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[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1582 Introduced in Senate (IS)]

105th CONGRESS
  2d Session
                                S. 1582

   To provide market transition assistance for quota holders, active 
tobacco producers, and tobacco-growing counties, to authorize a private 
Tobacco Production Control Corporation and tobacco loan associations to 
control the production and marketing and ensure the quality of tobacco 
             in the United States, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            January 28, 1998

   Mr. Robb 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 for quota holders, active 
tobacco producers, and tobacco-growing counties, to authorize a private 
Tobacco Production Control Corporation and tobacco loan associations to 
control the production and marketing and ensure the quality of tobacco 
             in the United States, 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 ``Tobacco Market 
Transition Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Purposes.
          TITLE I--TOBACCO COMMUNITY REVITALIZATION TRUST FUND

Sec. 101. Tobacco Community Revitalization Trust Fund.
             TITLE II--TOBACCO MARKET TRANSITION ASSISTANCE

Sec. 201. Compensation to quota holders for loss of tobacco quota asset 
                            value.
Sec. 202. Transition payments for active tobacco producers.
Sec. 203. Tobacco Loan associations.
Sec. 204. Tobacco community economic development grants.
Sec. 205. Tax treatment of compensation and transition payments.
 TITLE III--ESTABLISHMENT OF PRIVATE TOBACCO PRODUCTION ADJUSTMENT AND 
                       QUALITY ASSURANCE PROGRAMS

Sec. 301. Tobacco Production Control Corporation.
Sec. 302. Tobacco loan associations
Sec. 303. Tobacco price support levels.
Sec. 304. Penalties.
Sec. 305. Referenda.

SEC. 2. DEFINITIONS.

    In this Act:
            (1) Active tobacco producer.--The term ``active tobacco 
        producer'' means a person that--
                    (A) is the actual producer, as determined by the 
                Secretary, of tobacco on a farm where tobacco is 
                produced pursuant to a tobacco from marketing quota or 
                farm acreage allotment established under the 
                Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et 
                seq.) for the 1997 crop year; and
                    (B) planted the crop, or is considered to have 
                planted the crop under that Act, in 1997.
            (2) Quota holder.--The term ``quota holder'' means an owner 
        of a farm on January 1, 1998 for which a tobacco farm marketing 
        quota or farm acreage allotment was established under the 
        Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.)
            (3) Secretary.--The term ``Secretary'' means the Secretary 
        of Agriculture.
            (4) Tobacco loan association.--The term ``Association'' 
        means a producer-owned cooperative marketing association.
            (5) Tobacco production control corporation.--The term 
        ``Corporation'' means the Tobacco Production Control 
        Corporation established by section 301.
            (6) Trust fund.--The term ``Trust Fund'' means the Tobacco 
        Community Revitalization Trust Fund established by section 101.

SEC. 3. PURPOSES

    It is the purpose of this Act to--
            (1) dismantle the existing federal tobacco program and 
        establish a private program to ensure the stability of the 
        price and supply of domestically produce tobacco;
            (2) compensate quota holders for the value of assets that 
        may be diminished as a result of this legislation;
            (3) provide targeted economic development funds to tobacco 
        dependent communities for the creation of jobs, training of 
        individuals, and long-term economic development of the 
        communities;
            (4) reduce the operating costs of tobacco producers by 
        eliminating expenses associated with buying or leasing tobacco 
        quota; and
            (5) make domestically produced tobacco more competitive 
        with tobacco produced in other countries.

          TITLE I--TOBACCO COMMUNITY REVITALIZATION TRUST FUND

SEC. 101. TOBACCO COMMUNITY REVITALIZATION TRUST FUND.

