under section 106A or 106B of the Agricultural Act of
1949 (7 U.S.C. 1445 1, 1445 2).
(c) NO NET COST TOBACCO FUNDS.—Notwithstand-
ing sections 106A(f) and 106B(g) of the Agricultural Act
of 1949 (7 U.S.C. 1445–1(f) and 1445–2(g)), all funds
held in a No Net Cost Tobacco Fund or No Net Cost To-
bacco Account on behalf of an Association under section
106A or 106B of that Act (7 U.S.C. 1445–1, 1445–2)
on the date of enactment of this Act shall be the property
of the Association.
SEC. 204. TOBACCO COMMUNITY ECONOMIC DEVELOP-
MENT GRANTS.
(a) AUTHORITY.—The Corporation shall make grants
to eligible tobacco-growing political subdivisions in accord-
ance with this section to enable the political subdivisions
to carry out economic development activities.
(b) ELIGIBILITY.—To be eligible to receive payments
under this section, a political subdivisions in a State
shall—
(1) have in excess of $100,000 in gross income
from sales of tobacco produced within the political
subdivision during 1 or more of the 1995 through
1997 marketing years, as determined by the Cor-
poration;
(2) prepare and submit to the Corporation an
application at such time, in such manner, and con-
taining such information as the Corporation may re-
quire, including—
(A) a description of the activities that the
political subdivision will carry out using
amounts received under the grant;
(B) a designation of an appropriate politi-
cal subdivision agency to administer amounts
received under the grant;
(C) a description of the steps to be taken
to ensure that the funds are distributed in ac-
cordance with subsection (e); and
(D) an economic development plan, ap-
proved by a regional authority authorized to co-
ordinate economic development efforts in the re-
gion where the political subdivision is located,
or approved by the State if no such regional au-
thority exists, that describes the activities that
the political subdivision will carry out using
amounts received under the grant. Where a po-
litical subdivision ineligible to receive payments
under subsection (b)(1) is surrounded within
the State by a political subdivision eligible to
receive payments under subsection (b)(1), an
economic development plan shall not be ap-
proved unless submitted jointly by both jurisdic-
tions.
(c) AMOUNT OF GRANT.—
(1) IN GENERAL.—From the amounts available
to carry out this section for a fiscal year, the Cor-
poration shall allot to each eligible tobacco-growing
political subdivision an amount that bears the same
ratio to the total funds available as the total income
of the tobacco-growing political subdivision derived
from the production of tobacco within the political
subdivision during the 1995 and through 1997 mar-
keting years (as determined under paragraph (2))
bears to the total income of all tobacco-growing po-
litical subdivisions derived from the production of to-
bacco during the 1995 through 1997 marketing
years.
(2) TOBACCO INCOME.—For the 1995 through
1997 marketing years, the Secretary shall determine
and provide to the Corporation the amount of in-
come derived from the production of tobacco in each
tobacco-growing political subdivision and in all to-
bacco-growing political subdivisions.
(d) PAYMENTS.—
(1) IN GENERAL.—A tobacco-growing political
subdivision that has an application approved by the
Corporation under subsection (b) shall be entitled to
a payment under this section in an amount that is
equal to its allotment under subsection (c).
(2) FORM
OF
PAYMENTS.—The Corporation
may make payments under this section to a tobacco-
growing political subdivision in installments, and in
advance or by way of reimbursement, with necessary
adjustments on account of overpayments or under-
payments, as the Corporation may determine.
(3) REALLOTMENTS.—Any portion of the allot-
ment of a political subdivision under subsection (c)
that the Corporation determines will not be used to
carry out this section in accordance with an ap-
proved political subdivision application required
under subsection (b), shall be reallotted by the Cor-
poration to other tobacco-growing political subdivi-
sions in proportion to the original allotments to the
other tobacco-growing political subdivisions.
