I 

108TH CONGRESS 

2D SESSION H. R. 4033

To terminate the Federal tobacco quota and price support programs, to 

require the payment of fair and equitable compensation for tobacco 

quota holders and active tobacco producers adversely affected by the 

termination of such programs, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 25, 2004

Mr. JENKINS (for himself, Mr. MCINTYRE, Mr. BALLANCE, Mr. BALLENGER, 

Mr. BARRETT of South Carolina, Mr. BISHOP of Georgia, Mrs. 

BLACKBURN, Mr. BOUCHER, Mr. BROWN of South Carolina, Mr. BURNS, 

Mr. BURR, Mr. CHANDLER, Mr. COLLINS, Mr. COBLE, Mr. COOPER, Mr. 

DAVIS of Tennessee, Mr. GINGREY, Mr. GOODE, Mr. GORDON, Mr. 

HAYES, Mr. ISAKSON, Mr. JONES of North Carolina, Mr. KINGSTON, Mr. 

LEWIS of Kentucky, Mr. LUCAS of Kentucky, Mr. PETERSON of Minnesota, Mr. ROGERS of Kentucky, Mr. SCOTT of Georgia, Mr. TANNER, 

Mr. TAYLOR of North Carolina, Mr. TURNER of Ohio, Mr. WAMP, Mr. 

WHITFIELD, Mr. WILSON of South Carolina, and Mr. BOYD) introduced 

the following bill; which was referred to the Committee on Agriculture 

A BILL

To terminate the Federal tobacco quota and price support 

programs, to require the payment of fair and equitable 

compensation for tobacco quota holders and active tobacco producers adversely affected by the termination 

of such programs, 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,
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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

3 ‘‘Fair and Equitable Tobacco Reform Act of 2004’’. 

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

5 this Act is as follows:

Sec. 1. Short title; table of contents. 

Sec. 2. Effective date. 

TITLE I—TERMINATION OF FEDERAL TOBACCO QUOTA AND 

PRICE SUPPORT PROGRAMS 

Sec. 101. Termination of tobacco quota program and related provisions. 

Sec. 102. Termination of tobacco price support program and related provisions. 

Sec. 103. Liability. 

TITLE II—TRANSITIONAL PAYMENTS TO TOBACCO QUOTA 

HOLDERS AND ACTIVE PRODUCERS OF TOBACCO 

Sec. 201. Definitions of active tobacco producer and quota holder. 

Sec. 202. Payments to tobacco quota holders. 

Sec. 203. Transition payments for active producers of quota tobacco. 

Sec. 204. Geographical restrictions on expansion of tobacco production. 

Sec. 205. Resolution of disputes. 

Sec. 206. Source of funds for payments.

6 SEC. 2. EFFECTIVE DATE. 

7 This Act and the amendments made by this Act shall 

8 apply to the 2005 and subsequent crops of each kind of 

9 tobacco. 

10 TITLE I—TERMINATION OF FED11 ERAL TOBACCO QUOTA AND 

12 PRICE SUPPORT PROGRAMS 

13 SEC. 101. TERMINATION OF TOBACCO QUOTA PROGRAM 

14 AND RELATED PROVISIONS. 

15 (a) MARKETING QUOTAS.—Part I of subtitle B of 

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

17 U.S.C. 1311 et seq.) is repealed. 
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1 (b) PROCESSING TAX.—Section 9(b) of the Agricul2 tural Adjustment Act (7 U.S.C. 609(b)), reenacted with 

3 amendments by the Agricultural Marketing Agreement 

4 Act of 1937, is amended—

5 (1) in paragraph (2), by striking ‘‘tobacco,’’; 

6 and 

7 (2) in paragraph (6)(B)(i), by striking ‘‘, or, in 

8 the case of tobacco, is less than the fair exchange 

9 value by not more than 10 per centum,’’. 

10 (c) DECLARATION OF POLICY.—Section 2 of the Ag11 ricultural Adjustment Act of 1938 (7 U.S.C. 1282) is 

12 amended by striking ‘‘tobacco,’’. 

