I 
108TH CONGRESS 
1ST SESSION 
H. R. 245
To replace the existing Federal price support and quota programs for tobacco 
with price support and quota programs designed to assist the actual 
producers of tobacco, to compensate quota holders for the loss of tobacco 
quota asset value, to provide assistance for active tobacco producers, 
including those producers who forgo obtaining a tobacco production li-
cense, during the transition of the new programs, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 8, 2003
Mr. FLETCHER (for himself, Mr. ETHERIDGE, Mr. TANNER, Mr. BISHOP of 
Georgia, Mr. BOUCHER, Mr. LEWIS of Kentucky, Ms. MCCARTHY of Mis-
souri, Mr. LUCAS of Kentucky, Mr. WAMP, Mr. WHITFIELD, Mr. PRICE 
of North Carolina, and Mr. ROGERS of Kentucky) introduced the fol-
lowing bill; which was referred to the Committee on Agriculture 
A BILL 
To replace the existing Federal price support and quota 
programs for tobacco with price support and quota pro-
grams designed to assist the actual producers of tobacco, 
to compensate quota holders for the loss of tobacco quota 
asset value, to provide assistance for active tobacco pro-
ducers, including those producers who forgo obtaining 
a tobacco production license, during the transition of 
the new programs, 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 Equity Elimination Act of 2003’’. 
(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows:
Sec. 1. Short title; table of contents. 
Sec. 2. Findings and purpose. 
TITLE I—TOBACCO EQUITY ELIMINATION 
Sec. 101. Definitions of active tobacco producer and quota holder. 
Sec. 102. Payments to tobacco quota holders. 
Sec. 103. Transition payments for active tobacco producers. 
Sec. 104. Tobacco product manufacturer and importer user fees. 
Sec. 105. Reimbursement of Commodity Credit Corporation expenditures. 
TITLE II—TOBACCO PRICE SUPPORT 
Sec. 201. Availability of tobacco price support. 
Sec. 202. Repeal of related provisions. 
Sec. 203. Effective date. 
TITLE III—TOBACCO PRODUCTION LICENSES 
Sec. 301. Definitions of historic tobacco producer and licensed tobacco pro-
ducer. 
Sec. 302. Annual estimate of tobacco purchase intentions. 
Sec. 303. National tobacco marketing factor. 
Sec. 304. Issuance of tobacco production licenses. 
Sec. 305. Annual authorized tobacco production under tobacco production li-
censes. 
Sec. 306. Assessment on licensed tobacco producers for administrative costs. 
Sec. 307. Termination of marketing quota programs and repeal of related pro-
visions. 
Sec. 308. Effective date. 
TITLE IV—TOBACCO ADVISORY BOARD 
Sec. 401. Establishment and duties of Tobacco Advisory Board. 
TITLE V—ASSISTANCE TO TOBACCO-DEPENDENT COMMUNITIES 
Sec. 501. Center for Tobacco-Dependent Communities.
SEC. 2. FINDINGS AND PURPOSE. 
(a) FINDINGS.—Congress finds the following: 
(1) Tobacco production is conducted extensively 
in a number of States and generates significant in-
come in local communities in these States, which are 
dependent on such production for economic vitality. 
(2) Tobacco products manufactured from to-
bacco grown in the these States are transported in 
interstate commerce. 
(3) While manufacturers of tobacco products 
enjoy profitable circumstances, many tobacco grow-
ers and their communities are in dire economic situ-
ations. 
(4) Downturns in domestic manufacturing de-
mand for tobacco grown in the United States, losses 
in the United States share of the world tobacco mar-
ket, reduced domestic demand for tobacco products, 
and State and Federal tobacco policies that have in-
advertently encouraged economic dependence on to-
bacco have contributed to such dire economic situa-
tions. 
(5) Many tobacco-producing communities are 
experiencing the loss of tobacco farms, reductions in 
quota level, and a lowered value for tobacco quotas. 
(6) Such communities often have difficulty de-
veloping non-tobacco income, and are therefore quite 
dependent on tobacco and vulnerable to changes in 
the tobacco-growing industry.
holders as compensation for the loss of tobacco quota asset 
value on account of the repeal of part I of subtitle B of 
title III of the Agricultural Adjustment Act of 1938 (7 
U.S.C. 1311 et seq.). 
