I
107TH CONGRESS
2D SESSION
H. R. 5480
To eliminate the Federal quota and price support programs for certain to-
bacco, to compensate quota owners and holders for the loss of tobacco
quota asset value, to establish a tobacco community reinvestment pro-
gram, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 26, 2002
Mr. CHAMBLISS (for himself, Mr. HAYES, Mr. BURR of North Carolina, Mr.
KINGSTON, Mr. COBLE, Mr. BISHOP, Mr. JONES of North Carolina, and
Mr. BALLENGER) introduced the following bill; which was referred to the
Committee on Agriculture
A BILL
To eliminate the Federal quota and price support programs
for certain tobacco, to compensate quota owners and
holders for the loss of tobacco quota asset value, to
establish a tobacco community reinvestment program,
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
‘‘Rural Community Revitalization and Transition Act’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—TOBACCO TRANSITION PAYMENTS
Sec. 101. Tobacco transition payments.
‘‘Subtitle E—Tobacco Community Reinvestment Program
‘‘Sec. 380a. Definitions.
‘‘CHAPTER 1—TOBACCO TRANSITION PAYMENTS
‘‘Sec. 380d. Tobacco transition payments.
‘‘Sec. 380e. Tobacco Farmer Trust Fund.
Sec. 102. Sense of Congress on treatment of payments.
TITLE II—TOBACCO INVESTMENT PROTECTION PAYMENTS
Sec. 201. Tobacco investment protection payments.
‘‘CHAPTER 2—TOBACCO INVESTMENT PROTECTION PAYMENTS
‘‘Sec. 380h. Historic quota production.
‘‘Sec. 380i. Tobacco investment protection payments for Flue-cured to-
bacco.
‘‘Sec. 380j. Tobacco investment protection payments for Burley and other
kinds of tobacco.
‘‘Sec. 380k. Assessments.
TITLE III—ADMINISTRATION
Sec. 301. Administration.
‘‘CHAPTER 3—ADMINISTRATION
‘‘Sec. 380m. Center for Agricultural Innovation.
‘‘Sec. 380n. Tobacco Advisory Board.
TITLE IV—TERMINATION OF MARKETING QUOTAS FOR CERTAIN
TOBACCO
Sec. 401. Definitions.
Sec. 402. National marketing quota.
Sec. 403. Apportionment of national marketing quota.
Sec. 404. Burley tobacco acreage allotments.
Sec. 405. Lease and transfer of acreage allotments.
Sec. 406. Mandatory sale of Flue-cured tobacco acreage allotments and mar-
keting quotas.
Sec. 407. Mandatory sale of Burley tobacco acreage allotments and marketing
quotas.
Sec. 408. Acreage—poundage quotas.
Sec. 409. Sale or lease of acreage allotments.
Sec. 410. Farm poundage quotas for certain kinds of tobacco.
Sec. 411. Improved tobacco field measurement.
TITLE V—ADMINISTRATION
Sec. 501. Marketing years.
TITLE I—TOBACCO TRANSITION
PAYMENTS
SEC. 101. TOBACCO TRANSITION PAYMENTS.
Title III of the Agricultural Adjustment Act of 1938
is amended by inserting after subtitle D (7 U.S.C. 1379a
et seq.) the following:
‘‘Subtitle E—Tobacco Community
Reinvestment Program
‘‘SEC. 380a. DEFINITIONS.
‘‘In this subtitle:
‘‘(1) ACTIVE GROWER.—The term ‘active grow-
er’ means a person that (as determined by a county
committee)—
‘‘(A) is at risk for a crop of covered to-
bacco;
‘‘(B) is determined to be actively engaged
in farming (within the meaning of sections
1001 and 1001A of the Food Security Act of
1985 (7 U.S.C. 1308, 1308–1)) with respect to
the production of a kind of covered tobacco; and
‘‘(C) shared in the risk of producing the
2002 crop of covered tobacco.
‘‘(2) ADDITIONAL PRODUCTION.—The term ‘ad-
ditional production’ means the quantity of covered
tobacco produced on a farm for a marketing year in
excess of the quantity for which a tobacco producer
may receive a payment under chapter 2.
‘‘(3) CENTER.—The term ‘Center’ means the
Center for Agricultural Innovation established under
section 380m.
‘‘(4) CONSIDERED
PRODUCED.—The terms
‘considered produced’ and ‘considered to have pro-
duced’ means any production of covered tobacco that
was lost as a result of damaging weather or related
condition, as determined by the Secretary.
‘‘(5) COVERED TOBACCO.—The term ‘covered
tobacco’ means—
‘‘(A) Flue-cured tobacco;
‘‘(B) Burley tobacco;
‘‘(C) Fire-cured tobacco;
‘‘(D) dark air-cured tobacco; and
‘‘(E) Virginia sun-cured tobacco.
‘‘(6) HISTORIC QUOTA PRODUCTION.—The term
‘historic quota production’ means the quantity of the
average quantity of covered tobacco assigned to a
farm by a traditional producer pursuant to section
380h.
‘‘(7) NEW
PRODUCER.—The term ‘new pro-
ducer’ means a producer of a kind of covered to-
bacco that is not a traditional producer.
‘‘(8) NONTRADITIONAL
TOBACCO
COUNTY.—
The term ‘nontraditional tobacco county’ means a
county in the United States that did not have any
traditional tobacco farms during any of the 1999
through 2002 marketing years.
‘‘(9) QUOTA.—The term ‘quota’ means a farm
marketing quota for covered tobacco established
under part I of subtitle B for the marketing year for
any of the 2002 or previous crops.