(e) USE AND DISTRIBUTION OF FUNDS.—
(1) IN GENERAL.—Amounts received by a to-
bacco-growing political subdivision under this section
shall be used to carry out economic development ac-
tivities, including—
(A) activities designed to help create pro-
ductive farm or off-farm employment in rural
areas to provide a more viable economic base
and enhance opportunities for improved in-
comes, living standards, and contributions by
rural individuals to the economic and social de-
velopment of tobacco communities;
(B) activities designed to provide training
and transition assistance to quota holders and
active tobacco producers to enable the holders
and producers to produce alternative agricul-
tural commodities or obtain alternative employ-
ment;
(C) activities to improve the quality of edu-
cation in tobacco communities;
(D) activities to promote tourism in to-
bacco communities through natural resource
protection;
(E) activities to construct advanced manu-
facturing centers, industrial parks, water and
sewer facilities, and transportation improve-
ments in tobacco communities;
(F) activities to establish small business
incubators in tobacco communities;
(G) activities to install high technology in-
frastructure improvements in tobacco commu-
nities;
(H) rural business enterprise activities de-
scribed in subsections (c) and (e) of section
310B of the Consolidated Farm and Rural De-
velopment Act (7 U.S.C 1932);
(I) downpayment loan assistance programs
that are similar to the program described in
section 310E of the Consolidated Farm and
Rural Development Act (7 U.S.C 1935);
(J) activities that expand existing infra-
structure, facilities, and services to capitalize on
opportunities to diversify economies in tobacco
communities and that support the development
of new industries or commercial ventures;
(K) activities by agricultural organizations
that provide assistance directly to quota holders
and active tobacco producers to assist in devel-
oping other agricultural activities that supple-
ment tobacco-producing activities;
(L) initiatives designed to create or expand
locally owned value-added processing and mar-
keting operations in tobacco communities; and
(M) technical assistance activities by per-
sons to support farmer-owned enterprises, or
agriculture-based rural development enterprises,
of the type described in section 252 or 253 of
the Trade Act of 1974 (19 U.S.C 2342, 2343).
(2) MAINTENANCE OF EFFORT.—The political
subdivision and the State shall provide assurances to
the Corporation that funds provided to the political
subdivision under this section will be used only to
supplement, not to supplant, the amount of Federal,
State, and local funds otherwise expended for eco-
nomic development activities in the political subdivi-
sion.
SEC. 205. TRANSITION PAYMENTS FOR OTHER PERSONS IN-
VOLVED 
IN 
TOBACCO 
PRODUCTION 
AND
MARKETING AND CIGARETTE MANUFACTURE
AND DISTRIBUTION.
(a) PAYMENTS FOR WAREHOUSEMEN.—
(1) PAYMENTS
REQUIRED.—The Corporation
shall make transition payments to tobacco ware-
housemen as reimbursement for the reduced quan-
tities of tobacco to be marketed by producers
through warehousemen as a result of the decrease in
demand for domestically produced tobacco.
(2) PAYMENT
BASIS.—The Corporation shall
establish the amount of the payments to be made to
a tobacco warehouseman on the basis of the average
tobacco volume and commissions of the warehouse-
man for the 1995 through 1997 marketing years.
The average volume level for a tobacco warehouse-
man shall be equal to the average volume of sales of
a particular type of tobacco handled by the tobacco
warehouseman on behalf of active tobacco producers
for the 1995 through 1997 marketing years, as de-
termined using data collected by the Agricultural
Marketing Service of the Department of Agriculture.
The average commission level for a tobacco ware-
houseman shall be equal to the average amount of
commission and fees imposed by the tobacco ware-
houseman for marketing tobacco on behalf of active
tobacco producers for the 1995 through 1997 mar-
keting years, as determined using data collected by
the Agricultural Marketing Service.
(b) PAYMENTS
FOR OTHER PERSONS.—The Cor-
poration shall consider the feasibility of making transition
payments to tobacco graders, inspectors, checkers, auc-
tioneers, equipment dealers, cigarette vending machine
owners or operators, employees of tobacco manufacturing
and leaf dealer firms, and other persons who are adversely
and directly affected by the dismantling of the Federal to-
bacco program or any national tobacco settlement legisla-
tion.
(c) RULES.—Payment amounts under this section
shall be established by and made according to the rules
issued by the Corporation.
(d) AVAILABLE FUNDS.—From amounts in the Trust
Fund, the Corporation may expend $300,000,000 per year
for five years for payments under this section.
SEC. 206. TAX TREATMENT OF TOBACCO QUOTA HOLDER
COMPENSATION 
AND 
TRANSITION 
PAY-
MENTS.
(a) IN GENERAL.—Part II of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
items specifically included in gross income) is amended by
adding at the end the following:
‘‘SEC. 91. CERTAIN TOBACCO PROGRAM PAYMENTS.