(b) APPLICATION.—To receive payments under this 
section, a person shall prepare and submit to the Sec-
retary of Agriculture an application at such time, in such 
manner, and containing such information as the Secretary 
may require, including information sufficient to dem-
onstrate that the person satisfies the definition of tobacco 
quota holder. 
(c) TOTAL PAYMENT AMOUNT.—
(1) IN GENERAL.—The Secretary of Agriculture 
shall determine the total amount to be paid to all to-
bacco quota holders under this section with respect 
to each kind of tobacco.
(2) POUNDAGE
QUOTA
TOBACCO.—For each 
kind of tobacco for which the marketing quota is ex-
pressed in pounds, the total amount available for 
payments to tobacco quota holders under this section 
shall be equal to the product obtained by multi-
plying—
(A) $8 per pound; by 
(B) the total tobacco farm marketing 
quotas established under the Agriculture Ad-
justment Act of 1938 for the 1998 marketing 
year for that kind of tobacco. 
(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 Secretary shall convert the tobacco 
farm marketing quotas or allotments established 
under the Agriculture Adjustment Act of 1938 for 
the 1998 marketing year for that kind of tobacco to 
a poundage basis before executing the mathematical 
equation specified in paragraph (2). 
(d) BASE QUOTA LEVEL.—
(1) IN GENERAL.—The Secretary of Agriculture 
shall determine the base quota level of each tobacco 
quota holder with respect to each kind of tobacco. 
(2) POUNDAGE
QUOTA
TOBACCO.—For each 
kind of tobacco for which the marketing quota is ex-
pressed in pounds, the base quota level for a tobacco 
quota holder shall be equal to the average of the to-
bacco farm marketing quota established under the 
Agriculture Adjustment Act of 1938 for the 2002 
marketing year for quota tobacco on the farm owned 
by the tobacco quota holder. 
(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 a tobacco quota 
holder shall be equal to the product obtained (based 
on a poundage conversion) by multiplying—
(A) the average tobacco farm marketing 
quota or allotment established under the Agri-
culture Adjustment Act of 1938 for the 2002 
marketing year for the tobacco quota holder’s 
farm; by 
(B) the average yield per acre for the to-
bacco quota holder’s farm for the kind of to-
bacco for that marketing year. 
(e) PAYMENT AMOUNT.—The Secretary of Agri-
culture shall make payments to a tobacco quota holder 
with respect to a kind of tobacco under this section in a 
total amount that bears the same ratio to the amount de-
termined by the Secretary under subsection (c) with re-
spect to that kind of tobacco as the base quota level of 
the tobacco quota holder with respect to that kind of to-
bacco bears to the base quota level of all tobacco quota 
holders with respect to that kind of tobacco. 
(f) TIME FOR PAYMENT.—The amount determined 
under subsection (e) for a tobacco quota holder shall be 
paid in five equal installments during each of the 2003 
through 2007 crops of tobacco.
(g) DEATH OF TOBACCO QUOTA HOLDER.—If a to-
bacco quota holder who is entitled to payments under this 
section dies and is survived by a spouse or one 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 tobacco quota holder. 
SEC. 103. TRANSITION PAYMENTS FOR ACTIVE TOBACCO 
PRODUCERS. 
(a) PAYMENT AUTHORITY.—The Secretary of Agri-
culture shall use funds of the Commodity Credit Corpora-
tion to make transition payments under this section to ac-
tive tobacco producers. 
(b) APPLICATION.—To receive payments under this 
section, a person shall prepare and submit to the Sec-
retary of Agriculture an application at such time, in such 
manner, and containing such information as the Secretary 
may require, including information sufficient to dem-
onstrate that the person satisfies the definition of active 
tobacco producer. 
(c) TOTAL PAYMENT AMOUNT.—
(1) IN GENERAL.—The Secretary of Agriculture 
shall determine the total amount to be paid to all ac-
tive tobacco producers under this section with re-
spect to each kind of tobacco.
(2) POUNDAGE
QUOTA
TOBACCO.—For each 
kind of tobacco for which the marketing quota is ex-
pressed in pounds, the total amount available for 
payments to active tobacco producers under this sec-
tion shall be equal to the product obtained by multi-
plying—
(A) $4 per pound; by 
(B) the total tobacco farm marketing 
quotas established under the Agriculture Ad-
justment Act of 1938 for the 1998 marketing 
year for that kind of tobacco. 
(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 Secretary shall convert the tobacco 
farm marketing quotas or allotments established 
under the Agriculture Adjustment Act of 1938 for 
the 1998 marketing year for that kind of tobacco to 
a poundage basis before executing the mathematical 
equation specified in paragraph (2). 