‘‘(10) QUOTA OWNER.—The term ‘quota owner’
means the owner of a farm (as of July 1, 2002) for
which a quota was established for the 2002 crop
year.
‘‘(11) TOBACCO ADVISORY BOARD.—The term
‘Tobacco Advisory Board’ means the Tobacco Advi-
sory Board established by section 380n.
‘‘(12) TRADITIONAL
TOBACCO
FARM.—The
term ‘traditional tobacco farm’ means a farm in the
United States that produced, or was considered to
have produced, covered tobacco during—
‘‘(A) in the case of Flue-cured tobacco, any
or all of the 1999 through 2002 marketing
years; and
‘‘(B) in the case of any other kind of cov-
ered tobacco, the 2001 or 2002 marketing year.
‘‘(13) TRADITIONAL
PRODUCER.—The term
‘traditional producer’ means a producer on a farm in
the United States that produced, or considered to
have produced, covered tobacco during—
‘‘(A) in the case of Flue-cured tobacco, any
or all of the 1999 through 2002 marketing
years; and
‘‘(B) in the case of any other kind of cov-
ered tobacco, the 2001 or 2002 marketing year.
‘‘CHAPTER 1—TOBACCO TRANSITION
PAYMENTS
‘‘SEC. 380d. TOBACCO TRANSITION PAYMENTS.
‘‘(a) IN GENERAL.—The Secretary shall make pay-
ments to quota owners and active growers of covered to-
bacco in accordance with this section.
‘‘(b) ELIGIBILITY.—
‘‘(1) IN
GENERAL.—Effective beginning with
the 2003 crop year, each quota owner and active
grower of record of covered tobacco shall be eligible
to receive payments under this section.
‘‘(2) PROPORTIONAL PAYMENT.—Any payment
under this section shall be made only in an amount
that is proportional to the ownership or interest held
by the recipient.
‘‘(3) APPLICATION.—To be eligible to receive
compensation under this section, any quota owner or
active grower shall prepare and submit to the Sec-
retary an application for compensation in such form
and at such time as the Secretary shall prescribe.
‘‘(4) CRITERIA.—The application shall dem-
onstrate to the satisfaction of the Secretary that the
applicant meets the requirements of this section.
‘‘(c) PAYMENTS.—
‘‘(1) QUOTA OWNERS.—
‘‘(A) IN GENERAL.—Subject to paragraphs
(3) and (4), the amount of a payment made
under this section to a quota owner shall be
equal to the amount obtained by multiplying—
‘‘(i) the payment quantity determined
under subparagraph (B); by
‘‘(ii) $8 per pound.
‘‘(B) PAYMENT QUANTITY.—The payment
quantity for a payment made under this section
to a quota owner shall be equal to the amount
obtained by multiplying—
‘‘(i) the base quota for a kind of cov-
ered tobacco for the quota owner for the
2002 marketing year (as of July 1, 2002);
by
‘‘(ii) the ratio of—
‘‘(I) the national quota for the
kind of covered tobacco for the 1998
marketing year (as established under
part I of subtitle B); to
‘‘(II) the national quota for the
kind of covered tobacco for the 2002
marketing year (as established under
part I of subtitle B).
‘‘(2) ACTIVE GROWERS.—Subject to paragraphs
(3) and (4), the amount of a payment made under
this section to an active grower on a farm shall be
equal to the amount obtained by multiplying—
‘‘(A) the effective farm marketing quota
for the active grower for the 2001 marketing
year; by
‘‘(B) $4 per pound.
‘‘(3) QUOTA
OWNER-ACTIVE
GROWERS.—If a
person is both a quota owner and an active grower,
the person shall be eligible for payments under para-
graphs (1) and (2).
‘‘(4) DEATH OF QUOTA LESSEE OR QUOTA TEN-
ANT.—If a quota lessee or quota tenant who is enti-
tled to receive payments under this section dies and
is survived by a spouse or 1 or more dependents, the
right to receive the payments shall transfer to the
surviving spouse or, if there is no surviving spouse,
to the immediate family members in equal shares.
‘‘(d) TIMING OF PAYMENTS.—Payments under this
section shall be made to the quota owner or active grower,
at the option of the quota owner or active grower—
‘‘(1) in 1 lump sum payment during calendar
year 2003; or
‘‘(2) in 5 equal payments over a period of 5
years commencing with calendar year 2003.
‘‘SEC. 380e. TOBACCO FARMER TRUST FUND.
‘‘(a) ESTABLISHMENT.—There is established in the
Treasury of the United States a revolving fund to be used
in carrying out section 380d (referred to in this section
as the ‘Fund’), consisting of—
‘‘(1) such amounts as are appropriated to the
Fund under subsection (b); and
‘‘(2) any interest earned on investment of
amounts in the Fund under subsection (d).
‘‘(b) TRANSFERS TO FUND.—There are appropriated
to the Fund out of funds of the Treasury not otherwise
appropriated amounts equivalent to the taxes received
after the date of the enactment of this section in the
Treasury under chapter 52 of the Internal Revenue Code
of 1986 (relating to cigars, cigarettes, smokeless tobacco,
pipe tobacco, and cigarette papers and tubes) to the extent
such amounts exceed the amounts that would have been
received under the rates of tax that applied for 1999.
‘‘(c) EXPENDITURES FROM FUND.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
on request by the Secretary, the Secretary of the
Treasury shall transfer from the Fund to the Sec-
retary such amounts as the Secretary determines are
necessary to make payments under section 380d.
‘‘(2) ADMINISTRATIVE EXPENSES.—An amount
not exceeding 10 percent of the amounts in the
Fund shall be available in each fiscal year to pay the
administrative expenses necessary to carry out this
section and section 380d.