13 (d) DEFINITIONS.—Section 301(b) of the Agricul14 tural Adjustment Act of 1938 (7 U.S.C. 1301(b)) is 

15 amended—

16 (1) in paragraph (3)—

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

18 (B) by redesignating subparagraph (D) as 

19 subparagraph (C); 

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

21 (3) in paragraph (10)—

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

23 (B) by redesignating subparagraph (C) as 

24 subparagraph (B); 
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1 (4) in paragraph (11)(B), by striking ‘‘and to2 bacco’’; 

3 (5) in paragraph (12), by striking ‘‘tobacco,’’; 

4 (6) in paragraph (14)—

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

6 ‘‘(A)’’; and 

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

8 and (D); 

9 (7) by striking paragraph (15); 

10 (8) in paragraph (16)—

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

12 (B) by redesignating subparagraph (C) as 

13 subparagraph (B); 

14 (9) by striking paragraph (17); and 

15 (10) by redesignating paragraph (16) as para16 graph (15). 

17 (e) PARITY PAYMENTS.—Section 303 of the Agricul18 tural Adjustment Act of 1938 (7 U.S.C. 1303) is amended 

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

20 inserting ‘‘or rice,’’. 

21 (f) ADMINISTRATIVE PROVISIONS.—Section 361 of 

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

23 is amended by striking ‘‘tobacco,’’. 
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1 (g) ADJUSTMENT OF QUOTAS.—Section 371 of the 

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

3 amended—

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

5 striking ‘‘rice, or tobacco’’ and inserting ‘‘or rice’’; 

6 and 

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

8 striking ‘‘rice, or tobacco’’ and inserting ‘‘or rice’’. 

9 (h) REGULATIONS.—Section 375 of the Agricultural 

10 Adjustment Act of 1938 (7 U.S.C. 1375) is amended—

11 (1) in subsection (a), by striking ‘‘peanuts, or 

12 tobacco’’ and inserting ‘‘or peanuts’’; and 

13 (2) by striking subsection (c). 

14 (i) EMINENT DOMAIN.—Section 378 of the Agricul15 tural Adjustment Act of 1938 (7 U.S.C. 1378) is amend16 ed—

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

18 striking ‘‘cotton, and tobacco’’ and inserting ‘‘and 

19 cotton’’; and 

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

21 (j) BURLEY TOBACCO FARM RECONSTITUTION.—

22 Section 379 of the Agricultural Adjustment Act of 1938 

23 (7 U.S.C. 1379) is amended—

24 (1) in subsection (a)—

25 (A) by striking ‘‘(a)’’; and 
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1 (B) in paragraph (6), by striking ‘‘, but 

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

3 case of burley tobacco’’; and 

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

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

6 Act of April 16, 1955 (Public Law 89–12; 7 U.S.C. 1314c 

7 note), is repealed. 

8 (l) BURLEY TOBACCO ACREAGE ALLOTMENTS.—The 

9 Act of July 12, 1952 (7 U.S.C. 1315), is repealed. 

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

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

12 is repealed. 

13 (n) ADVANCE RECOURSE LOANS.—Section 

14 13(a)(2)(B) of the Food Security Improvements Act of 

15 1986 (7 U.S.C. 1433c–1(a)(2)(B)) is amended by striking 

16 ‘‘tobacco and’’. 

17 (o) TOBACCO FIELD MEASUREMENT.—Section 1112 

18 of the Omnibus Budget Reconciliation Act of 1987 (Public 

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

20 SEC. 102. TERMINATION OF TOBACCO PRICE SUPPORT 

21 PROGRAM AND RELATED PROVISIONS. 

22 (a) TERMINATION OF TOBACCO PRICE SUPPORT AND

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

24 106B of the Agricultural Act of 1949 (7 U.S.C. 1445, 

25 1445–1, 1445–2) are repealed. 
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1 (b) PARITY PRICE SUPPORT.—Section 101 of the Ag2 ricultural Act of 1949 (7 U.S.C. 1441) is amended—

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

4 striking ‘‘tobacco (except as otherwise provided here5 in), corn,’’ and inserting ‘‘corn’’; 

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

7 (3) in subsection (d)(3)—

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

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

10 be made available for any crop of tobacco for 

11 which marketing quotas have been disapproved 

12 by producers;’’; and 

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

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

15 (c) DEFINITION OF BASIC AGRICULTURAL COM16 MODITY.—Section 408(c) of the Agricultural Act of 1949 

17 (7 U.S.C. 1428(c)) is amended by striking ‘‘tobacco,’’. 

18 (d) POWERS OF COMMODITY CREDIT CORPORA19 TION.—Section 5 of the Commodity Credit Corporation 

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

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

22 each place it appears. 

23 SEC. 103. LIABILITY. 

24 The amendments made by this title shall not affect 

25 the liability of any person under any provision of law so 
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1 amended with respect to any crop of tobacco planted be2 fore the effective date of this Act. 