(d) PAYMENT QUANTITY.—
(1) IN GENERAL.—The Secretary of Agriculture 
shall determine the payment quantity of tobacco for 
each active tobacco producer with respect to each 
kind of tobacco.
(2) POUNDAGE
QUOTA
TOBACCO.—For each 
kind of tobacco for which the marketing quota is ex-
pressed in pounds, the payment quantity for an ac-
tive tobacco producer shall be equal to the average 
of the following: 
(A) The July 1 effective quota for that 
quota tobacco produced by the producer under 
the Agriculture Adjustment Act of 1938 for the 
2001 marketing year. 
(B) The marketing quota for that quota 
tobacco produced by the producer under the 
Agriculture Adjustment Act of 1938 for the 
2001 marketing year. 
(C) The July 1 effective quota for that 
quota tobacco produced by the producer under 
the Agriculture Adjustment Act of 1938 for the 
2002 marketing year. 
(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 payment quantity for an active to-
bacco producer shall be equal to the average of the 
actual pounds of that kind of tobacco produced by 
the active tobacco producer for the 2001 and 2002 
marketing years.
(e) PAYMENT AMOUNT.—
(1) ALL TOBACCO PRODUCERS.—The Secretary 
of Agriculture shall make payments to each active 
tobacco producer with respect to a kind of tobacco 
under this section in a total amount that bears the 
same ratio to the amount determined by the Sec-
retary under subsection (c) with respect to that kind 
of tobacco as the payment quantity of the active to-
bacco producer with respect to that kind of tobacco 
bears to the payment quantities of all active tobacco 
producers with respect to that kind of tobacco. 
(2) PRODUCERS
WHO
FORGO
OBTAINING
TO-
BACCO PRODUCTION LICENSE.—If an active tobacco 
producer who is entitled to transition payments 
under this section with respect to a kind of tobacco 
agrees to permanently forgo the opportunity to ob-
tain a tobacco production license under section 304 
for the same type of tobacco, the Secretary shall pay 
to the active tobacco producer, in addition to the 
amount determined under paragraph (1), an amount 
equal to the product obtained by multiplying—
(A) $2 per pound; by 
(B) the payment quantity of the active to-
bacco producer with respect to that kind of to-
bacco.
(f) TIME FOR PAYMENT.—The amount determined 
under subsection (e) for an active tobacco producer shall 
be paid in five equal installments during each of the 2003 
through 2007 crops of tobacco, except that an active to-
bacco producer who is also a quota owner with a base 
quota level of 1,000 pounds or less and who no longer in-
tends to engage in tobacco production may elect to receive 
the total amount in the first year after the date on which 
the agreement is signed. 
(g) DEATH OF ACTIVE TOBACCO PRODUCER.—If an 
active tobacco producer who is entitled to transition pay-
ments under this section dies and is survived by a spouse 
or one or more dependents, the right to receive the pay-
ments shall transfer to the surviving spouse or, if there 
is no surviving spouse, to the estate of the producer. 
SEC. 104. TOBACCO PRODUCT MANUFACTURER AND IM-
PORTER USER FEES. 
(a) IN GENERAL.—The Secretary of Agriculture shall 
assess an annual user fee, calculated in accordance with 
this section, upon each tobacco product manufacturer and 
tobacco product importer that sells tobacco products in do-
mestic commerce in the United States. The assessments 
shall commence during calendar year 2003, based on do-
mestic sales of tobacco products during fiscal year 2003.
(b) BASE AMOUNT OF USER FEE FOR EACH CLASS 
OF TOBACCO PRODUCT.—
(1) The base amount of the user fee for ciga-
rette 
manufacturers 
and 
importers 
shall 
be 
$2,116,252,000. 
(2) The base amount of the user fee for small 
cigar 
manufacturers 
and 
importers 
shall 
be 
$1,051,000. 
(3) The base amount of the user fee for large 
cigar 
manufacturers 
and 
importers 
shall 
be 
$164,274,000. 
(4) The base amount of the user fee for snuff 
manufacturers and importers shall be $9,920,000. 
(5) The base amount of the user fee for chew-
ing tobacco manufacturers and importers shall be 
$2,275,000. 
(6) The base amount of the user fee for pipe to-
bacco 
manufacturers 
and 
importers 
shall 
be 
$1,505,000. 
