nal Revenue Code of 1986) of an individual de-
scribed in subparagraph (A).
‘‘(2) ADMINISTRATION.—On request, the Sec-
retary of Agriculture shall provide to the Secretary
such information as is necessary to carry out this
subsection.
‘‘(c) SATISFACTORY PROGRESS.—
‘‘(1) IN GENERAL.—For the purpose of sub-
section (a)(3), a student is maintaining satisfactory
progress if—
‘‘(A) the institution at which the student is
in attendance reviews the progress of the stu-
dent at the end of each academic year, or its
equivalent, as determined by the institution;
and
‘‘(B) the student has at least a cumulative
C average or its equivalent, or academic stand-
ing consistent with the requirements for grad-
uation, as determined by the institution, at the
end of the second such academic year.
‘‘(2) SPECIAL RULE.—Whenever a student fails
to meet the eligibility requirements of subsection
(a)(3) as a result of the application of this sub-
section and subsequent to that failure the student
has academic standing consistent with the require-
ments for graduation, as determined by the institu-
tion, for any grading period, the student may, sub-
ject to this subsection, again be eligible under sub-
section (a)(3) for a grant under this subpart.
‘‘(3) WAIVER.—Any institution of higher edu-
cation at which the student is in attendance may
waive paragraph (1) or (2) for undue hardship based
on—
‘‘(A) the death of a relative of the student;
‘‘(B) the personal injury or illness of the
student; or
‘‘(C) special circumstances as determined
by the institution.
‘‘(d) STUDENTS WHO ARE NOT SECONDARY SCHOOL
GRADUATES.—In order for a student who does not have
a certificate of graduation from a school providing second-
ary education, or the recognized equivalent of such certifi-
cate, to be eligible for any assistance under this subpart,
the student shall meet either 1 of the following standards:
‘‘(1) EXAMINATION.—The student shall take an
independently administered examination and shall
achieve a score, specified by the Secretary, dem-
onstrating that such student can benefit from the
education or training being offered. Such examina-
tion shall be approved by the Secretary on the basis
of compliance with such standards for development,
administration, and scoring as the Secretary may
prescribe in regulations.
‘‘(2) DETERMINATION.—The student shall be
determined as having the ability to benefit from the
education or training in accordance with such proc-
ess as the State shall prescribe. Any such process
described or approved by a State for the purposes of
this section shall be effective 6 months after the date
of submission to the Secretary unless the Secretary
disapproves such process. In determining whether to
approve or disapprove such process, the Secretary
shall take into account the effectiveness of such
process in enabling students without secondary
school diplomas or the recognized equivalent to bene-
fit from the instruction offered by institutions utiliz-
ing such process, and shall also take into account
the cultural diversity, economic circumstances, and
educational preparation of the populations served by
the institutions.
‘‘(e) 
SPECIAL
RULE
FOR
CORRESPONDENCE
COURSES.—A student shall not be eligible to receive a
grant under this subpart for a correspondence course un-
less such course is part of a program leading to an associ-
ate, bachelor, or graduate degree.
‘‘(f) COURSES OFFERED THROUGH TELECOMMUNI-
CATIONS.—
‘‘(1) 
RELATION
TO
CORRESPONDENCE
COURSES.—A student enrolled in a course of in-
struction at an eligible institution of higher edu-
cation (other than an institute or school that meets
the definition in section 521(4)(C) of the Carl D.
Perkins Vocational and Applied Technology Edu-
cation Act (20 U.S.C. 2471(4)(C))) that is offered
in whole or in part through telecommunications and
leads to a recognized associate, bachelor, or graduate
degree conferred by such institution shall not be
considered to be enrolled in correspondence courses
unless the total amount of telecommunications and
correspondence courses at such institution equals or
exceeds 50 percent of such courses.
‘‘(2) RESTRICTION OR REDUCTIONS OF FINAN-
CIAL AID.—A student’s eligibility to receive a grant
under this subpart may be reduced if a financial aid
officer determines under the discretionary authority
provided in section 479A that telecommunications
instruction results in a substantially reduced cost of
attendance to such student.