    (a) In General.--There is established in the Treasury of the United 
States a trust fund to be known as the ``Tobacco Community 
Revitalization Trust Fund'', consisting of such amounts as may be 
appropriated or credited to the Trust Fund. The Trust Fund shall be 
administered by the Corporation.
    (b) Transfers to Trust Fund.--There are appropriated and 
transferred to the Trust Fund, from amounts made available to the Trust 
Fund out of funds allocated through national tobacco settlement 
legislation, $3,500,000,000 for each of fiscal years 1999 through 2003 
and $265,000,000 for each of fiscal years 2004 through 2023.
    (c) Repayable Advances.--
            (1) Authorization.--There are authorized to be appropriated 
        to the Trust Fund, as repayable advances, such sums as may from 
        time to time be necessary to make expenditures under subsection 
        (d).
            (2) Repayment with interest.--Repayable advances made to 
        the Trust Fund shall be repaid, and interest on the advances 
        shall be paid, to the general fund of the Treasury went the 
        Secretary of the Treasury determines that moneys are available 
        in the Trust Fund to make the payments.
            (3) Rate of interest.--Interest on an advance made under 
        this subsection shall be at a rate determined by the Secretary 
        of Treasury (as of the close of the calendar month preceding 
        the month in which the advance is made) that is equal to the 
        current average market yield on outstanding marketable 
        obligations of the United States with remaining period to 
        maturity comparable to the anticipated period during which the 
        advance will be outstanding.
    (d) Expenditures From Trust Fund.--Amounts in the Trust Fund shall 
be available for making expenditures to defray--
            (1) the costs of providing compensation to quota holders 
        for the loss of tobacco quota asset value under section 201;
            (2) the costs of making transition payments to active 
        tobacco producers under section 202;
            (3) the costs of forgiving loans and transferring title to 
        inventories of tobacco and funds to Associations under section 
        203;
            (4) the costs of making tobacco community economic 
        development grants under section 204, but not to exceed 
        $250,000,000 for each of fiscal years 1999 through 2003 and an 
        amount determined by the Corporation to be appropriate for each 
        of fiscal years 2004 through 2023;
            (5) the costs of carrying out the duties of the Corporation 
        and the Associations, including assuring the quality and 
        controlling the production and marketing of domestic tobacco 
        and otherwise carrying out title III;
            (6) the costs to the Secretary of enforcing title III;
            (7) the costs of providing crop insurance to tobacco 
        producers; and
            (8) any other costs incurred by the Department of 
        Agriculture associated with tobacco.

             TITLE II--TOBACCO MARKET TRANSITION ASSISTANCE

SEC. 201. COMPENSATION TO QUOTA HOLDERS FOR LOSS OF TOBACCO QUOTA ASSET 
              VALUE.

    (a) In General.--The Corporation shall make payments for tobacco 
quota to eligible quota holders.
    (b) Eligibility.--To be eligible to receive payments under this 
section, a quota holder shall prepare and submit to the Corporation an 
application at such time, in such manner, and containing such 
information as the Corporation may require, including information 
sufficient to demonstrate to the satisfaction of the Corporation that 
the person was a quota holder on January 1, 1998.
    (c) Base Quota Level.--
            (1) In general.--The Secretary shall determine, for each 
        quota holder, the base quota level for the 1995 through 1997 
        marketing years.
            (2) Level.--The base quota level for a quota holder shall 
        be equal to the average tobacco farm marketing quota 
        established for the 1995 through 1997 marketing years for the 
        farm owned by the quota holder on January 1, 1998.
            (3) Marketing quotas other than poundage quotas.--For each 
        kind of tobacco for which there is a marketing quota or 
        allotment (on an acreage basis), the base quota level for each 
        quota holder shall be determined in accordance with this 
        subsection (based on a poundage conversion) in an amount equal 
        to the product obtained by multiplying--
                    (A) the average tobacco farm marketing quota or 
                allotment for the 1995 through 1997 marketing years; by
                    (B) the average county yield per acre for the 
                county in which the farm is located for the kind of 
                tobacco for the marketing years.
    (d) Payments.--The Corporation shall make payments to each quota 
holder that is eligible under subsection (b) in 5 equal installments, 1 
for each of the 1999 through 2003 crops of tobacco, in an aggregate 
amount that is equal to the product obtained by multiplying--
            (1) $8 per pound; by
            (2) the base quota level established for the quota holder 
        under subsection (c).

SEC. 202. TRANSITION PAYMENTS FOR ACTIVE TOBACCO PRODUCERS.

    (a) In General.--The Corporation shall make transition payments to 
eligible active tobacco producers.
    (b) Eligibility.--To be eligible to receive payments under this 
section, an active tobacco producer shall--
            (1) prepare and submit to the Corporation an application at 
        such time, in such manner, and containing such information as 
        the Corporation may require, including information sufficient 
        to make the demonstration required under paragraph (2); and
            (2) demonstrate to the satisfaction of the Corporation 
        that, the person planted, or is considered to have planted, a 
        1997 crop of tobacco.
    (c) Payment Quantity.--
            (1) In general.--The Secretary shall determine and provide 
        to the Corporation, for each active tobacco producer, the 
        production quantity eligible for payment for the 1995 through 
        1997 marketing years.
            (2) Eligible production quantity.--The production quantity 
        eligible for payment for an active tobacco producer shall be 
        equal to the average number of pounds of tobacco quota 
        established for a farm for the 1995 through 1997 marketing 
        years for which the producer was the actual producer of the 
        tobacco on the farm.
            (3) Marketing quotas other than poundage quotas.--For each 
        kind of tobacco for which there is a marketing quota or 
        allotment (on an acreage basis), the production quantity 
        eligible for payment for each active tobacco producer shall be 
        determined in accordance with this subsection (based on a 
        poundage conversion) in an amount equal to the product obtained 
        by multiplying--
                    (A) the average tobacco farm marketing quota or 
                allotment for the 1995 through 1997 marketing years; by
                    (B) the average county yield per acre for the 
                county in which the farm is located for the kind of 
                tobacco for the marketing years.
    (d) Payments.--The Corporation shall make payments for each of the 
1999 through 2003 crops of tobacco to each active tobacco producer that 
is eligible under subsection (b) in an amount that is equal to the 
product obtained by multiplying--
            (1) $0.40 per pound; by
            (2) the payment quantity established for the producer under 
        subsection (c).
    (e) Death of Active Tobacco Producer.--If an active tobacco 
producer who is entitled to payments under this section dies and is 
survived by a spouse or 1 or more dependents, the right to receive the 
payments shall transfer to the surviving spouse or, if there is no 
surviving spouse, to the estate of the producer.