3 TITLE II—TRANSITIONAL PAY4 MENTS TO TOBACCO QUOTA 

5 HOLDERS AND ACTIVE PRO6 DUCERS OF TOBACCO 

7 SEC. 201. DEFINITIONS OF ACTIVE TOBACCO PRODUCER 

8 AND QUOTA HOLDER. 

9 In this title: 

10 (1) ACTIVE TOBACCO PRODUCER.—The term 

11 ‘‘active tobacco producer’’ means an owner, oper12 ator, landlord, tenant, or sharecropper who, as of 

13 the day before the date of the enactment of this 

14 Act—

15 (A) shared in the risk of producing tobacco 

16 on a farm where tobacco was produced pursu17 ant to a tobacco farm marketing quota or farm 

18 acreage allotment established under part I of 

19 subtitle B of title III of the Agricultural Ad20 justment Act of 1938 (7 U.S.C. 1311 et seq.), 

21 as in effect on the day before the date of the 

22 enactment of this Act; and 

23 (B) was actively engaged on that farm in 

24 the production of tobacco marketed or consid25 ered planted. 
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1 (2) CONSIDERED PLANTED.—The term ‘‘con2 sidered planted’’ means tobacco that was planted, 

3 but failed to be produced as a result of a natural 

4 disaster, as determined by the Secretary. 

5 (3) TOBACCO QUOTA HOLDER.—The term ‘‘to6 bacco quota holder’’ means an owner, as of the day 

7 before the date of the enactment of this Act, of a 

8 tobacco farm marketing quota or a farm acreage al9 lotment established under part I of subtitle B of title 

10 III of the Agricultural Adjustment Act of 1938 (7 

11 U.S.C. 1311 et seq.), as in effect on the day before 

12 the date of the enactment of this Act. 

13 (4) SECRETARY.—The term ‘‘Secretary’’ means 

14 the Secretary of Agriculture. 

15 SEC. 202. PAYMENTS TO TOBACCO QUOTA HOLDERS. 

16 (a) PAYMENT REQUIRED.—The Secretary shall make 

17 payments to each eligible tobacco quota holder for the ter18 mination of tobacco marketing quotas and related price 

19 support under title I, which shall constitute full and fair 

20 compensation for any losses relating to such termination. 

21 (b) ELIGIBILITY.—To be eligible to receive a payment 

22 under this section, a person shall submit to the Secretary 

23 an application containing such information as the Sec24 retary may require to demonstrate to the satisfaction of 

25 the Secretary that the person satisfies the definition of 
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1 tobacco quota holder. The application shall be submitted 

2 within such time, in such form, and in such manner as 

3 the Secretary may require. 

4 (c) INDIVIDUAL BASE QUOTA LEVEL.—

5 (1) IN GENERAL.—The Secretary shall establish 

6 a base quota level applicable to each eligible tobacco 

7 quota holder identified under subsection (b). 

8 (2) POUNDAGE QUOTAS.—Subject to adjust9 ment under subsection (d), for each kind of tobacco 

10 for which the marketing quota is expressed in 

11 pounds, the base quota level for each tobacco quota 

12 holder shall be equal to the basic tobacco marketing 

13 quota under the Agriculture Adjustment Act of 1938 

14 for the marketing year in effect on the date of the 

15 enactment of this Act for quota tobacco on the farm 

16 owned by the tobacco quota holder. 

17 (3) MARKETING QUOTAS OTHER THAN POUND18 AGE QUOTAS.—Subject to adjustment under sub19 section (d), for each kind of tobacco for which there 

20 is marketing quota or allotment on an acreage basis, 

21 the base quota level for each tobacco quota holder 

22 shall be the amount equal to the product obtained 

23 by multiplying—

24 (A) the basic tobacco farm marketing 

25 quota or allotment for the marketing year in ef-
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1 fect on the date of the enactment of this Act, 

2 as established by the Secretary for quota to3 bacco on the farm owned by the tobacco quota 

4 holder; by 

5 (B) the average county production yield 

6 per acre for the county in which the farm is lo7 cated for the kind of tobacco for that marketing 

8 year. 

9 (d) TREATMENT OF CERTAIN CONTRACTS AND

10 AGREEMENTS.—

11 (1) EFFECT OF PURCHASE CONTRACT.—If 

12 there was an agreement for the purchase of all or 

13 part of a farm described in subsection (c) as of the 

14 date of the enactment of this Act, and the parties 

15 to the sale are unable to agree to the disposition of 

16 eligibility for payments under this section, the Sec17 retary, taking into account any transfer of quota 

18 that has been agreed to, shall provide for the equi19 table division of the payments among the parties by 

20 adjusting the determination of who is the tobacco 

21 quota holder with respect to particular pounds of the 

22 quota. 

