I
105TH CONGRESS
2D SESSION
H. R. 3437
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 HOUSE OF REPRESENTATIVES
MARCH 11, 1998
Mr. GOODE (for himself, Mr. BOUCHER, and Mr. SISISKY) introduced the fol-
lowing bill; which was referred to the Committee on Agriculture, and in
addition to the Committee on Ways and Means, for a period to be subse-
quently determined by the Speaker, in each case for consideration of such
provisions as fall within the jurisdiction of the committee concerned
A BILL
To provide market transition assistance for quota holders,
active tobacco producers, and tobacco-growing counties,
to authorize a private Tobacco Production Control Cor-
poration and tobacco loan associations to control the
production and marketing and ensure the quality of to-
bacco in the United States, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives 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. Transition payments for other persons involved in tobacco production
and marketing and cigarette manufacture and distribution.
Sec. 206. 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 es-
tablished 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 acre-
age 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 CORPORA-
TION.—The term ‘‘Corporation’’ means the Tobacco
Production Control Corporation established by sec-
tion 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 pro-
gram and establish a private program to ensure the
stability of the price and supply of domestically pro-
duced tobacco;
(2) compensate quota holders for the value of
assets that may be diminished as a result of this leg-
islation;
(3) provide targeted economic development
funds to tobacco dependent communities for the cre-
ation of jobs, training of individuals, and long-term
economic development of the communities;
(4) reduce the operating costs of tobacco pro-
ducers by eliminating expenses associated with buy-
ing or leasing tobacco quota;
(5) make domestically produced tobacco more
competitive with tobacco produced in other coun-
tries; and
(6) provide funds for those persons who are ad-
versely and directly affected by the dismantling of
the Federal tobacco program and the implementa-
tion of national tobacco settlement legislation.
TITLE I—TOBACCO COMMUNITY
REVITALIZATION TRUST FUND
SEC. 101. TOBACCO COMMUNITY REVITALIZATION TRUST
FUND.
(a) IN GENERAL.—There is established in the Treas-
ury of the United States a trust fund to be known as the
‘‘Tobacco Community Revitalization Trust Fund’’, con-
sisting of such amounts as may be appropriated or cred-
ited to the Trust Fund. The Trust Fund shall be adminis-
tered by the Corporation.
(b) TRANSFERS TO TRUST FUND.—There are appro-
priated 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 ad-
vances, such sums as may from time to time be nec-
essary 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 when 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 ad-
vance made under this subsection shall be at a rate
determined by the Secretary of the 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 market-
able obligations of the United States with remaining
period to maturity comparable to the anticipated pe-
riod during which the advance will be outstanding.
(d) EXPENDITURES FROM TRUST FUND.—Amounts
in the Trust Fund shall be available for making expendi-
tures 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 Associa-
tions under section 203;
(4) the costs of making tobacco community eco-
nomic 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 making transition payments to
tobacco warehousemen and other persons directly in-
volved in tobacco production and marketing and cig-
arette manufacture and distribution under section
205.
(6) the costs of carrying out the duties of the
Corporation and the Associations, including assuring
the quality and controlling the production and mar-
keting of domestic tobacco and otherwise carrying
out title III;
(7) the costs to the Secretary of enforcing title
III;
(8) the costs of providing crop insurance to to-
bacco producers; and
(9) 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 pay-
ments for tobacco quota to eligible quota holders.
(b) ELIGIBILITY.—To be eligible to receive payments
under this section, a quota holder shall prepare and sub-
mit to the Corporation an application at such time, in such
manner, and containing such information as the Corpora-
tion may require, including information sufficient to dem-
onstrate 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 deter-
mine, 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 POUND-
AGE QUOTAS.—For each kind of tobacco for which
there is a marketing quota or allotment (on an acre-
age basis), the base quota level for each quota holder
shall be determined in accordance with this sub-
section (based on a poundage conversion) in an
amount equal to the product obtained by multiply-
ing—
(A) the average tobacco farm marketing
quota or allotment for the 1995 through 1997
marketing years; by
(B) the average yield per acre for the
quota holder’s farm for the kind of tobacco for
the marketing years.
(d) PAYMENTS.—The Corporation shall make pay-
ments to each quota holder that is eligible under sub-
section (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 tran-
sition 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 con-
taining such information as the Corporation may re-
quire, including information sufficient to make the
demonstration required under paragraph (2); and
(2) demonstrate to the satisfaction of the Cor-
poration that, the person planted, or is considered to
have planted, a 1997 crop of tobacco.
(c) PAYMENT QUANTITY.—
(1) IN GENERAL.—The Secretary shall deter-
mine 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 ac-
tive 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 POUND-
AGE QUOTAS.—For each kind of tobacco for which
there is a marketing quota or allotment (on an acre-
age basis), the production quantity eligible for pay-
ment for each active tobacco producer shall be deter-
mined 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 yield per acre for the ac-
tive tobacco producer for the kind of tobacco for
the marketing years.
(d) PAYMENTS.—The Corporation shall make pay-
ments for each of the 1999 through 2003 crops of tobacco
to each active tobacco producer that is eligible under sub-
section (b) in an amount that is equal to the product ob-
tained by multiplying—
(1) $0.80 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 trans-
fer 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