I
105TH CONGRESS
2D SESSION
H. R. 3264
To stabilize tobacco quota fluctuations despite any comprehensive legal settle-
ment between cigarette manufacturers and State governments, to require
cigarette manufacturers to pay all Department of Agriculture costs asso-
ciated with tobacco regulation, to establish a voluntary quota retirement
system for tobacco quota holders, to provide market transition assistance
for tobacco producers, tobacco industry workers, and their communities,
particularly in the event of tobacco quota reductions, and for other
purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 25, 1998
Mr. BAESLER (for himself and Mr. HAMILTON) introduced the following bill;
which was referred to the Committee on Agriculture, and in addition to
the Committees on Ways and Means, Education and the Workforce, the
Judiciary, and the Budget, for a period to be subsequently determined
by the Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
A BILL
To stabilize tobacco quota fluctuations despite any com-
prehensive legal settlement between cigarette manufac-
turers and State governments, to require cigarette manu-
facturers to pay all Department of Agriculture costs
associated with tobacco regulation, to establish a vol-
untary quota retirement system for tobacco quota hold-
ers, to provide market transition assistance for tobacco
producers, tobacco industry workers, and their commu-
nities, particularly in the event of tobacco quota reduc-
tions, 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 Community Economic Stabilization and Support
Act’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
TITLE I—FEDERAL TOBACCO PRICE SUPPORT PROGRAM
Sec. 101. Consistent purchase intention requirements for cigarette manufactur-
ers.
Sec. 102. Penalties for failure to comply with purchase intentions and use of
penalty payments.
Sec. 103. Trade advocacy to assist United States tobacco farmers.
Sec. 104. Program referenda regarding lease and transfer of tobacco quota.
Sec. 105. Elimination of tobacco marketing assessment.
TITLE II—TOBACCO COMMUNITY REVITALIZATION TRUST
FUND
Sec. 201. Establishment of Tobacco Community Economic Stabilization and
Support Act.
Sec. 202. Contributions by tobacco product manufacturers and importers.
TITLE III—INDUSTRY PAYMENTS FOR DEPARTMENT
TOBACCO COSTS
Sec. 301. Industry payments for all Department costs associated with tobacco
production and regulation.
Sec. 302. Industry responsibility for No Net Cost Tobacco Funds and Ac-
counts.
TITLE IV—PERMANENT SALE, RETIREMENT, AND
DISTRIBUTION OF TOBACCO QUOTA
Sec. 401. Funds for voluntary quota retirement.
Sec. 402. Tobacco quota retirement contracts for tobacco quota holders.
Sec. 403. Distribution of retired quota.
TITLE V—AGRICULTURAL MARKET TRANSITION
ASSISTANCE
Sec. 501. Payments for lost tobacco quota.
Sec. 502. Determination of base quota levels for tobacco producers.
Sec. 503. Determination of base quota volume and commission levels for to-
bacco warehousemen.
Sec. 504. Payment amounts.
Sec. 505. Effect of changes in quota or farm ownership.
Sec. 506. Acceleration of payments.
Sec. 508. Payment source and aggregate annual payments.
Sec. 509. Cost-of-living adjustment.
Sec. 510. Effective date.
TITLE VI—COMMUNITY, FARMER, AND WORKER
TRANSITION ASSISTANCE
Sec. 601. Tobacco community economic development grants.
Sec. 602. Tobacco worker transition program.
Sec. 603. Farmer opportunity grants.
Sec. 604. Research grants for alternative uses of tobacco production and proc-
essing equipment.
TITLE VII—TAX TREATMENT FOR PAYMENTS FOR LOST
TOBACCO QUOTA
Sec. 701. Payments for lost tobacco quota.
TITLE VIII—IMMUNITY
Sec. 801. General immunity for tobacco producers and warehousers.
SEC. 2. DEFINITIONS.
In this Act:
(1) ACTIVE
TOBACCO
PRODUCER.—The term
‘‘active tobacco producer’’ means a quota holder,
quota lessee, or quota tenant.
(2) QUOTA HOLDER.—The term ‘‘quota holder’’
means a producer that owns a farm for which a to-
bacco farm marketing quota or farm acreage allot-
ment was established under the Agricultural Adjust-
ment Act of 1938 (7 U.S.C. 1281 et seq.) for any
of the 1995, 1996, or 1997 crop years.
(3) QUOTA LESSEE.—The term ‘‘quota lessee’’
means—
(A) a producer that owns a farm that pro-
duced tobacco pursuant to a lease and transfer
to that farm of all or part of a tobacco farm
marketing quota or farm acreage allotment es-
tablished under the Agricultural Adjustment
Act of 1938 (7 U.S.C. 1281 et seq.) for any of
the 1995, 1996, or 1997 crop years; or
(B) a producer that rented land from a
farm operator to produce tobacco under a to-
bacco farm marketing quota or farm acreage al-
lotment established under the Agricultural Ad-
justment Act of 1938 (7 U.S.C. 1281 et seq.)
for any of the 1995, 1996, or 1997 crop years.
