(B) purchase during a marketing year, on 
the United States auction markets, from li-
censed tobacco producers, or from inventories of 
tobacco of the producer-owned cooperative mar-
keting associations that have entered into loan 
agreements with the Commodity Credit Cor-
poration to make price support available to pro-
ducers of flue-cured and burley tobacco, a quan-
tity of flue-cured or burley tobacco equal to at 
least ninety percent of the quantity submitted 
under subsection (b). 
(2) The amount of any penalty to be imposed 
on a manufacturer under this section shall be deter-
mined by multiplying—
(A) twice the per pound assessment (as de-
termined under Section 106A or 106B of the 
Agricultural Act of 1949 (7 U.S.C. 1445–1 or 
1445–2)) for the kind of tobacco involved; by 
(B) the quantity—
(i) of purchases described in para-
graph (1)(A); or 
(ii) by which the purchases by such 
manufacturer 
described 
in 
paragraph 
(1)(B) are less than ninety percent of the 
quantity of intended purchases of such
kind of tobacco (as that quantity may be 
reduced under paragraph (3)). 
(3) If the quantity of flue-cured or burley to-
bacco marketed during a marketing year on United 
States auction markets (including tobacco consigned 
to a producer association for a price support ad-
vance) or directly from licensed tobacco producers is 
less than the national estimate for that kind of to-
bacco for that marketing year, the quantity of in-
tended purchases of each domestic manufacturer of 
cigarettes, for purposes of this subsection, shall be 
reduced by a percentage equal to the percentage by 
which the total quantity marketed is less than the 
national estimate for that kind of tobacco for the 
marketing year. 
(d) ENFORCEMENT.—The Secretary of Agriculture 
may enforce subsection (c) in the courts of the United 
States. 
(e) RESERVE SUPPLY LEVEL.—
(1) The reserve supply level for flue-cured to-
bacco under subparagraph (a)(3)(C) shall be the 
greater of—
(A) 
60,000,000 
pounds 
(farm 
sales 
weight); or
(B) 10 percent of the national estimate for 
flue-cured tobacco for the marketing year im-
mediately preceding the marketing year for 
which the level is being determined (or for the 
2004 crop of flue-cured tobacco, 10 percent of 
the national marketing quota for the 2003 mar-
keting year). 
(2) The reserve supply level for burley tobacco 
under subparagraph (a)(3)(C) shall be the greater 
of—
(A) 
50,000,000 
pounds 
(farm 
sales 
weight); or 
(B) 15 percent of the national estimate for 
burley tobacco for the marketing year imme-
diately preceding the marketing year for which 
the level is being determined (or for the 2004 
crop of burley tobacco, 15 percent of the na-
tional marketing quota for the 2003 marketing 
year). 
SEC. 103. NATIONAL TOBACCO MARKETING FACTOR. 
(a) 2004 CROP.—For the 2004 crop, the national 
marketing factor for flue-cured or burley tobacco shall be 
the ratio of the national estimate determined under section 
102(a) to the national marketing quota for the 2003 mar-
keting year.
(b) SUBSEQUENT CROPS.—For the 2005 and subse-
quent crops, the national marketing factor for flue-cured 
or burley tobacco for a crop year shall be the ratio of—
(1) the national estimate determined under sec-
tion 102(a); to 
(2) the sum of the quantity of flue-cured or 
burley tobacco that is authorized to be produced 
pursuant to a tobacco production license for the im-
mediately preceding year for all farms for which to-
bacco production licenses will be determined for such 
succeeding marketing year. 
SEC. 104. ISSUANCE OF TOBACCO PRODUCTION LICENSES. 
(a) INITIAL ISSUANCE TO HISTORIC TOBACCO PRO-
DUCERS.—
(1) ISSUANCE.—
(A) ISSUANCE
REQUIRED.—As soon as 
practicable after the date of the enactment of 
this Act, the Secretary of Agriculture shall 
issue to each historic tobacco producer a to-
bacco production license for the purpose of en-
suring sufficient production of flue-cured and 
burley tobacco to satisfy the national estimate 
determined under section 102. 
(B) EXCEPTION.—The Secretary shall not 
issue a tobacco production license to an historic
tobacco producer with respect to flue-cured or 
burley tobacco if the historic tobacco producer 
does not certify to the Secretary that such pro-
ducer intends to produce such type of tobacco 
during the 2004 crop year.