(7) The base amount of the user fee for roll-
your-own tobacco manufacturers and importers shall 
be $3,231,000. 
(c) DETERMINATION OF ANNUAL USER FEE FOR 
EACH CLASS OF TOBACCO PRODUCT.—The total user fee 
to be assessed upon, and paid by, the manufacturers and
importers of each class of tobacco product in each calendar 
year, as allocated pursuant to subsection (d), shall be the 
base amount for that class of tobacco product provided 
in subsection (b) multiplied by a fraction—
(1) the numerator of which is the total volume 
of domestic sales of that class of tobacco product in 
the fiscal year ending on September 30 of that cal-
endar year; and 
(2) the denominator of which is the total vol-
ume of domestic sales of that class of tobacco prod-
uct in fiscal year 2003. 
(d) ALLOCATION OF TOTAL USER FEE AMOUNTS BY 
MARKET SHARE—
(1) FORMULA.—The user fee for each class of 
tobacco product to be paid by each manufacturer or 
importer of that class of tobacco product under sub-
section (a) shall be determined in each year by mul-
tiplying—
(A) such manufacturer’s or importer’s 
market share, as calculated with respect to the 
current calendar year, of that class of tobacco 
product; by 
(B) the total user fee amount for the cur-
rent calendar year, as determined under sub-
section (c), for that class of tobacco product.
(2) MARKET
SHARE
DEFINED.—In this sub-
section, the term ‘‘market share’’ for each manufac-
turer or importer of a class of tobacco product for 
the purpose of the assessment to be calculated in the 
current calendar year shall be equal to that manu-
facturer’s or importer’s respective share (expressed 
as a decimal to the fourth place) of the total volume 
of domestic sales of that class of tobacco product 
during the calendar year immediately preceding the 
year of such assessment. 
(e) DETERMINATION
OF VOLUME
OF DOMESTIC 
SALES.—
(1) BASED ON CERTIFIED REPORTS.—The cal-
culation of the volume of domestic sales of a class 
of tobacco product by a manufacturer or importer, 
and by all manufacturers and importers as a group, 
shall be made by the Secretary of Agriculture based 
on certified reports submitted by such manufactur-
ers and importers pursuant to subsection (f). 
(2) MEASUREMENT CRITERIA.—For purposes of 
the Secretary’s calculations under this subsection 
and the certifications under subsection (f), the vol-
umes of domestic sales shall be measured as follows: 
(A) With respect to cigarettes, in terms of 
the numbers of cigarettes sold.
(B) With respect to small cigars, the num-
ber of cigars weighing not more than three 
pounds per thousand sold. 
(C) With respect to large cigars, the num-
ber of cigars weighing more than three pounds 
per thousand sold. 
(D) With respect to other classes of to-
bacco products, in terms of the number of 
pounds, or fraction thereof, or these tobacco 
products sold. 
(f) CERTIFICATION
OF
VOLUME
OF
DOMESTIC 
SALES.— Every manufacturer and importer of tobacco 
products shall submit each year a certified report to the 
Secretary of Agriculture setting forth for each class of to-
bacco products the total, for the prior year, of such manu-
facturer’s or importer’s domestic sales to wholesalers and 
retailers and directly to consumers. These certified reports 
must be submitted to the Secretary not later than March 
1 of the year after the year for which the certified report 
is being made. 
(g) TERMINATION.—The user fees imposed under 
this section shall terminate at the end of the fiscal year 
in which the Secretary of Agriculture determines that the 
Commodity Credit Corporation has been fully reimbursed
for all expenditures made using Commodity Credit Cor-
poration funds under this title. 
SEC. 105. REIMBURSEMENT OF COMMODITY CREDIT COR-
PORATION EXPENDITURES. 
Amounts collected by the Secretary of Agriculture 
under section 104 shall be used to reimburse the Com-
modity Credit Corporation for all expenditures made 
under this title.
TITLE II—TOBACCO PRICE 
SUPPORT 
SEC. 201. AVAILABILITY OF TOBACCO PRICE SUPPORT. 
(a) NEW APPROACH TO PRICE SUPPORT.—Section 
106 of the Agricultural Act of 1949 (7 U.S.C. 1445) is 
amended to read as follows: 
‘‘SEC. 106. TOBACCO PRICE SUPPORT. 