‘‘(d) INVESTMENT OF AMOUNTS.—
‘‘(1) IN
GENERAL.—The Secretary of the
Treasury shall invest such portion of the Fund as is
not, in the judgment of the Secretary of the Treas-
ury, required to meet current withdrawals. Invest-
ments may be made only in interest-bearing obliga-
tions of the United States.
‘‘(2) ACQUISITION OF OBLIGATIONS.—For the
purpose of investments under paragraph (1), obliga-
tions may be acquired—
‘‘(A) on original issue at the issue price; or
‘‘(B) by purchase of outstanding obliga-
tions at the market price.
‘‘(3) SALE
OF
OBLIGATIONS.—Any obligation
acquired by the Fund may be sold by the Secretary
of the Treasury at the market price.
‘‘(4) CREDITS TO FUND.—The interest on, and
the proceeds from the sale or redemption of, any ob-
ligations held in the Fund shall be credited to and
form a part of the Fund.
‘‘(e) TRANSFERS OF AMOUNTS.—
‘‘(1) IN GENERAL.—The amounts required to
be transferred to the Fund under this section shall
be transferred at least monthly from the general
fund of the Treasury to the Fund on the basis of es-
timates made by the Secretary of the Treasury.
‘‘(2) ADJUSTMENTS.—Proper adjustment shall
be made in amounts subsequently transferred to the
extent prior estimates were in excess of or less than
the amounts required to be transferred.’’.
SEC. 102. SENSE OF CONGRESS ON TREATMENT OF PAY-
MENTS.
It is the sense of Congress that quota holders and
active growers should be allowed to receive capital gains
treatment under the Internal Revenue Code of 1986 for
payments received under section 380d of the Agricultural
Adjustment Act of 1938 (as added by section 101).
TITLE 
II—TOBACCO 
INVEST-
MENT 
PROTECTION 
PAY-
MENTS
SEC. 201. TOBACCO INVESTMENT PROTECTION PAYMENTS.
Subtitle E of title III of the Agricultural Adjustment
Act of 1938 (as added by section 101) is amended by add-
ing at the end the following:
‘‘CHAPTER 2—TOBACCO INVESTMENT
PROTECTION PAYMENTS
‘‘SEC. 380h. HISTORIC QUOTA PRODUCTION.
‘‘(a) AVERAGE QUANTITY
OF FLUE-CURED
AND
BURLEY TOBACCO PRODUCED
BY TRADITIONAL PRO-
DUCERS.—
‘‘(1) IN GENERAL.—In the case of Flue-cured
and Burley tobacco, the Secretary shall determine,
for each traditional producer, the average effective
quota for each kind of tobacco on each farm on
which the traditional producer shared in the risk of
producing the kind of tobacco for the 1997 through
1999 marketing years.
‘‘(2) PROPORTIONAL SHARES.—If more than 1
traditional producer shared in the risk of producing
the kind of tobacco for a marketing year on a farm,
the traditional producers shall receive their propor-
tional share of the quantity of the kind of tobacco
planted to the kind of tobacco for harvest on the
farm based on the sharing arrangement that was in
effect among the producers for the crop.
‘‘(b) HISTORIC
QUOTA
PRODUCTION
OF
FIRE-
CURED, DARK AIR-CURED, AND VIRGINIA SUN-CURED
TOBACCO.—In the case of Fire-cured, dark air-cured, and
Virginia sun-cured tobacco, the Secretary shall determine,
for each traditional producer, the historic quota produc-
tion for each kind of tobacco on each farm on which the
traditional producer shared in the risk of producing the
kind of tobacco by multiplying—
‘‘(1) the average effective acreage allotment for
the kind of tobacco for the 1999 through 2001 mar-
keting years;
‘‘(2)(A) in the case of Fire-cured tobacco, 2,600
pounds per acre; and
‘‘(B) in the case of dark air-cured tobacco and
Virginia sun-cured tobacco, 2,500 pounds per acre;
by
‘‘(3) 1.75.
‘‘(c) ASSIGNMENT OF QUANTITY TO FARMS.—
‘‘(1) IN GENERAL.—At the beginning of each
crop year, the Secretary shall give each producer an
opportunity to assign the quantity of covered to-
bacco determined under subsection (a) or (b) for
each farm of the producer to that farm or another
farm in the same State or a contiguous State.
‘‘(2) LIMITATION ON ACREAGE ASSIGNMENT.—
Notwithstanding paragraph (1), the quantity of cov-
ered tobacco determined under subsection (a) or (b)
for a farm may not be assigned by a producer to a
farm in a nontraditional tobacco county.
‘‘(3) ASSIGNMENT TO FARMS.—Subject to para-
graph (2), the Secretary may not limit the quantity
of covered tobacco determined under subsection (a)
or (b) that may be assigned to a farm.
‘‘(4) PERMANENT TRANSFERS.—
‘‘(A) IN GENERAL.—A producer may per-
manently transfer all or part of the quantity of
tobacco assigned to a farm to, at the option of
the producer—
‘‘(i) other tobacco producers des-
ignated by the tobacco producer; or
‘‘(ii) the applicable county-State pool
for redistribution to other tobacco pro-
ducers that own or operate tobacco farms
located in the State.
‘‘(B) NEW PRODUCERS.—In redistributing
historic quota production of Flue-cured tobacco
from the county-State pool under subparagraph
(A)(ii), the Secretary shall give priority to new
producers, taking into consideration the produc-
tivity of the land.
‘‘(5) TEMPORARY TRANSFERS.—If a producer
leases or temporarily transfers a quantity of tobacco
assigned to a farm to another producer, the quantity
of tobacco leased or transferred shall be returned to
the county-State pool described in paragraph
(5)(A)(ii).