(4) QUOTA TENANT.—The term ‘‘quota tenant’’
means a producer who—
(A) is the principal producer, as deter-
mined by the Secretary, of tobacco on a farm
where tobacco is produced pursuant to a to-
bacco farm marketing quota or farm acreage al-
lotment established under the Agricultural Ad-
justment Act of 1938 (7 U.S.C. 1281 et seq.)
for any of the 1995, 1996, or 1997 crop years;
and
(B) is not a quota holder or quota lessee.
(5) SECRETARY.—Except in section 601, the
term ‘‘Secretary’’ means the Secretary of Agri-
culture.
(6) TOBACCO PRODUCT IMPORTER.—The term
‘‘tobacco product importer’’ has the meaning given
the term ‘‘importer’’ in section 5702 of the Internal
Revenue Code of 1986.
(7) TOBACCO PRODUCT MANUFACTURER.—
(A) IN
GENERAL.—The term ‘‘tobacco
product manufacturer’’ has the meaning given
the term ‘‘manufacturer of tobacco products’’ in
section 5702 of the Internal Revenue Code of
1986.
(B) 
EXCLUSION.—The 
term 
‘‘tobacco
product manufacturer’’ does not include a per-
son that manufactures cigars or pipe tobacco.
(8) HISTORICALLY BLACK COLLEGES AND UNI-
VERSITIES.—The term ‘‘historically black colleges
and universities’’ has the meaning given the term
‘‘part B institution’’ in section 322 of the Higher
Education Act of 1965 (20 U.S.C. 1061).
TITLE I—FEDERAL TOBACCO
PRICE SUPPORT PROGRAM
SEC. 101. CONSISTENT PURCHASE INTENTION REQUIRE-
MENTS FOR CIGARETTE MANUFACTURERS.
(a) MINIMUM PURCHASE INTENTIONS.—Subsection
(b) of section 320A of the Agricultural Adjustment Act
of 1938 (7 U.S.C. 1314g) is amended to read as follows:
‘‘(b) MINIMUM PURCHASE INTENTIONS.—
‘‘(1) MINIMUM SUBMISSION BY EACH MANUFAC-
TURER.—The quantity of intended purchases sub-
mitted by a domestic cigarette manufacturer under
subsection (a) for a marketing year with respect to
Flue-cured tobacco may not be less than the quan-
tity of intended purchases submitted by that manu-
facturer for Flue-cured tobacco in the case of the
1997 crop. The quantity of intended purchases sub-
mitted by a domestic cigarette manufacturer under
subsection (a) for a marketing year with respect to
Burley tobacco may not be less than the quantity of
intended purchases submitted by that manufacturer
for Burley tobacco in the case of the 1997 crop.
‘‘(2) SECRETARY ESTABLISHMENT IN CASE OF
FAILURE TO SUBMIT.—If a domestic manufacturer
of cigarettes fails to submit a statement of the quan-
tity of intended purchases of that manufacturer, as
required by subsection (a), or fails to comply with
paragraph (1) in the submission of the statement,
the Secretary shall establish the quantity of intended
purchases to be attributed to that manufacturer for
purposes of this Act, based on—
‘‘(A) the quantity of intended purchases
submitted by that manufacturer (or established
by the Secretary under this subsection) in the
case of the 1997 crop of Flue-cured tobacco or
Burley tobacco, as the case may be;
‘‘(B) the quantity of intended purchases
submitted by that manufacturer under this sec-
tion for the marketing year immediately preced-
ing the marketing year for which the deter-
mination is being made, if that quantity of in-
tended purchases exceeds the amount otherwise
determined under subparagraph (A) for that
manufacturer; or
‘‘(C) if that manufacturer did not submit
a statement of the quantity of intended pur-
chases of the manufacturer for the marketing
year immediately preceding the marketing year
for which the determination is being made, the
most recent information available to the Sec-
retary, but not less than the amount otherwise
determined under subparagraph (A) for that
manufacturer.
‘‘(3) MINIMUM PURCHASE INTENTION FOR ALL
MANUFACTURERS.—If the aggregate of the quan-
tities of intended purchases for a marketing year is
less than 600,000,000 pounds, in the case of Burley
tobacco, or 900,000,000 pounds, in the case of Flue-
cured tobacco, the Secretary shall modify the pur-
chase intentions regarding that type of tobacco of
each domestic manufacturer of cigarettes as nec-
essary to ensure that the minimum aggregate quan-
tity specified in this paragraph is to be purchased by
the manufacturers.’’.
(b) TIME FOR SUBMISSION.—Subsection (a)(1) of
such section is amended by striking ‘‘(or’’ the first place
it appears and all that follows through ‘‘whichever is
later)’’ and inserting ‘‘and January 15 of any marketing
year with respect to Burley tobacco’’.
(c) EFFECT ON CALCULATION OF NATIONAL MAR-
KETING QUOTA.—
(1) 
FLUE-CURED
TOBACCO.—Section
317(a)(1)(B) of the Agricultural Adjustment Act of
1938 (7 U.S.C. 1314c(a)(1)(B)) is amended—
(A) in clause (i), by inserting after ‘‘mar-
keting year,’’ the following: ‘‘whether for manu-
facture for domestic or export sale or for export
as unmanufactured tobacco,’’; and
(B) in clause (ii), by inserting before the
semicolon the following: ‘‘, but excluding any
exports of unmanufactured tobacco counted
under clause (i)’’.
