I 

108TH CONGRESS 

1ST SESSION H. R. 986

To replace the existing Federal tobacco program with a federally chartered 

corporation to ensure the stability of the price and supply of domestically 

produced tobacco, to compensate quota holders for the loss of tobacco 

quota asset value, to provide transition assistance for active tobacco 

producers, to increase the competitiveness of domestically produced tobacco, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 27, 2003

Mr. GOODE (for himself, Mr. LEWIS of Kentucky, and Mr. JONES of North 

Carolina) introduced the following bill; which was referred to the Committee on Agriculture, and in addition to the Committee on Ways and 

Means, for a period to be subsequently determined by the Speaker, in 

each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL

To replace the existing Federal tobacco program with a federally chartered corporation to ensure the stability of 

the price and supply of domestically produced tobacco, 

to compensate quota holders for the loss of tobacco quota 

asset value, to provide transition assistance for active 

tobacco producers, to increase the competitiveness of domestically produced tobacco, 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 ‘‘Tobacco Market Transition Act’’. 

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

5 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. Transition payments for other persons involved in tobacco production 

and marketing. 

Sec. 205. Tax treatment of compensation and transition payments. 

TITLE III—ESTABLISHMENT OF PRIVATE TOBACCO PRODUCTION 

ADJUSTMENT AND QUALITY ASSURANCE PROGRAMS 

Sec. 301. Establishment and duties of Tobacco Production Control Corporation. 

Sec. 302. Board of directors of Corporation. 

Sec. 303. Board meetings. 

Sec. 304. Staff. 

Sec. 305. General powers of Corporation. 

Sec. 306. Corporation relationship with tobacco loan associations. 

Sec. 307. Tobacco base price levels. 

Sec. 308. Penalties. 

Sec. 309. Program referenda. 

TITLE IV—TERMINATION OF CURRENT TOBACCO PROGRAMS 

Sec. 401. Termination of marketing quota programs and repeal of related provisions. 

Sec. 402. Termination of tobacco price support loan and no net cost provisions 

and repeal of related provisions. 

Sec. 403. Continued availability of Federal crop insurance.

6 SEC. 2. DEFINITIONS. 

7 In this Act: 

8 (1) ACTIVE TOBACCO PRODUCER.—The term 

9 ‘‘active tobacco producer’’ means a person that—
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1 (A) is the actual producer, as determined 

2 by the Secretary, of tobacco on a farm where 

3 tobacco is produced pursuant to a tobacco farm 

4 marketing quota or farm acreage allotment es5 tablished under the Agricultural Adjustment 

6 Act of 1938 (7 U.S.C. 1281 et seq.) for the 

7 2002 or 2003 crop year; and 

8 (B) planted the crop, or is considered to 

9 have planted the crop under that Act, in 2001, 

10 2002, or 2003. 

11 (2) ASSOCIATION.—The term ‘‘Association’’ 

12 means a producer-owned cooperative marketing asso13 ciation. 

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

15 means the Tobacco Production Control Corporation 

16 established by section 301. 

17 (4) QUOTA HOLDER.—The term ‘‘quota holder’’ 

18 means an owner, as of January 1, 2003, of a to19 bacco farm marketing quota or a farm acreage allot20 ment established under the Agricultural Adjustment 

21 Act of 1938 (7 U.S.C. 1281 et seq.) for the 2002 

22 marketing year. 

23 (5) SECRETARY.—The term ‘‘Secretary’’ means 

24 the Secretary of Agriculture. 
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1 (6) TRUST FUND.—The term ‘‘Trust Fund’’ 

2 means the Tobacco Community Revitalization Trust 

3 Fund established by section 101. 

4 SEC. 3. PURPOSES. 

5 It is the purpose of this Act—

6 (1) to terminate the existing Federal tobacco 

7 program and establish federally chartered corpora8 tion to ensure the stability of the price and supply 

9 of domestically produced tobacco; 

10 (2) to compensate quota holders for the loss of 

11 tobacco quota asset value as a result of the termi12 nation of the existing Federal tobacco program; 

13 (3) to provide transition assistance to active to14 bacco producers; and 

15 (4) to make domestically produced tobacco 

16 more competitive with tobacco produced in other 

17 countries by reducing the operating costs of tobacco 

18 producers through the elimination of expenses asso19 ciated with buying or leasing tobacco quota. 

20 TITLE I—TOBACCO COMMUNITY 

21 REVITALIZATION TRUST FUND 

22 SEC. 101. TOBACCO COMMUNITY REVITALIZATION TRUST 

23 FUND. 

24 (a) IN GENERAL.—
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1 (1) ESTABLISHMENT.—There is established in 

2 the Treasury of the United States a trust fund to 

3 be known as the ‘‘Tobacco Community Revitalization 

4 Trust Fund’’. 

5 (2) CONTENTS.—The Trust Fund shall consist 

6 of such amounts as may be appropriated or credited 

7 to the Trust Fund, including funds held in a No Net 

8 Cost Tobacco Fund or No Net Cost Tobacco Ac9 count that are transferred to the Trust Fund under 

10 section 203(c). 

11 (b) ADMINISTRATION.—The Trust Fund shall be ad12 ministered by the Tobacco Production Control Corpora13 tion. 

14 (c) EXPENDITURES FROM TRUST FUND.—Amounts 

15 in the Trust Fund shall be available for making expendi16 tures to defray—

17 (1) the costs of providing compensation to 

18 quota holders for the loss of tobacco quota asset 

19 value under section 201; 

20 (2) the costs of making transition payments to 

21 active tobacco producers under section 202; 

22 (3) the costs of forgiving loans and transferring 

23 title to inventories of tobacco and funds to the Com24 modity Credit Corporation under section 203;
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1 (4) the costs of making transition payments to 

2 other persons directly involved in tobacco production 

3 and marketing under section 204; 

4 (5) the costs of carrying out the duties of the 

5 Corporation and the Associations, including assuring 

6 the quality and controlling the production and mar7 keting of domestic tobacco and otherwise carrying 

8 out title III; and 

9 (6) the costs to the Secretary and the Corpora10 tion of enforcing title III. 