‘‘(d) TREATMENT OF CONSERVATION RESERVE CON-
TRACT ACREAGE.—
‘‘(1) IN GENERAL.—The Secretary shall provide
for an adjustment, as appropriate, in the historic
quota production for a farm whenever either of the
following circumstances occur:
‘‘(A) A conservation reserve contract en-
tered into under section 1231 of the Food Secu-
rity Act of 1985 (16 U.S.C. 3831) with respect
to the farm expires or is voluntarily terminated.
‘‘(B) Cropland is released from coverage
under a conservation reserve contract by the
Secretary.
‘‘(2) SPECIAL PAYMENT RULES.—For the mar-
keting year in which an adjustment under paragraph
(1) is first made, the traditional producer of the
farm shall elect to receive either a payment under
this chapter with respect to the acreage added to the
farm under this subsection or a prorated payment
under the conservation reserve contract, but not
both.
‘‘(e) NONPRODUCTION OF COVERED TOBACCO.—If at
least 75 percent of the historic quota production of a kind
of covered tobacco in a county in a State that is not pro-
duced or considered produced to the kind of covered to-
bacco during at least 2 of every 3 crop years, the quantity
of the historic quota production of the kind of covered to-
bacco that is not produced or considered produced shall
be transferred to the county-State pool for redistribution
in accordance with section 380i(b)(3) or 380j(b)(3), as ap-
propriate.
‘‘(f) HISTORIC QUOTA PRODUCTION ADJUSTMENT.—
Not later than end of the 2008 marketing year, and each
5 marketing years thereafter, the Secretary shall—
‘‘(1) examine the total historic quota production
pounds of each kind of covered tobacco nationally;
and
‘‘(2) make pro rata adjustments to the historic
quota production pounds on all farms to reflect in-
creases or decreases in the demand for the kind of
covered tobacco.
‘‘SEC. 380i. TOBACCO INVESTMENT PROTECTION PAY-
MENTS FOR FLUE-CURED TOBACCO.
‘‘(a) COUNTER-CYCLICAL PAYMENTS (TIPP 1).—
‘‘(1) IN GENERAL.—The Secretary shall make
available to each tobacco producer for each of the
2003 and subsequent marketing years for Flue-
cured tobacco a payment in an amount computed by
multiplying—
‘‘(A) the payment rate determined under
paragraph (2); by
‘‘(B) the payment quantity determined
under paragraph (3).
‘‘(2) PAYMENT RATE.—
‘‘(A) IN GENERAL.—The payment rate for
each of the 2003 and subsequent marketing
years for Flue-cured tobacco under this sub-
section shall be the amount by which—
‘‘(i) the investment protection price
for Flue-cured tobacco for the marketing
year determined under subparagraph (B);
exceeds
‘‘(ii) the payment rate paid by a pur-
chaser for the Flue-cured tobacco.
‘‘(B) INVESTMENT PROTECTION PRICE.—
‘‘(i) IN
GENERAL.—The investment
protection price for Flue-cured tobacco
under this subsection shall be established
by the Secretary, and adjusted annually, to
reflect the costs of production for pro-
ducers of Flue-cured tobacco (on a per
pound basis), other than—
‘‘(I) the cost of marketing Flue-
cured tobacco; and
‘‘(II) the cost of leasing quota for
Flue-cured tobacco.
‘‘(ii) DETERMINATION.—To determine
the cost of production of Flue-cured to-
bacco in the United States, the Secretary
shall use—
‘‘(I) the information collection
and survey resources of the Economic
Research Service and National Agri-
cultural Statistics Service of the De-
partment of Agriculture; and
‘‘(II) the most recent data avail-
able.
‘‘(iii) 
REEVALUATION.—The 
Sec-
retary, acting through the Economic Re-
search Service, shall—
‘‘(I) annually reevaluate the cost
of production of Flue-cured tobacco,
based on the survey of factors used by
the Secretary; and
‘‘(II) once every 5 years, conduct
the survey.
‘‘(iv) 
CONSULTATION.—In 
deter-
mining the costs of production of Flue-
cured tobacco, the Secretary shall consult
with—
‘‘(I) farm organizations;
‘‘(II) producer cooperatives and
associations;
‘‘(III) colleges and universities in
tobacco-producing States; and
‘‘(IV) other interested persons.
‘‘(v) DISCOUNTS.—In the case of
Flue-cured tobacco that is graded less than
the standard commercial grade for Flue-
cured tobacco established by the Secretary,
the Secretary shall reduce the investment
protection price for Flue-cured tobacco to
reflect the lower quality of the tobacco.
‘‘(3) PAYMENT QUANTITY.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graphs (B) through (D), a tobacco producer
shall be eligible for a payment under this sub-
section for any quantity of Flue-cured tobacco
marketed by the producer.
‘‘(B) INELIGIBLE
PRODUCTION.—A to-
bacco producer shall be ineligible for any pay-
ment under this subsection for a marketing
year with respect to—
‘‘(i) any Flue-cured tobacco that is
produced in a nontraditional tobacco coun-
ty;
‘‘(ii) any additional production of
Flue-cured tobacco during the marketing
year; or
‘‘(iii) any pounds of Flue-cured to-
bacco that are marketed by the tobacco
producer at a grade that is—
‘‘(I) below the minimum commer-
cial grade for Flue-cured tobacco es-
tablished by the Secretary; and
‘‘(II) in the case of Flue-cured
tobacco marketed under a contract,
below the minimum grade established
by the contract.