SEC. 203. TOBACCO LOAN ASSOCIATIONS.

    (a) Prior Loans.--The Secretary shall forgive each loan made to an 
Association under section 106A or 106B of the Agricultural Act of 1949 
(7 U.S.C. 1445 1, 1445 2) that is outstanding on the date of enactment 
of this Act.
    (b) Transfer of Title for Loan Inventories.--The Secretary shall 
transfer to each Association described in subsection (a) the title to 
all inventories of tobacco held by the Secretary to secure loans made 
to the Association under section 106A or 106B of the Agricultural Act 
of 1949 (7 U.S.C. 1445 1, 1445 2).
    (c) No Net Cost Tobacco Funds.--Notwithstanding sections 106A(f) 
and 106B(g) of the Agricultural Act of 1949 (7 U.S.C. 1445-1(f) and 
1445-2(g)), all funds held in a No Net Cost Tobacco Fund or No Net Cost 
Tobacco Account on behalf of an Association under section 106A or 106B 
of that Act (7 U.S.C. 1445-1, 1445-2) on the date of enactment of this 
Act shall be the property of the Association.

SEC. 204. TOBACCO COMMUNITY ECONOMIC DEVELOPMENT GRANTS.

    (a) Authority.--The Corporation shall make grants to eligible 
tobacco-growing political subdivisions in accordance with this section 
to enable the political subdivisions to carry out economic development 
activities.
    (b) Eligibility.--To be eligible to receive payments under this 
section, a political subdivisions in a State shall--
            (1) have in excess of $100,000 in gross income from sales 
        of tobacco produced within the political subdivision during 1 
        or more of the 1995 through 1997 marketing years, as determined 
        by the Corporation;
            (2) prepare and submit to the Corporation an application at 
        such time, in such manner, and containing such information as 
        the Corporation may require, including--
                    (A) a description of the activities that the 
                political subdivision will carry out using amounts 
                received under the grant;
                    (B) a designation of an appropriate political 
                subdivision agency to administer amounts received under 
                the grant;
                    (C) a description of the steps to be taken to 
                ensure that the funds are distributed in accordance 
                with subsection (e); and
                    (D) an economic development plan, approved by a 
                regional authority authorized to coordinate economic 
                development efforts in the region where the political 
                subdivision is located, or approved by the State if no 
                such regional authority exists, that describes the 
                activities that the political subdivision will carry 
                out using amounts received under the grant. Where a 
                political subdivision ineligible to receive payments 
                under subsection (b)(1) is surrounded within the State 
                by a political subdivision eligible to receive payments 
                under subsection (b)(1), an economic development plan 
shall not be approved unless submitted jointly by both jurisdictions.
    (c) Amount of Grant.--
            (1) In general.--From the amounts available to carry out 
        this section for a fiscal year, the Corporation shall allot to 
        each eligible tobacco-growing political subdivision an amount 
        that bears the same ratio to the total funds available as the 
        total income of the tobacco-growing political subdivision 
        derived from the production of tobacco within the political 
        subdivision during the 1995 and through 1997 marketing years 
        (as determined under paragraph (2)) bears to the total income 
        of all tobacco-growing political subdivisions derived from the 
        production of tobacco during the 1995 through 1997 marketing 
        years.
            (2) Tobacco income.--For the 1995 through 1997 marketing 
        years, the Secretary shall determine and provide to the 
        Corporation the amount of income derived from the production of 
        tobacco in each tobacco-growing political subdivision and in 
        all tobacco-growing political subdivisions.
    (d) Payments.--
            (1) In general.--A tobacco-growing political subdivision 
        that has an application approved by the Corporation under 
        subsection (b) shall be entitled to a payment under this 
        section in an amount that is equal to its allotment under 
        subsection (c).
            (2) Form of payments.--The Corporation may make payments 
        under this section to a tobacco-growing political subdivision 
        in installments, and in advance or by way of reimbursement, 
        with necessary adjustments on account of overpayments or 
        underpayments, as the Corporation may determine.
            (3) Reallotments.--Any portion of the allotment of a 
        political subdivision under subsection (c) that the Corporation 
        determines will not be used to carry out this section in 
        accordance with an approved political subdivision application 
        required under subsection (b), shall be reallotted by the 
        Corporation to other tobacco-growing political subdivisions in 
        proportion to the original allotments to the other tobacco-
        growing political subdivisions.
    (3) Use and Distribution of Funds.--
            (1) In general.--Amounts received by a tobacco-growing 
        political subdivision under this section shall be used to carry 
        out economic development activities, including--
                    (A) activities designed to help create productive 
                farm or off-farm employment in rural areas to provide a 
                more viable economic base and enhance opportunities for 
                improved incomes, living standards, and contributions 
                by rural individuals to the economic and social 
                development of tobacco communities;
                    (B) activities designed to provide training and 
                transition assistance to quota holders and active 
                tobacco producers to enable the holders and producers 
                to produce alternative agricultural commodities or 
                obtain alternative employment;
                    (C) activities to improve the quality of education 
                in tobacco communities;
                    (D) activities to promote tourism in tobacco 
                communities through natural resource protection;
                    (E) activities to construct advanced manufacturing 
                centers, industrial parks, water and sewer facilities, 
                and transportation improvements in tobacco communities;
                    (F) activities to establish small business 
                incubators in tobacco communities;
                    (G) activities to install high technology 
                infrastructure improvements in tobacco communities;
                    (H) rural business enterprise activities described 
                in subsections (c) and (e) of section 310B of the 
                Consolidated Farm and Rural Development Act (7 U.S.C 
                1932);
                    (I) downpayment loan assistance programs that are 
                similar to the program described in section 310E of the 
                Consolidated Farm and Rural Development Act (7 U.S.C 
                1935);
                    (J) activities that expand existing infrastructure, 
                facilities, and services to capitalize on opportunities 
                to diversify economies in tobacco communities and that 
                support the development of new industries or commercial 
                ventures;
                    (K) activities by agricultural organizations that 
                provide assistance directly to quota holders and active 
                tobacco producers to assist in developing other 
                agricultural activities that supplement tobacco-
                producing activities;
                    (L) initiatives designed to create or expand 
                locally owned value-added processing and marketing 
                operations in tobacco communities; and
                    (M) technical assistance activities by persons to 
                support farmer-owned enterprises, or agriculture-based 
                rural development enterprises, of the type described in 
                section 252 or 253 of the Trade Act of 1974 (19 U.S.C 
                2342, 2343).
            (2) Maintenance of effort.--The political subdivision and 
        the State shall provide assurances to the Corporation that 
        funds provided to the political subdivision under this section 
        will be used only to supplement, not to supplant, the amount of 
        Federal, State, and local funds otherwise expended for economic 
        development activities in the political subdivision.