‘‘(a) GENERAL
RULE.—Gross income includes
amounts received under section 201 or 202 of the Tobacco
Market Transition Act.
‘‘(b) EXCEPTION
FOR
AMOUNTS
TRANSFERRED
DURING REINVESTMENT PERIOD.—
‘‘(1) IN
GENERAL.—Subsection (a) shall not
apply to any amount if during reinvestment period
such amount is—
‘‘(A) used to make a qualified debt repay-
ment, or
‘‘(B) transferred to a tobacco farmer indi-
vidual retirement account established under sec-
tion 522.
‘‘(2) QUALIFIED DEBT REPAYMENT.—For pur-
poses of paragraph (1), the term ‘qualified debt re-
payment’ means the payment of debt incurred di-
rectly by the taxpayer to produce tobacco prior to
January 1, 1998.
‘‘(c) CHARACTER OF INCOME.—For purposes of this
subtitle—
‘‘(1) any amount received under section 201 of
the Tobacco Market Assistance Act and included in
gross income under this section shall be treated as
long-term capital gain or may be used to reduce the
basis in real estate to which the tobacco quota is at-
tached, and
‘‘(2) any amount received under section 202 of
such Act and so included in gross income shall be
treated as ordinary income.’’.
(b) TOBACCO FARMER INDIVIDUAL RETIREMENT AC-
COUNTS.—Part IV of subchapter F of chapter 1 of the
Internal Revenue Code of 1986 (relating to farmers’ co-
operatives) is amended by adding at the end the following:
‘‘SEC. 522. TOBACCO FARMER INDIVIDUAL RETIREMENT
ACCOUNTS.
‘‘(a) GENERAL RULE.—Except as provided in this
section, a tobacco farmer individual retirement account
shall be treated for purposes of this title in the same man-
ner as an individual retirement plan.
‘‘(b) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this title—
‘‘(1) TOBACCO
FARMER
INDIVIDUAL
RETIRE-
MENT ACCOUNT.—The term ‘tobacco farmer individ-
ual retirement account’ means an individual retire-
ment plan (as defined in section 7701(a)(37)) other
than a Roth IRA which is designated (in such man-
ner as the Corporation may prescribe) at the time
of establishment of the plan as a tobacco farmer in-
dividual retirement account.
‘‘(2) TREATMENT OF CONTRIBUTIONS.—
‘‘(A) CASH ONLY.—No contribution will be
accepted unless it is in cash.
‘‘(B) SOURCE
OF
CONTRIBUTIONS.—The
only contributions which will be accepted are—
‘‘(i) payments under section 201 or
202 of the Tobacco Market Transition Act,
and
‘‘(ii) trustee-to-trustee transfers to
such trust from another tobacco farmer in-
dividual retirement account of the account
beneficiary.
‘‘(C) NO DEDUCTION ALLOWED.—No de-
duction shall be allowed under section 219 for
a contribution to a tobacco farmer individual
retirement account.
‘‘(D) NO ROLLOVER CONTRIBUTIONS AL-
LOWED.—No rollover contribution may be made
to or from a tobacco farmer individual retire-
ment account.
‘‘(3) TAX
TREATMENT
OF
DISTRIBUTIONS.—
Any amount distributed from a tobacco farmer indi-
vidual retirement account attributable to payments
made under section 201 or 202 of the Tobacco Mar-
ket Transition Act (including earnings thereon) shall
be includible in the gross income of the distributee
under the rules described in section 91(c). Any such
distribution shall be made first from amounts in
such account (if any) attributable to payments under
such section 202 (and earnings thereon).
‘‘(4) COORDINATION WITH INDIVIDUAL RETIRE-
MENT ACCOUNTS.—Section 408(d)(2) shall be ap-
plied separately with respect to tobacco farmer indi-
vidual retirement accounts and other individual re-
tirement plans.’’.
(c) CONFORMING AMENDMENTS.—
(1) The table of sections for part II of sub-
chapter B of chapter 1 of the Internal Revenue Code
of 1986 is amended by adding at the end the follow-
ing:
‘‘Sec. 91. Certain tobacco program payments.’’.
(2) The table of sections for part IV of sub-
chapter F of chapter 1 of such Code is amended by
adding at the end the following:
‘‘Sec. 522. Tobacco farmer individual retirement accounts.’’.
