall be transferred

13 from the Trust Fund to each No Net Cost Tobacco

14 Fund such amount as the Secretary determines will

15 be adequate to reimburse the Corporation for any

16 net losses that the Corporation may sustain under

17 its loan agreements with the association, based on—

18 ‘‘(A) reasonable estimates of the amounts

19 that the Corporation has lent or will lend to the

20 association for price support for the 1982 and

21 subsequent crops of quota tobacco, except that

22 for the 1986 and subsequent crops of burley

23 quota tobacco, the Secretary shall determine the

24 amount of assessments without regard to any

25 net losses that the Corporation may sustain
18

•S 1313 IS

1 under the loan agreements of the Corporation

2 with the association for the 1983 crop of burley

3 quota tobacco;

4 ‘‘(B) the cost of administering the tobacco

5 price support program (as determined by the

6 Secretary); and

7 ‘‘(C) the proceeds that will be realized

8 from the sales of tobacco that are pledged to

9 the Corporation by the association as security

10 for loans.

11 ‘‘(d) ADMINISTRATION.—The Secretary shall—

12 ‘‘(1) require that the No Net Cost Tobacco

13 Fund established by each association be kept and

14 maintained separately from all other accounts of the

15 association and be used exclusively, as prescribed by

16 the Secretary, for the purpose of ensuring, insofar

17 as practicable, that the Corporation, under its loan

18 agreements with the association with respect to

19 1982 and subsequent crops of quota tobacco, will

20 suffer no net losses (including recovery of the

21 amount of loans extended to cover the overhead

22 costs of the association), after any net gains are ap23 plied to net losses of the Corporation under para24 graph (3), except that, notwithstanding any other

25 provision of law, the association may, with the ap-
19

•S 1313 IS

1 proval of the Secretary, use funds in the No Net

2 Cost Tobacco Fund, including interest and other

3 earnings, for—

4 ‘‘(A) the purposes of reducing the associa5 tion’s outstanding indebtedness to the Corpora6 tion associated with 1982 and subsequent crops

7 of quota tobacco and making loan advances to

8 producers as authorized; and

9 ‘‘(B) any other purposes that will be mutu10 ally beneficial to producers and purchasers and

11 to the Corporation;

12 ‘‘(2) permit an association to invest the funds

13 in the No Net Cost Tobacco Fund in such manner

14 as the Secretary may approve, and require that the

15 interest or other earnings on the investment shall

16 become a part of the No Net Cost Tobacco Fund;

17 ‘‘(3) require that loan agreements between the

18 Corporation and the association provide that the

19 Corporation shall retain the net gains from each of

20 the 1982 and subsequent crops of tobacco pledged

21 by the association as security for price support

22 loans, and that the net gains will be used for the

23 purpose of—

24 ‘‘(A) offsetting any losses sustained by the

25 Corporation under its loan agreements with the
20

•S 1313 IS

1 association for any of the 1982 and subsequent

2 crops of tobacco; or

3 ‘‘(B) reducing the outstanding balance of

4 any price support loan made by the Corporation

5 to the association under the loan agreements

6 for 1982 and subsequent crops of tobacco; and

7 ‘‘(4) effective for the 1986 and subsequent

8 crops of quota tobacco, if the Secretary determines

9 that the amount in the No Net Cost Tobacco Fund

10 or the net gains referred to in paragraph (3) exceeds

11 the total amount necessary for the purposes speci12 fied in this section, suspend the transfer of amounts

13 from the Trust Fund to the No Net Cost Tobacco

14 Fund under this section.

15 ‘‘(e) NONCOMPLIANCE.—

16 ‘‘(1) IN GENERAL.—If any association that has

17 entered into a loan agreement with the Corporation

18 with respect to any of the 1982 or subsequent crops

19 of quota tobacco fails or refuses to comply with this

20 section (including regulations promulgated under

21 this section) or the terms of the agreement, the Sec22 retary may terminate the agreement or provide that

23 no additional loan funds may be made available

24 under the agreement to the association.
21

•S 1313 IS

1 ‘‘(2) PRICE SUPPORT.—If the Secretary takes

2 action under paragraph (1), the Secretary shall

3 make price support available to producers of the

4 kind or kinds of tobacco, the price of which had been

5 supported through loans to the association, through

6 such other means as are authorized by this Act or

7 the Commodity Credit Corporation Charter Act (15

8 U.S.C. 714 et seq.).

9 ‘‘(f) TERMINATION OF AGREEMENT OR ASSOCIA10 TION.—If, under subsection (e), a loan agreement with an

11 association is terminated, or if an association having a

12 loan agreement with the Corporation is dissolved, merges

13 with another association, or otherwise ceases to operate,

14 the No Net Cost Tobacco Fund or the net gains referred

15 to in subsection (d)(3) shall be applied or disposed of in

16 such manner as the Secretary may approve or prescribe,

17 except that the net gains shall, to the extent necessary,

18 first be applied or used for the purposes specified in this

19 section.