SEC. 205. TAX TREATMENT OF TOBACCO QUOTA HOLDER COMPENSATION AND 
              TRANSITION PAYMENTS.

    (a) In General.--Part II of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically included 
in gross income) is amended by adding at the end the following:

``SEC. 91. CERTAIN TOBACCO PROGRAM PAYMENTS.

    ``(a) General Rule.--Gross income includes amounts received under 
section 201 or 202 of the Tobacco Market Transition Act.
    ``(b) Exception for Amounts Transferred During Reinvestment 
period.--
            ``(1) In general.--Subsection (a) shall not apply to any 
        amount if during reinvestment period such amount is--
                    ``(A) used to make a qualified debt repayment, or
                    ``(B) transferred to a tobacco farmer individual 
                retirement account established under section 522.
            ``(2) Qualified debt repayment.--For purposes of paragraph 
        (1), the term `qualified debt repayment' means the payment of 
        debt incurred directly by the taxpayer to produce tobacco prior 
        to January 1, 1998.
    ``(c) Character of Income.--For purposes of this subtitle--
            ``(1) any amount received under section 201 of the Tobacco 
        Market Assistance Act and included in gross income under this 
        section shall be treated as long-term capital gain, and
            ``(2) any amount received under section 202 of such Act and 
        so included in gross income shall be treated as ordinary 
        income.''.
    (b) Tobacco Farmer Individual Retirement Accounts.--Part IV of 
subchapter F of chapter 1 of the Internal Revenue Code of 1986 
(relating to farmers' cooperatives) is amended by adding at the end the 
following:

``SEC. 522. TOBACCO FARMER INDIVIDUAL RETIREMENT ACCOUNTS.