11 TITLE II—TOBACCO MARKET 

12 TRANSITION ASSISTANCE 

13 SEC. 201. COMPENSATION TO QUOTA HOLDERS FOR LOSS 

14 OF TOBACCO QUOTA ASSET VALUE. 

15 (a) PAYMENT AUTHORITY.—Using amounts in the 

16 Trust Fund, the Corporation shall make payments for to17 bacco quota to eligible quota holders. 

18 (b) ELIGIBILITY.—To be eligible to receive payments 

19 under this section, a quota holder shall prepare and sub20 mit to the Corporation an application at such time, in such 

21 manner, and containing such information as the Corpora22 tion may require, including information sufficient to dem23 onstrate to the satisfaction of the Corporation that the 

24 person was a quota holder on January 1, 2003. 

25 (c) BASE QUOTA LEVEL.—
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1 (1) IN GENERAL.—For each eligible quota hold2 er that submits an application under subsection (b), 

3 the Secretary shall determine and provide to the 

4 Corporation the base quota level of the quota holder. 

5 (2) LEVEL.—For each kind of tobacco for 

6 which the marketing quota is expressed in pounds, 

7 the base quota level for a quota holder shall be equal 

8 to, at the election of the quota holder—

9 (A) the tobacco farm marketing quota es10 tablished under the Agriculture Adjustment Act 

11 of 1938 for the 2002 marketing year for quota 

12 tobacco on the farm owned by the quota holder; 

13 or 

14 (B) the average of the tobacco farm mar15 keting quota established under the Agriculture 

16 Adjustment Act of 1938 for the 1997, 1998, 

17 and 1999 marketing years for quota tobacco on 

18 the farm owned by the quota holder. 

19 (3) MARKETING QUOTAS OTHER THAN POUND20 AGE QUOTAS.—For each kind of tobacco for which 

21 there is a marketing quota or allotment (on an acre22 age basis), the base quota level for each eligible 

23 quota holder shall be determined in accordance with 

24 this subsection (based on a poundage conversion) in 
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1 an amount equal to the product obtained by multi2 plying—

3 (A) the tobacco farm marketing quota or 

4 allotment established under the Agriculture Ad5 justment Act of 1938 for the 2002 marketing 

6 year (or, at the election of the quota holder, the 

7 average of the tobacco farm marketing quota or 

8 allotment established under such for the 1997, 

9 1998, and 1999 marketing years, for the quota 

10 holder’s farm; by 

11 (B) the average yield per acre for the 

12 quota holder’s farm for the kind of tobacco for 

13 that marketing year or those marketing years, 

14 whichever applies. 

15 (d) PAYMENT AMOUNT.—The Corporation shall 

16 make payments to each eligible quota holder in a total 

17 amount equal to the product obtained by multiplying—

18 (1) $8 per pound; by 

19 (2) the base quota level established for the 

20 quota holder under subsection (c). 

21 (e) TIME FOR PAYMENT.—The amount determined 

22 under subsection (d) for a quota holder shall be paid in 

23 five equal installments during each of the 2003 through 

24 2007 crops of tobacco. 
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1 SEC. 202. TRANSITION PAYMENTS FOR ACTIVE TOBACCO 

2 PRODUCERS. 

3 (a) PAYMENT AUTHORITY.—Using amounts in the 

4 Trust Fund, the Corporation shall make transition pay5 ments to eligible active tobacco producers. 

6 (b) ELIGIBILITY.—To be eligible to receive payments 

7 under this section, an active tobacco producer shall pre8 pare and submit to the Corporation an application at such 

9 time, in such manner, and containing such information as 

10 the Corporation may require, including information suffi11 cient to demonstrate to the satisfaction of the Corporation 

12 that, the person planted, or is considered to have planted, 

13 a 2001, 2002, or 2003 crop of tobacco. 

14 (c) PAYMENT QUANTITY.—

15 (1) IN GENERAL.—For each eligible active to16 bacco producer that submits an application under 

17 subsection (b), the Secretary shall determine and 

18 provide to the Corporation, the production quantity 

19 of the producer eligible for payments under this sec20 tion. 

21 (2) ELIGIBLE PRODUCTION QUANTITY.—The 

22 production quantity eligible for payment for an ac23 tive tobacco producer shall be equal to, at the elec24 tion of the active tobacco producer—

25 (A) the quantity, in pounds, of quota to26 bacco subject to the quota produced by the pro-
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1 ducer under the Agriculture Adjustment Act of 

2 1938 for the 2002 marketing year; or 

3 (B) the average quantity, in pounds, of 

4 quota tobacco subject to the quota produced by 

5 the producer under the Agriculture Adjustment 

6 Act of 1938 for the 1997, 1998, and 1999 mar7 keting years. 

8 (3) MARKETING QUOTAS OTHER THAN POUND9 AGE QUOTAS.—For each kind of tobacco for which 

10 there is a marketing quota or allotment on an acre11 age basis, the production quantity eligible for pay12 ment for each active tobacco producer shall be equal 

13 to, at the election of the active tobacco producer—

14 (A) the actual pounds marketed for the 

15 2002 crop year; or 

16 (B) the average of the actual pounds mar17 keted for the 1997, 1998, and 1999 crop years. 

18 (d) PAYMENT AMOUNT.—The Corporation shall 

19 make payments to each active tobacco producer in a total 

20 amount equal to the product obtained by multiplying—

21 (1) $4 per pound; by 

22 (2) the production base established for the ac23 tive producer under subsection (c). 

24 (e) TIME FOR PAYMENT.—The amount determined 

25 under subsection (d) for an active tobacco producer shall
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1 be paid in five equal installments during each of the 2003 

2 through 2007 crops of tobacco. 