(3) The heading for part IV of subchapter F of
chapter 1 of such code is amended by striking
‘‘FARMERS’ COOPERATIVES’’ and inserting
‘‘CERTAIN FARMER ENTITIES’’.
(4) The table of parts for subchapter F of
chapter 1 of such Code is amended by striking
‘‘FARMERS’ COOPERATIVES’’ and inserting ‘‘CERTAIN
FARMER ENTITIES’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1997.
TITLE III—ESTABLISHMENT OF
PRIVATE TOBACCO PRODUC-
TION 
ADJUSTMENT 
AND
QUALITY 
ASSURANCE 
PRO-
GRAM
SEC. 301. TOBACCO PRODUCTION CONTROL CORPORATION.
(a) ESTABLISHMENT.—There is established a cor-
poration to be known as the ‘‘Tobacco Production Control
Corporation’’, which shall be a federally chartered instru-
mentality of the United States.
(b) DUTIES.—Effective for the 1999 and each subse-
quent crop of each kind of tobacco, on at least a two-thirds
vote of the Board of Directors of the Corporation, the Cor-
poration shall—
(1) promulgate rules that govern the produc-
tion, marketing, importation, exportation, and con-
sumer quality assurances for each kind of tobacco;
(2) establish a licensing system that provides
for the orderly production and marketing of tobacco
in the United States under which—
(A) the Corporation shall issue a license to
each active tobacco producer, or other person
that meets requirements established by the Cor-
poration, initially based upon the eligible pro-
duction quantity determined for each producer
under section 202(c)(1);
(B) the licensee shall surrender the license
to the Corporation if the licensee fails to ac-
tively engage in the production of tobacco;
(C) the sale or marketing of a type of to-
bacco which prior to the date of enactment was
produced pursuant to a tobacco farm marketing
quota or farm acreage allotment issued under
the Agricultural Act of 1938 is prohibited with-
out a license;
(D) the sale, lease, or other transfer of a
license shall be prohibited except pursuant to
subsection (c); and
(E) the Corporation shall issue marketing
licenses to tobacco marketing facilities and to-
bacco purchasing entities;
(3) ensure compliance, through whatever means
is available, of all persons with any license, regula-
tion, rule, limitation, or guideline issued under, or in
order to carry out, this Act;
(4) offer crop insurance for tobacco producers;
(5) establish a system that will provide assur-
ance to consumers of the quality of all tobacco mar-
keted in the United States and that, at a mini-
mum—
(A) provides for the inspection and grading
of domestically produced tobacco and imported
tobacco;
(B) determines and describes the physical
characteristics of domestically produced tobacco
and imported tobacco;
(C) ensures the physical and chemical in-
tegrity of domestically produced tobacco and
imported tobacco;
(6) carry out its duties, functions, and deter-
minations through loan associations and local com-
mittees, to the extent practicable and appropriate;
and
(7) continue to maintain and carry out a to-
bacco program in accordance with the rules and reg-
ulations contained in chapter 7 of the Code of Fed-
eral Regulations unless and until rules are promul-
gated under subsection (c).
(c) TRANSFER OF LICENSE.—
(1) RIGHT OF SURVIVORSHIP.—
(A) IN
GENERAL.—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 surviving
direct descendants of the persons.
(B) 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 unable to produce a crop of to-
bacco, the Corporation may hold the license in
the name of the descendants for a period of not
more than 18 months, at the discretion of the
Corporation.
(2) 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.
(d) BOARD OF DIRECTORS.—
(1) IN GENERAL.—The powers of the Corpora-
tion shall be vested in a Board of Directors.
(2) MEMBERS.—The Board of Directors shall
consist of 25 members as follows:
(A) The Secretary of Agriculture.
(B) The Secretary of Health and Human
Services.
(C) The Administrator of the Environ-
mental Protection Agency.
(D) The United States Trade Representa-
tive.
(E) 1 member from each state that pro-
duces more than 50,000,000 pounds of tobacco.
All members appointed under this subpara-
graph shall be actively engaged in the produc-
tion of tobacco and shall be elected by the to-
bacco producers from each respective state.
(F) 3 members appointed by the flue-cured
tobacco association and 2 members appointed
by the burley tobacco associations, all such
members to be licensees under this Act.
(G) 1 member appointed by tobacco asso-
ciations other than those specified in subpara-
graph (F), on a rotating basis.
(H) 3 members representing public health
interests, appointed by the Secretary of Health
and Human Services.