‘‘(a) PRICE SUPPORT RATE TO REFLECT COST OF 
PRODUCTION.—
‘‘(1) ESTABLISHMENT
AND
ANNUAL
ADJUST-
MENT.—The price of each type of tobacco produced 
in the United States shall be supported at a rate es-
tablished by the Secretary, and adjusted annually, to 
reflect the costs of production for producers of that 
type of tobacco. 
‘‘(2) DETERMINATION
OF
COST
OF
PRODUC-
TION.—The Secretary shall use the information col-
lection and survey resources of the Economic Re-
search Service and National Agricultural Statistics 
Service of the Department of Agriculture to deter-
mine the cost of domestic tobacco production. The 
Economic Research Service shall reevaluate the cost-
of-production annually, based on the survey of fac-
tors used by the Economic Research Service, which 
shall be conducted once every five years. 
‘‘(b) CONSIDERATION
OF INTERNATIONAL PRICE 
LEVELS.—In establishing the price support rate for a type 
of tobacco, the Secretary shall also consider the inter-
national tobacco price levels. 
‘‘(c) CONSULTATION.—The Secretary shall consult 
with the Tobacco Advisory Board, farm organizations, 
producer cooperatives and associations, colleges and uni-
versities in tobacco-producing States, and other interested 
persons when determining the costs of tobacco production 
and establishing or adjusting the price support rate. 
‘‘(d) DIFFERENCES IN GRADE.—The Secretary may 
take into consideration differences in tobacco grades when 
establishing or adjusting the price support rate for a type 
of tobacco.’’. 
(b) ELIMINATION OF REFERENCES TO QUOTA TO-
BACCO IN NO NET COST PROVISIONS.—(1) Section 106A
of the Agricultural Act of 1949 (7 U.S.C. 1445–1) is 
amended as follows: 
(A) In subsection (a), by striking ‘‘quota’’ each 
place it appears in paragraphs (4), (5), and (6). 
(B) By striking subsection (a)(7). 
(C) In subsection (d), by striking ‘‘quota’’ each 
place it appears in paragraphs (1), (3), and (7). 
(D) In subsection (e), by striking ‘‘quota’’. 
(2) Section 106B of the Agricultural Act of 1949 (7 
U.S.C. 1445–2) is amended as follows: 
(A) In subsection (a)(5), by striking ‘‘, for 
which marketing quotas are in effect or for which 
marketing quotas are not disapproved by pro-
ducers’’. 
(B) In subsection (a)(8), by striking ‘‘quota’’. 
(C) In subsection (d), by striking ‘‘quota’’ each 
place it appears in paragraphs (1)(B) and (2)(A). 
SEC. 202. REPEAL OF RELATED PROVISIONS. 
(a) PARITY PRICE SUPPORT.—Section 101 of the Ag-
ricultural Act of 1949 (7 U.S.C. 1441) is amended—
(1) in the first sentence of subsection (a), by 
striking ‘‘tobacco (except as otherwise provided here-
in), corn’’ and inserting ‘‘corn’’; 
(2) by striking subsection (c); 
(3) in subsection (d)(3)—
(A) by striking ‘‘, except tobacco,’’; and 
(B) by striking ‘‘and no price support shall 
be made available for any crop of tobacco for 
which marketing quotas have been disapproved 
by producers;’’; and 
(4) by redesignating subsections (d) and (e) as 
subsection (c) and (d), respectively.
(b) DEFINITION
OF BASIC AGRICULTURAL COM-
MODITY.—Section 408(c) of the Agricultural Act of 1949 
(7 U.S.C. 1428(c)) is amended by striking ‘‘tobacco,’’. 
SEC. 203. EFFECTIVE DATE. 
This title and the amendments made by this title 
shall apply with respect to the 2003 and subsequent to-
bacco crops. 
TITLE III—TOBACCO 
PRODUCTION LICENSES
SEC. 301. DEFINITIONS OF HISTORIC TOBACCO PRODUCER 
AND LICENSED TOBACCO PRODUCER. 
In this title: 
(1) The term ‘‘historic tobacco producer’’ 
means an owner, operator, landlord, tenant, or 
sharecropper who bore, individually or collectively, 
the risk of producing a crop of tobacco on a farm 
for the 2002 crop year.
(2) The term ‘‘licensed tobacco producer’’ 
means an owner, operator, landlord, tenant, or 
sharecropper who holds a license issued under this 
title—
(A) to plant a crop of tobacco on a farm 
in a specified county for the 2003 or a subse-
quent crop year; and 
(B) to harvest and market an authorized 
quantity of tobacco. 
