(3) SUBSEQUENT CROP YEARS.—The Corpora-
tion shall establish the amount that each licensee 
may market for each subsequent year based on the 
production level recommended by the Secretary for 
that year, which shall be based on the information 
collected under section 320A of the Agricultural Ad-
justment Act of 1938 (7 U.S.C. 1314g), and the li-
censee’s production quantity for the preceding year. 
(4) SURRENDER.—The licensee shall surrender 
the license to the Corporation if the licensee fails to 
actively engage in the production of tobacco. 
(5) PROHIBITIONS.—
(A) MARKETING WITHOUT LICENSE.—The 
sale or marketing of a type of tobacco which 
prior to the date of enactment of this Act 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. 
(B) TRANSFER
OF
LICENSE.—The sale, 
lease, or other transfer of a license shall be pro-
hibited except pursuant to subsection (h). 
(d) COMPLIANCE.—The Corporation shall ensure 
compliance, through whatever means is available, of all
persons with any license, regulation, rule, limitation, or 
guideline issued under, or in order to carry out, this Act. 
(e) QUALITY ASSURANCE.—The Corporation shall es-
tablish a system that will provide assurance to consumers 
of the quality of all tobacco marketed in the United States 
and that, at a minimum—
(1) provides for the inspection and grading of 
domestically produced tobacco and imported tobacco; 
(2) determines and describes the physical char-
acteristics of domestically produced tobacco and im-
ported tobacco; and 
(3) ensures the physical and chemical integrity 
of domestically produced tobacco and imported to-
bacco; 
(f) METHODS TO CARRY OUT DUTIES.—To carry out 
its duties, functions, and determinations, the Corporation 
shall utilize Associations and local committees to the ex-
tent practicable and appropriate. 
(g) TRANSITION.—The Corporation shall continue to 
maintain and carry out a tobacco program in accordance 
with the rules and regulations contained in chapter 7 of 
the Code of Federal Regulations unless and until the Cor-
poration promulgates rules under subsection (b). 
(h) TRANSFER OF LICENSE.—
(1) RIGHT OF SURVIVORSHIP.—In the case of 
the death of a person to whom a license has been 
issued under this section, the license shall transfer 
to the surviving spouse of the person or, if there is 
no surviving spouse, to surviving direct descendants 
of the person. 
(2) HARDSHIP.—In the case of the death of a 
person to whom a license has been issued under this 
section and whose descendants are temporarily un-
able to produce a crop of tobacco, the Corporation 
may hold the license in the name of the descendants 
for a period of not more than 18 months, at the dis-
cretion of the Corporation. 
(3) 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. 
SEC. 302. BOARD OF DIRECTORS OF CORPORATION. 
(a) IN GENERAL.—The powers of the Corporation 
shall be vested in a Board of Directors. 
(b) MEMBERS.—The Board of Directors shall consist 
of 25 members as follows: 
(1) The Secretary of Agriculture.
(2) The Secretary of Agriculture shall ap-
point—
(A) two members from each State that 
produces more than 250,000,000 pounds of to-
bacco; 
(B) one member from each State that pro-
duces more than 50,000,000 pounds, but less 
than 250,000,000 pounds, of tobacco; and 
(C) one member, to be appointed on a ro-
tating basis, from a State that produces less 
than 50,000,000 pounds of tobacco. 
(3) Three members appointed by Flue-cured to-
bacco associations and two members appointed by 
Burley tobacco associations. 
(4) One member appointed by tobacco associa-
tions other than those specified in paragraph (3), on 
a rotating basis. 
(5) The Secretary of Health and Human Serv-
ices shall appoint three members representing public 
health interests. 
(6) The Secretary of Agriculture shall appoint 
four members representing domestic tobacco product 
manufacturers, except that—
(A) no manufacturer may have more than 
one member on the Board;
(B) at least one of the members must be 
from a domestic smokeless tobacco manufac-
turer; and 
(C) one of the members must be from a 
domestic cigarette manufacturer that comprises 
less than 5 percent of domestic cigarette sales, 
or a cigar manufacturer, or a pipe tobacco man-
ufacturer, on a rotating basis. 
(7) The Secretary of Agriculture shall appoint 
one member representing domestic export leaf deal-
ers. 
(8) The Secretary of Agriculture shall appoint 
one member that is the person responsible for oper-
ating the quality assurance system of the Corpora-
tion described in section 301(e). 
(c) MEMBERSHIP QUALIFICATIONS.—A member of 
the Board shall not hold any Federal, State, or local elect-
ed office. The members appointed under paragraphs (2), 
(3), and (4) of subsection (b) must be licensees under sec-
tion 301. 
(d) CHAIRPERSONS.—The Secretary of Agriculture 
shall serve as chairperson of the Board. 
(e) TERM; VACANCIES.—
(1) TERM.—The term of office of a member of 
the Board appointed under any of paragraphs (2) 
through (8) of subsection (b) shall be four years. 