‘‘(C) DISASTERS.—If a tobacco producer
assigns historic quota production of Flue-cured
tobacco for a marketing year to a farm in a
county and the county receives an emergency
disaster designation by the President or the
Secretary for the marketing year, the Secretary
may increase the payment quantity for a pay-
ment made under this subsection to the tobacco
producer for the marketing year to reflect the
loss of production of Flue-cured tobacco.
‘‘(D) MARKET
CONDITIONS.—The Sec-
retary may reduce the payment quantity for
payments made to tobacco producers under this
subsection to reflect the supply and demand
conditions for Flue-cured tobacco.
‘‘(b) DIRECT PAYMENTS (TIPP 2).—
‘‘(1) IN GENERAL.—The Secretary shall make
available to each producer of Flue-cured tobacco a
payment in an amount computed by multiplying—
‘‘(A) 35 cents per pound; by
‘‘(B) the historic quota production of Flue-
cured tobacco assigned to a farm by the pro-
ducer for the 2003 marketing year pursuant to
section 380h.
‘‘(2) ELIGIBILITY.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), a tobacco producer shall be
eligible for a payment for a marketing year
under this subsection only if the tobacco pro-
ducer produces, or is considered to have pro-
duced, at least 75 percent of the historic quota
production of Flue-cured tobacco assigned to a
farm by the producer pursuant to section 380h
that is eligible for a counter-cyclical payment
under subsection (a).
‘‘(B) 
PRODUCERS
THAT
DISCONTINUE
PRODUCTION OF FLUE-CURED TOBACCO.—Sub-
paragraph (A) shall not apply to a tobacco pro-
ducer that elects to discontinue production of
Flue-cured tobacco.
‘‘(C) DURATION.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii)(I), payments under this
subsection shall be made for each of the
2003 and subsequent marketing years for
Flue-cured tobacco.
‘‘(ii) EXCEPTION.—If a producer per-
manently transfers historic quota produc-
tion to another producer during any of the
2003 through 2009 marketing years for
Flue-cured tobacco, the producer may—
‘‘(I) continue to receive payments
under this subsection through the
2009 marketing year for Flue-cured
tobacco; or
‘‘(II) transfer the right to receive
payments under this subsection to the
producer to which the historic quota
production is transferred, who shall be
eligible for payments in accordance
with clause (i).
‘‘(D) DEATH OF TOBACCO PRODUCER.—If
a tobacco producer who is entitled to receive
payments under this subsection dies and is sur-
vived by a spouse or 1 or more dependents, the
right to receive the payments shall transfer to
the surviving spouse or, if there is no surviving
spouse, to the immediate family members in
equal shares.
‘‘(3) PURCHASE OF SURPLUS TOBACCO.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graphs (B) and (C), not later than the end of
each marketing year, the Commodity Credit
Corporation shall offer to purchase from each
traditional producer, at the investment protec-
tion 
price 
determined 
under 
subsection
(a)(2)(B), any remaining stocks of Flue-cured
tobacco that are produced by the producer from
the historic quota production of the producer.
‘‘(B) MAXIMUM
QUANTITY
PURCHASED
WITH ASSESSMENTS.—Subject to subparagraph
(C), the maximum quantity of Flue-cured to-
bacco for a marketing year that may be pur-
chased with assessments collected under section
380k shall not exceed a quantity determined by
the Secretary.
‘‘(C) ADDITIONAL PURCHASES.—
‘‘(i) IN
GENERAL.—If the Secretary
determines that the assessments collected
pursuant to section 380k are not sufficient
to purchase the quantity of tobacco re-
quired to be purchased under subpara-
graph (A), the Secretary may authorize the
Commodity Credit Corporation to purchase
the additional quantity of tobacco required
to be purchased.
‘‘(ii) REPAYMENTS.—Any funds of the
Commodity Credit Corporation used to
carry out clause (i) shall be repaid with as-
sessments collected pursuant to section
380k.
‘‘(D) PROCEEDS OF SALE OF PURCHASED
TOBACCO.—Any amounts realized from the sale
of tobacco purchased under this paragraph shall
be used in accordance with section 380k.
‘‘(c) RECORDS.—The Secretary and the Commodity
Credit Corporation may require persons to provide such
records relating to the marketing and purchase of Flue-
cured tobacco as are necessary to carry out this section.
‘‘(d) PRODUCTION
IN
NONTRADITIONAL
COUN-
TIES.—Any tobacco producer that plants Flue-cured to-
bacco in a nontraditional county during a marketing year
shall be—
‘‘(1) ineligible, as to any commodity produced
during the marketing year on any farm in which the
producer has an interest, for—
‘‘(A) any payment under this section; or
‘‘(B) any payment or loan described in sec-
tion 1211(a) of the Food Security Act of 1985
(16 U.S.C. 3811(a)); and
‘‘(2) subject to a fine assessed by the Secretary
in an amount determined by the Secretary, in con-
sultation with the Tobacco Advisory Board.
‘‘SEC. 380j. TOBACCO INVESTMENT PROTECTION PAY-
MENTS FOR BURLEY AND OTHER KINDS OF
TOBACCO.
‘‘(a) COUNTER-CYCLICAL PAYMENTS (TIPP 1).—
‘‘(1) IN GENERAL.—The Secretary shall make
available to each tobacco producer for each of the
2003 and subsequent marketing years for Burley,
dark air-cured, Virginia sun-cured, and Fire-cured
tobacco (referred to in this section as ‘Burley and
other kinds of tobacco’) a payment in an amount
computed by multiplying—
‘‘(A) the payment rate determined under
paragraph (2); by
‘‘(B) the payment quantity determined
under paragraph (3).