SEC. 302. ANNUAL ESTIMATE OF TOBACCO PURCHASE IN-
TENTIONS. 
(a) ANNUAL ESTIMATE.—Not later than February 1 
of each calendar year, the Secretary of Agriculture shall 
publish in the Federal Register an estimate of the quantity 
in pounds of each type of tobacco necessary—
(1) to satisfy domestic use and export needs 
during the next marketing year; and 
(2) to maintain a reasonable reserve. 
(b) RULES FOR ESTIMATE.—When making an esti-
mate under subsection (a), the Secretary of Agriculture 
shall consider—
(1) the industry purchase estimates submitted 
under subsection (c); 
(2) export estimates; and 
(3) an appropriate reserve stock adjustment.
(c) INDUSTRY PURCHASE ESTIMATES.—Not later 
than December 1 of each calendar year with respect to 
Flue-cured tobacco, and January 15 of each calendar year 
with respect to Burley tobacco or other types of tobacco, 
each domestic manufacturer of cigarettes or other type of 
domestic tobacco-product manufacturer shall submit to 
the Secretary of Agriculture a statement, by kind, of the 
quantity of Flue-cured tobacco, Burley tobacco, and other 
types of tobacco that the manufacturer intends to pur-
chase, directly or indirectly, on the United States auction 
markets or from licensed tobacco producers during the 
next marketing year. 
(d) FAILURE TO SUBMIT, OR OVER-DECLARATION 
OF, PURCHASE INTENTIONS.—If a domestic manufacturer 
of cigarettes or other type of domestic tobacco-product 
manufacturer fails to submit to the Secretary of Agri-
culture purchase intentions as required under subsection 
(c) for a marketing year, but subsequently purchases to-
bacco on the United States auction markets or from li-
censed tobacco producers during that marketing year, or 
if a domestic manufacturer of cigarettes or other type of 
domestic tobacco-product manufacturer over-estimates 
such purchase intentions by more than 5 percent, the do-
mestic manufacturer of cigarettes or other type of domes-
tic tobacco-product manufacturer shall be liable for a civil 
penalty up to an amount determined by multiplying—
(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. 
(e) ENFORCEMENT.—The Secretary of Agriculture 
may enforce subsection (d) in the courts of the United 
States. 
(f) CONSULTATION
WITH
TOBACCO
ADVISORY 
BOARD.—The Secretary of Agriculture shall prepare the 
estimate under subsection (a) and otherwise carry out this 
title in consultation with the Tobacco Advisory Board ap-
pointed under title IV. 
SEC. 303. NATIONAL TOBACCO MARKETING FACTOR. 
The national marketing factor for a type of tobacco 
for a crop year shall be the ratio of—
(1) the aggregate quantity of that type of to-
bacco estimated by the Secretary of Agriculture 
under section 302 to be necessary to satisfy domes-
tic consumption and exports of tobacco for the cor-
responding marketing year; to
(2) the estimated aggregate quantity of that 
type of tobacco to be produced in the United States 
for that year. 
SEC. 304. 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 each type of to-
bacco to satisfy annual purchase intentions for 
that type of tobacco estimated under section 
302, but also preventing over-production of that 
type of tobacco. 
(B) EXCEPTION.—The Secretary shall not 
issue a tobacco production license to an historic 
tobacco producer with respect to a kind of to-
bacco if the historic tobacco producer agreed 
under subsection (e) of section 103 to perma-
nently forgo the tobacco production license for 
that type of tobacco in exchange for additional 
transition payments under such section.
(2) TOBACCO PRODUCTION HISTORY.—The to-
bacco production license issued to an historic to-
bacco producer under paragraph (1) shall specify the 
tobacco production history of the producer for each 
type of tobacco for each county in which the pro-
ducer bore, individually or collectively, the risk of 
producing a crop of tobacco on a farm in the county 
for the 2002 crop year. In the case of an historic to-
bacco producer who bore 100 percent of the risk of 
producing a type of tobacco on a farm for the 2002 
crop year, the tobacco production history of the his-
toric tobacco producer for that type of tobacco in a 
county shall be equal to the 2002 marketing and ef-
fective quota of that type tobacco produced by the 
producer in the county for commercial use during 
the 2002 crop year. In the case of an historic to-
bacco producer 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 pro-
ducer. 
(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
a type of tobacco on the grounds that the producer’s 
2002 production under-represents the producer’s 
historic production of that type of tobacco. 