3 (f) DEATH OF ACTIVE TOBACCO PRODUCER.—If an 

4 active tobacco producer who is entitled to payments under 

5 this section dies and is survived by a spouse or one or 

6 more dependents, the right to receive the payments shall 

7 transfer to the surviving spouse or, if there is no surviving 

8 spouse, to the estate of the producer. 

9 SEC. 203. TOBACCO LOAN ASSOCIATIONS. 

10 (a) PRIOR LOANS.—The Secretary shall forgive each 

11 loan made to an Association under section 106A or 106B 

12 of the Agricultural Act of 1949 (7 U.S.C. 1445 1, 1445 

13 2) that is outstanding on the date of enactment of this 

14 Act. 

15 (b) TRANSFER OF TITLE FOR LOAN INVENTORIES.—

16 The Secretary shall transfer to the Commodity Credit Cor17 poration the title to all inventories of tobacco held by the 

18 Secretary to secure loans made to the Association under 

19 section 106A or 106B of the Agricultural Act of 1949 (7 

20 U.S.C. 1445 1, 1445 2). 

21 (c) NO NET COST TOBACCO FUNDS.—Notwith22 standing sections 106A(f) and 106B(g) of the Agricultural 

23 Act of 1949 (7 U.S.C. 1445–1(f) and 1445–2(g)), all 

24 funds held in a No Net Cost Tobacco Fund or No Net 

25 Cost Tobacco Account on behalf of an Association under 
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1 section 106A or 106B of that Act (7 U.S.C. 1445–1, 

2 1445–2) on the day before the date of enactment of this 

3 Act shall be transferred to the Trust Fund. 

4 SEC. 204. TRANSITION PAYMENTS FOR OTHER PERSONS IN5 VOLVED IN TOBACCO PRODUCTION AND 

6 MARKETING. 

7 (a) PAYMENTS FOR OTHER PERSONS.—The Cor8 poration shall consider the feasibility of making transition 

9 payments to tobacco graders, inspectors, checkers, auc10 tioneers, equipment dealers, warehousemen, and other 

11 persons who are adversely and directly affected by the ter12 mination of the Federal tobacco program. 

13 (b) RULES.—Payment amounts under this section 

14 shall be established by and made according to the rules 

15 issued by the Corporation.

16 SEC. 205. TAX TREATMENT OF COMPENSATION AND TRAN17 SITION PAYMENTS. 

18 (a) IN GENERAL.—Part II of subchapter B of chap19 ter 1 of the Internal Revenue Code of 1986 (relating to 

20 items specifically included in gross income) is amended by 

21 adding at the end the following new section: 

22 ‘‘SEC. 91. TOBACCO QUOTA HOLDER COMPENSATION AND 

23 TRANSITION PAYMENTS. 

24 ‘‘(a) COMPENSATION TO QUOTA HOLDERS FOR LOSS

25 OF TOBACCO QUOTA ASSET VALUE.—Any amount re-
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1 ceived under section 201 of the Tobacco Market Transi2 tion Act shall be treated as gain from the sale of a capital 

3 asset held for more than 1 year. 

4 ‘‘(b) TRANSITION PAYMENTS FOR ACTIVE TOBACCO

5 PRODUCERS.—Any amount received under section 202 of 

6 such Act shall be included in gross income as ordinary 

7 income.’’

8 (b) CLERICAL AMENDMENT.—The table of sections 

9 for part II of subchapter B of chapter 1 of such Code 

10 is amended by adding at the end the following new item:

‘‘Sec. 91. Tobacco quota holder compensation and transition payments.’’

11 (c) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply to taxable years beginning after 

13 December 31, 2002.

14 TITLE III—ESTABLISHMENT OF 

15 PRIVATE TOBACCO PRODUC16 TION ADJUSTMENT AND 

17 QUALITY ASSURANCE PRO18 GRAM 

19 SEC. 301. ESTABLISHMENT AND DUTIES OF TOBACCO PRO20 DUCTION CONTROL CORPORATION. 

21 (a) ESTABLISHMENT.—There is established a cor22 poration to be known as the ‘‘Tobacco Production Control 

23 Corporation’’, which shall be a federally chartered instru24 mentality of the United States. 
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1 (b) DUTIES.—

2 (1) IN GENERAL.—Effective for the 2003 and 

3 each subsequent crop of each kind of tobacco, the 

4 Corporation shall be responsible for the promulga5 tion of rules governing the production, marketing, 

6 importation, exportation, and consumer quality as7 surances for each kind of tobacco. 

8 (2) MAJORITY VOTE REQUIRED.—The promul9 gation of rules under this section and other decisions 

10 of the Corporation under this section shall require at 

11 least a majority vote of the Board of Directors of 

12 the Corporation. 

13 (c) PRODUCTION AND MARKETING LICENSES.—

14 (1) IN GENERAL.—The Corporation shall estab15 lish a licensing system that provides for the orderly 

16 production and marketing of tobacco in the United 

17 States. The Corporation shall issue marketing li18 censes to tobacco marketing facilities and tobacco 

19 purchasing entities. 

20 (2) INITIAL LICENSE.—The Corporation shall 

21 issue a license to each active tobacco producer, or 

22 other person that meets requirements established by 

23 the Corporation, initially based upon the eligible pro24 duction quantity determined for each active tobacco 

25 producer under section 202(c). 
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1 (3) SUBSEQUENT CROP YEARS.—The Corpora2 tion shall establish the amount that each licensee 

3 may market for each subsequent year based on the 

4 production level recommended by the Secretary for 

5 that year, which shall be based on the information 

6 collected under section 320A of the Agricultural Ad7 justment Act of 1938 (7 U.S.C. 1314g), and the li8 censee’s production quantity for the preceding year. 

9 (4) SURRENDER.—The licensee shall surrender 

10 the license to the Corporation if the licensee fails to 

11 actively engage in the production of tobacco. 

