61⁄2 inches in length, they shall be taxable at
the rate prescribed for cigarettes weighing not
more than 3 pounds per thousand, counting
each 23⁄4 inches, or fraction thereof, of the
length of each as one cigarette.
(E) 
CIGARETTE
PACKS
CONTAINING
FEWER THAN 20 CIGARETTES.—On any pack of
cigarettes containing fewer than 20 cigarettes,
the excess of $1 over the sum of—
(i) the tax imposed by paragraphs (1)
and (2) of section 5701(a) of the Internal
Revenue Code of 1986, plus
(ii) the tax imposed by this sub-
section,
on the cigarettes in such pack.
(F) CIGARETTE PAPERS.—On each book or
set of cigarette papers containing more than 25
papers, 2.43 cents for each 50 papers or frac-
tional part thereof; except that, if cigarette pa-
pers measure more than 61⁄2 inches in length,
they shall be taxable at the rate prescribed,
counting each 23⁄4 inches, or fraction thereof, of
the length of each as one cigarette paper.
(G) CIGARETTE
TUBES.—On cigarette
tubes, 4.75 cents for each 50 tubes or fractional
part thereof; except that, if cigarette tubes
measure more than 61⁄2 inches in length, they
shall be taxable at the rate prescribed, counting
each 23⁄4 inches, or fraction thereof, of the
length of each as one cigarette tube.
(H) SNUFF.—On snuff, $9.64 per pound
(and a proportionate tax at the like rate on all
fractional parts of a pound).
(I) CHEWING TOBACCO.—On chewing to-
bacco, $4.68 per pound (and a proportionate
tax at the like rate on all fractional parts of a
pound).
(J) PIPE
TOBACCO.—On pipe tobacco,
$2.145 per pound (and a proportionate tax at
the like rate on all fractional parts of a pound).
(K) CIGARETTE
TOBACCO.—On cigarette
tobacco, $22.40 per pound (and a proportionate
tax at the like rate on all fractional parts of a
pound).
(2) LIABILITY FOR TAX AND METHOD OF PAY-
MENT.—
(A) LIABILITY FOR TAX.—A person hold-
ing tax-increased articles on January 1, 1994,
to which any tax imposed by paragraph (1) ap-
plies shall be liable for such tax.
(B) METHOD OF PAYMENT.—The tax im-
posed by paragraph (1) shall be paid in such
manner as the Secretary shall prescribe by reg-
ulations.
(C) TIME
FOR
PAYMENT.—The tax im-
posed by paragraph (1) shall be paid on or be-
fore June 30, 1994.
(3) TAX-INCREASED ARTICLES.—For purposes
of this subsection, the term ‘‘tax-increased articles’’
means tobacco products (as defined by section
5702(c) of the Internal Revenue Code of 1986, as
amended by this Act), cigarette papers (as defined
by section 5702(f) of such Code), cigarette tubes (as
defined by section 5702(g) of such Code), and packs
of cigarettes containing fewer than 20 cigarettes.
(4) OTHER LAWS APPLICABLE.—All provisions
of law, including penalties, applicable with respect to
the taxes imposed by section 5701 of such Code
shall, insofar as applicable and not inconsistent with
the provisions of this subsection, apply to the floor
stocks taxes imposed by paragraph (1), to the same
extent as if such taxes were imposed by such section
5701.
SEC. 3. ESTABLISHMENT OF TOBACCO HEALTH TAX TRUST
FUND.
(a) IN GENERAL.—Subchapter A of chapter 98 (re-
lating to trust fund code) is amended by adding at the
end thereof the following new section:
‘‘SEC. 9512. TOBACCO HEALTH TAX TRUST FUND.
‘‘(a) CREATION OF TRUST FUND.—There is estab-
lished in the Treasury of the United States a trust fund
to be known as the ‘Tobacco Health Tax Trust Fund’,
consisting of such amounts as may be appropriated or
credited to such Trust Fund as provided in this section
or section 9602(b).