23 (2) EFFECT OF AGREEMENT FOR PERMANENT

24 QUOTA TRANSFER.—If the Secretary determines 

25 that there was in existence, as of the day before the 
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1 date of the enactment of this Act, an agreement for 

2 the permanent transfer of quota, but that the trans3 fer was not completed by that date, the Secretary 

4 shall consider the tobacco quota holder to be the 

5 party to the agreement that, as of that date, was the 

6 owner of the farm to which the quota was to be 

7 transferred. 

8 (e) TOTAL PAYMENT AMOUNTS BASED ON 2002 

9 MARKETING YEAR.—

10 (1) CALCULATION OF ANNUAL PAYMENT

11 AMOUNT.—During fiscal years 2005 through 2009, 

12 the Secretary shall make payments to all eligible to13 bacco quota holders identified under subsection (b) 

14 in an annual amount equal to the product obtained 

15 by multiplying, for each kind of tobacco for which 

16 the marketing quota is expressed in pounds—

17 (A) $1.40 per pound; by 

18 (B) the total tobacco farm marketing 

19 quotas established under the Agriculture Ad20 justment Act of 1938 for the 2002 marketing 

21 year for that kind of tobacco. 

22 (2) MARKETING QUOTAS OTHER THAN POUND23 AGE QUOTAS.—For each kind of tobacco for which 

24 there is a marketing quota or allotment on an acre25 age basis, the Secretary shall convert the tobacco 
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1 farm marketing quotas or allotments established 

2 under the Agriculture Adjustment Act of 1938 for 

3 the 2002 marketing year for that kind of tobacco to 

4 a poundage basis before executing the mathematical 

5 equation specified in paragraph (1). 

6 (f) INDIVIDUAL PAYMENT AMOUNTS.—The annual 

7 payment amount for each eligible tobacco quota holder 

8 with respect to a kind of tobacco under this section shall 

9 bear the same ratio to the amount determined by the Sec10 retary under subsection (e) with respect to that kind of 

11 tobacco as the individual base quota level of that eligible 

12 tobacco quota holder under subsection (c) with respect to 

13 that kind of tobacco bears to the total base quota levels 

14 of all eligible tobacco quota holders with respect to that 

15 kind of tobacco. 

16 (g) DEATH OF TOBACCO QUOTA HOLDER.—If a to17 bacco quota holder who is entitled to payments under this 

18 section dies and is survived by a spouse or one or more 

19 dependents, the right to receive the payments shall trans20 fer to the surviving spouse or, if there is no surviving 

21 spouse, to the estate of the tobacco quota holder. 
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1 SEC. 203. TRANSITION PAYMENTS FOR ACTIVE PRODUCERS 

2 OF QUOTA TOBACCO. 

3 (a) TRANSITION PAYMENTS REQUIRED.—The Sec4 retary shall make transition payments under this section 

5 to eligible active producers of quota tobacco. 

6 (b) ELIGIBILITY.—To be eligible to receive a transi7 tion payment under this section, a person shall submit to 

8 the Secretary an application containing such information 

9 as the Secretary may require to demonstrate to the satis10 faction of the Secretary that the person satisfies the defi11 nition of active producer of quota tobacco. The application 

12 shall be submitted within such time, in such form, and 

13 in such manner as the Secretary may require. 

14 (c) CURRENT PRODUCTION BASE.—The Secretary 

15 shall establish a production base applicable to each eligible 

16 active producer of quota tobacco identified under sub17 section (b). A producer’s production base shall be equal 

18 to the quantity, in pounds, of quota tobacco subject to the 

19 basic marketing quota marketed or considered planted by 

20 the producer under the Agriculture Adjustment Act of 

21 1938 for the marketing year in effect on the date of the 

22 enactment of this Act. 

23 (d) TOTAL PAYMENT AMOUNTS BASED ON 2002 

24 MARKETING YEAR.—

25 (1) CALCULATION OF ANNUAL PAYMENT

26 AMOUNT.—During fiscal years 2005 through 2009, 
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1 the Secretary shall make payments to all eligible ac2 tive producers of quota tobacco identified under sub3 section (b) in an annual amount equal to the prod4 uct obtained by multiplying, for each kind of tobacco 

5 for which the marketing quota is expressed in 

6 pounds—

7 (A) $0.60 per pound; by 

8 (B) the total tobacco farm marketing 

9 quotas established under the Agriculture Ad10 justment Act of 1938 for the 2002 marketing 

11 year for that kind of tobacco. 