(2) TOBACCO PRODUCTION HISTORY.—
(A) The tobacco production license issued 
to an historic tobacco producer under para-
graph (1) shall specify the tobacco production 
history of the producer for each type of tobacco 
for each county in which the producer bore, in-
dividually or collectively, the risk of producing 
a crop of tobacco on a farm in the county for 
the 2003 crop year. 
(B) In the case of an historic tobacco pro-
ducer who bore 100 percent of the risk of pro-
ducing a type of tobacco on a farm for the 
2003 crop year, the tobacco production history 
of the historic tobacco producer for that type of 
tobacco in a county shall be equal to the 2003 
marketing and effective quota of that type to-
bacco produced by the producer in the county 
for commercial use during the 2003 crop year. 
(C) In the case of an historic tobacco pro-
ducer who bore less than 100 percent of the
risk of production, the Secretary of Agriculture 
shall adjust the tobacco production history to 
reflect the percentage of risk that was borne by 
the producer. 
(D) The Secretary of Agriculture shall au-
thorize a production level under each tobacco 
production license for the 2004 crop determined 
by multiplying the tobacco production history 
by the national marketing factor for the 2004 
crop. 
(3) ADJUSTMENT AUTHORITY.—An historic to-
bacco producer may petition the Secretary of Agri-
culture to increase the tobacco production history 
determined under paragraph (2) for the producer for 
flue-cured or burley tobacco on the grounds that the 
producer’s 2003 production under-represents the 
producer’s historic production of that type of to-
bacco. 
(4) CONSOLIDATION OF COUNTIES.—If the ini-
tial issuance of a tobacco production license to an 
historic tobacco producer for flue-cured or burley to-
bacco would result in the producer receiving a li-
cense for that type of tobacco for more than one 
county, the producer may elect to consolidate the li-
censes in a single county in which the producer bore
an historic tobacco producer who does not certify to 
the Secretary that such producer intends to produce 
such type of tobacco during the 2004 crop year shall 
also be available to the Secretary for distribution as 
provided in paragraph (1). 
(c) LIMITATIONS ON USE OF LICENSE.—
(1) IN GENERAL.—A tobacco production license 
specifying a particular type of tobacco and the coun-
ty in which that type of tobacco may be grown may 
not be used as the basis to grow a different type of 
tobacco or to grow that type of tobacco in a different 
county. 
(2) REVOCATION.—Any use of a tobacco pro-
duction license contrary to this subsection shall re-
sult in the revocation of the license. 
(d) LIMITATIONS ON SALE, LEASE, OR TRANSFER OF 
LICENSE.—
(1) SALE PROHIBITED.—A tobacco production 
license and the corresponding tobacco production 
history may not be sold or leased. 
(2) 
TRANSFER
UNDER
LIMITED
CIR-
CUMSTANCES.—A licensed tobacco producer may not 
transfer a tobacco production license and the cor-
responding tobacco production history unless—
(A) in the case of a licensed tobacco pro-
ducer who is in a partnership, the transfer is 
among the partners; or 
(B) in the case of a licensed tobacco pro-
ducer who is an individual, the transfer is made 
to the spouse, parent, brother, sister, or natural
or adopted child of the licensed tobacco pro-
ducer. 
(3) RIGHT OF SURVIVORSHIP.—In the case of 
the death of a person to whom a license has been 
issued under this section, the license shall transfer 
to the surviving spouse of the person or, if there is 
no surviving spouse, to the direct descendants of the 
person. 
(4) HARDSHIP.—In the case of the death of a 
person to whom a license has been issued under this 
section and whose descendants are temporarily un-
able to produce a crop of tobacco, the Secretary may 
hold the license in the name of the descendants for 
a period of not more than 18 months, at the discre-
tion of the Secretary. 
(5) LIFETIME TRANSFER.—A person that is eli-
gible to obtain a license under this section may at 
any time transfer all or part of the license to the
person’s spouse or direct descendants that are ac-
tively engaged in the production of tobacco. 
(6) REVOCATION.—Any sale, lease, or transfer 
of a tobacco production license or the corresponding 
tobacco production history contrary to this sub-
section shall result in the revocation of the license. 