‘‘(b) TRANSFERS TO TRUST FUND.—
‘‘(1) IN
GENERAL.—There is hereby appro-
priated to the Tobacco Health Tax Trust Fund
amounts equivalent to the increase in net revenues
received in the Treasury from the Tobacco Health
Tax Act of 1993 taxes.
‘‘(2) NET REVENUES.—For purposes of para-
graph (1), the term ‘net revenues’ means the
amount estimated by the Secretary based on the ex-
cess of—
‘‘(A) the Tobacco Health Tax Act of 1993
taxes received in the Treasury, over
‘‘(B) the decrease in the tax imposed by
chapter 1 resulting from such taxes.
‘‘(3) TOBACCO
HEALTH
TAX
ACT
OF
1993
TAXES.—For purposes of this subsection, the term
‘Tobacco Health Tax Act of 1993 taxes’ means the
taxes imposed by section 5701 which are attrib-
utable to the amendments made by the Tobacco
Health Tax Act of 1993 and the taxes imposed by
section 2(j) of such Act.
‘‘(c) EXPENDITURES FROM TRUST FUND.—The fol-
lowing percentages of the amounts appropriated or cred-
ited to the Tobacco Health Tax Trust Fund shall be avail-
able, as provided in appropriation Acts, for the following
purposes:
‘‘(1) 80 percent shall be available to make Fed-
eral payments to States to carry out section 4 of the
Tobacco Health Tax Act of 1993;
‘‘(2) 10 percent shall be available to make
grants under section 5 of such Act;
‘‘(3) 4.5 percent shall be available for additional
funding under section 6 of such Act (relating to gen-
eral health prevention and health care);
‘‘(4) 2.5 percent shall be available to provide
for counter advertising and tobacco preventive activi-
ties under section 7 of such Act; and
‘‘(5) 3 percent shall be available under section
8 of such Act to assist tobacco producers experienc-
ing financial hardship caused by increased excise
taxes on tobacco products.’’
(b) CLERICAL AMENDMENT.—The table of sections
for such subchapter A is amended by adding at the end
thereof the following new item:
‘‘Sec. 9512. Tobacco Health Tax Trust Fund.’’
SEC. 4. MEDICAID ELIGIBILITY AND PAYMENT EXPAN-
SIONS.
(a) EXPANSION OF MEDICAID ELIGIBILITY.—Subject
to subsection (c)—
(1) the Secretary of Health and Human Serv-
ices (in this subsection referred to as the ‘‘Sec-
retary’’) shall specify—
(A) a percentage (not to exceed 200 per-
cent) 
that 
shall 
apply 
under 
section
1902(z)(2)(A) of the Social Security Act, and
(B) a maximum age (not to exceed 19
years) 
that 
shall 
apply 
under 
section
1902(z)(2)(B) of such Act for a fiscal year; and
(2) if the percentage specified under paragraph
(1)(A) is 200 percent and the maximum age speci-
fied under paragraph (1)(B) is 19 years of age, the
Secretary shall specify a percentage (not to exceed
200 percent) that shall apply under section
1902(a)(2)(B) of such Act for the fiscal year.
(b) AUTHORITY TO REQUIRE INCREASE IN MEDIC-
AID PAYMENT RATES TO HOSPITALS AND PHYSICIANS.—
Subject to subsection (c), the Secretary may, in addition
to specifying a percentages and a maximum age under
subsection (a)—
(1) specify a percent that shall apply for pur-
poses of subsection (e)(1)(A)(i), and
(2) specify a percent that shall apply for pur-
poses of section 1902(aa)(1) of the Social Security
Act (as added by subsection (e)(2)(A) of this sec-
tion).
(c) LIMITATION ON TOTAL INCREASE.—The percent-
ages and percents under subsections (a) and (b) for a fis-
cal year shall be specified in a manner so that the total
amount of additional Federal expenditures in a fiscal year
resulting from this section (and the amendments made by
this section) does not exceed the amounts made available
to carry out this section under section 9512(c)(1) of the
Internal Revenue Code of 1986 for the fiscal year.