‘‘(3) DEFINITION.—For the purposes of this
subsection, the term ‘telecommunications’ means the
use of television, audio, or computer transmission,
including open broadcast, closed circuit, cable,
microwave, or satellite, audio conferencing, computer
conferencing, or video cassettes or discs, except that
such term does not include a course that is delivered
using video cassette or disc recordings at such insti-
tution and that is not delivered in person to other
students of that institution.
‘‘(g) STUDY ABROAD.—Nothing in this subpart shall
be construed to limit or otherwise prohibit access to study
abroad programs approved by the home institution at
which a student is enrolled. An otherwise eligible student
who is engaged in a program of study abroad approved
for academic credit by the home institution at which the
student is enrolled shall be eligible to receive a grant under
this subpart, without regard to whether such study abroad
program is required as part of the student’s degree
program.
‘‘(h) VERIFICATION
OF SOCIAL SECURITY NUM-
BER.—The Secretary, in cooperation with the Commis-
sioner of Social Security, shall verify any social security
number provided by a student to an eligible institution
under subsection (a)(5)(B) and shall enforce the following
conditions:
‘‘(1) PENDING VERIFICATION.—Except as pro-
vided in paragraphs (2) and (3), an institution shall
not deny, reduce, delay, or terminate a student’s eli-
gibility for assistance under this subpart because so-
cial security number verification is pending.
‘‘(2) DENIAL OR TERMINATION.—If there is a
determination by the Secretary that the social secu-
rity number provided to an eligible institution by a
student is incorrect, the institution shall deny or ter-
minate the student’s eligibility for any grant under
this subpart until such time as the student provides
documented evidence of a social security number
that is determined by the institution to be correct.
‘‘(3) CONSTRUCTION.—Nothing in this sub-
section shall be construed to permit the Secretary to
take any compliance, disallowance, penalty, or other
regulatory action against—
‘‘(A) any institution of higher education
with respect to any error in a social security
number, unless such error was a result of fraud
on the part of the institution; or
‘‘(B) any student with respect to any error
in a social security number, unless such error
was a result of fraud on the part of the
student.’’.
(b) AVAILABLE FUNDS.—Amounts in the Tobacco
Community Revitalization Trust Fund shall be available
for making expenditures after October 1, 1998, under sub-
part 9 of part A of title IV of the Higher Education Act
of 1965, as added by this section, for farmer opportunity
grants, but not to exceed—
(1) $42,500,000 for each of the academic years
1999–2000 through 2003–2004;
(2) $50,000,000 for each of the academic years
2004–2005 through 2008–2009;
(3) $57,500,000 for each of the academic years
2009–2010 through 2013–2014;
(4) $65,000,000 for each of the academic years
2014–2015 through 2018–2019; and
(5) $72,500,000 for each of the academic years
2019–2020 through 2023–2024.
SEC. 604. RESEARCH GRANTS FOR ALTERNATIVE USES OF
TOBACCO PRODUCTION AND PROCESSING
EQUIPMENT.
(a) RESEARCH GRANTS AUTHORIZED.—The Sec-
retary of Agriculture may make grants under this section
on the basis of a competitive application process (and in
accordance with such regulations that the Secretary may
promulgate) to an eligible institution to assist the institu-
tion to conduct research regarding alternative uses for to-
bacco production and processing equipment.
(b) ELIGIBLE INSTITUTIONS.—A land-grant college
or university (as defined in section 1404(10) of the Na-
tional Agricultural Research, Extension, and Teaching
Policy Act of 1977 (7 U.S.C. 3103(10))) and historically
black colleges and universities shall be eligible for grants
under this section.
(c) PERIOD OF GRANT.—The Secretary may award
a grant under this section for a period not to exceed five
years.
(d) PREFERENCES.—In making grants under this
section, the Secretary shall give preference to proposals
that—
(1) demonstrate linkages with—
(A) agencies of the Department of Agri-
culture;
(B) other related Federal research labora-
tories and agencies;
(C) other colleges and universities; and
(D) private industry; and
(2) guarantee matching funds in excess of the
amounts required by subsection (e).