(e) SURRENDER OR REVOCATION OF LICENSE FOR 
NON-USE.—
(1) SURRENDER.—A licensed tobacco producer 
may surrender a tobacco production license and the 
corresponding tobacco production history to the Sec-
retary of Agriculture at any time. 
(2) REVOCATION.—The Secretary of Agri-
culture shall revoke the tobacco production license 
and the corresponding tobacco production history of 
a licensed tobacco producer if the licensed tobacco 
producer—
(A) fails to share, individually or collec-
tively, in 100 percent of the risk of producing 
a crop of tobacco of the type specified in the to-
bacco production license for any year; or 
(B) fails to produce at least 75 percent of 
the quantity of that type of tobacco specified in 
the tobacco production license for two out of 
three years, unless that Secretary determines
the failure was due to damaging weather or re-
lated condition. 
SEC. 105. ANNUAL AUTHORIZED TOBACCO PRODUCTION 
UNDER TOBACCO PRODUCTION LICENSES. 
(a) NOTIFICATION
OF LICENSED TOBACCO PRO-
DUCERS.—As soon as practicable after preparing the na-
tional estimate required by section 102 for flue-cured or 
burley tobacco for a marketing year, the Secretary of Agri-
culture shall notify each licensed tobacco producer of that 
type of tobacco of the authorized quantity of tobacco that 
the producer may produce in a county in the cor-
responding crop year under the tobacco production license. 
(b) DETERMINATION OF AUTHORIZED PRODUCTION 
LEVELS.—For the 2005 and subsequent marketing years, 
the authorized tobacco production level for a licensed to-
bacco producer for flue-cured or burley tobacco in a county 
for a crop year is equal to the product of—
(1) the production level authorized for such to-
bacco production license during the immediately pre-
ceding marketing year; and 
(2) the national tobacco marketing factor for 
that year determined by the Secretary of Agriculture 
under section 103. 
(c) EXCESS PRODUCTION.—Except as provided in 
subsection (e), if a licensed tobacco producer harvests and
markets tobacco in excess of the quantity specified in the 
producer’s tobacco production license or any other person 
produces tobacco without a tobacco production license, the 
licensed tobacco producer or other person shall be liable 
for a civil penalty up to an amount determined by multi-
plying—
(1) the quantity of tobacco involved in the viola-
tion; by 
(2) price support rate for the type of tobacco 
involved in effect under section 106 of the Agri-
culture Act of 1949 at the time of the violation. 
(d) ENFORCEMENT.—The Secretary of Agriculture 
may enforce subsection (c) in the courts of the United 
States. 
(e) LIMITED AUTHORITY TO EXCEED LICENSE.—If 
the Secretary determines that the actual production of 
flue-cured or burley tobacco for a crop year will be less 
than 80 percent of the production authorized under all li-
censes issued for that type of tobacco, the Secretary may 
authorize a licensed tobacco producer of that type of to-
bacco to harvest and market tobacco in excess of the quan-
tity specified in the producer’s tobacco production license. 
The Secretary shall establish a mechanism under which 
a licensed tobacco producer may apply for the authority 
to exceed the quantity specified in the producer’s license.
SEC. 106. TERMINATION OF FLUE-CURED AND BURLEY 
QUOTA PROGRAMS. 
Section 312 of the Agricultural Adjustment Act of 
1938 (7 U.S.C. 1312) is amended by adding after sub-
section (c):
‘‘(d) INAPPLICABILITY TO 2004 AND SUBSEQUENT 
CROP YEARS OF BURLEY AND FLUE-CURED TOBACCO.—
The provisions of this section and sections 317 and 319 
of this Act are not applicable to 2004 and subsequent crop 
years of burley and flue-cured tobacco.’’. 
SEC. 107. PROGRAM REFERENDA. 
(a) INITIAL REFERENDUM.—
(1) REFERENDUM
REQUIRED.—Within sixty 
days after the enactment of this Act, the Secretary 
shall conduct a referendum, by type of tobacco, 
among the licensees engaged in the production of 
flue-cured or burley tobacco to determine whether 
the licensees engaged in the production of that kind 
of tobacco are in favor of continuing the operation 
of the program established under this Act with re-
spect to that kind of tobacco. 