20 ‘‘(g) REGULATIONS.—The Secretary shall issue such

21 regulations as are necessary to carry out this section.’’.

22 (2) NO NET COST TOBACCO ACCOUNT.—Section

23 106B of the Agricultural Act of 1949 (7 U.S.C.

24 1445–2) is amended to read as follows:
22

•S 1313 IS

1 ‘‘SEC. 106B. NO NET COST TOBACCO ACCOUNT.

2 ‘‘(a) DEFINITIONS.—In this section:

3 ‘‘(1) AREA.—The term ‘area’, when used in

4 connection with an association, means the general

5 geographical area in which farms of the producer6 members of the association are located, as deter7 mined by the Secretary.

8 ‘‘(2) ASSOCIATION.—The term ‘association’ has

9 the meaning given the term in section 106A(a)(1).

10 ‘‘(3) CORPORATION.—The term ‘Corporation’

11 has the meaning given the term in section

12 106A(a)(2).

13 ‘‘(4) NET GAINS.—The term ‘net gains’ has the

14 meaning given the term in section 106A(a)(3).

15 ‘‘(5) NO NET COST TOBACCO ACCOUNT.—The

16 term ‘No Net Cost Tobacco Account’ means an ac17 count established by and in the Corporation for an

18 association under this section.

19 ‘‘(6) PURCHASER.—The term ‘purchaser’ has

20 the meaning given the term in section 106A(a)(5).

21 ‘‘(7) TOBACCO.—The term ‘tobacco’ means any

22 kind of tobacco (as defined in section 301(b) of the

23 Agricultural Adjustment Act of 1938 (7 U.S.C.

24 1301(b))) for which marketing quotas are in effect

25 or for which marketing quotas are not disapproved

26 by producers.
23

•S 1313 IS

1 ‘‘(8) TRUST FUND.—The term ‘Trust Fund’

2 has the meaning given the term in section

3 106A(a)(7).

4 ‘‘(b) PRICE SUPPORT PROGRAM; LOANS.—Notwith5 standing section 106A, the Secretary shall, on the request

6 of any association, and may, if the Secretary determines,

7 after consultation with the association, that the accumula8 tion of the No Net Cost Tobacco Fund for the association

9 under section 106A is, and is likely to remain, inadequate

10 to reimburse the Corporation for net losses that the Cor11 poration sustains under its loan agreements with the asso12 ciation—

13 ‘‘(1) continue to make price support available to

14 producers through the association in accordance

15 with loan agreements entered into between the Cor16 poration and the association; and

17 ‘‘(2) establish and maintain in accordance with

18 this section a No Net Cost Tobacco Account for the

19 association in lieu of the No Net Cost Tobacco Fund

20 established within the association under section

21 106A.

22 ‘‘(c) ESTABLISHMENT OF ACCOUNT.—

23 ‘‘(1) IN GENERAL.—A No Net Cost Tobacco

24 Account established for an association under sub-
24

•S 1313 IS

1 section (b)(2) shall be established within the Cor2 poration.

3 ‘‘(2) AMOUNT.—There shall be transferred

4 from the Trust Fund to each No Net Cost Tobacco

5 Account such amount as the Secretary determines

6 will be adequate to reimburse the Corporation for

7 any net losses that the Corporation may sustain

8 under its loan agreements with the association,

9 based on—

10 ‘‘(A) reasonable estimates of the amounts

11 that the Corporation has lent or will lend to the

12 association for price support for the 1982 and

13 subsequent crops of quota tobacco, except that

14 for the 1986 and subsequent crops of burley

15 quota tobacco, the Secretary shall determine the

16 amount of assessments without regard to any

17 net losses that the Corporation may sustain

18 under the loan agreements of the Corporation

19 with the association for the 1983 crop of burley

20 quota tobacco;

21 ‘‘(B) the cost of administering the tobacco

22 price support program (as determined by the

23 Secretary); and

24 ‘‘(C) the proceeds that will be realized

25 from the sales of the kind of tobacco involved
25

•S 1313 IS

1 that are pledged to the Corporation by the asso2 ciation as security for loans.