(I) 1 member representing domestic ciga-
rette manufacturers.
(J) 1 member representing domestic export
leaf dealers, appointed by the Leaf Tobacco Ex-
porters Association (LTEA).
(K) 2 members representing tobacco mar-
keting facilities, 1 each appointed by the Bright
Belt Warehouse Association (BBWA) and the
Burley 
Auction 
Warehouse 
Association
(BAWA).
(L) 1 member that is the person respon-
sible for operating the quality assurance system
of the Corporation described in subsection
(b)(4).
(M) 1 member who is a Dean of Agri-
culture of a Land Grant University from a to-
bacco producing state.
(3) MEMBERSHIP QUALIFICATIONS.—A member
of the Board shall not hold any Federal, State, or
local elected office.
(4) CHAIRPERSONS.—The Secretary of Agri-
culture shall serve as chairperson of the Board.
(5) EXECUTIVE DIRECTOR.—
(A) APPOINTMENT.—The Board shall ap-
point an Executive Director.
(B) DUTIES.—The Executive Director
shall be the chief executive officer of the Cor-
poration, with such power and authority as may
be conferred by the Board.
(C) COMPENSATION.—The Executive Di-
rector shall receive basic pay at the rate pro-
vided for level IV of the Executive Schedule
under section 5315 of title 5, United States
Code.
(6) OFFICERS.—The Board shall establish the
offices and appoint the officers of the Corporation,
including a Secretary, and define the duties of the
officers in a manner consistent with this section.
(7) MEETINGS.—
(A) IN GENERAL.—The Board shall meet
at least 3 times each fiscal year at the call of
a Chairperson or at the request of the Execu-
tive Director.
(B) LOCATION.—The location of a meeting
shall be subject to approval of the Executive Di-
rector.
(C) QUORUM.—A quorum of the Board
shall consist of a majority of the members.
(8) TERM; VACANCIES.—
(A) TERM.—The term of office of a mem-
ber of the Board appointed under any of sub-
paragraphs (E) through (K) of paragraph (2)
shall be 4 years.
(B) VACANCIES.—A vacancy on the Board
shall be filled in the same manner as the origi-
nal appointment was made.
(9) COMPENSATION.—
(A) FEDERAL
MEMBERS.—A member of
the Board who is an officer or employee of the
United States shall not receive any additional
compensation by reason of service on the
Board.
(B) NON-FEDERAL MEMBERS.—Any other
member shall receive compensation, for each
day (including travel time) that the member is
engaged in the performance of the functions of
the Board, at a rate determined appropriate by
the Board.
(C) EXPENSES.—A member of the Board
shall be reimbursed for travel, subsistence, and
other necessary expenses incurred by the mem-
ber in the performance of the duties of the
member.
(10) CONFLICT OF INTEREST; FINANCIAL DIS-
CLOSURE.—
(A) CONFLICT OF INTEREST.—Except as
provided in subparagraph (C), a member of the
Board shall not vote on any matter concerning
any application, contract, or claim, or other
particular matter pending before the Corpora-
tion, in which, to the knowledge of the member,
spouse, or child of the member, partner of the
member, or organization in which the member
is serving as officer, director, trustee, partner,
or employee, or any person or organization with
which the member is negotiating or has any ar-
rangement concerning prospective employment,
has a financial interest.
(B) VIOLATIONS.—Violation of subpara-
graph (A) by a member of the Board shall be
cause for removal of the member, but shall not
impair or otherwise affect the validity of any
otherwise lawful action by the Corporation in
which the member participated.
(C) EXCEPTIONS.—The prohibitions con-
tained in subparagraph (A) shall not apply to
a member of the Board that is a tobacco pro-
ducer if the member advises the Board of the
nature of the particular matter in which the
member proposes to participate, and if the
member makes a full disclosure of the financial
interest, prior to any participation.
(D) FINANCIAL
DISCLOSURE.—A Board
member shall be subject to the financial disclo-
sure requirements of subchapter B of chapter
XVI of title 5, Code of Federal Regulations (or
any corresponding or similar regulation or rul-
ing), applicable to a special Government em-
ployee (as defined in section 202(a) of title 18,
United States Code).
(E) REPRESENTATION.—No member of
the Board shall receive compensation from more
than one interest represented on the Board.