(d) CONFORMING AMENDMENTS FOR MEDICAID ELI-
GIBILITY EXPANSION.—
(1) BENEFITS
FOR
LOW-INCOME
INDIVID-
UALS.—Section 1902(a)(10)(A)(i) of the Social Se-
curity Act (42 U.S.C. 1396a(a)(10)(A)(i)) is amend-
ed—
(A) by striking ‘‘or’’ at the end of
subclause (VI);
(B) by striking the semicolon at the end of
subclause (VII) and inserting ‘‘, or’’; and
(C) by adding at the end the following new
subclause:
‘‘(VIII) who are described in sub-
section (z)(1);’’.
(2) INDIVIDUALS DESCRIBED.—
(A) IN GENERAL.—Section 1902 of such
Act (42 U.S.C. 1396a) is amended by adding at
the end the following new subsection:
‘‘(z)(1) Individuals described in this paragraph are—
‘‘(A) women during pregnancy (and during the
60-day period beginning on the last day of the preg-
nancy) or individuals who have not attained the age
specified by the Secretary under section 4(a)(1)(B)
of the Tobacco Health Tax Act of 1993, who are not
described in any of subclauses (I) through (VII) of
subsection (a)(10)(A)(i), and whose family income
does not exceed the income level described in para-
graph (2)(A) for a family of the size of the family;
and
‘‘(B) individuals not described in subparagraph
(A) who have not attained 65 years of age, who are
not described in any of subclauses (I) through (VII)
of subsection (a)(10)(A)(i), and whose family income
does not exceed the income level described in para-
graph (2)(B) for a family of the size of the family.
‘‘(2)(A) The income level described in this subpara-
graph is the percent, specified under section 4(a)(1)(A)
of the Tobacco Health Tax Act of 1993, of the official
poverty line (as defined by the Office of Management and
Budget, and revised annually in accordance with section
673(2) of the Omnibus Budget Reconciliation Act of
1981) applicable to a family of the size involved.
‘‘(B) The income level described in this subparagraph
is the percent (if any), specified under section 4(a)(2) of
the Tobacco Health Tax Act of 1993, of the official pov-
erty line (as defined by the Office of Management and
Budget, and revised annually in accordance with section
673(2) of the Omnibus Budget Reconciliation Act of
1981) applicable to a family of the size involved.
‘‘(3) Notwithstanding subsection (a)(17), for individ-
uals who are eligible for medical assistance because of sub-
section (a)(10)(A)(i)(VIII)—
‘‘(A) no resource standard shall be applied;
‘‘(B) the income standard to be applied is the
appropriate income standard established under para-
graph (2); and
‘‘(C) family income shall be determined in ac-
cordance with the methodology that is not more re-
strictive than the methodology employed under the
State plan under part A or E of title IV (except to
the extent such methodology is inconsistent with
clause (D) of subsection (a)(17)), and costs incurred
for medical care or for any other type of remedial
care shall not be taken into account.
Any different treatment provided under this paragraph for
such individuals shall not, because of subsection (a)(17),
require or permit such treatment for other individuals.
‘‘(4)(A) In the case of any State which is providing
medical assistance to its residents under a waiver granted
under section 1115, the Secretary shall require the State
to provide medical assistance for individuals described in
paragraph (1) in the same manner as the State would be
required to provide such assistance for such individuals
if the State had in effect a plan approved under this title.
‘‘(B) In the case of a State which is not one of the
50 States or the District of Columbia, the State need not
meet the requirement of subsection (a)(10)(A)(i)(VIII)
and, for purposes of paragraph (2)(A), the State may sub-
stitute for the percentages provided under such paragraph
any percentages that are less than such percentages.
‘‘(5) The Secretary may not require that an individ-
ual apply for eligibility under subclauses (I) through (VII)
of subsection (a)(10)(A)(i) as a condition of being deter-
mined to be eligible for medical assistance under this title
as an individual described in paragraph (1).’’.
(B) CONFORMING
AMENDMENT.—Section
1905(a) of such Act (42 U.S.C. 1396d(a)) is
amended—
(i) by striking ‘‘or’’ at the end of
clause (ix),
(ii) by adding ‘‘or’’ at the end of
clause (x), and
(iii) by inserting after clause (x) the
following new clause:
‘‘(xi) individuals described in section
1902(z)(1),’’.