12 (5) PROHIBITIONS.—

13 (A) MARKETING WITHOUT LICENSE.—The 

14 sale or marketing of a type of tobacco which 

15 prior to the date of enactment of this Act was 

16 produced pursuant to a tobacco farm marketing 

17 quota or farm acreage allotment issued under 

18 the Agricultural Act of 1938 is prohibited with19 out a license. 

20 (B) TRANSFER OF LICENSE.—The sale, 

21 lease, or other transfer of a license shall be pro22 hibited except pursuant to subsection (h). 

23 (d) COMPLIANCE.—The Corporation shall ensure 

24 compliance, through whatever means is available, of all
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1 persons with any license, regulation, rule, limitation, or 

2 guideline issued under, or in order to carry out, this Act. 

3 (e) QUALITY ASSURANCE.—The Corporation shall es4 tablish a system that will provide assurance to consumers 

5 of the quality of all tobacco marketed in the United States 

6 and that, at a minimum—

7 (1) provides for the inspection and grading of 

8 domestically produced tobacco and imported tobacco; 

9 (2) determines and describes the physical char10 acteristics of domestically produced tobacco and im11 ported tobacco; and 

12 (3) ensures the physical and chemical integrity 

13 of domestically produced tobacco and imported to14 bacco; 

15 (f) METHODS TO CARRY OUT DUTIES.—To carry out 

16 its duties, functions, and determinations, the Corporation 

17 shall utilize Associations and local committees to the ex18 tent practicable and appropriate. 

19 (g) TRANSITION.—The Corporation shall continue to 

20 maintain and carry out a tobacco program in accordance 

21 with the rules and regulations contained in chapter 7 of 

22 the Code of Federal Regulations unless and until the Cor23 poration promulgates rules under subsection (b). 

24 (h) TRANSFER OF LICENSE.—
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1 (1) RIGHT OF SURVIVORSHIP.—In the case of 

2 the death of a person to whom a license has been 

3 issued under this section, the license shall transfer 

4 to the surviving spouse of the person or, if there is 

5 no surviving spouse, to surviving direct descendants 

6 of the person. 

7 (2) HARDSHIP.—In the case of the death of a 

8 person to whom a license has been issued under this 

9 section and whose descendants are temporarily un10 able to produce a crop of tobacco, the Corporation 

11 may hold the license in the name of the descendants 

12 for a period of not more than 18 months, at the dis13 cretion of the Corporation. 

14 (3) LIFETIME TRANSFER.—A person that is eli15 gible to obtain a license under this section may at 

16 any time transfer all or part of the license to the 

17 person’s spouse or direct descendants that are ac18 tively engaged in the production of tobacco. 

19 SEC. 302. BOARD OF DIRECTORS OF CORPORATION. 

20 (a) IN GENERAL.—The powers of the Corporation 

21 shall be vested in a Board of Directors. 

22 (b) MEMBERS.—The Board of Directors shall consist 

23 of 25 members as follows: 

24 (1) The Secretary of Agriculture. 
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1 (2) The Secretary of Agriculture shall ap2 point—

3 (A) two members from each State that 

4 produces more than 250,000,000 pounds of to5 bacco; 

6 (B) one member from each State that pro7 duces more than 50,000,000 pounds, but less 

8 than 250,000,000 pounds, of tobacco; and 

9 (C) one member, to be appointed on a ro10 tating basis, from a State that produces less 

11 than 50,000,000 pounds of tobacco. 

12 (3) Three members appointed by Flue-cured to13 bacco associations and two members appointed by 

14 Burley tobacco associations. 

15 (4) One member appointed by tobacco associa16 tions other than those specified in paragraph (3), on 

17 a rotating basis. 

18 (5) The Secretary of Health and Human Serv19 ices shall appoint three members representing public 

20 health interests. 

21 (6) The Secretary of Agriculture shall appoint 

22 four members representing domestic tobacco product 

23 manufacturers, except that—

24 (A) no manufacturer may have more than 

25 one member on the Board; 
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1 (B) at least one of the members must be 

2 from a domestic smokeless tobacco manufac3 turer; and 

4 (C) one of the members must be from a 

5 domestic cigarette manufacturer that comprises 

6 less than 5 percent of domestic cigarette sales, 

7 or a cigar manufacturer, or a pipe tobacco man8 ufacturer, on a rotating basis. 

9 (7) The Secretary of Agriculture shall appoint 

10 one member representing domestic export leaf deal11 ers. 

12 (8) The Secretary of Agriculture shall appoint 

13 one member that is the person responsible for oper14 ating the quality assurance system of the Corpora15 tion described in section 301(e). 

16 (c) MEMBERSHIP QUALIFICATIONS.—A member of 

17 the Board shall not hold any Federal, State, or local elect18 ed office. The members appointed under paragraphs (2), 

19 (3), and (4) of subsection (b) must be licensees under sec20 tion 301. 

21 (d) CHAIRPERSONS.—The Secretary of Agriculture 

22 shall serve as chairperson of the Board. 

23 (e) TERM; VACANCIES.—
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1 (1) TERM.—The term of office of a member of 

2 the Board appointed under any of paragraphs (2) 

3 through (8) of subsection (b) shall be four years. 

4 (2) VACANCIES.—A vacancy on the Board shall 

5 be filled in the same manner as the original appoint6 ment was made. 

7 (f) COMPENSATION.—

8 (1) FEDERAL MEMBERS.—A member of the 

9 Board who is an officer or employee of the United 

10 States shall not receive any additional compensation 

11 by reason of service on the Board. 

12 (2) NON-FEDERAL MEMBERS.—Any other mem13 ber shall receive compensation, for each day (includ14 ing travel time) that the member is engaged in the 

15 performance of the functions of the Board, at a rate 

16 determined appropriate by the Board. 

17 (3) EXPENSES.—A member of the Board shall 

18 be reimbursed for travel, subsistence, and other nec19 essary expenses incurred by the member in the per20 formance of the duties of the member. 