(2) BURLEY
TOBACCO.—Section 319(c)(3)(A)
of such Act (7 U.S.C. 1314e(c)(3)(A)) is amended—
(A) in clause (i), by inserting after ‘‘mar-
keting year,’’ the following: ‘‘whether for manu-
facture for domestic or export sale or for export
as unmanufactured tobacco,’’; and
(B) in clause (ii), by inserting before the
semicolon the following: ‘‘, but excluding any
exports of unmanufactured tobacco counted
under clause (i)’’.
SEC. 102. PENALTIES FOR FAILURE TO COMPLY WITH PUR-
CHASE INTENTIONS AND USE OF PENALTY
PAYMENTS.
(a) DETERMINATION OF FAILURE TO COMPLY WITH
PURCHASE INTENTIONS.—Section 320B(b)(1) of the Ag-
ricultural Adjustment Act of 1938 (7 U.S.C. 1314h(b)(1))
is amended—
(1) by striking ‘‘from the 1985 and subsequent
crops’’;
(2) by striking ‘‘90 percent of’’; and
(3) by striking ‘‘submitted by such manufac-
turer or established by the Secretary for such manu-
facturer’’ and inserting ‘‘in effect for that manufac-
turer’’.
(b) PURCHASE REQUIREMENT PENALTIES.—Sub-
section (c) of section 320B of the Agricultural Adjustment
Act of 1938 (7 U.S.C. 1314h) is amended—
(1) by striking paragraph (1) and inserting the
following new paragraph:
‘‘(1) 110 percent of the price support rate in ef-
fect under section 106 of the Agricultural Act of
1949 for the kind of tobacco involved; by’’; and
(2) in paragraph (2)(B), by striking ‘‘90 per-
cent of the quantity of intended purchases of such
kinds of tobacco, respectively, submitted by the man-
ufacturer or established by the Secretary for such
manufacturer’’ and inserting ‘‘the quantity of in-
tended purchases of such kinds of tobacco, respec-
tively, in effect for that manufacturer’’.
(c) USE OF PENALTY PAYMENTS.—Subsection (d) of
such section is amended to read as follows:
‘‘(d) USE
OF PENALTY PAYMENTS.—An amount
equal to the amount of each penalty collected by the Sec-
retary under this section shall be transmitted by the Sec-
retary to the Secretary of the Treasury for deposit in the
Tobacco Community Revitalization Trust Fund estab-
lished under section 301 of the Tobacco Community Eco-
nomic Stabilization and Support Act.’’.
SEC. 103. TRADE ADVOCACY TO ASSIST UNITED STATES TO-
BACCO FARMERS.
(a) REQUIREMENTS.—The United States Trade Rep-
resentative, the Secretary of Commerce, and the Secretary
of Agriculture may not advocate lower foreign trade bar-
riers or increased market access for tobacco products that
contain less than 75 percent United States domestic con-
tent.
(b) FINDINGS.—Congress finds the following:
(1) The intersection of United States trade and
health policies should be based on a recognition that
insisting on nondiscriminatory treatment of United
States products should not have the effect of in-
creasing smoking rates in any country.
(2) United States officials should not interfere
with or object to the adoption or enforcement by a
foreign country of legitimate measures necessary to
protect public health when such restrictions are ap-
plied in a nondiscriminatory fashion.
(3) The United States Government should con-
tinue to work to eliminate discriminatory foreign
practices that disadvantage United States workers,
farmers, or companies, and the United States should
continue to seek ‘‘national treatment’’ for United
States products so long as these activities are not
aimed at increasing overall demand for tobacco
products.
SEC. 104. PROGRAM REFERENDA REGARDING LEASE AND
TRANSFER OF TOBACCO QUOTA.
Section 312(c) of the Agricultural Adjustment Act of
1938 (7 U.S.C. 1312(c)) is amended—
(1) by striking ‘‘(c) Within thirty’’ and insert-
ing the following:
‘‘(c) REFERENDA REQUIREMENTS.—
‘‘(1) REFERENDA ON USE OF NATIONAL MAR-
KETING QUOTAS.—Not later than 30’’; and
(2) by adding at the end the following new
paragraph:
‘‘(2) REFERENDA ON LEASE AND TRANSFER OF
TOBACCO QUOTA.—
‘‘(A) IN
GENERAL.—In the case of any
kind of tobacco for which marketing quotas are
in effect, on the receipt of a petition from more
than 5 percent of the producers of that kind of
tobacco in a State, the Secretary shall conduct
a referendum in that State on any proposal
contained in the petition related to the lease
and transfer of tobacco quota within a State.
‘‘(B) EFFECT
OF
APPROVAL
OF
PRO-
POSAL.—If a majority of producers of the kind
of tobacco in the State approve a proposal in
a referendum conducted under subparagraph
(A), the Secretary shall implement the proposal
in a manner that applies to all producers and
quota holders of that kind of tobacco in the
State.’’.