(3) RESTRICTIONS ON BENEFITS PROVIDED.—
Section 1902(a)(10) of such Act (42 U.S.C.
1396a(a)(10)) is amended in the matter following
subparagraph (F)—
(A) by striking ‘‘; and (XI) the making’’
and inserting ‘‘, (XI) the making’’;
(B) by striking ‘‘and (XI) the medical’’
and inserting ‘‘(XII) the medical’’; and
(C) by striking the semicolon at the end
and inserting the following: ‘‘ and (XIII) the
medical assistance required to be made avail-
able to an individual described in subsection
(z)(1) shall not include nursing facility services,
home and community-based services (as defined
in section 1915(d)(5)(C)(i)), services in an in-
termediate care facility for the mentally re-
tarded, and community supported living ar-
rangements services;’’.
(e) CONFORMING PROVISIONS IMPOSING A FLOOR ON
MEDICAID PAYMENT LEVELS FOR INPATIENT HOSPITAL
SERVICES AND PHYSICIANS’ SERVICES.—
(1) INPATIENT HOSPITAL SERVICES.—
(A) IN GENERAL.—(i) A State plan under
title XIX of the Social Security Act shall not be
considered to meet the requirement of section
1902(a)(13)(A) of such Act (insofar as it re-
quires payments to hospitals for inpatient hos-
pital services that are reasonable and adequate
to meet the costs which must be incurred by ef-
ficiently and economically operated facilities),
as of a calendar quarter, unless the State has
submitted to the Secretary of Health and
Human Services, by not later than the first
date of such quarter, an amendment to such
plan that assures that, in the aggregate, the
amount of payments for inpatient hospital serv-
ices provided in subsection (d) hospitals (as de-
fined in section 1886(d)(1)(B) of such Act)
under the plan is not less than—
(I) in the case of services furnished
during fiscal year 1997, such percent as
may be specified under section 4(b)(1) of
the Tobacco Health Tax Act of 1993 (but
not to exceed 80 percent, or, if greater, the
percent specified in clause (ii)) of the
amount of payments for such services that
would be made under title XVIII of such
Act (without regard to any deductible im-
posed under section 1813(a) of such Act or
any limitation on the coverage of inpatient
hospital services under such title) for such
services if covered under such title;
(II) in the case of services furnished
during fiscal year 1998, such percent spec-
ified under section 4(b)(1) of the Tobacco
Health Tax Act of 1993 (not to exceed 85
percent or, if greater, the percent specified
in clause (ii)) of the amount of payments
for such services that would be made under
title XVIII of such Act (without regard to
any deductible imposed under section
1813(a) of such Act or any limitation on
the coverage of inpatient hospital services
under such title) for such services if cov-
ered under such title; and
(III) in the case of services furnished
during any succeeding fiscal year, such
percent specified under section 4(b)(1) of
the Tobacco Health Tax Act of 1993 (not
to exceed 90 percent) of the amount of
payments for such services that would be
made under title XVIII of such Act (with-
out regard to any deductible imposed
under section 1813(a) of such Act or any
limitation on the coverage of inpatient hos-
pital services under such title) for such
services if covered under such title.
(ii) The percent specified in this clause is
the quotient of—
(I) the total payments made under the
State plan under title XIX of the Social
Security Act in fiscal year 1993 with re-
spect to inpatient hospital services, divided
by
(II) the amount of payments for such
services that would be made under title
XVIII of such Act (without regard to any
deductible imposed under section 1813(a)
of such Act or any limitation on the cov-
erage of inpatient hospital services under
such title) for such services in such fiscal
year if covered under such title,
expressed as a percentage, or, if less, 90 per-
cent.
(iii) In computing amounts under clause
(i), the Secretary shall adjust for differences in
case mix, volume, the age and disability of the
populations covered by the two programs, and
other relevant factors identified by the Sec-
retary.
(B) REVIEW.—The Secretary, by not later
than 90 days after the date of submission of a
plan amendment under subparagraph (A),
shall—
(i) review each such amendment for
compliance with the requirement of section
1902(a)(13)(A) of the Social Security Act;
and
(ii) approve or disapprove each such
amendment.