(11) BYLAWS.—The Board shall adopt, and
may from time to time amend, any bylaw that is
necessary for the proper management and function-
ing of the Corporation.
(12) PERSONNEL.—The Corporation may select
and appoint officers, attorneys, employees, and
agents, who shall be vested with such powers and
duties as the Corporation may determine.
(e) GENERAL POWERS.—In addition to any other
powers granted to the Corporation under this title, the
Corporation—
(1) shall have succession in its corporate name;
(2) may adopt, alter, and rescind any bylaw and
adopt and alter a corporate seal, which shall be judi-
cially noticed;
(3) may enter into any agreement or contract
with a person or private or governmental agency;
(4) may lease, purchase, accept a gift or dona-
tion of, or otherwise acquire, use, own, hold, im-
prove, or otherwise deal in or with, and sell, convey,
mortgage, pledge, lease, exchange, or otherwise dis-
pose of, any property or interest in property, as the
Corporation considers necessary in the transaction
of the business of the Corporation;
(5) may sue and be sued in the corporate name
of the Corporation, except that—
(A) no attachment, injunction, garnish-
ment, or similar process shall be issued against
the Corporation or property of the Corporation;
and
(B) exclusive original jurisdiction shall re-
side in the district courts of the United States,
and the Corporation may intervene in any court
in any suit, action, or proceeding in which the
Corporation has an interest;
(6) may independently retain legal representa-
tion;
(7) may provide for and designate such commit-
tees, and the functions of the committees, as the
Board considers necessary or desirable;
(8) may indemnify officers of the Corporation,
as the Board considers necessary and desirable, ex-
cept that the officers shall not be indemnified for an
act outside the scope of employment;
(9) may, with the consent of any board, com-
mission, independent establishment, or executive de-
partment of the Federal Government, including any
field service, use information, services, facilities, offi-
cials, and employees in carrying out this section, and
pay for the use, which payments shall be transferred
to the applicable appropriation account that incurred
the expense;
(10) may obtain the services and fix the com-
pensation of any consultant and otherwise procure
temporary and intermittent services under section
3109(b) of title 5, United States Code;
(11) shall have the rights, privileges, and immu-
nities of the United States with respect to the right
to priority of payment with respect to debts due
from bankrupt, insolvent, or deceased creditors;
(12) may collect or compromise any obligations
assigned to or held by the Corporation, including
any legal or equitable rights accruing to the Cor-
poration;
(13) shall determine the character of, and ne-
cessity for, obligations and expenditures of the Cor-
poration and the manner in which the obligations
and expenditures shall be incurred, allowed, and
paid, subject to provisions of law specifically applica-
ble to Government corporations;
(14) may make final and conclusive settlement
and adjustment of any claim by or against the Cor-
poration or a fiscal officer of the Corporation;
(15) may sell assets, loans, and equity interests
acquired in connection with the financing of projects
funded by the Corporation; and
(16) may exercise all other lawful powers nec-
essarily or reasonably related to the establishment of
the Corporation to carry out this title and the pow-
ers, purposes, functions, duties, and authorized ac-
tivities of the Corporation.
SEC. 302. TOBACCO LOAN ASSOCIATIONS.
The Corporation shall enter into an agreement with
producer-owned cooperative marketing loan associations
for each kind of tobacco to—
(1) make price support available to producers of
the kind of tobacco;
(2) carry out the licensing system established
under subsection (b)(2);
(3) arrange for financing and the administra-
tion of price supports for the kind of tobacco; and
(4) receive, process, store, and sell any domesti-
cally produced tobacco received as collateral for a
price support loan.
SEC. 303. TOBACCO PRICE SUPPORT LEVELS.
(a) INITIAL LEVEL.—Effective for the 1999 crop of
each kind of tobacco, the support level in cents per pound
established under this title shall be equal to—
(1) the simple average price received by produc-
ers of the kind of tobacco, as determined by the Cor-
poration, during the marketing years for the imme-
diately preceding 5 crops of the kind of tobacco; less
(2) the average return to quota for 1994
through 1998 crops of the kind of tobacco, as deter-
mined by the Corporation.
(b) SUBSEQUENT ADJUSTMENT.—The Corporation,
in consultation with the Associations, shall adjust and es-
tablish the support level for each kind of tobacco at an
appropriate level for each year after 1999.
SEC. 304. PENALTIES.