SEC. 105. ELIMINATION OF TOBACCO MARKETING ASSESS-
MENT.
(a) REPEAL.—Section 106 of the Agricultural Act of
1949 (7 U.S.C. 1445(g)) is amended by striking sub-
section (g).
(b) CONFORMING AMENDMENT.—Section 422(c) of
the Uruguay Round Agreements Act (Public Law 103–
465; 7 U.S.C. 1445 note) is amended by striking ‘‘section
106(g), 106A, or 106B of the Agricultural Act of 1949
(7 U.S.C. 1445(g), 1445–1, or 1445–2)’’ and inserting
‘‘section 106A or 106B of the Agricultural Act of 1949
(7 U.S.C. 1445–1, 1445–2)’’.
TITLE II—TOBACCO COMMUNITY
REVITALIZATION TRUST FUND
SEC. 201. ESTABLISHMENT OF TOBACCO COMMUNITY REVI-
TALIZATION TRUST FUND.
(a) ESTABLISHMENT.—There is established in the
Treasury of the United States a trust fund to be known
as the ‘‘Tobacco Community Revitalization Trust Fund’’,
consisting of such amounts as may be appropriated or
credited to the Tobacco Community Revitalization Trust
Fund. The Tobacco Community Revitalization Trust
Fund shall be administered by the Secretary of Agri-
culture.
(b) TRANSFERS TO TRUST FUND.—There are appro-
priated and transferred to the Tobacco Community Revi-
talization Trust Fund for each fiscal year—
(1) amounts contributed by tobacco product
manufacturers and tobacco product importers under
section 202; and
(2) amounts made available to the Tobacco
Community Revitalization Trust Fund out of funds
allocated through national tobacco settlement legisla-
tion.
(c) REPAYABLE ADVANCES.—
(1) AUTHORIZATION.—There are authorized to
be appropriated to the Tobacco Community Revital-
ization Trust Fund, as repayable advances, such
sums as may from time to time be necessary to
make expenditures authorized under subsection (d).
(2) REPAYMENT
WITH
INTEREST.—Repayable
advances made to the Tobacco Community Revital-
ization Trust Fund shall be repaid, and interest on
the advances shall be paid, to the general fund of
the Treasury when the Secretary of the Treasury de-
termines that moneys are available in the Tobacco
Community Revitalization Trust Fund to make the
payments.
(3) RATE OF INTEREST.—Interest on an ad-
vance made under this subsection shall be at a rate
determined by the Secretary of Treasury (as of the
close of the calendar month preceding the month in
which the advance is made) that is equal to the cur-
rent average market yield on outstanding marketable
obligations of the United States with remaining pe-
riod to maturity comparable to the anticipated pe-
riod during which the advance will be outstanding.
(d) EXPENDITURES FROM TOBACCO TRUST FUND.—
Amounts in the Tobacco Community Revitalization Trust
Fund shall be available after October 1, 1998, to carry
out this Act and the amendments made by this Act.
(e) BUDGETARY TREATMENT.—This section con-
stitutes budget authority in advance of appropriations
Acts and represents the obligation of the Federal Govern-
ment to provide payments to States and eligible persons
in accordance with this Act.
SEC. 202. CONTRIBUTIONS BY TOBACCO PRODUCT MANU-
FACTURERS AND IMPORTERS.
(a) DEFINITION OF MARKET SHARE.—In this sec-
tion, the term ‘‘market share’’ means the ratio of—
(1) the tax liability of a tobacco product manu-
facturer or tobacco product importer for a calendar
year under section 5703 of the Internal Revenue
Code of 1986; to
(2) the tax liability of all tobacco product man-
ufacturers or tobacco product importers for the cal-
endar year under section 5703 of the Internal Reve-
nue Code of 1986.
(b) DETERMINATIONS.—Not later than September
30 of each fiscal year, the Secretary of the Treasury
shall—
(1) determine—
(A) the market share of each tobacco prod-
uct manufacturer or tobacco product importer
during the most recent calendar year;
(B) the total amount of assessments pay-
able for the subsequent fiscal year under sub-
section (c); and
(C) the amount of an assessment payable
by the tobacco product manufacturer or tobacco
product importer for the fiscal year under sub-
section (d); and
(2) notify each tobacco product manufacturer
and tobacco product importer of the determinations
made under paragraph (1) with respect to the manu-
facturer or importer.
(c) TOTAL AMOUNT OF ASSESSMENTS.—
(1) IN GENERAL.—The total amount of assess-
ments payable by all tobacco product manufacturers
and tobacco product importers into the Tobacco
Community Revitalization Trust Fund for a fiscal
year shall be equal to—
(A) the amount of the contribution to the
Tobacco Community Revitalization Trust Fund
for the fiscal year required under paragraph
(2); less
(B) any amount made available during the
preceding fiscal year to the Tobacco Community
Revitalization Trust Fund out of funds allo-
cated through national tobacco settlement legis-
lation.