(2) PROCESS AND RESULTS.—If more than one-
half of the licensees voting in a referendum con-
ducted under paragraph (1) with respect to flue-
cured or burley tobacco oppose the continuation of 
the program, the Secretary shall announce the result
and shall conduct a second referendum with respect 
to that kind of tobacco one year later. If more than 
one-half of the licensees voting in the second ref-
erendum also oppose the continuation of the pro-
gram, the Secretary shall announce the result and 
the program shall cease to be in effect for that kind 
of tobacco. 
(b) SUBSEQUENT REFERENDA.—
(1) REFERENDUM INITIATED BY SECRETARY.—
The Secretary may conduct subsequent referenda 
from time to time as the Secretary considers appro-
priate to determine whether producers are in favor 
of continuing the program established under this 
Act, the use of licenses, limitations on license trans-
fer, or any other aspect of the program. 
(2) REFERENDUM INITIATED BY LICENSEES.—
If at least one-third of the licensees engaged in the 
production of flue-cured or burley tobacco request a 
referendum under this subsection, the Secretary 
shall conduct a referendum among the licensees en-
gaged in the production of that kind of tobacco to 
determine whether the licensees are in favor of con-
tinuing the operation of the program established 
under this Act with respect to that kind of tobacco.
(3) PROCESS AND RESULTS.—If more than one-
half of the licensees voting in a referendum con-
ducted under paragraph (1) or (2) with respect to 
flue-cured or burley tobacco oppose the continuation 
of the program, the Secretary shall announce the re-
sult and shall conduct a second referendum with re-
spect to that kind of tobacco one year later. If more 
than one-half of the licensees voting in the second 
referendum also oppose the continuation of the pro-
gram, the Secretary shall announce the result and 
the program shall cease to be in effect for that kind 
of tobacco. 
SEC. 108. EFFECTIVE DATE. 
This title and the amendments made by this title 
shall apply with respect to the 2004 and subsequent flue-
cured and burley tobacco crops. 
TITLE II—TOBACCO COST OF 
PRODUCTION SUPPORT 
SEC. 201. TOBACCO COST OF PRODUCTION CALCULATION. 
(a) ADJUSTMENT TO FLUE-CURED AND BURLEY TO-
BACCO SUPPORT LEVELS.—Section 106 of the Agricul-
tural Act of 1949 (7 U.S.C. 1445) is amended by adding 
at the end thereof the following: 
‘‘(h) SPECIAL SUPPORT LEVEL.—
‘‘(1) SUPPORT
RATE; 
APPLICABILITY.—Not-
withstanding the foregoing provisions of this section, 
for the 2004 and each subsequent crop of flue-cured 
and burley tobacco for which tobacco production li-
censes are in effect or have not been disapproved by 
producers under title I of the Phase III Implementa-
tion Act, the support level shall be the level in cents 
per pound equal to the cost of production. 
‘‘(2) COST OF PRODUCTION BASIS.—For pur-
poses of paragraph (1), the cost of production for to-
bacco producers shall include items representing 
general, variable costs of producing tobacco, as de-
termined by the Secretary, but shall not include the 
cost of land, risk, overhead, management, adminis-
tration of production licenses, marketing contribu-
tions or assessments, and other costs not directly re-
lated to the production of tobacco.’’. 
(b) AMENDMENT
TO
QUOTA
TOBACCO
DEFINI-
TION.—
(1) Section 106A(a)(7) of the Agricultural Act 
of 1949 (7 U.S.C. 1445–1(a)(7)) is amended by 
striking the period at the end of the paragraph and 
inserting ‘‘, and shall include any kind of tobacco for 
which tobacco production licenses are in effect or for 
which tobacco production licenses are not dis-
approved by producers under title I of the Phase III 
Implementation Act.’’. 
(2) Section 106B(a)(5) of the Agricultural Act 
of 1949 (7 U.S.C. 1445–2(a)(5)) is amended by 
striking the period at the end of the paragraph and 
inserting ‘‘, and shall include any kind of tobacco for 
which tobacco production licenses are in effect or for 
which tobacco production licenses are not dis-
approved by producers under title I of the Phase III 
Implementation Act.’’
SEC. 202. EFFECTIVE DATE. 
This title and the amendments made by this title 
shall apply with respect to the 2004 and subsequent flue-
cured and burley tobacco crops.
Æ