21 (4) REPRESENTATION.—No member of the 

22 Board shall receive compensation from more than 

23 one interest represented on the Board. 

24 (g) CONFLICT OF INTEREST.—
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1 (1) CONFLICT OF INTEREST.—Except as pro2 vided in paragraph (3), a member of the Board shall 

3 not vote on any matter concerning any application, 

4 contract, or claim, or other particular matter pend5 ing before the Corporation, in which, to the knowl6 edge of the member, the member, spouse, or child of 

7 the member, partner of the member, or organization 

8 in which the member is serving as officer, director, 

9 trustee, partner, or employee, or any person or orga10 nization with which the member is negotiating or 

11 has any arrangement concerning prospective employ12 ment, has a financial interest. 

13 (2) VIOLATIONS.—Violation of paragraph (1) 

14 by a member of the Board shall be cause for removal 

15 of the member, but shall not impair or otherwise af16 fect the validity of any otherwise lawful action by 

17 the Corporation in which the member participated. 

18 (3) EXCEPTIONS.—The prohibitions contained 

19 in paragraph (1) shall not apply to a member of the 

20 Board that is a tobacco producer if the member ad21 vises the Board of the nature of the particular mat22 ter in which the member proposes to participate, and 

23 if the member makes a full disclosure of the finan24 cial interest, prior to any participation. 
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1 (h) FINANCIAL DISCLOSURE.—A Board member 

2 shall be subject to the financial disclosure requirements 

3 of subchapter B of chapter XVI of title 5, Code of Federal 

4 Regulations (or any corresponding or similar regulation 

5 or ruling), applicable to a special Government employee 

6 (as defined in section 202(a) of title 18, United States 

7 Code). 

8 SEC. 303. BOARD MEETINGS. 

9 (a) IN GENERAL.—The Board shall meet at least 

10 three times each fiscal year at the call of a Chairperson 

11 or at the request of the Executive Director. 

12 (b) LOCATION.—The location of a meeting shall be 

13 subject to approval of the Executive Director. 

14 (c) QUORUM.—A quorum of the Board shall consist 

15 of a majority of the members. 

16 SEC. 304. STAFF. 

17 (a) EXECUTIVE DIRECTOR.—

18 (1) APPOINTMENT.—The Board shall appoint 

19 an Executive Director. 

20 (2) DUTIES.—The Executive Director shall be 

21 the chief executive officer of the Corporation, with 

22 such power and authority as may be conferred by 

23 the Board. 

24 (3) COMPENSATION.—The Executive Director 

25 shall receive basic pay at the rate provided for level 
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1 IV of the Executive Schedule under section 5315 of 

2 title 5, United States Code. 

3 (b) OFFICERS.—The Board shall establish the offices 

4 and appoint the officers of the Corporation, including a 

5 Secretary, and define the duties of the officers in a man6 ner consistent with this section. 

7 (c) OTHER PERSONNEL.—The Corporation may se8 lect and appoint officers, attorneys, employees, and 

9 agents, who shall be vested with such powers and duties 

10 as the Corporation may determine. The Corporation shall 

11 indemnify such personnel, as the Board considers nec12 essary and desirable, except that an officer, attorney, or 

13 employee of the Corporation shall not be indemnified for 

14 an act outside the scope of employment. 

15 (d) CONSULTANT AND INTERMITTENT SERVICES.—

16 The Corporation may obtain the services and fix the com17 pensation of any consultant and otherwise procure tem18 porary and intermittent services under section 3109(b) of 

19 title 5, United States Code. 

20 (e) COMMITTEES.—The Corporation may provide for 

21 and designate such committees, and the functions of the 

22 committees, as the Board considers necessary or desirable. 

23 SEC. 305. GENERAL POWERS OF CORPORATION. 

24 (a) BYLAWS.—The Board shall adopt, and may from 

25 time to time amend, any bylaw that is necessary for the 
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1 proper management and functioning of the Corporation 

2 and adopt and alter a corporate seal, which shall be judi3 cially noticed. 

4 (b) CORPORATION NAME.—The Corporation shall 

5 have succession in its corporate name. 

6 (c) AGREEMENT AND CONTRACT AUTHORITY.—The 

7 Corporation may enter into any agreement or contract 

8 with a person or private or governmental agency. 

9 (d) ACQUISITION AND DISPOSAL AUTHORITY.—The 

10 Corporation may lease, purchase, accept a gift or donation 

11 of, or otherwise acquire, use, own, hold, improve, or other12 wise deal in or with, and sell, convey, mortgage, pledge, 

13 lease, exchange, or otherwise dispose of, any property or 

14 interest in property, as the Corporation considers nec15 essary in the transaction of the business of the Corpora16 tion. The Corporation may sell assets, loans, and equity 

17 interests acquired in connection with the financing of 

18 projects funded by the Corporation. 

19 (e) LEGAL ACTIONS.—The Corporation may sue and 

20 be sued in the corporate name of the Corporation and may 

21 independently retain legal representation, except that—

22 (1) no attachment, injunction, garnishment, or 

23 similar process shall be issued against the Corpora24 tion or property of the Corporation; and
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1 (2) exclusive original jurisdiction shall reside in 

2 the district courts of the United States, and the Cor3 poration may intervene in any court in any suit, ac4 tion, or proceeding in which the Corporation has an 

5 interest. 

6 (f) ASSISTANCE OF FEDERAL AGENCIES.—The Cor7 poration may, with the consent of any board, commission, 

8 independent establishment, or executive department of the 

9 Federal Government, including any field service, use infor10 mation, services, facilities, officials, and employees in car11 rying out the duties of the Corporation, and pay for the 

12 use, which payments shall be transferred to the applicable 

13 appropriation account that incurred the expense. 

14 (g) RIGHTS, PRIVILEGES, AND IMMUNITIES.—The 

15 Corporation shall have the rights, privileges, and immuni16 ties of the United States with respect to the right to pri17 ority of payment with respect to debts due from bankrupt, 

18 insolvent, or deceased creditors. 