(2) TOBACCO TRUST FUND CONTRIBUTIONS.—
The amount of the contribution to the Tobacco
Community Revitalization Trust Fund shall be—
(A) $2,100,000,000 for each of fiscal years
1999 through 2008;
(B) $500,000,000 for each of fiscal years
2009 through 2023; and
(C) for fiscal year 2024 and each subse-
quent fiscal year, the amount payable under
sections 201 and 202.
(d) INDIVIDUAL AMOUNT OF ASSESSMENTS.—The
amount of an assessment payable by each tobacco product
manufacturer and tobacco product importer into the To-
bacco Community Revitalization Trust Fund for a fiscal
year shall be equal to the product obtained by multiply-
ing—
(1) the total amount of assessments payable by
all tobacco product manufacturers and tobacco prod-
uct importers for the fiscal year under subsection
(c); by
(2) the market share of the tobacco product
manufacturer or tobacco product importer during
the most recent calendar year determined under sub-
section (b)(1)(A).
TITLE III—INDUSTRY PAYMENTS
FOR DEPARTMENT TOBACCO
COSTS
SEC. 301. INDUSTRY PAYMENTS FOR ALL DEPARTMENT
COSTS ASSOCIATED WITH TOBACCO PRODUC-
TION AND REGULATION.
(a) REIMBURSEMENT AUTHORITY.—The Secretary
shall use such amounts as are necessary from the Tobacco
Community Revitalization Trust Fund at the end of each
fiscal year to reimburse the Secretary for—
(1) costs associated with the administration of
programs established under this Act and amend-
ments made by this Act;
(2) costs associated with the administration of
the tobacco quota program under subtitle B of title
III of the Agricultural Adjustment Act of 1938 (7
U.S.C. 1311 et seq.) and the tobacco price support
program under sections 106, 106A, and 106B of the
Agricultural Act of 1949 (7 U.S.C. 1445, 1445–1,
1445–2);
(3) costs to the Federal Government of carrying
out crop insurance programs for tobacco, including
the costs incurred by the Federal Crop Insurance
Corporation under section 508(e) of the Federal
Crop Insurance Act (7 U.S.C. 1508(e)) to pay the
premium for catastrophic risk protection for tobacco
crops and the Federal portion of the premium for
various additional coverages available for tobacco
crops;
(4) costs associated with all agricultural re-
search, extension, or education activities associated
with tobacco;
(5) costs associated with the administration of
loan association and cooperative programs for to-
bacco producers, as approved by the Secretary; and
(6) any other costs incurred by the Department
of Agriculture associated with the production of to-
bacco.
(b) LIMITATIONS.—Amounts made available under
subsection (a) may not be used—
(1) to provide direct benefits to quota holders,
quota lessees, or quota tenants; or
(2) in a manner that results in a decrease, or
an increase relative to other crops, in the amount of
the crop insurance premiums assessed to active to-
bacco producers under the Federal Crop Insurance
Act (7 U.S.C. 1501 et seq.).
(c) DETERMINATIONS.—Not later than September
30, 1998, and each fiscal year thereafter, the Secretary
shall determine—
(1) the amount of costs described in subsection
(a); and
(2) the amount that will be provided under this
section as reimbursement for the costs.
SEC. 302. INDUSTRY RESPONSIBILITY FOR NO NET COST
TOBACCO FUNDS AND ACCOUNTS.
(a) NO NET COST TOBACCO FUND.—Section 106A
of the Agricultural Act of 1949 (7 U.S.C. 1445–1) is
amended to read as follows:
‘‘SEC. 106A. NO NET COST TOBACCO FUND.
‘‘(a) DEFINITIONS.—In this section:
‘‘(1) ASSOCIATION.—The term ‘association’
means a producer-owned cooperative marketing asso-
ciation that has entered into a loan agreement with
the Corporation to make price support available to
producers of a kind of tobacco.
‘‘(2) CORPORATION.—The term ‘Corporation’
means the Commodity Credit Corporation, an agen-
cy and instrumentality of the United States within
the Department of Agriculture through which the
Secretary makes price support available to produc-
ers.
‘‘(3) NET GAINS.—The term ‘net gains’ means
the amount by which the total proceeds obtained
from the sale by an association of a crop of quota
tobacco pledged to the Corporation for a price sup-
port loan exceeds the principal amount of the price
support loan made by the Corporation to the asso-
ciation on the crop, plus interest, charges, and costs
of administering the price support program.
‘‘(4) NO NET COST TOBACCO FUND.—The term
‘No Net Cost Tobacco Fund’ means the capital ac-
count established within each association under this
section.
‘‘(5) 
PURCHASER.—The 
term 
‘purchaser’
means any person who purchases in the United
States, either directly or indirectly for the account of
the person or another person, Flue-cured or burley
quota tobacco.
‘‘(6) QUOTA
TOBACCO.—The term ‘quota to-
bacco’ means any kind of tobacco for which market-
ing quotas are in effect or for which marketing
quotas are not disapproved by producers.
‘‘(7) TOBACCO
COMMUNITY
REVITALIZATION
TRUST FUND.—The term ‘Tobacco Community Revi-
talization Trust Fund’ means the Tobacco Commu-
nity Revitalization Trust Fund established under the
Tobacco Community Economic Stabilization and
Support Act.