3 ‘‘(3) ADMINISTRATION.—On the establishment

4 of a No Net Cost Tobacco Account for an associa5 tion, any amount in the No Net Cost Tobacco Fund

6 established within the association under section

7 106A shall be applied or disposed of in such manner

8 as the Secretary may approve or prescribe, except

9 that the amount shall, to the extent necessary, first

10 be applied or used for the purposes specified in that

11 section.

12 ‘‘(d) USE.—Amounts deposited in a No Net Cost To13 bacco Account established for an association shall be used

14 by the Secretary for the purpose of ensuring, insofar as

15 practicable, that the Corporation under its loan agree16 ments with the association will suffer, with respect to the

17 crop involved, no net losses (including recovery of the

18 amount of loans extended to cover the overhead costs of

19 the association), after any net gains are applied to net

20 losses of the Corporation under subsection (g).

21 ‘‘(e) EXCESS AMOUNTS.—If the Secretary determines

22 that the amount in the No Net Cost Tobacco Account or

23 the net gains referred to in subsection (g) exceed the total

24 amount necessary to carry out this section, the Secretary

25 shall suspend the transfer of amounts from the Trust
26

•S 1313 IS

1 Fund to the No Net Cost Tobacco Account under this sec2 tion.

3 ‘‘(f) TERMINATION OF AGREEMENT OR ASSOCIA4 TION.—In the case of an association for which a No Net

5 Cost Tobacco Account is established under subsection

6 (b)(2), if a loan agreement between the Corporation and

7 the association is terminated, if the association is dissolved

8 or merges with another association that has entered into

9 a loan agreement with the Corporation to make price sup10 port available to producers of the kind of tobacco involved,

11 or if the No Net Cost Tobacco Account terminates by op12 eration of law, amounts in the No Net Cost Tobacco Ac13 count and the net gains referred to in subsection (g) shall

14 be applied to or disposed of in such manner as the Sec15 retary may prescribe, except that the net gains shall, to

16 the extent necessary, first be applied to or used for the

17 purposes specified in this section.

18 ‘‘(g) NET GAINS.—The provisions of section

19 106A(d)(3) relating to net gains shall apply to any loan

20 agreement between an association and the Corporation en21 tered into on or after the establishment of a No Net Cost

22 Tobacco Account for the association under subsection

23 (b)(2).

24 ‘‘(h) REGULATIONS.—The Secretary shall issue such

25 regulations as are necessary to carry out this section.’’.
27

•S 1313 IS

1 (3) CONFORMING AMENDMENTS.—

2 (A) Section 314(a) of the Agricultural Ad3 justment Act of 1938 (7 U.S.C. 1314(a)) is

4 amended in the first sentence—

5 (i) by striking ‘‘(1)’’; and

6 (ii) by striking ‘‘, or (2)’’ and all that

7 follows through ‘‘106B(d)(1) of that Act’’.

8 (B) Section 320B(c)(1) of the Agricultural

9 Adjustment Act of 1938 (7 U.S.C. 1314h(c)(1))

10 is amended by inserting after ‘‘1445–2)’’ the

11 following: ‘‘(as in effect before the effective date

12 of the amendments made by section 201(c) of

13 the Tobacco Transition Act)’’.

14 (d) ADMINISTRATIVE COSTS.—Section 1109 of the

15 Agriculture and Food Act of 1981 (Public Law 97–98;

16 7 U.S.C. 1445 note) is repealed.

17 (e) CROPS.—This section and the amendments made

18 by this section shall apply with respect to the 1999 and

19 subsequent crops of the kind of tobacco involved.

20 SEC. 202. TERMINATION OF TOBACCO PRICE SUPPORT

21 PROGRAM.

22 (a) PARITY PRICE SUPPORT.—Section 101 of the Ag23 ricultural Act of 1949 (7 U.S.C. 1441) is amended—
28

•S 1313 IS

1 (1) in the first sentence of subsection (a), by

2 striking ‘‘tobacco (except as otherwise provided here3 in), corn,’’ and inserting ‘‘corn’’;

4 (2) by striking subsections (c), (g), (h), and (i);

5 (3) in subsection (d)(3)—

6 (A) by striking ‘‘, except tobacco,’’; and

7 (B) by striking ‘‘and no price support shall

8 be made available for any crop of tobacco for

9 which marketing quotas have been disapproved

10 by producers;’’; and

11 (4) by redesignating subsections (d) and (e) as

12 subsections (c) and (d), respectively.

13 (b) TERMINATION OF TOBACCO PRICE SUPPORT AND

14 NO NET COST PROVISIONS.—Sections 106, 106A, and

15 106B of the Agricultural Act of 1949 (7 U.S.C. 1445,

16 1445–1, 1445–2) are repealed.