    ``(a) General Rule.--Except as provided in this section, a tobacco 
farmer individual retirement account shall be treated for purposes of 
this title in the same manner as an individual retirement plan.
    ``(b) Definitions and Special Rules.--For purposes of this title--
            ``(1) Tobacco farmer individual retirement account.--The 
        term `tobacco farmer individual retirement account' means an 
        individual retirement plan (as defined in section 7701(a)(37)) 
        other than a Roth IRA which is designated (in such manner as 
        the Corporation may prescribe) at the time of establishment of 
        the plan as a tobacco farmer individual retirement account.
            ``(2) Treatment of contributions.--
                    ``(A) Cash only.--No contribution will be accepted 
                unless it is in cash.
                    ``(B) Source of contributions.--The only 
                contributions which will be accepted are--
                            ``(i) payments under section 201 or 202 of 
                        the Tobacco Market Transition Act, and
                            ``(ii) trustee-to-trustee transfers to such 
                        trust from another tobacco farmer individual 
                        retirement account of the account beneficiary.
                    ``(C) No deduction allowed.--No deduction shall be 
                allowed under section 219 for a contribution to a 
                tobacco farmer individual retirement account.
                    ``(D) No rollover contributions allowed.--No 
                rollover contribution may be made to or from a tobacco 
                farmer individual retirement account.
            ``(3) Tax treatment of distributions.--Any amount 
        distributed from a tobacco farmer individual retirement account 
        attributable to payments made under section 201 or 202 of the 
        Tobacco Market Transition Act (including earnings thereon) 
        shall be includible in the gross income of the distributee 
        under the rules described in section 91(c). Any such 
        distribution shall be made first from amounts in such account 
        (if any) attributable to payments under such section 202 (and 
        earnings thereon).
            ``(4) Coordination with individual retirement accounts.--
        Section 408(d)(2) shall be applied separately with respect to 
        tobacco farmer individual retirement accounts and other 
        individual retirement plans.''.
    (c) Conforming Amendments.--
            (1) The table of sections for part II of subchapter B of 
        chapter 1 of the Internal Revenue Code of 1986 is amended by 
        adding at the end the following:

``Sec. 91. Certain tobacco program payments.''.
            (2) The table of sections for part IV of subchapter F of 
        chapter 1 of such Code is amended by adding at the end the 
        following:

``Sec. 522. Tobacco farmer individual retirement accounts.''.
            (3) The heading for part IV of subchapter F of chapter 1 of 
        such code is amended by striking ``FARMERS' COOPERATIVES'' and 
        inserting ``CERTAIN FARMER ENTITIES''.
            (4) The table of parts for subchapter F of chapter 1 of 
        such Code is amended by striking ``farmers' cooperatives'' and 
        inserting ``certain farmer entities''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1997.

 TITLE III--ESTABLISHMENT OF PRIVATE TOBACCO PRODUCTION ADJUSTMENT AND 
                       QUALITY ASSURANCE PROGRAM

SEC. 301. TOBACCO PRODUCTION CONTROL CORPORATION.