(a) IN GENERAL.—The violation of any provision of
this Act, or any rule or regulation issued to carry out this
Act, or the terms of any license issued under this Act,
by a person (including the marketing of any kind of to-
bacco without a license issued under this title or in excess
of the quantity permitted under such a license) shall sub-
ject the person to revocation or suspension of the person’s
license, a penalty of 75 percent of the average market
price (calculated to the nearest whole cent) for the kind
of tobacco for the immediately preceding marketing year,
or both, in the discretion of the Secretary.
(b) PAYER.—
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the penalty shall be paid by
the person who acquired the tobacco from the pro-
ducer.
(2) DEDUCTION
FROM
PRICE.—An amount
equivalent to the penalty may be deducted by the
buyer from the price paid to the producer in any
case in which the tobacco is marketed by sale.
(3) WAREHOUSEMAN
OR
AGENT.—If the to-
bacco is marketed by the producer through a ware-
houseman or other agent, the penalty shall be paid
by the warehouseman or agent who may deduct an
amount equivalent to the penalty from the price paid
to the producer.
(4) DIRECT
MARKETING
OUTSIDE
UNITED
STATES.—In any case in which tobacco is marketed
directly to any person outside the United States, the
penalty shall be paid and remitted by the producer.
(c) FALSE STATEMENT OR OMISSION.—If any pro-
ducer falsely identifies or fails to account for the disposi-
tion of any tobacco—
(1) an amount of tobacco equal to the normal
yield of the number of acres harvested in excess of
the quantity permitted under a license issued under
this title shall be considered to have been marketed
in excess of the license for the farm; and
(2) the penalty for the excess marketing shall
be paid and remitted by the producer.
(d) CARRYOVER.—Tobacco carried over by the pro-
ducer of the tobacco from 1 marketing year to another
marketing year may be marketed without payment of the
penalty imposed by this section if—
(1) the total quantity of tobacco available for
marketing from the farm in the marketing year from
which the tobacco is carried over does not exceed the
quantity that may be marketed under a license
issued for the farm for the marketing year; or
(2) the quantity of tobacco carried over does
not exceed the normal production of that number of
acres by which the harvested acreage of tobacco in
the calendar year in which the marketing year be-
gins is less than the quantity that may be marketed
under the license.
(e) TOBACCO MARKETED PRIOR
TO MARKETING
YEAR.—Tobacco produced in a calendar year for the mar-
keting year beginning during the calendar year shall be
subject to licenses issued for the marketing year even
though the tobacco is marketed prior to the date on which
the marketing year begins.
(f) PROPORTIONAL PAYMENTS.—The Secretary shall
require collection of the penalty on a proportion of each
lot of tobacco marketed from the farm equal to the propor-
tion that the tobacco available for marketing from the
farm in excess of the quantity that may be marketed under
a license is of the total quantity of tobacco available for
marketing from the farm if satisfactory proof is not fur-
nished as to the disposition to be made of the excess to-
bacco prior to the marketing of any tobacco from the farm.
(g) LIEN.—Until the amount of the penalty provided
by this section is paid, a lien on the tobacco with respect
to which the penalty is incurred, and on any subsequent
tobacco subject to licenses issued under this title in which
the person liable for payment of the penalty has an inter-
est, shall be in effect in favor of the Corporation for the
amount of the penalty.
SEC. 305. PROGRAM REFERENDA.
(a) INITIAL REFERENDUM.—Not later than 3 years
after the date of enactment of this Act, the Corporation
shall conduct a referendum among licensees engaged in
the production of each kind of tobacco to determine wheth-
er such producers are in favor of continuing the operation
of the program established under this Act with respect to
that kind of tobacco. If more than one half of the licensees
voting oppose the continuation of the program, the Cor-
poration shall announce the result and shall conduct a sec-
ond referendum one year later. If more than one half of
the licensees voting in the second referendum also oppose
the continuation of the program, the Corporation shall an-
nounce the result and the program shall cease to be in
effect for that kind of tobacco.
(b) SUBSEQUENT REFERENDA.—The Corporation
may conduct subsequent referenda from time to time as
the Corporation deems appropriate to determine whether
producers are in favor of continuing the program estab-
lished under this Act, the use of marketing allotments and
quotas, limitations on transfer of quota, or any other as-
pect of the program.
(c) EFFECTIVE DATE.—This section shall be effective
1 year after the date of enactment of this Act.
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