‘‘(2) PAYMENT RATE.—
‘‘(A) IN GENERAL.—The payment rate for
each of the 2003 and subsequent marketing
years for Burley and other kinds of tobacco
under this subsection shall be the amount by
which—
‘‘(i) the investment protection price
for Burley and other kinds of tobacco, re-
spectively, for the marketing year deter-
mined under subparagraph (B); exceeds
‘‘(ii) the payment rate paid by a pur-
chaser for the Burley and other kinds of
tobacco, respectively.
‘‘(B) INVESTMENT PROTECTION PRICE.—
‘‘(i) IN
GENERAL.—The investment
protection price for Burley and other kinds
of tobacco under this subsection shall be
established by the Secretary, and adjusted
annually, to reflect the costs of production
for producers of Burley and other kinds of
tobacco (on a per pound basis), respec-
tively, other than—
‘‘(I) the cost of marketing Burley
and other kinds of tobacco, respec-
tively; and
‘‘(II) the cost of leasing quota for
Burley and other kinds of tobacco, re-
spectively.
‘‘(ii) DETERMINATION.—To determine
the cost of production of Burley and other
kinds of tobacco in the United States, the
Secretary shall use—
‘‘(I) the information collection
and survey resources of the Economic
Research Service and National Agri-
cultural Statistics Service of the De-
partment of Agriculture; and
‘‘(II) the most recent data avail-
able.
‘‘(iii) 
REEVALUATION.—The 
Sec-
retary, acting through the Economic Re-
search Service, shall—
‘‘(I) annually reevaluate the cost
of production of Burley and other
kinds of tobacco, based on the survey
of factors used by the Secretary; and
‘‘(II) once every 5 years, conduct
the survey.
‘‘(iv) 
CONSULTATION.—In 
deter-
mining the costs of production of Burley
and other kinds of tobacco, the Secretary
shall consult with—
‘‘(I) farm organizations;
‘‘(II) producer cooperatives and
associations;
‘‘(III) colleges and universities in
tobacco-producing States; and
‘‘(IV) other interested persons.
‘‘(v) DISCOUNTS.—In the case of Bur-
ley and other kinds of tobacco that is grad-
ed less than the standard commercial
grade for Burley and other kinds of to-
bacco, respectively, established by the Sec-
retary, the Secretary shall reduce the in-
vestment protection price for Burley and
other kinds of tobacco, respectively, to re-
flect the lower quality of the tobacco.
‘‘(3) PAYMENT QUANTITY.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graphs (B) through (D), a tobacco producer
shall be eligible for a payment under this sub-
section for any quantity of Burley and other
kinds of tobacco marketed by the producer.
‘‘(B) INELIGIBLE
PRODUCTION.—A to-
bacco producer shall be ineligible for any pay-
ment under this subsection for a marketing
year with respect to—
‘‘(i) any Burley and other kinds of to-
bacco that is produced in a nontraditional
tobacco county;
‘‘(ii) any additional production of
Burley and other kinds of tobacco during
the marketing year; or
‘‘(iii) any pounds of Burley and other
kinds of tobacco that are marketed by the
tobacco producer at a grade that is—
‘‘(I) below the minimum commer-
cial grade for Burley and other kinds
of tobacco, respectively, established by
the Secretary; and
‘‘(II) in the case of Burley and
other kinds of tobacco marketed
under a contract, below the minimum
grade established by the contract.
‘‘(C) DISASTERS.—If a tobacco producer
assigns historic quota production of Burley and
other kinds of tobacco for a marketing year to
a farm in a county and the county receives an
emergency disaster designation by the President
or the Secretary for the marketing year, the
Secretary may increase the payment quantity
for a payment made under this subsection to
the tobacco producer for the marketing year to
reflect the loss of production of Burley and
other kinds of tobacco, respectively.
‘‘(D) MARKET
CONDITIONS.—The Sec-
retary may reduce the payment quantity for
payments made to tobacco producers under this
subsection to reflect the supply and demand
conditions for Burley and other kinds of to-
bacco.
‘‘(b) DIRECT PAYMENTS (TIPP 2).—
‘‘(1) IN GENERAL.—The Secretary shall make
available to each producer of Burley and other kinds
of tobacco a payment in an amount computed by
multiplying—
‘‘(A) 35 cents per pound; by
‘‘(B) the historic quota production of Bur-
ley and other kinds of tobacco, respectively, as-
signed to a farm by the producer for the 2003
marketing year pursuant to section 380h.
‘‘(2) ELIGIBILITY.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), a tobacco producer shall be
eligible for a payment for a marketing year
under this subsection only if the tobacco pro-
ducer produces, or is considered to have pro-
duced, at least 75 percent of the historic quota
production of Burley and other kinds of to-
bacco, respectively, assigned to a farm by the
producer pursuant to section 380h that is eligi-
ble for a counter-cyclical payment under sub-
section (a).
‘‘(B) 
PRODUCERS
THAT
DISCONTINUE
PRODUCTION OF BURLEY AND OTHER KINDS OF
TOBACCO.—Subparagraph (A) shall not apply
to a tobacco producer that elects to discontinue
production of Burley and other kinds of to-
bacco, respectively.
‘‘(C) DURATION.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii)(I), payments under this
subsection shall be made for each of the
2003 and subsequent marketing years for
Burley and other kinds of tobacco.
‘‘(ii) EXCEPTION.—If a producer per-
manently transfers historic quota produc-
tion to another producer during any of the
2003 through 2009 marketing years for
Burley and other kinds of tobacco, the pro-
ducer may—
‘‘(I) continue to receive payments
under this subsection through the
2009 marketing year for Burley and
other kinds of tobacco; or
‘‘(II) transfer the right to receive
payments under this subsection to the
producer to which the historic quota
production is transferred, who shall be
eligible for payments in accordance
with clause (i).