    (a) Establishment.--There is established a corporation to be known 
as the ``Tobacco Production Control Corporation'', which shall be a 
federally chartered instrumentality of the United States.
    (b) Duties.--Effective for the 1999 and each subsequent crop of 
each kind of tobacco, on at least a two-thirds vote of the Board of 
Directors of the Corporation, the Corporation shall--
            (1) promulgate rules that govern the production, marketing, 
        importation, exportation, and consumer quality assurances for 
        each kind of tobacco;
            (2) establish a licensing system that provides for the 
        orderly production and marketing of tobacco in the United 
        States under which--
                    (A) the Corporation shall issue a license to each 
                active tobacco producer, or other person that meets 
                requirements established by the Corporation, initially 
                based upon the eligible production quantity determined 
                for each producer under section 202(c)(1);
                    (B) the licensee shall surrender the license to the 
                Corporation if the licensee fails to actively engage in 
                the production of tobacco;
                    (C) the sale or marketing of a type of tobacco 
                which prior to the date of enactment was produced 
                pursuant to a tobacco farm marketing quota or farm 
                acreage allotment issued under the Agricultural Act of 
                1938 is prohibited without a license;
                    (D) the sale, lease, or other transfer of a license 
                shall be prohibited except pursuant to subsection (c); 
                and
                    (E) the Corporation shall issue marketing licenses 
                to tobacco marketing facilities and tobacco purchasing 
                entities;
            (3) ensure compliance, through whatever means is available, 
        of all persons with any license, regulation, rule, limitation, 
        or guideline issued under, or in order to carry out, this Act;
            (4) offer crop insurance for tobacco producers;
            (5) establish a system that will provide assurance to 
        consumers of the quality of all tobacco marketed in the United 
        States and that, at a minimum--
                    (A) provides for the inspection and grading of 
                domestically produced tobacco and imported tobacco;
                    (B) determines and describes the physical 
                characteristics of domestically produced tobacco and 
                imported tobacco;
                    (C) ensures the physical and chemical integrity of 
                domestically produced tobacco and imported tobacco;
            (6) carry out its duties, functions, and determinations 
        through loan associations and local committees, to the extent 
        practicable and appropriate; and
            (7) continue to maintain and carry out a tobacco program in 
        accordance with the rules and regulations contained in chapter 
        7 of the Code of Federal Regulations unless and until rules are 
        promulgated under subsection (c).
    (c) Transfer of License.--
            (1) Right of survivorship.--
                    (A) In general.--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 surviving direct descendants of the persons.
                    (B) 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 Corporation may hold the license 
                in the name of the descendants for a period of not more 
                than 18 months, at the discretion of the Corporation.
            (2) 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.
    (d) Board of Directors.--
            (1) In general.--The powers of the Corporation shall be 
        vested in a Board of Directors.
            (2) Members.--The Board of Directors shall consist of 25 
        members as follows:
                    (A) The Secretary of Agriculture.
                    (B) The Secretary of Health and Human Services.
                    (C) The Administrator of the Environmental 
                Protection Agency.
                    (D) The United States Trade Representative.
                    (E) 1 member from each state that produces more 
                than 50,000,000 pounds of tobacco. All members 
                appointed under this subparagraph shall be actively 
                engaged in the production of tobacco and shall be 
                elected by the tobacco producers from each respective 
                state.
                    (F) 3 members appointed by the flue-cured tobacco 
                association and 2 members appointed by the burley 
                tobacco associations, all such members to be licensees 
                under this Act.
                    (G) 1 member appointed by tobacco associations 
                other than those specified in subparagraph (F), on a 
                rotating basis.
                    (H) 3 members representing public health interests, 
                appointed by the Secretary of Health and Human 
                Services.
                    (I) 1 member representing domestic cigarette 
                manufacturers.
                    (J) 1 member representing domestic export leaf 
                dealers, appointed by the Leaf Tobacco Exporters 
                Association (LTEA).
                    (K) 2 members representing tobacco marketing 
                facilities, 1 each appointed by the Bright Belt 
                Warehouse Association (BBWA) and the Burley Auction 
                Warehouse Association (BAWA).
                    (L) 1 member that is the person responsible for 
                operating the quality assurance system of the 
                Corporation described in subsection (b)(4).
                    (M) 1 member who is a Dean of Agriculture of a Land 
                Grant University from a tobacco producing state.
            (3) Membership qualifications.--A member of the Board shall 
        not hold any Federal, State, or local elected office.
            (4) Chairpersons.--The Secretary of Agriculture shall serve 
        as chairperson of the Board.
            (5) Executive director.--
                    (A) Appointment.--The Board shall appoint an 
                Executive Director.
                    (B) Duties.--The Executive Director shall be the 
                chief executive officer of the Corporation, with such 
                power and authority as may be conferred by the Board.
                    (C) Compensation.--The Executive Director shall 
                receive basic pay at the rate provided for level IV of 
                the Executive Schedule under section 5315 of title 5, 
                United States Code.
            (6) Officers.--The Board shall establish the offices and 
        appoint the officers of the Corporation, including a Secretary, 
        and define the duties of the officers in a manner consistent 
        with this section.
            (7) Meetings.--
                    (A) In general.--The Board shall meet at least 3 
                times each fiscal year at the call of a Chairperson or 
                at the request of the Executive Director.
                    (B) Location.--The location of a meeting shall be 
                subject to approval of the Executive Director.
                    (C) Quorum.--A quorum of the Board shall consist of 
                a majority of the members.
            (8) Term; vacancies.--
                    (A) Term.--The term of office of a member of the 