(4) CONSOLIDATION OF COUNTIES.—If the ini-
tial issuance of a tobacco production license to an 
historic tobacco producer for a type of tobacco would 
result in the producer receiving a license for that 
type of tobacco for more than one county, the pro-
ducer may elect to consolidate the licenses in a sin-
gle county in which the producer bore or shared in 
the risk of producing a crop of that type of tobacco 
for the 2002 crop year. The option to make this 
election shall be provided only once. 
(b) SUBSEQUENT ISSUANCE.—
(1) IN GENERAL.—If a tobacco production li-
cense is surrendered or revoked, the Secretary of 
Agriculture shall transfer the license and the cor-
responding tobacco production history to beginning 
tobacco producers or licensed tobacco producers in 
the following order of preference: 
(A) Producers in the same county as the 
county in which the tobacco production history 
was derived. 
(B) Producers in the same State.
(C) Producers in counties in other States 
in which licensed tobacco producers are oper-
ating. 
(2) 
RESERVATION
FOR
BEGINNING
PRO-
DUCERS.—In all instances specified in subpara-
graphs (A), (B), and (C) of paragraph (1), the Sec-
retary shall reserve for beginning tobacco producers 
at least five percent of the tobacco production his-
tory surrendered or revoked under this section. 
(3) PRODUCERS
WHO
FORGO
OBTAINING
TO-
BACCO PRODUCTION LICENSE.—The tobacco produc-
tion history of those historic tobacco producers who 
agree under section 103(e) to permanently forgo the 
opportunity to obtain a tobacco production license 
under subsection (a) 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) 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. 
(3) ANNUAL MONITORING OF RISK.—The Sec-
retary of Agriculture, acting through the Farm Serv-
ice Agency, shall monitor at least five percent of all 
licensed tobacco producers annually to ensure that
the producers comply with the risk-sharing require-
ments of paragraph (2). The licensed tobacco pro-
ducers to be monitored in a given crop year under 
the authority of this paragraph shall be selected at 
random. Nothing in this paragraph prevents the 
Secretary from instituting an investigation of a spe-
cific licensed tobacco producer if the Secretary has 
reasonable cause to believe the producer is not com-
plying with such risk-sharing requirements. 
SEC. 305. ANNUAL AUTHORIZED TOBACCO PRODUCTION 
UNDER TOBACCO PRODUCTION LICENSES. 
(a) NOTIFICATION
OF LICENSED TOBACCO PRO-
DUCERS.—As soon as practicable after preparing the esti-
mate required by section 302 for a type of tobacco for 
a marketing year, the Secretary of Agriculture 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 corresponding crop year under 
the tobacco production license. 
(b) DETERMINATION OF AUTHORIZED PRODUCTION 
LEVELS.—The authorized tobacco production level for a 
licensed tobacco producer for a type of tobacco in a county 
for a crop year is equal to the product of—
(1) the tobacco production history of the pro-
ducer for that type of tobacco in that county; and
(2) the national tobacco marketing factor for 
that year determined by the Secretary of Agriculture 
under section 303. 
(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 Tobacco Advisory Board notifies the Secretary of Agri-
culture that the actual production of a type of tobacco for 
a crop year will be less than 80 percent of the production 
authorized under all licenses issued for that type of to-
bacco, the Secretary may authorize a licensed tobacco pro-
ducer of that type of tobacco to harvest and market to-
bacco in excess of the quantity 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. 306. ASSESSMENT ON LICENSED TOBACCO PRO-
DUCERS FOR ADMINISTRATIVE COSTS. 
(a) ASSESSMENT.—Effective for the 2003 and subse-
quent marketing years for each type of tobacco covered 
by this title, each licensed tobacco producer shall remit 
to the Secretary a nonrefundable marketing assessment 
in an amount determined by the Secretary that, in the 
aggregate, will cover all administrative expenses incurred 
by the Secretary and the Corporation in carrying out this 
title. 
(b) LIMITATION.—The amount of the assessment im-
posed under this section shall not exceed 1 cent for each 
pound of covered tobacco produced. 
SEC. 307. TERMINATION OF MARKETING QUOTA PROGRAMS 
AND REPEAL OF RELATED PROVISIONS. 
(a) TOBACCO CONTROL ACT.—The Act of April 25, 
1936 (commonly known as the Tobacco Control Act; 7 
U.S.C. 515–515k), is repealed.