‘‘(D) DEATH OF TOBACCO PRODUCER.—If
a tobacco producer who is entitled to receive
payments under this subsection dies and is sur-
vived by a spouse or 1 or more dependents, the
right to receive the payments shall transfer to
the surviving spouse or, if there is no surviving
spouse, to the immediate family members in
equal shares.
‘‘(3) PURCHASE OF SURPLUS TOBACCO.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graphs (B) and (C), not later than the end of
each marketing year, the Commodity Credit
Corporation shall offer to purchase from each
traditional producer, at the investment protec-
tion 
price 
determined 
under 
subsection
(a)(2)(B), any remaining stocks of Burley and
other kinds of tobacco that are produced by the
producer from the historic quota production of
the producer.
‘‘(B) MAXIMUM
QUANTITY
PURCHASED
WITH ASSESSMENTS.—Subject to subparagraph
(C), the maximum quantity of Burley and other
kinds of tobacco for a marketing year that may
be purchased with assessments collected under
section 380k shall not exceed a quantity deter-
mined by the Secretary.
‘‘(C) ADDITIONAL PURCHASES.—
‘‘(i) IN
GENERAL.—If the Secretary
determines that the assessments collected
pursuant to section 380k are not sufficient
to purchase the quantity of tobacco re-
quired to be purchased under subpara-
graph (A), the Secretary may authorize the
Commodity Credit Corporation to purchase
the additional quantity of tobacco required
to be purchased.
‘‘(ii) REPAYMENTS.—Any funds of the
Commodity Credit Corporation used to
carry out clause (i) shall be repaid with as-
sessments collected pursuant to section
380k.
‘‘(D) PROCEEDS OF SALE OF PURCHASED
TOBACCO.—Any amounts realized from the sale
of tobacco purchased under this paragraph shall
be used in accordance with section 380k.
‘‘(c) RECORDS.—The Secretary and the Commodity
Credit Corporation may require persons to provide such
records relating to the marketing and purchase of Burley
and other kinds of tobacco as are necessary to carry out
this section.
‘‘(d) ADDITIONAL PRODUCTION AND PRODUCTION IN
NONTRADITIONAL
COUNTIES.—Any tobacco producer
that markets any additional production of Burley and
other kinds of tobacco, or plants Burley and other kinds
of tobacco in a nontraditional county, during a marketing
year shall be—
‘‘(1) ineligible, as to any commodity marketed
during the marketing year on any farm in which the
producer has an interest, for—
‘‘(A) any payment under this section; or
‘‘(B) any payment or loan described in sec-
tion 1211(a) of the Food Security Act of 1985
(16 U.S.C. 3811(a)); and
‘‘(2) subject to a fine assessed by the Secretary
in an amount determined by the Secretary, in con-
sultation with the Tobacco Advisory Board.
‘‘SEC. 380k. ASSESSMENTS.
‘‘(a) ASSESSMENT ON SELLERS, PRODUCERS, AND
PURCHASERS.—
‘‘(1) IN GENERAL.—Effective for the 2003 and
subsequent marketing years for each kind of covered
tobacco, subject to paragraph (2), each person that
sells in the United States cigarettes or smokeless to-
bacco produced from covered tobacco, and each pro-
ducer and purchaser of covered tobacco, shall remit
to the Commodity Credit Corporation a nonrefund-
able marketing assessment in an amount equal to—
‘‘(A) in the case of a person that sells in
the United States cigarettes produced (in whole
or in part) from covered tobacco, 3 cents for
each pack of cigarettes sold, as adjusted by the
Secretary to enable the collection of a sufficient
amount of funds to carry out this subsection;
‘‘(B) in the case of a person that sells in
the United States smokeless tobacco produced
(in whole or in part) from covered tobacco, an
amount determined by the Secretary that is
based on ratio of—
‘‘(i) the amount of excise taxes im-
posed on the sale of cigarettes under sec-
tion 5701(b) of the Internal Revenue Code
of 1986; to
‘‘(ii) the amount of excise taxes im-
posed on the sale of smokeless tobacco
under section 5701(c) of that Code;
‘‘(C) in the case of a producer of covered
tobacco, 1 cent for each pound of covered to-
bacco marketed; and
‘‘(D) in the case of a purchaser of covered
tobacco, 1 cent for each pound of covered to-
bacco purchased.
‘‘(2) REBATE.—A domestic manufacturer of
cigarettes or smokeless tobacco that purchases cov-
ered tobacco produced in the United States and uses
the tobacco to produce cigarettes or smokeless sold
in the United States shall be entitled to a rebate of
any assessment payable under paragraph (1)(D) in
an amount equal to 1 cent for each such pound of
covered tobacco purchased.
‘‘(3) USE.—Assessments collected under this
subsection shall be used—
‘‘(A) to make direct payments under sec-
tions 381i(b) and 381j(b);
‘‘(B) to establish and operate marketing
centers for covered tobacco in an amount not to
exceed, for each kind of covered tobacco,
$1,500,000 for each of the 2003 through 2007
fiscal years;
‘‘(C) to establish and operate the Center
for Agricultural Innovation in accordance under
section 380m;
‘‘(D) to purchase surplus tobacco under
sections 380i(b)(4) and 380j(b)(4); and
‘‘(E) to repay the Commodity Credit Cor-
poration for the purchase of surplus tobacco
under 
sections 
380i(b)(4)(C)(ii) 
and
380j(b)(4)(C)(ii).