                Board appointed under any of subparagraphs (E) through 
                (K) of paragraph (2) shall be 4 years.
                    (B) Vacancies.--A vacancy on the Board shall be 
                filled in the same manner as the original appointment 
                was made.
            (9) Compensation.--
                    (A) Federal members.--A member of the Board who is 
                an officer or employee of the United States shall not 
                receive any additional compensation by reason of 
                service on the Board.
                    (B) Non-federal members.--Any other member shall 
                receive compensation, for each day (including travel 
                time) that the member is engaged in the performance of 
                the functions of the Board, at a rate determined 
                appropriate by the Board.
                    (C) Expenses.--A member of the Board shall be 
                reimbursed for travel, subsistence, and other necessary 
                expenses incurred by the member in the performance of 
                the duties of the member.
            (10) Conflict of interest; financial disclosure.--
                    (A) Conflict of interest.--Except as provided in 
                subparagraph (C), a member of the Board shall not vote 
                on any matter concerning any application, contract, or 
                claim, or other particular matter pending before the 
                Corporation, in which, to the knowledge of the member, 
                the member, spouse, or child of the member, partner of 
                the member, or organization in which the member is 
                serving as officer, director, trustee, partner, or 
                employee, or any person or organization with which the 
                member is negotiating or has any arrangement concerning 
                prospective employment, has a financial interest.
                    (B) Violations.--Violation of subparagraph (A) by a 
                member of the Board shall be cause for removal of the 
                member, but shall not impair or otherwise affect the 
                validity of any otherwise lawful action by the 
                Corporation in which the member participated.
                    (C) Exceptions.--The prohibitions contained in 
                subparagraph (A) shall not apply to a member of the 
                Board that is a tobacco producer if the member advises 
                the Board of the nature of the particular matter in 
                which the member proposes to participate, and if the 
                member makes a full disclosure of the financial 
                interest, prior to any participation.
                    (D) Financial disclosure.--A Board member shall be 
                subject to the financial disclosure requirements of 
                subchapter B of chapter XVI of title 5, Code of Federal 
                Regulations (or any corresponding or similar regulation 
                or ruling), applicable to a special Government employee 
                (as defined in section 202(a) of title 18, United 
                States Code).
                    (E) Representation.--No member of the Board shall 
                receive compensation from more than one interest 
                represented on the Board.
            (11) Bylaws.--The Board shall adopt, and may from time to 
        time amend, any bylaw that is necessary for the proper 
        management and functioning of the Corporation.
            (12) Personnel.--The Corporation may select and appoint 
        officers, attorneys, employees, and agents, who shall be vested 
        with such powers and duties as the Corporation may determine.
    (e) General Powers.--In addition to any other powers granted to the 
Corporation under this title, the Corporation--
            (1) shall have succession in its corporate name;
            (2) may adopt, alter, and rescind any bylaw and adopt and 
        alter a corporate seal, which shall be judicially noticed;
            (3) may enter into any agreement or contract with a person 
        or private or governmental agency;
            (4) may lease, purchase, accept a gift or donation of, or 
        otherwise acquire, use, own, hold, improve, or otherwise deal 
        in or with, and sell, convey, mortgage, pledge, lease, 
        exchange, or otherwise dispose of, any property or interest in 
        property, as the Corporation considers necessary in the 
        transaction of the business of the Corporation;
            (5) may sue and be sued in the corporate name of the 
        Corporation, except that--
                    (A) no attachment, injunction, garnishment, or 
                similar process shall be issued against the Corporation 
                or property of the Corporation; and
                    (B) exclusive original jurisdiction shall reside in 
                the district courts of the United States, and the 
                Corporation may intervene in any court in any suite, 
                action, or proceeding in which the Corporation has an 
                interest;
            (6) may independently retain legal representation;
            (7) may provide for and designate such committees, and the 
        functions of the committees, as the Board considers necessary 
        or desirable;
            (8) may indemnify officers of the Corporation, as the Board 
        considers necessary and desirable, except that the officers 
        shall not be indemnified for an act outside the scope of 
        employment;
            (9) may, with the consent of any board, commission, 
        independent establishment, or executive department of the 
        Federal Government, including any field service, use 
        information, services, facilities, officials, and employees in 
        carrying out this section, and pay for the use, which payments 
        shall be transferred to the applicable appropriation account 
        that incurred the expense;
            (10) may obtain the services and fix the compensation of 
        any consultant and otherwise procure temporary and intermittent 
        services under section 3109(b) of title 5, United States Code;
            (11) shall have the rights, privileges, and immunities of 
        the United States with respect to the right to priority of 
        payment with respect to debts due from bankrupt, insolvent, or 
        deceased creditors;
            (12) may collect or compromise any obligations assigned to 
        or held by the Corporation, including any legal or equitable 
        rights accruing to the Corporation;
            (13) shall determine the character of, and necessity for, 
        obligations and expenditures of the Corporation and the manner 
        in which the obligations and expenditures shall be incurred, 
        allowed, and paid, subject to provisions of law specifically 
        applicable to Government corporations;
            (14) may make final and conclusive settlement and 
        adjustment of any claim by or against the Corporation or a 
        fiscal officer of the Corporation;
            (15) may sell assets, loans, and equity interests acquired 
        in connection with the financing of projects funded by the 
        Corporation; and
            (16) may exercise all other lawful powers necessarily or 
        reasonably related to the establishment of the Corporation to 
        carry out this title and the powers, purposes, functions, 
        duties, and authorized activities of the Corporation.