‘‘(b) PRICE SUPPORT PROGRAM; LOANS TO ASSOCIA-
TIONS.—The Secretary may carry out the tobacco price
support program through the Corporation. Except as oth-
erwise provided by this section, the Secretary shall con-
tinue to make price support available to producers through
loans to associations that, under agreements with the Cor-
poration, agree to make loan advances to producers.
‘‘(c) ESTABLISHMENT OF NO NET COST TOBACCO
FUND.—
‘‘(1) IN GENERAL.—Each association shall es-
tablish within the association a No Net Cost To-
bacco Fund.
‘‘(2) AMOUNT.—There shall be transferred
from the Tobacco Community Economic Stabiliza-
tion and Support Act to each No Net Cost Tobacco
Fund such amount as the Secretary determines will
be adequate to reimburse the Corporation for any
net losses that the Corporation may sustain under
its loan agreements with the association, based on—
‘‘(A) reasonable estimates of the amounts
that the Corporation has lent or will lend to the
association for price support for a crop of quota
tobacco, except that, in the case of burley quota
tobacco, the Secretary shall determine the
transfer amount without regard to any net
losses that the Corporation sustained under the
loan agreements of the Corporation with the as-
sociation for the 1983 crop of burley quota to-
bacco;
‘‘(B) the cost of administering the tobacco
price support program (as determined by the
Secretary); and
‘‘(C) the proceeds that will be realized
from the sales of tobacco that are pledged to
the Corporation by the association as security
for loans.
‘‘(d) ADMINISTRATIVE PROVISIONS.—
‘‘(1) SEPARATE
ADMINISTRATION.—The Sec-
retary shall require that the No Net Cost Tobacco
Fund established by each association be kept and
maintained separately from all other accounts of the
association and be used exclusively, as prescribed by
the Secretary, for the purpose of ensuring, insofar
as practicable, that the Corporation, under its loan
agreements with the association with respect to a
crop of quota tobacco, will suffer no net losses (in-
cluding recovery of the amount of loans extended to
cover the overhead costs of the association), after
any net gains are applied to net losses of the Cor-
poration under paragraph (3), except that, notwith-
standing any other provision of law, the association
may, with the approval of the Secretary, use funds
in the No Net Cost Tobacco Fund, including interest
and other earnings, for—
‘‘(A) the purposes of reducing the associa-
tion’s outstanding indebtedness to the Corpora-
tion associated with a crop of quota tobacco
and making loan advances to producers as au-
thorized; and
‘‘(B) any other purposes that will be mutu-
ally beneficial to producers and purchasers and
to the Corporation;
‘‘(2) INVESTMENT AUTHORITY.—The Secretary
shall permit an association to invest amounts in the
No Net Cost Tobacco Fund in such manner as the
Secretary may approve, and require that the interest
or other earnings on the investment shall become a
part of the No Net Cost Tobacco Fund;
‘‘(3) TREATMENT
OF
NET
GAINS.—The Sec-
retary shall require that loan agreements between
the Corporation and the association provide that the
Corporation shall retain the net gains from each
crop of tobacco pledged by the association as secu-
rity for price support loans, and that the net gains
will be used for the purpose of—
‘‘(A) offsetting any losses sustained by the
Corporation under its loan agreements with the
association for any crop of tobacco; or
‘‘(B) reducing the outstanding balance of
any price support loan made by the Corporation
to the association under the loan agreements
for a crop of tobacco; and
‘‘(4) SUSPENSION OF TRANSFERS.—If the Sec-
retary determines that the amount in the No Net
Cost Tobacco Fund or the net gains referred to in
paragraph (3) exceeds the total amount necessary
for the purposes specified in this section, the Sec-
retary shall suspend the transfer of amounts from
the Tobacco Community Economic Stabilization and
Support Act to the No Net Cost Tobacco Fund
under this section.
‘‘(e) NONCOMPLIANCE.—
‘‘(1) IN GENERAL.—If any association that has
entered into a loan agreement with the Corporation
with respect to a crop of quota tobacco fails or re-
fuses to comply with this section (including regula-
tions promulgated under this section) or the terms
of the agreement, the Secretary may terminate the
agreement or provide that no additional loan funds
may be made available under the agreement to the
association.
‘‘(2) PRICE SUPPORT.—If the Secretary takes
action under paragraph (1), the Secretary shall
make price support available to producers of the
kind or kinds of tobacco, the price of which had been
supported through loans to the association, through
such other means as are authorized by this Act or
the Commodity Credit Corporation Charter Act (15
U.S.C. 714 et seq.).
‘‘(f) TERMINATION
OF AGREEMENT
OR ASSOCIA-
TION.—If, under subsection (e), a loan agreement with an
association is terminated, or if an association having a
loan agreement with the Corporation is dissolved, merges
with another association, or otherwise ceases to operate,
the No Net Cost Tobacco Fund or the net gains referred
to in subsection (d)(3) shall be applied or disposed of in
such manner as the Secretary may approve or prescribe,
except that the net gains shall, to the extent necessary,
first be applied or used for the purposes specified in this
section.
‘‘(g) REGULATIONS.—The Secretary shall issue such
regulations as are necessary to carry out this section.’’.