‘‘(4) NO NET COST TOBACCO FUND AND AC-
COUNT.—Any funds that remain in the No Net Cost
Tobacco Fund and the No Net Cost Tobacco Ac-
count established under sections 106A and 106B of
the Agricultural Act of 1949 (7 U.S.C. 1445–1,
1445–2), respectively, after carrying out those sec-
tions may be used to make direct payments under
sections 381i(b) and 381j(b).
‘‘(b) ASSESSMENT ON PRODUCERS FOR ADMINISTRA-
TIVE COSTS.—
‘‘(1) IN GENERAL.—Effective for the 2003 and
subsequent marketing years for covered tobacco, in
addition to the assessments imposed under sub-
section (a) and subject to paragraph (2), each pro-
ducer of covered tobacco shall remit to the Com-
modity Credit Corporation a nonrefundable mar-
keting assessment in an amount determined by the
Secretary that, in the aggregate, will cover all ad-
ministrative expenses incurred by the Secretary and
the Corporation in carrying out sections 381i(b) and
381j(b).
‘‘(2) LIMITATION.—The amount of the assess-
ment imposed under paragraph (1) shall not exceed
1 cent for each pound of covered tobacco produced.
‘‘(c) ASSESSMENT
ON
PURCHASERS
FOR
PUR-
CHASING
AT
LESS
THAN
INVESTMENT
PROTECTION
PRICE.—Effective for the 2003 and subsequent marketing
years for covered tobacco, each person that purchases a
kind of covered tobacco (other than tobacco described in
section 380i(a)(3)(B) or 380j(a)(3)(B)) at a price that is
less than the investment protection price established for
the kind of covered tobacco under section 380i(a)(2)(B)
or 380j(a)(2)(B), as applicable, shall remit to the Com-
modity Credit Corporation a nonrefundable marketing as-
sessment in an amount equal to the difference—
‘‘(1) the investment protection price for the
kind of covered tobacco (including any applicable in-
terest cost incurred by the Commodity Credit Cor-
poration); and
‘‘(2) the purchase price for the kind of covered
tobacco.
‘‘(d) ADMINISTRATION AND ENFORCEMENT OF AS-
SESSMENTS.—
‘‘(1) ADMINISTRATION.—Assessments this sec-
tion shall be—
‘‘(A) collected in the same manner as pro-
vided for in section 106A(d)(2) or 106B(d)(3)
of the Agricultural Act of 1949 (7 U.S.C.
1445–1(d)(2), 1445–2(d)(3)), as applicable;
and
‘‘(B) enforced in the same manner as pro-
vided in section 106A(h) or 106B(j) of that
Act, as applicable.
‘‘(2) ENFORCEMENT.—The Secretary may en-
force provisions of this section relating to assess-
ments in the courts of the United States.’’.
TITLE III—ADMINISTRATION
SEC. 301. ADMINISTRATION.
Subtitle E of title III of the Agricultural Adjustment
Act of 1938 (as added by section 201) is amended by add-
ing at the end the following:
‘‘CHAPTER 3—ADMINISTRATION
‘‘SEC. 380m. CENTER FOR AGRICULTURAL INNOVATION.
‘‘(a) ESTABLISHMENT.—
‘‘(1) IN GENERAL.—There is authorized to be
established a nonprofit corporation, to be known as
the ‘Center for Agricultural Innovation’, which will
not be an agency or establishment of the United
States Government.
‘‘(2) LAWS.—The Center shall be subject to—
‘‘(A) this section; and
‘‘(B) to the extent consistent with this sec-
tion, the laws (including regulations) of the
State where the Center is incorporated applica-
ble to nonprofit corporations.
‘‘(3) LOCATION.—The Center shall be located
at a land-grant college or university in a traditional
tobacco quota State (as defined by the Secretary).
‘‘(b) BOARD OF DIRECTORS.—
‘‘(1) COMPOSITION.—
or employee of the Center may receive com-
pensation for—
‘‘(i) service on a board of directors of
an organization that does not receive funds
from the Center;
‘‘(ii) service on a committee of a
board described in clause (i); and
‘‘(iii) similar activities for an organi-
zation described in clause (i).
‘‘(5) TENURE.—An officer or employee of the
Center shall serve at the pleasure of the Board.
‘‘(6) NONPOLITICAL POSITION.—Except as pro-
vided in subsection (b)(1)(B), no political test or
qualification shall be used in selecting, appointing,
promoting, or taking other personnel actions with re-
spect to an officer, employee, or agent of the Center.
‘‘(d) NONPROFIT AND NONPOLITICAL NATURE OF
THE CENTER.—
‘‘(1) NO STOCK OR DIVIDENDS.—The Center
shall have no power to issue any shares of stock or
to declare or pay any dividends.
‘‘(2) USE OF INCOME OR ASSETS.—No part of
the income or assets of the Center shall inure to the
benefit of any director, officer, employee, or any
other individual except as salary or reasonable com-
pensation for services.
‘‘(3) POLITICAL CONTRIBUTIONS.—The Center
may not contribute to or otherwise support any po-
litical party or candidate for elective public office.
‘‘(e) DUTIES.—
‘‘(1) IN GENERAL.—The Center shall coordi-
nate work among land-grant colleges and univer-
sities in the Southeast area of the United States to
foster and facilitate development, evaluation, and
implementation of economically viable new agricul-
tural technologies and enterprises for rural commu-
nities.
‘‘(2) TOBACCO-DEPENDENT COMMUNITIES.—In
carrying out paragraph (1), the Center shall give
priority to developing technologies and enterprises
described in paragraph (1) in tobacco-dependent
communities.
‘‘(3) POWERS.—In carrying out paragraph (1),
the Center may—
‘‘(A) convene meetings and conduct work-
shops and conferences;
‘‘(B) serve as a clearinghouse for exchange
of information;