SEC. 302. TOBACCO LOAN ASSOCIATIONS.

    The Corporation shall enter into an agreement with producer-owned 
cooperative marketing loan associations for each kind of tobacco to--
            (1) make price support available to producers of the kind 
        of tobacco;
            (2) carry out the licensing system established under 
        subsection (b)(2);
            (3) arrange for financing and the administration of price 
        supports for the kind of tobacco; and
            (4) receive, process, store, and sell any domestically 
        produced tobacco received as collateral for a price support 
        loan.

SEC. 303. TOBACCO PRICE SUPPORT LEVELS.

    (a) Initial Level.--Effective for the 1999 crop of each kind of 
tobacco, the support level in cents per pound established under this 
title shall be equal to--
            (1) the simple average price received by producers of the 
        kind of tobacco, as determined by the Corporation, during the 
        marketing years for the immediately preceding 5 crops of the 
        kind of tobacco; less
            (2) the average return to quota for 1994 through 1998 crops 
        of the kind of tobacco, as determined by the Corporation.
    (b) Subsequent Adjustment.--The Corporation, in consultation with 
the Associations, shall adjust and establish the support level for each 
kind of tobacco at an appropriate level for each year after 1999.

SEC. 304. PENALTIES.

    (a) In General.--The violation of any provision of this Act, or any 
rule or regulation issued to carry out this Act, or the terms of any 
license issued under this Act, by a person (including the marketing of 
any kind of tobacco without a license issued under this title or in 
excess of the quantity permitted under such a license) shall subject 
the person to revocation or suspension of the person's license, a 
penalty of 75 percent of the average market price (calculated to the 
nearest whole cent) for the kind of tobacco for the immediately 
preceding marketing year, or both, in the discretion of the Secretary.
    (b) Payor.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the penalty shall be paid by the person who 
        acquired the tobacco from the producer.
            (2) Deduction from price.--An amount equivalent to the 
        penalty may be deducted by the buyer from the price paid to the 
        producer in any case in which the tobacco is marketed by sale.
            (3) Warehouseman or agent.--If the tobacco is marketed by 
        the producer through a warehouseman or other agent, the penalty 
        shall be paid by the warehouseman or agent who may deduct an 
        amount equivalent to the penalty from the price paid to the 
        producer.
            (4) Direct marketing outside united states.--In any case in 
        which tobacco is marketed directly to any person outside the 
        United States, the penalty shall be paid and remitted by the 
        producer.
    (c) False Statement or Omission.--If any producer falsely 
identifies or fails to account for the disposition of any tobacco--
            (1) an amount of tobacco equal to the normal yield of the 
        number of acres harvested in excess of the quantity permitted 
        under a license issued under this title shall be considered to 
        have been marketed in excess of the license for the farm; and
            (2) the penalty for the excess marketing shall be paid and 
        remitted by the producer.
    (d) Carryover.--Tobacco carried over by the producer of the tobacco 
from 1 marketing year to another marketing year may be marketed without 
payment of the penalty imposed by this section if--
            (1) the total quantity of tobacco available for marketing 
        from the farm in the marketing year from which the tobacco is 
        carried over does not exceed the quantity that may be marketed 
        under a license issued for the farm for the marketing year; or
            (2) the quantity of tobacco carried over does not exceed 
        the normal production of that number of acres by which the 
        harvested acreage of tobacco in the calendar year in which the 
        marketing year begins is less than the quantity that may be 
        marketed under the license.
    (e) Tobacco Marketed Prior to Marketing Year.--Tobacco produced in 
a calendar year for the marketing year beginning during the calendar 
year shall be subject to licenses issued for the marketing year even 
though the tobacco is marketed prior to the date on which the marketing 
year begins.
    (f) Proportional Payments.--The Secretary shall require collection 
of the penalty on a proportion of each lot of tobacco marketed from the 
farm equal to the proportion that the tobacco available for marketing 
from the farm in excess of the quantity that may be marketed under a 
license is of the total quantity of tobacco available for marketing 
from the farm if satisfactory proof is not furnished as to the 
disposition to be made of the excess tobacco prior to the marketing of 
any tobacco from the farm.
    (g) Lien.--Until the amount of the penalty provided by this section 
is paid, a lien on the tobacco with respect to which the penalty is 
incurred, and on any subsequent tobacco subject to licenses issued 
under this title in which the person liable for payment of the penalty 
has an interest, shall be in effect in favor of the Corporation for the 
amount of the penalty.

SEC. 305. PROGRAM REFERENDA.

    (a) Initial Referendum.--Not later than 3 years after the date of 
enactment of this Act, the Corporation shall conduct a referendum among 
licensees engaged in the production of each kind of tobacco to 
determine whether such producers are in favor of continuing the 
operation of the program established under this Act with respect to 
that kind of tobacco. If more than one half of the licensees voting 
oppose the continuation of the program, the Corporation shall announce 
the result and shall conduct a second referendum one year later. If 
more than one half of the licensees voting in the second referendum 
also oppose the continuation of the program, the Corporation shall 
announce the result and the program shall cease to be in effect for 
that kind of tobacco.
    (b) Subsequent Referenda.--The Corporation may conduct subsequent 
referenda from time to time as the Corporation deems appropriate to 
determine whether producers are in favor of continuing the program 
established under this Act, the use of marketing allotments and quotas, 
limitations on transfer of quota, or any other aspect of the program.
    (c) Effective Date.--This section shall be effective 1 year after 
the date of enactment of this Act.
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