(b) NO NET COST TOBACCO ACCOUNT.—Section
106B of the Agricultural Act of 1949 (7 U.S.C. 1445–
2) is amended to read as follows:
‘‘SEC. 106B. NO NET COST TOBACCO ACCOUNT.
‘‘(a) DEFINITIONS.—In this section:
‘‘(1) AREA.—The term ‘area’, when used in
connection with an association, means the general
geographical area in which farms of the producer-
members of the association are located, as deter-
mined by the Secretary.
‘‘(2) ASSOCIATION.—The term ‘association’ has
the meaning given the term in section 106A(a)(1).
‘‘(3) CORPORATION.—The term ‘Corporation’
has the meaning given the term in section
106A(a)(2).
‘‘(4) NET GAINS.—The term ‘net gains’ has the
meaning given the term in section 106A(a)(3).
‘‘(5) NO NET COST TOBACCO ACCOUNT.—The
term ‘No Net Cost Tobacco Account’ means an ac-
count established by and in the Corporation for an
association under this section.
‘‘(6) PURCHASER.—The term ‘purchaser’ has
the meaning given the term in section 106A(a)(5).
‘‘(7) TOBACCO.—The term ‘tobacco’ means any
kind of tobacco (as defined in section 301(b) of the
Agricultural Adjustment Act of 1938 (7 U.S.C.
1301(b))) for which marketing quotas are in effect
or for which marketing quotas are not disapproved
by producers.
‘‘(8) TOBACCO
COMMUNITY
REVITALIZATION
TRUST FUND.—The term ‘Tobacco Community Revi-
talization Trust Fund’ has the meaning given the
term in section 106A(a)(7).
‘‘(b) PRICE SUPPORT PROGRAM; USE OF NO NET
COST TOBACCO ACCOUNT IN LIEU OF NO NET COST TO-
BACCO FUND.—Notwithstanding section 106A, the Sec-
retary shall, on the request of any association, and may,
if the Secretary determines, after consultation with the as-
sociation, that the accumulation of the No Net Cost To-
bacco Fund for the association under section 106A is, and
is likely to remain, inadequate to reimburse the Corpora-
tion for net losses that the Corporation sustains under its
loan agreements with the association—
‘‘(1) continue to make price support available to
producers through the association in accordance
with loan agreements entered into between the Cor-
poration and the association; and
‘‘(2) establish and maintain in accordance with
this section a No Net Cost Tobacco Account for the
association in lieu of the No Net Cost Tobacco Fund
established within the association under section
106A.
‘‘(c) ESTABLISHMENT OF NO NET COST TOBACCO
ACCOUNT.—
‘‘(1) IN GENERAL.—A No Net Cost Tobacco
Account established for an association under sub-
section (b)(2) shall be established within the Cor-
poration.
‘‘(2) AMOUNT.—There shall be transferred
from the Tobacco Community Revitalization Trust
Fund to each No Net Cost Tobacco Account such
amount as the Secretary determines will be adequate
to reimburse the Corporation for any net losses that
the Corporation may sustain under its loan agree-
ments with the association, based on—
‘‘(A) reasonable estimates of the amounts
that the Corporation has lent or will lend to the
association for price support for a crop of quota
tobacco, except that, in the case of burley quota
tobacco, the Secretary shall determine the
transfer amount without regard to any net
losses that the Corporation sustained under the
loan agreements of the Corporation with the as-
sociation for the 1983 crop of burley quota to-
bacco;
‘‘(B) the cost of administering the tobacco
price support program (as determined by the
Secretary); and
‘‘(C) the proceeds that will be realized
from the sales of the kind of tobacco involved
that are pledged to the Corporation by the asso-
ciation as security for loans.
‘‘(3) TREATMENT OF NO NET COST TOBACCO
FUND AMOUNTS.—On the establishment of a No Net
Cost Tobacco Account for an association, any
amount in the No Net Cost Tobacco Fund estab-
lished within the association under section 106A
shall be applied or disposed of in such manner as
the Secretary may approve or prescribe, except that
the amount shall, to the extent necessary, first be
applied or used for the purposes specified in that
section.
‘‘(d) USE.—Amounts deposited in a No Net Cost To-
bacco Account established for an association shall be used
by the Secretary for the purpose of ensuring, insofar as
practicable, that the Corporation under its loan agree-
ments with the association will suffer, with respect to the
crop involved, no net losses (including recovery of the
amount of loans extended to cover the overhead costs of
the association), after any net gains are applied to net
losses of the Corporation under subsection (g).
‘‘(e) EXCESS AMOUNTS.—If the Secretary determines
that the amount in the No Net Cost Tobacco Account or
the net gains referred to in subsection (g) exceed the total
amount necessary to carry out this section, the Secretary
shall suspend the transfer of amounts from the Tobacco
Community Revitalization Trust Fund to the No Net Cost
Tobacco Account under this section.