19 (h) FINANCIAL AUTHORITIES.—The Corporation 

20 may collect or compromise any obligations assigned to or 

21 held by the Corporation, including any legal or equitable 

22 rights accruing to the Corporation, and shall determine 

23 the character of, and necessity for, obligations and ex24 penditures of the Corporation and the manner in which 

25 the obligations and expenditures shall be incurred, al-
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1 lowed, and paid, subject to provisions of law specifically 

2 applicable to Government corporations. The Corporation 

3 may make final and conclusive settlement and adjustment 

4 of any claim by or against the Corporation or a fiscal offi5 cer of the Corporation. 

6 (i) OTHER POWERS.—The Corporation may exercise 

7 all other lawful powers necessarily or reasonably related 

8 to the establishment of the Corporation to carry out this 

9 title and the powers, purposes, functions, duties, and au10 thorized activities of the Corporation. 

11 SEC. 306. CORPORATION RELATIONSHIP WITH TOBACCO 

12 LOAN ASSOCIATIONS. 

13 The Corporation shall enter into an agreement with 

14 producer-owned cooperative marketing loan associations 

15 for each kind of tobacco—

16 (1) to make a base price available to producers 

17 of the kind of tobacco; 

18 (2) arrange for financing and the administra19 tion of a base price for the kind of tobacco; and 

20 (3) receive, process, store, and sell any domesti21 cally produced tobacco received as collateral for a 

22 base price loan. 

23 SEC. 307. TOBACCO BASE PRICE LEVELS. 

24 (a) DETERMINATION.—The Corporation, in consulta25 tion with the Secretary and the Associations, shall deter-
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1 mine, and revise as necessary, a base price for each kind 

2 of tobacco, which shall be based on the cost of producing 

3 that kind of tobacco. 

4 (b) EFFECTIVE DATE.—The base prices determined 

5 under subsection (a) shall take effect beginning with the 

6 2004 tobacco crops. 

7 SEC. 308. PENALTIES. 

8 (a) IN GENERAL.—The violation of any provision of 

9 this Act, or any rule or regulation issued to carry out this 

10 Act, or the terms of any license issued under this Act, 

11 by a person (including the marketing of any kind of to12 bacco without a license issued under this title or in excess 

13 of the quantity permitted under such a license) shall sub14 ject the person to revocation or suspension of the person’s 

15 license, a penalty of 100 percent of the average market 

16 price (calculated to the nearest whole cent) for the kind 

17 of tobacco for the immediately preceding marketing year, 

18 or both, in the discretion of the Secretary. 

19 (b) PAYER.—

20 (1) IN GENERAL.—Except as otherwise pro21 vided in this subsection, the penalty shall be paid by 

22 the person who acquired the tobacco from the pro23 ducer. 

24 (2) DEDUCTION FROM PRICE.—An amount 

25 equivalent to the penalty may be deducted by the 
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1 buyer from the price paid to the producer in any 

2 case in which the tobacco is marketed by sale. 

3 (3) HANDLER.—If the tobacco is marketed by 

4 the producer through a handler, the penalty shall be 

5 paid by the handler, which may deduct an amount 

6 equivalent to the penalty from the price paid to the 

7 producer. 

8 (4) DIRECT MARKETING OUTSIDE UNITED

9 STATES.—In any case in which tobacco is marketed 

10 directly to any person outside the United States, the 

11 penalty shall be paid and remitted by the producer. 

12 (c) FALSE STATEMENT OR OMISSION.—If any pro13 ducer falsely identifies or fails to account for the disposi14 tion of any tobacco—

15 (1) an amount of tobacco equal to the normal 

16 yield of the number of acres harvested in excess of 

17 the quantity permitted under a license issued under 

18 this title shall be considered to have been marketed 

19 in excess of the license for the farm; and 

20 (2) the penalty for the excess marketing shall 

21 be paid and remitted by the producer. 

22 (d) CARRYOVER.—Tobacco carried over by the pro23 ducer of the tobacco from 1 marketing year to another 

24 marketing year may be marketed without payment of the 

25 penalty imposed by this section if—
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1 (1) the total quantity of tobacco available for 

2 marketing from the farm in the marketing year from 

3 which the tobacco is carried over does not exceed the 

4 quantity that may be marketed under a license 

5 issued for the farm for the marketing year; or 

6 (2) the quantity of tobacco carried over does 

7 not exceed the normal production of that number of 

8 acres by which the harvested acreage of tobacco in 

9 the calendar year in which the marketing year be10 gins is less than the quantity that may be marketed 

11 under the license. 

12 (e) TOBACCO MARKETED PRIOR TO MARKETING

13 YEAR.—Tobacco produced in a calendar year for the mar14 keting year beginning during the calendar year shall be 

15 subject to licenses issued for the marketing year even 

16 though the tobacco is marketed prior to the date on which 

17 the marketing year begins. 

18 (f) PROPORTIONAL PAYMENTS.—The Secretary shall 

19 require collection of the penalty on a proportion of each 

20 lot of tobacco marketed from the farm equal to the propor21 tion that the tobacco available for marketing from the 

22 farm in excess of the quantity that may be marketed under 

23 a license is of the total quantity of tobacco available for 

24 marketing from the farm if satisfactory proof is not fur-
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1 nished as to the disposition to be made of the excess to2 bacco prior to the marketing of any tobacco from the farm. 

3 (g) LIEN.—Until the amount of the penalty provided 

4 by this section is paid, a lien on the tobacco with respect 

5 to which the penalty is incurred, and on any subsequent 

6 tobacco subject to licenses issued under this title in which 

7 the person liable for payment of the penalty has an inter8 est, shall be in effect in favor of the Corporation for the 

9 amount of the penalty. 