17 (c) DEFINITION OF BASIC AGRICULTURAL COMMOD18 ITY.—Section 408(c) of the Agricultural Act of 1949 (7

19 U.S.C. 1428(c)) is amended by striking ‘‘tobacco,’’.

20 (d) REVIEW OF BURLEY TOBACCO IMPORTS.—Sec21 tion 3 of Public Law 98–59 (7 U.S.C. 625) is repealed.

22 (e) POWERS OF COMMODITY CREDIT CORPORA23 TION.—Section 5 of the Commodity Credit Corporation

24 Charter Act (15 U.S.C. 714c) is amended by inserting
29

•S 1313 IS

1 ‘‘(other than tobacco)’’ after ‘‘agricultural commodities’’

2 each place it appears.

3 (f) TRANSITION PROVISIONS.—

4 (1) LIABILITY.—The amendments made by this

5 section shall not affect the liability of any person

6 under any provision of law as in effect before the ef7 fective date of this section.

8 (2) TOBACCO STOCKS AND LOANS.—The Sec9 retary shall issue regulations that require—

10 (A) the orderly disposition of tobacco

11 stocks; and

12 (B) the repayment of all tobacco price sup13 port loans by not later than 1 year after the ef14 fective date of this section.

15 (g) CROPS.—This section and the amendments made

16 by this section shall apply with respect to the 2002 and

17 subsequent crops of the kind of tobacco involved.

18 Subtitle B—Tobacco Production

19 Adjustment Programs

20 SEC. 211. TERMINATION OF TOBACCO PRODUCTION AD21 JUSTMENT PROGRAMS.

22 (a) DECLARATION OF POLICY.—Section 2 of the Ag23 ricultural Adjustment Act of 1938 (7 U.S.C. 1282) is

24 amended by striking ‘‘tobacco,’’.
30

•S 1313 IS

1 (b) DEFINITIONS.—Section 301(b) of the Agricul2 tural Adjustment Act of 1938 (7 U.S.C. 1301(b)) is

3 amended—

4 (1) in paragraph (3)—

5 (A) by striking subparagraph (C); and

6 (B) by redesignating subparagraph (D) as

7 subparagraph (C);

8 (2) in paragraph (6)(A), by striking ‘‘tobacco,’’;

9 (3) in paragraph (7), by striking the following:

10 ‘‘tobacco (flue-cured), July 1—June 30;

11 ‘‘tobacco (other than flue-cured), October

12 1–September 30;’’;

13 (4) in paragraph (10)—

14 (A) by striking subparagraph (B); and

15 (B) by redesignating subparagraph (C) as

16 subparagraph (B);

17 (5) in paragraph (11)(B), by striking ‘‘and to18 bacco’’;

19 (6) in paragraph (12), by striking ‘‘tobacco,’’;

20 (7) in paragraph (14)—

21 (A) in subparagraph (A), by striking

22 ‘‘(A)’’; and

23 (B) by striking subparagraphs (B), (C),

24 and (D);

25 (8) by striking paragraph (15);
31

•S 1313 IS

1 (9) in paragraph (16)—

2 (A) by striking subparagraph (B); and

3 (B) by redesignating subparagraph (C) as

4 subparagraph (B); and

5 (10) by redesignating paragraphs (16) and (17)

6 as paragraphs (15) and (16), respectively.

7 (c) PARITY PAYMENTS.—Section 303 of the Agricul8 tural Adjustment Act of 1938 (7 U.S.C. 1303) is amended

9 in the first sentence by striking ‘‘rice, or tobacco,’’ and

10 inserting ‘‘or rice,’’.

11 (d) MARKETING QUOTAS.—Part I of subtitle B of

12 title III of the Agricultural Adjustment Act of 1938 (7

13 U.S.C. 1311 et seq.) is repealed.

14 (e) ADMINISTRATIVE PROVISIONS.—Section 361 of

15 the Agricultural Adjustment Act of 1938 (7 U.S.C. 1361)

16 is amended by striking ‘‘tobacco,’’.

17 (f) ADJUSTMENT OF QUOTAS.—Section 371 of the

18 Agricultural Adjustment Act of 1938 (7 U.S.C. 1371) is

19 amended—

20 (1) in the first sentence of subsection (a), by

21 striking ‘‘peanuts, or tobacco’’ and inserting ‘‘or

22 peanuts’’; and

23 (2) in the first sentence of subsection (b), by

24 striking ‘‘peanuts or tobacco’’ and inserting ‘‘or pea25 nuts’’.
32

•S 1313 IS

1 (g) REPORTS AND RECORDS.—Section 373 of the Ag2 ricultural Adjustment Act of 1938 (7 U.S.C. 1373) is

3 amended—

4 (1) by striking ‘‘peanuts, or tobacco’’ each place

5 it appears in subsections (a) and (b) and inserting

6 ‘‘or peanuts’’; and

7 (2) in subsection (a)—

8 (A) in the first sentence, by striking ‘‘all

9 persons engaged in the business of redrying,

10 prizing, or stemming tobacco for producers,’’;

11 and

12 (B) in the last sentence, by striking

13 ‘‘$500;’’ and all that follows through the period

14 at the end of the sentence and inserting

15 ‘‘$500.’’.