If the Secretary disapproves such an amend-
ment, the State shall immediately submit a re-
vised amendment which meets such require-
ment.
(C) COLLECTION
OF
DATA.—The Sec-
retary may provide for such collection of data
on payment for inpatient hospital services as
may be necessary to carry out this paragraph.
(D) NONWAIVABILITY.—The provisions of
this paragraph may not be waived by the Sec-
retary.
(2) PHYSICIANS’ SERVICES.—
(A) IN GENERAL.—Section 1902 of the So-
cial Security Act (42 U.S.C. 1396a) is amend-
ed—
(i) in subsection (a)(13)—
(I) by striking ‘‘and’’ at the end
of subparagraph (E);
(II) by striking the semicolon at
the end of subparagraph (F) and in-
serting ‘‘; and’’; and
(III) by adding at the end the
following new subparagraph:
‘‘(G) for payment for physicians’ services
through a methodology under which the amount
of payment for such services furnished during a
calendar quarter is not less than the amount
specified in subsection (aa);’’; and
(ii) by adding at the end the following
new subsection:
‘‘(aa)(1) For purposes of subsection (a)(13)(G), the
amount specified in this subsection is—
‘‘(A) for physicians’ services furnished during a
calendar quarter in fiscal year 1997, a percent speci-
fied under section 4(b)(2) of the Tobacco Health
Tax Act of 1993 (not to exceed 60 percent or, if
greater, the percent specified in paragraph (2)) of
the applicable fee schedule amount established under
section 1848 for services furnished in such year,
‘‘(B) for physicians’ services furnished during a
calendar quarter in fiscal year 1998, a percent speci-
fied under section 4(b)(2) of the Tobacco Health
Tax Act of 1993 (but not to exceed 70 percent or,
if greater, the percent specified in paragraph (2)) of
the applicable fee schedule amount established under
section 1848 for services furnished in such year, and
‘‘(C) for physicians’ services furnished during a
calendar quarter in a succeeding fiscal year, a per-
cent specified under section 4(b)(2) of the Tobacco
Health Tax Act of 1993 (but not to exceed 90 per-
cent) of the applicable fee schedule amount estab-
lished under section 1848 for services furnished in
such year.
‘‘(2) The percent specified in this paragraph is the
quotient of—
‘‘(A) the total payments made under the State
plan under title XIX of the Social Security Act in
fiscal year 1993 for physicians’ services, divided by
‘‘(B) the amount of payments for such services
that would be made under title XVIII of such Act
(without regard to any deductible or coinsurance)
for such services in such fiscal year if covered under
such title,
expressed as a percentage, or, if less, 90 percent.’’.
(B) TRANSMITTAL OF PAYMENT INFORMA-
TION TO STATES.—Section 1848(i) of such Act
(42 U.S.C. 1395w–4(i)) is amended by adding
at the end the following new paragraph:
‘‘(4) TRANSMITTAL OF PHYSICIAN PAYMENT IN-
FORMATION TO STATES.—Not later than August 1
of 1996 (and of each year thereafter), the Secretary
shall transmit such information to the States as is
necessary to enable the States to carry out the re-
quirements of section 1902(a)(13)(G) of the Social
Security Act (as added by section 4(e)(2)(A) of the
Tobacco Health Tax Act of 1993).’’.
(C) RELATION TO PAYMENTS FOR OBSTET-
RICAL
AND
PEDIATRIC
SERVICES.—Section
1926 of such Act (42 U.S.C. 1396r–7) is
amended by adding at the end the following
new subsection:
‘‘(e) Payment rates established under this section
with respect to services shall in no case be less than the
minimum payment amounts specified under section
1902(aa) with respect to such services. The fact that pay-
ment amounts with respect to such services are consistent
with the payment rates required under such section shall
not be the basis for a determination that the payment
amounts comply with the requirements of this section.’’.