(2) VACANCIES.—A vacancy on the Board shall 
be filled in the same manner as the original appoint-
ment was made. 
(f) COMPENSATION.—
(1) 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. 
(2) NON-FEDERAL MEMBERS.—Any other mem-
ber shall receive compensation, for each day (includ-
ing travel time) that the member is engaged in the 
performance of the functions of the Board, at a rate 
determined appropriate by the Board. 
(3) EXPENSES.—A member of the Board shall 
be reimbursed for travel, subsistence, and other nec-
essary expenses incurred by the member in the per-
formance of the duties of the member. 
(4) REPRESENTATION.—No member of the 
Board shall receive compensation from more than 
one interest represented on the Board. 
(g) CONFLICT OF INTEREST.—
(1) CONFLICT OF INTEREST.—Except as pro-
vided in paragraph (3), a member of the Board shall 
not vote on any matter concerning any application, 
contract, or claim, or other particular matter pend-
ing before the Corporation, in which, to the knowl-
edge of the member, 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 orga-
nization with which the member is negotiating or 
has any arrangement concerning prospective employ-
ment, has a financial interest. 
(2) VIOLATIONS.—Violation of paragraph (1) 
by a member of the Board shall be cause for removal 
of the member, but shall not impair or otherwise af-
fect the validity of any otherwise lawful action by 
the Corporation in which the member participated. 
(3) EXCEPTIONS.—The prohibitions contained 
in paragraph (1) shall not apply to a member of the 
Board that is a tobacco producer if the member ad-
vises the Board of the nature of the particular mat-
ter in which the member proposes to participate, and 
if the member makes a full disclosure of the finan-
cial interest, prior to any participation.
(h) FINANCIAL DISCLOSURE.—A Board member 
shall be subject to the financial disclosure requirements 
of subchapter B of chapter XVI of title 5, Code of Federal 
Regulations (or any corresponding or similar regulation 
or ruling), applicable to a special Government employee 
(as defined in section 202(a) of title 18, United States 
Code). 
SEC. 303. BOARD MEETINGS. 
(a) IN GENERAL.—The Board shall meet at least 
three times each fiscal year at the call of a Chairperson 
or at the request of the Executive Director. 
(b) LOCATION.—The location of a meeting shall be 
subject to approval of the Executive Director. 
(c) QUORUM.—A quorum of the Board shall consist 
of a majority of the members. 
SEC. 304. STAFF. 
(a) EXECUTIVE DIRECTOR.—
(1) APPOINTMENT.—The Board shall appoint 
an Executive Director. 
(2) DUTIES.—The Executive Director shall be 
the chief executive officer of the Corporation, with 
such power and authority as may be conferred by 
the Board. 
(3) COMPENSATION.—The Executive Director 
shall receive basic pay at the rate provided for level
IV of the Executive Schedule under section 5315 of 
title 5, United States Code. 
(b) 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 man-
ner consistent with this section. 
(c) OTHER PERSONNEL.—The Corporation may se-
lect and appoint officers, attorneys, employees, and 
agents, who shall be vested with such powers and duties 
as the Corporation may determine. The Corporation shall 
indemnify such personnel, as the Board considers nec-
essary and desirable, except that an officer, attorney, or 
employee of the Corporation shall not be indemnified for 
an act outside the scope of employment. 
(d) CONSULTANT AND INTERMITTENT SERVICES.—
The Corporation may obtain the services and fix the com-
pensation of any consultant and otherwise procure tem-
porary and intermittent services under section 3109(b) of 
title 5, United States Code. 
(e) COMMITTEES.—The Corporation may provide for 
and designate such committees, and the functions of the 
committees, as the Board considers necessary or desirable. 
SEC. 305. GENERAL POWERS OF CORPORATION. 
(a) BYLAWS.—The Board shall adopt, and may from 
time to time amend, any bylaw that is necessary for the
proper management and functioning of the Corporation 
and adopt and alter a corporate seal, which shall be judi-
cially noticed. 
(b) CORPORATION NAME.—The Corporation shall 
have succession in its corporate name. 
(c) AGREEMENT AND CONTRACT AUTHORITY.—The 
Corporation may enter into any agreement or contract 
with a person or private or governmental agency. 
(d) ACQUISITION AND DISPOSAL AUTHORITY.—The 
Corporation may lease, purchase, accept a gift or donation 
of, or otherwise acquire, use, own, hold, improve, or other-
wise deal in or with, and sell, convey, mortgage, pledge, 
lease, exchange, or otherwise dispose of, any property or 
interest in property, as the Corporation considers nec-
essary in the transaction of the business of the Corpora-
tion. The Corporation may sell assets, loans, and equity 
interests acquired in connection with the financing of 
projects funded by the Corporation. 