16 (h) REGULATIONS.—Section 375(a) of the Agricul17 tural Adjustment Act of 1938 (7 U.S.C. 1375(a)) is

18 amended by striking ‘‘peanuts, or tobacco’’ and inserting

19 ‘‘or peanuts’’.

20 (i) EMINENT DOMAIN.—Section 378 of the Agricul21 tural Adjustment Act of 1938 (7 U.S.C. 1378) is amend22 ed—

23 (1) in the first sentence of subsection (c), by

24 striking ‘‘cotton, tobacco, and peanuts’’ and insert25 ing ‘‘cotton and peanuts’’; and
33

•S 1313 IS

1 (2) by striking subsections (d), (e), and (f).

2 (j) BURLEY TOBACCO FARM RECONSTITUTION.—

3 Section 379 of the Agricultural Adjustment Act of 1938

4 (7 U.S.C. 1379) is amended—

5 (1) in subsection (a)—

6 (A) by striking ‘‘(a)’’; and

7 (B) in paragraph (6), by striking ‘‘, but

8 this clause (6) shall not be applicable in the

9 case of burley tobacco’’; and

10 (2) by striking subsections (b) and (c).

11 (k) ACREAGE-POUNDAGE QUOTAS.—Section 4 of the

12 Act entitled ‘‘An Act to amend the Agricultural Adjust13 ment Act of 1938, as amended, to provide for acreage14 poundage marketing quotas for tobacco, to amend the to15 bacco price support provisions of the Agricultural Act of

16 1949, as amended, and for other purposes’’, approved

17 April 16, 1965 (Public Law 89–12; 7 U.S.C. 1314c note),

18 is repealed.

19 (l) BURLEY TOBACCO ACREAGE ALLOTMENTS.—The

20 Act entitled ‘‘An Act relating to burley tobacco farm acre21 age allotments under the Agricultural Adjustment Act of

22 1938, as amended’’, approved July 12, 1952 (7 U.S.C.

23 1315), is repealed.
34

•S 1313 IS

1 (m) TRANSFER OF ALLOTMENTS.—Section 703 of

2 the Food and Agriculture Act of 1965 (7 U.S.C. 1316)

3 is repealed.

4 (n) ADVANCE RECOURSE LOANS.—Section

5 13(a)(2)(B) of the Food Security Improvements Act of

6 1986 (7 U.S.C. 1433c–1(a)(2)(B)) is amended by striking

7 ‘‘tobacco and’’.

8 (o) TOBACCO FIELD MEASUREMENT.—Section 1112

9 of the Omnibus Budget Reconciliation Act of 1987 (Public

10 Law 100–203) is amended by striking subsection (c).

11 (p) LIABILITY.—The amendments made by this sec12 tion shall not affect the liability of any person under any

13 provision of law as in effect before the effective date under

14 subsection (q).

15 (q) CROPS.—This section and the amendments made

16 by this section shall apply with respect to the 1999 and

17 subsequent crops of the kind of tobacco involved.

18 TITLE III—FUNDING

19 SEC. 301. TRUST FUND.

20 (a) REQUEST.—The Secretary of Agriculture shall

21 request the Secretary of the Treasury to transfer, from

22 the Tobacco Transition Account in the Trust Fund,

23 amounts authorized under sections 104, 105, and 111,

24 and the amendments made by section 201, to the account

25 of the Commodity Credit Corporation.
35

•S 1313 IS

1 (b) TRANSFER.—On receipt of such a request, the

2 Secretary of the Treasury shall transfer amounts re3 quested under subsection (a).

4 (c) USE.—The Secretary of Agriculture shall use the

5 amounts transferred under subsection (b) to carry out the

6 activities described in subsection (a).

7 (d) TERMINATION OF AUTHORITY.—The authority

8 provided under this section shall expire on September 30,

9 2001.

10 SEC. 302. COMMODITY CREDIT CORPORATION.

11 The Secretary may use the funds, facilities, and au12 thorities of the Commodity Credit Corporation to carry

13 out this Act and the amendments made by this Act.

Æ