10 SEC. 309. PROGRAM REFERENDA. 

11 (a) INITIAL REFERENDUM.—

12 (1) REFERENDUM REQUIRED.—After the end of 

13 the three-year period beginning on the date of enact14 ment of this Act, if at least one-third of the licensees 

15 engaged in the production of a kind of tobacco re16 quest a referendum under this subsection, the Cor17 poration shall conduct a referendum among the li18 censees engaged in the production of that kind of to19 bacco to determine whether the licensees are in favor 

20 of continuing the operation of the program estab21 lished under this Act with respect to that kind of to22 bacco. 

23 (2) PROCESS AND RESULTS.—If more than one24 half of the licensees voting in a referendum con25 ducted under paragraph (1) with respect to a kind
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1 of tobacco oppose the continuation of the program, 

2 the Corporation shall announce the result and shall 

3 conduct a second referendum with respect to that 

4 kind of tobacco one year later. If more than one5 half of the licensees voting in the second referendum 

6 also oppose the continuation of the program, the 

7 Corporation shall announce the result and the pro8 gram shall cease to be in effect for that kind of to9 bacco. 

10 (b) SUBSEQUENT REFERENDA.—The Corporation 

11 may conduct subsequent referenda from time to time as 

12 the Corporation considers appropriate to determine wheth13 er producers are in favor of continuing the program estab14 lished under this Act, the use of licenses, limitations on 

15 license transfer, or any other aspect of the program. 

16 TITLE IV—TERMINATION OF 

17 CURRENT TOBACCO PROGRAMS 

18 SEC. 401. TERMINATION OF MARKETING QUOTA PROGRAMS 

19 AND REPEAL OF RELATED PROVISIONS. 

20 (a) TOBACCO CONTROL ACT.—The Act of April 25, 

21 1936 (commonly known as the Tobacco Control Act; 7 

22 U.S.C. 515–515k), is repealed. 

23 (b) COMMODITY HANDLING ORDERS.—Section 8c(2) 

24 of the Agricultural Adjustment Act (7 U.S.C. 608c(2)), 

25 reenacted with amendments by the Agricultural Marketing 
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1 Agreement Act of 1937, is amended by striking ‘‘to2 bacco,’’. 

3 (c) PROCESSING TAX.—Section 9(b) of the Agricul4 tural Adjustment Act (7 U.S.C. 609(b)), reenacted with 

5 amendments by the Agricultural Marketing Agreement 

6 Act of 1937, is amended—

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

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

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

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

11 (d) BURLEY TOBACCO IMPORT REVIEW.—Section 3 

12 of Public Law 98–59 (7 U.S.C. 625) is repealed. 

13 (e) DECLARATION OF POLICY.—Section 2 of the Ag14 ricultural Adjustment Act of 1938 (7 U.S.C. 1282) is 

15 amended by striking ‘‘tobacco,’’. 

16 (f) DEFINITIONS.—Section 301(b) of the Agricultural 

17 Adjustment Act of 1938 (7 U.S.C. 1301(b)) is amended—

18 (1) in paragraph (3)—

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

20 (B) by redesignating subparagraph (D) as 

21 subparagraph (C); 

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

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

24 ‘‘Tobacco (flue-cured), July 1–June 30; 
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1 Tobacco (other than flue-cured), October 1–Sep2 tember 30);’’

3 (4) in paragraph (10)—

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

5 (B) by redesignating subparagraph (C) as 

6 subparagraph (B); 

7 (5) in paragraph (11)(B), by striking ‘‘and to8 bacco’’; 

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

10 (7) in paragraph (14)—

11 (A) by striking ‘‘(A)’’ in subparagraph (A); 

12 and 

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

14 and (D); 

15 (8) by striking paragraph (15); 

16 (9) in paragraph (16)—

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

18 (B) by redesignating subparagraph (C) as 

19 subparagraph (B); 

20 (10) by striking paragraph (17); and 

21 (11) by redesignating paragraph (16) as para22 graph (15). 

23 (g) PARITY PAYMENTS.—Section 303 of the Agricul24 tural Adjustment Act of 1938 (7 U.S.C. 1303) is amended 
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1 in the first sentence by striking ‘‘rice, or tobacco’’ and 

2 inserting ‘‘or rice’’. 

3 (h) MARKETING QUOTAS.—

4 (1) REPEAL.—Except for the section referred 

5 to in paragraph (2), part I of subtitle B of title III 

6 of the Agricultural Adjustment Act of 1938 (7 

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

8 (2) SUBMISSION OF MANUFACTURER PURCHASE

9 INTENTIONS.—Section 320A of the Agricultural Ad10 justment Act of 1938 (7 U.S.C. 1314g) is not re11 pealed, but subsection (a)(1) of such section is 

12 amended to read as follows: 

13 ‘‘(1) Not later than December 1 of each marketing 

14 year with respect to Flue-cured tobacco, and January 15 

15 of each marketing year with respect to Burley tobacco or 

16 other types of tobacco, each domestic manufacturer of 

17 cigarettes shall submit to the Secretary a statement, by 

18 kind, of the quantity of Flue-cured tobacco, Burley to19 bacco, and other types of tobacco that the manufacturer 

20 intends to purchase, directly or indirectly, on the United 

21 States auction markets or from producers during the next 

22 succeeding marketing year (in this section referred to as 

23 the ‘quantity of intended purchases’).’’. 
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1 (i) ADMINISTRATIVE PROVISIONS.—Section 361 of 

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

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

4 (j) ADJUSTMENT OF QUOTAS.—Section 371 of the 

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

6 amended—

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

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

9 and 

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

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

12 (k) REPORTS AND RECORDS.—Section 373 of the Ag13 ricultural Adjustment Act of 1938 (7 U.S.C. 1373) is 

14 amended—

15 (1) by striking ‘‘rice, or tobacco’’ each place it 

16 appears in subsections (a) and (b) and inserting ‘‘or 

17 rice’’; and 

18 (2) in subsection (a)—

19 (A) in the first sentence by striking ‘‘all 

20 persons engaged in the business of redrying, 

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

22 and 

23 (B) in the last sentence by striking ‘‘$500’’ 

24 and all that follows through the period at the 

25 end of the sentence and inserting ‘‘$500.’’.
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1 (l) REGULATIONS.—Section 375(a) of the Agricul2 tural Adjustment Act of 1938 (7 U.S.C. 1375(a)) is 

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

4 ‘‘or peanuts’’. 