(e) LEGAL ACTIONS.—The Corporation may sue and 
be sued in the corporate name of the Corporation and may 
independently retain legal representation, except that—
(1) no attachment, injunction, garnishment, or 
similar process shall be issued against the Corpora-
tion or property of the Corporation; and
(2) exclusive original jurisdiction shall reside in 
the district courts of the United States, and the Cor-
poration may intervene in any court in any suit, ac-
tion, or proceeding in which the Corporation has an 
interest. 
(f) ASSISTANCE OF FEDERAL AGENCIES.—The Cor-
poration may, with the consent of any board, commission, 
independent establishment, or executive department of the 
Federal Government, including any field service, use infor-
mation, services, facilities, officials, and employees in car-
rying out the duties of the Corporation, and pay for the 
use, which payments shall be transferred to the applicable 
appropriation account that incurred the expense. 
(g) RIGHTS, PRIVILEGES, AND IMMUNITIES.—The 
Corporation shall have the rights, privileges, and immuni-
ties of the United States with respect to the right to pri-
ority of payment with respect to debts due from bankrupt, 
insolvent, or deceased creditors. 
(h) FINANCIAL
AUTHORITIES.—The Corporation 
may collect or compromise any obligations assigned to or 
held by the Corporation, including any legal or equitable 
rights accruing to the Corporation, and shall determine 
the character of, and necessity for, obligations and ex-
penditures of the Corporation and the manner in which 
the obligations and expenditures shall be incurred, al-
lowed, and paid, subject to provisions of law specifically 
applicable to Government corporations. The Corporation 
may make final and conclusive settlement and adjustment 
of any claim by or against the Corporation or a fiscal offi-
cer of the Corporation. 
(i) OTHER POWERS.—The Corporation may exercise 
all other lawful powers necessarily or reasonably related 
to the establishment of the Corporation to carry out this 
title and the powers, purposes, functions, duties, and au-
thorized activities of the Corporation. 
SEC. 306. CORPORATION RELATIONSHIP WITH TOBACCO 
LOAN ASSOCIATIONS. 
The Corporation shall enter into an agreement with 
producer-owned cooperative marketing loan associations 
for each kind of tobacco—
(1) to make a base price available to producers 
of the kind of tobacco; 
(2) arrange for financing and the administra-
tion of a base price for the kind of tobacco; and 
(3) receive, process, store, and sell any domesti-
cally produced tobacco received as collateral for a 
base price loan. 
SEC. 307. TOBACCO BASE PRICE LEVELS. 
(a) DETERMINATION.—The Corporation, in consulta-
tion with the Secretary and the Associations, shall deter-
mine, and revise as necessary, a base price for each kind 
of tobacco, which shall be based on the cost of producing 
that kind of tobacco. 
(b) EFFECTIVE DATE.—The base prices determined 
under subsection (a) shall take effect beginning with the 
2004 tobacco crops. 
SEC. 308. 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 100 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) HANDLER.—If the tobacco is marketed by 
the producer through a handler, the penalty shall be 
paid by the handler, which 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. 309. PROGRAM REFERENDA. 
(a) INITIAL REFERENDUM.—
(1) REFERENDUM REQUIRED.—After the end of 
the three-year period beginning on the date of enact-
ment of this Act, if at least one-third of the licensees 
engaged in the production of a kind of tobacco re-
quest a referendum under this subsection, the Cor-
poration shall conduct a referendum among the li-
censees engaged in the production of that kind of to-
bacco to determine whether the licensees are in favor 
of continuing the operation of the program estab-
lished under this Act with respect to that kind of to-
bacco. 
(2) PROCESS AND RESULTS.—If more than one-
half of the licensees voting in a referendum con-
ducted under paragraph (1) with respect to a kind
of tobacco oppose the continuation of the program, 
the Corporation shall announce the result and shall 
conduct a second referendum with respect to that 
kind of tobacco one year later. If more than one-
half of the licensees voting in the second referendum 
also oppose the continuation of the program, the 
Corporation shall announce the result and the pro-
gram shall cease to be in effect for that kind of to-
bacco. 
(b) SUBSEQUENT REFERENDA.—The Corporation 
may conduct subsequent referenda from time to time as 
the Corporation considers appropriate to determine wheth-
er producers are in favor of continuing the program estab-
lished under this Act, the use of licenses, limitations on 
license transfer, or any other aspect of the program. 
TITLE IV—TERMINATION OF 
CURRENT TOBACCO PROGRAMS 
SEC. 401. TERMINATION OF MARKETING QUOTA PROGRAMS 
AND REPEAL OF RELATED PROVISIONS. 
(a) TOBACCO CONTROL ACT.—The Act of April 25, 
1936 (commonly known as the Tobacco Control Act; 7 
U.S.C. 515–515k), is repealed. 
(b) COMMODITY HANDLING ORDERS.—Section 8c(2) 
of the Agricultural Adjustment Act (7 U.S.C. 608c(2)), 
reenacted with amendments by the Agricultural Marketing