(e) FULL
FEDERAL
PAYMENT
FOR
INCREASED
COSTS.—Section 1903 of the Social Security Act (42
U.S.C. 1396b) is amended by adding at the end the follow-
ing new subsection:
‘‘(w)(1) Notwithstanding subsection (a), with respect
to new mandated expenditures (as defined in paragraph
(2)) in a quarter, instead of the amounts otherwise paid
to a State under subsection (a) for a quarter with respect
to such expenditures, there shall be paid to the State an
amount equal to 100 percent of the amount of such ex-
penditures.
‘‘(2) In this subsection, the term ‘new mandated ex-
penditures’ means the sum of the following expenditures
under the State plan during a quarter:
‘‘(A) The amount by which (i) the minimum
amount of expenditures for medical assistance for
inpatient hospital services (consistent with section
4(e)(1)(A) of the Tobacco Health Tax Act of 1993),
exceeds (ii) the amount of expenditures for such as-
sistance which the Secretary determines would have
been payable under the plan (as such plan was in ef-
fect as of the date of the enactment of this sub-
section).
‘‘(B) The amount by which (i) the minimum
amount of expenditures under the plan for medical
assistance for physicians’ services (consistent with
section 1902(a)(13)(G)) for the quarter, exceeds (ii)
the amount of expenditures under the plan for such
assistance which the Secretary determines would
have been payable under the plan (as such plan was
in effect as of the date of the enactment of this sub-
section) for the quarter.
‘‘(C) The amount of expenditures for medical
assistance attributable to individuals with respect to
whom the State plan would not be required to pro-
vide such assistance but for the amendments made
by section 4(c) of the Tobacco Health Tax Act of
1993.
‘‘(D) The amount of expenses reasonably attrib-
utable to the expenditures described in subpara-
graphs (A) through (C).’’.
SEC. 5. STATE GRANTS TO REPLACE STATE AND LOCAL
REVENUE LOSS DUE TO FEDERAL TOBACCO
TAX INCREASE.
With respect to the funds made available under sec-
tion 9512(c)(2) of the Internal Revenue Code of 1986, the
Secretary of the Treasury shall, by grant, allocate such
funds among State and local governments to compensate
for any reduction in revenues to such governments which
such Secretary determines is attributable to the reduced
consumption of articles subject to tax under section 5701
of such Code by reason of the amendments made by sec-
tion 2 of this Act. In determining revenue reduction, such
Secretary shall take into account the presence of military
bases and international boundaries, among other factors.
SEC. 6. ADDITIONAL FUNDS FOR GENERAL HEALTH PRE-
VENTION AND ACCESS TO HEALTH CARE.
With respect to the funds made available under sec-
tion 9512(c)(3) of the Internal Revenue Code of 1986, the
Secretary of Health and Human Services shall, for the
purpose of providing additional funds to carry out the fol-
lowing programs, make such allocations as the Secretary
deems appropriate:
(1) LEAD POISONING PREVENTION.—The pro-
gram under section 317A of the Public Health Serv-
ice Act.
(2) MINORITY HEALTH PROMOTION.—Programs
under section 1707 of such Act.
(3) AIDS PREVENTION.—Programs of the Cen-
ters for Disease Control and Prevention under such
Act 
to 
prevent 
infection 
with 
the 
human
immunodeficiency virus.
(4) PREVENTIVE HEALTH AND HEALTH SERV-
ICES BLOCK GRANT.—The program under part A of
title XIX of such Act.
(5) NATIONAL HEALTH SERVICE CORPS.—The
programs of the National Health Service Corps
under subparts II and III of part D of title III of
such Act.
(6) COMMUNITY HEALTH PROGRAMS.—The pro-
grams under sections 329 and 330 of such Act.
SEC. 7. ADDITIONAL FUNDS FOR COUNTER ADVERTISING
AND TOBACCO PREVENTIVE ACTIVITIES.
With respect to the funds made available under sec-
tion 9512(c)(4) of the Internal Revenue Code of 1986, the
Secretary of Health and Human Services shall provide for
public education and other activities to discourage the use
of tobacco products, with special emphasis on discouraging
cigarette smoking by youths. At least 1⁄2 of such funds
shall be made available for counter-advertising to discour-
age the use of such products.