12 (2) MARKETING QUOTAS OTHER THAN POUND13 AGE QUOTAS.—For each kind of tobacco for which 

14 there is a marketing quota or allotment on an acre15 age basis, the Secretary shall convert the tobacco 

16 farm marketing quotas or allotments established 

17 under the Agriculture Adjustment Act of 1938 for 

18 the 2002 marketing year for that kind of tobacco to 

19 a poundage basis before executing the mathematical 

20 equation specified in paragraph (1). 

21 (e) INDIVIDUAL PAYMENT AMOUNTS.—The annual 

22 payment amount for each eligible active producer of quota 

23 tobacco identified under subsection (b) with respect to a 

24 kind of tobacco under this section shall bear the same 

25 ratio to the amount determined by the Secretary under 
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1 subsection (d) with respect to that kind of tobacco as the 

2 individual production base of that eligible active producer 

3 under subsection (c) with respect to that kind of tobacco 

4 bears to the total production bases determined under that 

5 subsection for all eligible active producers of that kind of 

6 tobacco. 

7 (f) DEATH OF TOBACCO PRODUCER.—If a tobacco 

8 producer who is entitled to payments under this section 

9 dies and is survived by a spouse or one or more depend10 ents, the right to receive the payments shall transfer to 

11 the surviving spouse or, if there is no surviving spouse, 

12 to the estate of the tobacco producer. 

13 SEC. 204. GEOGRAPHICAL RESTRICTIONS ON EXPANSION 

14 OF TOBACCO PRODUCTION. 

15 (a) PURPOSE.—The purpose of this section is to pro16 vide an orderly economic transition away from the mar17 keting of tobacco based on quotas and price support while 

18 also addressing the economic dislocation, and the resulting 

19 impact on interstate commerce, that the termination of the 

20 tobacco quota and price support programs might cause. 

21 (b) PENALTY APPLICABLE TO TOBACCO GROWN

22 OUTSIDE TRADITIONAL TOBACCO COUNTIES.—The mar23 keting of tobacco in the 2005 or subsequent marketing 

24 years, of a kind of tobacco that was subject to a marketing 

25 quota in the 2002 marketing year, shall be subject to a 
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1 penalty equal to 100 percent of the total amount received 

2 on the marketing of the tobacco unless the tobacco was 

3 grown in a traditional tobacco county. 

4 (c) DEFINITIONS.—In this section: 

5 (1) The term ‘‘marketing year’’ means July 1 

6 to June 30 for flue-cured tobacco and October 1 to 

7 September 30 for all other kinds of tobacco. 

8 (2) The term ‘‘marketing quota in the 2002 

9 marketing year’’ means a quota established for that 

10 year pursuant to part I of subtitle B of title III of 

11 the Agricultural Adjustment Act of 1938 (7 U.S.C. 

12 1311 et seq.) and related provisions, as in effect for 

13 that marketing year. 

14 (3) The term ‘‘traditional tobacco county’’, with 

15 respect to a kind of tobacco, means—

16 (A) a county in the United States that had 

17 1 or more farms operated by active producers 

18 of quota tobacco of that kind of tobacco under 

19 a marketing quota in the 2002 marketing year; 

20 or 

21 (B) a county contiguous to a county de22 scribed in subparagraph (A) for that kind of to23 bacco. 
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1 SEC. 205. RESOLUTION OF DISPUTES. 

2 Any dispute regarding the eligibility of a person to 

3 receive a payment under this title, or the amount of the 

4 payment, shall be resolved by the county committee estab5 lished under section 8 of the Soil Conservation and Do6 mestic Allotment Act (16 U.S.C. 590h) for the county or 

7 other area in which the farming operation of the person 

8 is located. 

9 SEC. 206. SOURCE OF FUNDS FOR PAYMENTS. 

10 There is hereby appropriated to the Secretary, from 

11 amounts in the general fund of the Treasury, such 

12 amounts as the Secretary needs in order to make the pay13 ments required by sections 202 and 203, provided such 

14 amounts do not exceed amounts received in the Treasury 

15 under chapter 52 of the Internal Revenue Code of 1986 

16 (relating to tobacco products and cigarette papers and 

17 tubes).

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