(e) MATCHING FUNDS.—An eligible institution shall
contribute an amount of non-Federal funds that is at least
equal to the amount of grant funds received under this
section.
(f) LIMITATION ON USE OF GRANT FUNDS.—Funds
provided under this section may not be used for the plan-
ning, repair, rehabilitation, acquisition, or construction of
a building or facility.
(g) AVAILABLE FUNDS.—Amounts in the Tobacco
Community Revitalization Trust Fund shall be available
for making expenditures after October 1, 1998, for re-
search grants regarding alternative uses of tobacco pro-
duction and processing equipment, but not to exceed
$3,000,000 for any fiscal year.
TITLE VII—TAX TREATMENT FOR
PAYMENTS 
FOR 
LOST 
TO-
BACCO QUOTA
SEC. 701. PAYMENTS FOR LOST TOBACCO QUOTA.
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
items specifically excluded from gross income) is amended
by redesignating section 139 as section 140 and by insert-
ing after section 138 the following new section:
‘‘SEC. 139. PAYMENTS FOR LOST TOBACCO QUOTA.
‘‘(a) EXCLUSION FROM GROSS INCOME.—In the case
of an eligible person, gross income does not include any
amount which (but for this subsection) would be includible
in gross income by reason of receipt of a payment for lost
tobacco quota.
‘‘(b) REDUCTION IN BASIS OF FARM PROPERTY.—
The amount excluded from gross income under subsection
(a) shall be applied to reduce the basis of the real property
of the taxpayer to which the tobacco quota relates. Such
reduction shall be applied at the beginning of the taxable
year following the taxable year in which such exclusion oc-
curs.
‘‘(c) LIMITATION.—The amount excluded under sub-
section (a) shall not exceed the aggregate adjusted bases
of depreciable real property (determined after any reduc-
tions under subsection (b)) held by the taxpayer imme-
diately before the receipt of the payment for lost tobacco
quota.
‘‘(d) LOSS.—No loss shall be allowed under this sub-
title on a sale or other disposition of a tobacco quota with
respect to which a payment for lost tobacco quota is ex-
cluded from gross income under this section.
‘‘(e) DEFINITIONS.—For purposes of this section—
‘‘(1) ELIGIBLE
PERSON.—The term ‘eligible
person’ means a quota holder, quota lessee, or quota
tenant.
‘‘(2) QUOTA HOLDER, QUOTA LESSEE, QUOTA
TENANT.—The terms ‘quota holder’, ‘quota lessee’,
and ‘quota tenant’ have the meanings given such
terms by section 2 of the Tobacco Community Eco-
nomic Stabilization and Support Act.
‘‘(3) PAYMENT FOR LOST TOBACCO QUOTA.—
The term ‘payment for lost tobacco quota’ means a
payment under title IV or V of the Tobacco Commu-
nity Economic Stabilization and Support Act.
‘‘(4) TOBACCO
QUOTA.—The term ‘tobacco
quota’ means a tobacco farm marketing quota or
farm acreage allotment that was established under
the Agricultural Adjustment Act of 1938 for any of
the 1995, 1996, or 1997 crop years.’’.
(b) CLERICAL AMENDMENTS.—The table of sections
for part III of subchapter B of chapter 1 of such Code
is amended by striking the item relating to section 139
and inserting after the item relating to section 138 the
following new items:
‘‘Sec. 139. Payments for lost tobacco quota.
‘‘Sec. 140. Cross references to other Acts.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after the
beginning of the 1999 marketing year for any kind of to-
bacco.
TITLE VIII—IMMUNITY
SEC. 801. GENERAL IMMUNITY FOR TOBACCO PRODUCERS
AND WAREHOUSERS.
Notwithstanding any other provision of this Act, an
active tobacco producer, tobacco-related growers associa-
tion, or tobacco warehouse owner or employee may not be
subject to liability in any Federal or State court for any
cause of action resulting from the failure of any tobacco
product manufacturer, distributor, or retailer to comply
with national tobacco settlement legislation.
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