SEC. 8. DEPARTMENT OF AGRICULTURE PROGRAMS TO AS-
SIST TOBACCO PRODUCERS EXPERIENCING
FINANCIAL 
HARDSHIP 
CAUSED 
BY 
IN-
CREASED EXCISE TAXES ON TOBACCO PROD-
UCTS.
(a) INCOME ASSISTANCE.—
(1) ASSISTANCE
AUTHORIZED.—If the Sec-
retary of Agriculture determines that the domestic
consumption of tobacco for a marketing year is
equal to or less than 95 percent of the normal year’s
domestic consumption of tobacco calculated in 1993,
the Secretary may make payments to a tobacco pro-
ducer in the United States to offset all or a portion
of the reduced sales of tobacco made by that pro-
ducer during that marketing year compared to sales
made by that producer during the marketing year
ending in 1993.
(2) EXCEPTION.—The Secretary may not make
a payment under this subsection to a tobacco pro-
ducer if the Secretary determines that the reduction
in tobacco sales by the producer—
(A) is unrelated to the increase in excise
taxes on tobacco products imposed by section 2;
or
(B) is offset by sales of other crops pro-
duced on lands converted from tobacco produc-
tion.
(b) PROMOTION OF ALTERNATIVE CROPS.—The Sec-
retary of Agriculture shall encourage and assist tobacco
producers in the United States to convert their farm oper-
ations from the production of tobacco to other crops. As-
sistance provided under this subsection may include—
(1) the provision of grants and loans to pur-
chase equipment, seeds or nursery stocks, or fer-
tilizer to produce other crops;
(2) the treatment of lands converted from to-
bacco production to the production of another pro-
gram crop as lands considered planted to that crop
in the calculation of crop acreage bases under title
V of the Agricultural Act of 1949 (7 U.S.C. 1461
et seq.);
(3) the provision of technical advice regarding
the care and harvesting of other crops; and
(4) the undertaking of measures to improve the
access of tobacco producers to the markets for other
crops.
(c) PROCESSING AND MARKETING INITIATIVES.—
(1) GRANTS.—The Secretary of Agriculture
shall make grants to States in which tobacco is pro-
duced to assist those States—
(A) in attracting food processing compa-
nies to establish food processing facilities in
those States in order to create a market for to-
bacco producers who convert their farm oper-
ations from the production of tobacco to other
crops; and
(B) in establishing a cooperative collection
and distribution process among tobacco produc-
ers who convert to other crops in order to effi-
ciently supply food processing facilities in those
States.
(2) APPLICATION AND CONVERSION PLAN.—To
receive a grant under this subsection, a State shall
submit to the Secretary an application in such form
and containing such information as the Secretary
may require. The application shall contain—
(A) a description of the extent to which the
economy of the State is dependent upon the
production of tobacco and the manufacturing of
tobacco products; and
(B) a specific plan to use the grant to re-
duce the State’s dependence upon the produc-
tion of tobacco and the manufacturing of to-
bacco products.
(3) REPORT.—Not later than 15 months after
receiving a grant under this subsection, each State
receiving such a grant shall submit a report to the
Secretary containing—
(A) a description of the uses made of the
grant by the State, including the amount of the
grant expended for each use; and
(B) an evaluation of the extent to which
the grant assisted the State in reducing its de-
pendence upon the production of tobacco and
the manufacturing of tobacco products.
(d) FUNDING.—The Secretary of Agriculture shall
carry out this section using funds made available to the
Secretary from the Tobacco Health Tax Trust Fund
under section 9512(c)(5) of the Internal Revenue Code of
1986.
(e) DEFINITIONS.—For purposes of this section:
(1) The term ‘‘normal year’s domestic con-
sumption’’ has the meaning given that term in sec-
tion 301(b)(11)(B) of the Agricultural Adjustment
Act of 1938 (7 U.S.C. 1301(b)(11)(B)).
(2) The term ‘‘marketing year’’ has the mean-
ing given that term in section 301(b)(7) of such Act
(7 U.S.C. 1301(b)(7)).
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