‘‘(f) TERMINATION
OF AGREEMENT
OR ASSOCIA-
TION.—In the case of an association for which a No Net
Cost Tobacco Account is established under subsection
(b)(2), if a loan agreement between the Corporation and
the association is terminated, if the association is dissolved
or merges with another association that has entered into
a loan agreement with the Corporation to make price sup-
port available to producers of the kind of tobacco involved,
or if the No Net Cost Tobacco Account terminates by op-
eration of law, amounts in the No Net Cost Tobacco Ac-
count and the net gains referred to in subsection (g) shall
be applied to or disposed of in such manner as the Sec-
retary may prescribe, except that the net gains shall, to
the extent necessary, first be applied to or used for the
purposes specified in this section.
‘‘(g) 
NET
GAINS.—The 
provisions 
of 
section
106A(d)(3) relating to net gains shall apply to any loan
agreement between an association and the Corporation en-
tered into on or after the establishment of a No Net Cost
Tobacco Account for the association under subsection
(b)(2).
‘‘(h) REGULATIONS.—The Secretary shall issue such
regulations as are necessary to carry out this section.’’.
(c) CONFORMING AMENDMENTS.—(1) Section 314(a)
of the Agricultural Adjustment Act of 1938 (7 U.S.C.
1314(a)) is amended in the first sentence—
(A) by striking ‘‘(1)’’; and
(B) by striking ‘‘, or (2)’’ and all that follows
through ‘‘106B(d)(1) of that Act’’.
(2) Section 1109 of the Agriculture and Food Act
of 1981 (Public Law 97–98; 7 U.S.C. 1445 note) is re-
pealed.
TITLE 
IV—PERMANENT 
SALE,
RETIREMENT, AND DISTRIBU-
TION OF TOBACCO QUOTA
SEC. 401. FUNDS FOR VOLUNTARY QUOTA RETIREMENT.
From amounts in the Tobacco Community Revitaliza-
tion Trust Fund, there shall be available to the Secretary
$400,000,000 for each fiscal year to make payments to
quota holders who enter into a tobacco quota retirement
contract under this title. Amounts unobligated for quota
retirement contracts by the end of the fiscal year for which
the amounts are made available shall be returned to the
Tobacco Community Revitalization Trust Fund.
SEC. 402. TOBACCO QUOTA RETIREMENT CONTRACTS FOR
TOBACCO QUOTA HOLDERS.
(a) OFFER.—The Secretary shall offer to enter into
a quota retirement contract with quota holders under
which a quota holder shall agree, in exchange for a lump-
sum payment under the contract, to permanently relin-
quish to the Secretary all or a portion of the tobacco quota
on the quota holder’s farm.
(b) ANNUAL RETIREMENT LIMITS.—
(1) PER QUOTA HOLDER.—A quota holder may
not enter into a quota retirement contract under this
section for any fiscal year for the retirement of more
than—
(A) 25,000 pounds of tobacco, in the case
of Burley tobacco; and
(B) 50,000 pounds of tobacco, in the case
of Flue-cured tobacco.
(2) FOR ALL QUOTA HOLDERS.—The maximum
pounds purchased by the Secretary each fiscal year
using quota retirement contracts from all types of
tobacco may not exceed 100,000,000 pounds.
(c) CONTRACT PAYMENTS.—
(1) CALCULATION.—Subject to paragraph (2)
and subsection (d), the amount of the payment to be
made to a quota holder who enters into in a quota
retirement contract under this section shall be equal
to the product obtained by multiplying—
(A) the total quantity, in pounds, of to-
bacco quota relinquished by the quota holder
under the contract; by
(B) $4.00.
(2) PRO RATA DISTRIBUTION.—If the amount
available for a fiscal year under section 401 for pay-
ments under quota retirement contracts is insuffi-
cient, the Secretary shall make payments under the
contracts entered into during that fiscal year on a
pro rata basis.
(d) PAYMENT LIMITATION.—The amount paid under
subsection (b) to a quota holder under one or more quota
retirement contracts may not exceed the difference be-
tween—
(1) the lifetime limitation on payments under
title V that applies to the quota holder under such
title; and
(2) the total amount of any payments actually
received by the quota holder under such section.
(e) PROHIBITION ON LEASING OF QUOTA.—A quota
holder that enters into a quota retirement contract may
not acquire tobacco quota, after the date the contract is
entered into, for the purpose of producing tobacco on the
quota holder’s farm or for leasing the quota to a another
person to produce tobacco.
(f) NONCOMPLIANCE.—If a quota holder who is a
party to a quota retirement contract under this section
fails to comply with the terms of the contract, the quota
holder shall repay to the Secretary the entire amount re-
ceived under the contract, including interest payable at a
rate prescribed by the Secretary to reflect the cost to the
Commodity Credit Corporation of its borrowings from the
Treasury of the United States, commencing on the date
payment is made under the contract.
SEC. 403. DISTRIBUTION OF RETIRED QUOTA.
(a) REDISTRIBUTION WITHIN SAME COUNTY.—The
Secretary shall distribute tobacco quota received by the
Secretary under a quota retirement contract to farms—
(1) that are located in the same county as the
farm subject to the contract;
(2) that are not themselves subject to a quota
retirement contract; and
(3) for which a tobacco farm marketing quota
or farm acreage allotment is established under the