5 (m) EMINENT DOMAIN.—Section 378 of the Agricul6 tural Adjustment Act of 1938 (7 U.S.C. 1378) is amend7 ed—

8 (1) in the first sentence of subsection (c) by 

9 striking ‘‘and tobacco’’; and 

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

11 (n) BURLEY TOBACCO FARM RECONSTITUTION.—

12 Section 379 of the Agricultural Adjustment Act of 1938 

13 (7 U.S.C. 1379) is amended—

14 (1) in subsection (a)—

15 (A) by striking ‘‘(a)’’; and 

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

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

18 case of burley tobacco’’; and 

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

20 (o) ACREAGE-POUNDAGE QUOTAS.—Section 4 of the 

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

22 note), is repealed. 

23 (p) BURLEY TOBACCO ACREAGE ALLOTMENTS.—

24 The Act of July 12, 1952 (7 U.S.C. 1315), is repealed. 
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1 (q) TRANSFER OF ALLOTMENTS.—Section 703 of the 

2 Food and Agriculture Act of 1965 (7 U.S.C. 1316) is re3 pealed. 

4 (r) 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 (s) 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 (t) LIABILITY.—The amendments made by this sec12 tion shall not affect the liability of any person under any 

13 provision of law in effect before the amendments take ef14 fect as provided under subsection (u). 

15 (u) APPLICATION OF AMENDMENTS.—The amend16 ments made by this section shall apply with respect to the 

17 2004 and subsequent tobacco crops. 

18 SEC. 402. TERMINATION OF TOBACCO PRICE SUPPORT 

19 LOAN AND NO NET COST PROVISIONS AND 

20 REPEAL OF RELATED PROVISIONS. 

21 (a) PARITY PRICE SUPPORT.—Section 101 of the Ag22 ricultural Act of 1949 (7 U.S.C. 1441) is amended—

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

24 striking ‘‘tobacco (except as otherwise provided here25 in), corn’’ and inserting ‘‘corn’’; 
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1 (2) by striking subsection (c); 

2 (3) in subsection (d)(3)—

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

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

5 be made available for any crop of tobacco for 

6 which marketing quotas have been disapproved 

7 by producers;’’; and 

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

9 subsection (c) and (d), respectively. 

10 (b) TERMINATION OF TOBACCO PRICE SUPPORT AND

11 NO NET COST PROVISIONS.—Sections 106, 106A, 106B, 

12 and 106C of the Agricultural Act of 1949 (7 U.S.C. 1445, 

13 1445–1, 1445–2, 1445–3) are repealed. 

14 (c) DEFINITION OF BASIC AGRICULTURAL COM15 MODITY.—Section 408(c) of the Agricultural Act of 1949 

16 (7 U.S.C. 1428(c)) is amended by striking ‘‘tobacco,’’. 

17 (d) REVIEW OF BURLEY TOBACCO IMPORTS.—Sec18 tion 3 of Public Law 98–59 (7 U.S.C. 625) is repealed. 

19 (e) POWERS OF COMMODITY CREDIT CORPORA20 TION.—Section 5 of the Commodity Credit Corporation 

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

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

23 each place it appears. 

24 (f) TRANSITION PROVISIONS.—
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1 (1) PRICE SUPPORT LOAN OBLIGATIONS.—The 

2 amendments made by this section shall not affect 

3 any person’s obligations that arise under or with re4 spect to the price support loan program or loans 

5 issued through such program under any provision of 

6 law in effect before the amendments take effect as 

7 provided under subsection (g). 

8 (2) TOBACCO STOCKS AND LOANS.—The Sec9 retary of Agriculture shall issue regulations that re10 quire—

11 (A) the orderly disposition of quota to12 bacco held by any producer-owned cooperative 

13 marketing association that has entered into a 

14 loan agreement with the Commodity Credit 

15 Corporation to make price support available to 

16 producers of quota tobacco; 

17 (B) the repayment of all tobacco price sup18 port loans or surrender of collateral by such as19 sociations not later than one year after this sec20 tion becomes effective. 

21 (3) SPECIAL RULES FOR TERMINATION OF NO

22 NET COST FUNDS AND ACCOUNTS.—Notwithstanding 

23 any other provision of law, upon the repeal by sub24 section (b) of the authorities in section 106A and 

25 106B of the Agricultural Act of 1949 for the estab-
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1 lishment of tobacco no net cost funds and accounts, 

2 respectively—

3 (A) any obligation of a tobacco producer, 

4 purchaser, or importer to make payments into 

5 any such fund or account also shall terminate; 

6 and 

7 (B) any monies in any such fund or ac8 count shall be disposed of in the manner pre9 scribed by the Secretary of Agriculture, except 

10 that—

11 (i) to the extent needed, such monies 

12 shall be applied or used for the purposes 

13 therefor prescribed by such sections; and 

14 (ii) if any monies remain, the Sec15 retary shall transfer such monies to the 

16 Secretary of Health and Human Services 

17 for use in accordance with section 402. 

18 (g) APPLICATION OF AMENDMENTS.—This section 

19 and the amendments made by this section shall apply with 

20 respect to the 2004 and subsequent tobacco crops. 

21 SEC. 403. CONTINUED AVAILABILITY OF FEDERAL CROP IN22 SURANCE. 

23 Nothing in this title shall be construed to affect the 

24 eligibility of tobacco producers to obtain crop insurance 
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1 for their crops pursuant to the Federal Crop Insurance 

2 Act (7 U.S.C. 1501 et seq.) under the terms of such Act.

Æ