H.R. 3264 (105th): Tobacco Community Economic Stabilization and Support Act

105th Congress, 1997–1998. Text as of Feb 25, 1998 (Introduced).

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HR 3264 IH

105th CONGRESS

2d Session

H. R. 3264

To stabilize tobacco quota fluctuations despite any comprehensive legal settlement between cigarette manufacturers and State governments, to require cigarette manufacturers to pay all Department of Agriculture costs associated 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 comprehensive legal settlement between cigarette manufacturers and State governments, to require cigarette manufacturers to pay all Department of Agriculture costs associated 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.

    Be it enacted by the Senate and House of Representatives 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 manufacturers.

      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 Accounts.

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 tobacco 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 processing 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 tobacco farm marketing quota or farm acreage allotment was established under the Agricultural Adjustment 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 produced tobacco pursuant to a lease and transfer to that farm of all or part of a tobacco farm marketing quota or farm acreage allotment established 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 tobacco farm marketing quota or farm acreage allotment established under the Agricultural Adjustment 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 determined by the Secretary, of tobacco on a farm where tobacco is produced pursuant to a tobacco farm marketing quota or farm acreage allotment established under the Agricultural Adjustment 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 Agriculture.

      (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 person that manufactures cigars or pipe tobacco.

      (8) HISTORICALLY BLACK COLLEGES AND UNIVERSITIES- 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 REQUIREMENTS 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 MANUFACTURER- The quantity of intended purchases submitted by a domestic cigarette manufacturer under subsection (a) for a marketing year with respect to Flue-cured tobacco may not be less than the quantity of intended purchases submitted by that manufacturer for Flue-cured tobacco in the case of the 1997 crop. The quantity of intended purchases submitted 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 quantity 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 section for the marketing year immediately preceding the marketing year for which the determination is being made, if that quantity of intended 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 purchases 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 Secretary, 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 quantities 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 purchase intentions regarding that type of tobacco of each domestic manufacturer of cigarettes as necessary to ensure that the minimum aggregate quantity 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 MARKETING 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 ‘marketing year,’ the following: ‘whether for manufacture 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 ‘marketing year,’ the following: ‘whether for manufacture 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 PURCHASE INTENTIONS AND USE OF PENALTY PAYMENTS.

    (a) DETERMINATION OF FAILURE TO COMPLY WITH PURCHASE INTENTIONS- Section 320B(b)(1) of the Agricultural 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 manufacturer or established by the Secretary for such manufacturer’ and inserting ‘in effect for that manufacturer’.

    (b) PURCHASE REQUIREMENT PENALTIES- Subsection (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 effect 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 percent of the quantity of intended purchases of such kinds of tobacco, respectively, submitted by the manufacturer or established by the Secretary for such manufacturer’ and inserting ‘the quantity of intended purchases of such kinds of tobacco, respectively, 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 Secretary under this section shall be transmitted by the Secretary to the Secretary of the Treasury for deposit in the Tobacco Community Revitalization Trust Fund established under section 301 of the Tobacco Community Economic Stabilization and Support Act.’.

SEC. 103. TRADE ADVOCACY TO ASSIST UNITED STATES TOBACCO FARMERS.

    (a) REQUIREMENTS- The United States Trade Representative, the Secretary of Commerce, and the Secretary of Agriculture may not advocate lower foreign trade barriers or increased market access for tobacco products that contain less than 75 percent United States domestic content.

    (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 increasing 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 applied in a nondiscriminatory fashion.

      (3) The United States Government should continue 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 inserting the following:

    ‘(c) REFERENDA REQUIREMENTS-

      ‘(1) REFERENDA ON USE OF NATIONAL MARKETING 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 PROPOSAL- 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 ASSESSMENT.

    (a) REPEAL- Section 106 of the Agricultural Act of 1949 (7 U.S.C. 1445(g)) is amended by striking subsection (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 REVITALIZATION 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 Agriculture.

    (b) TRANSFERS TO TRUST FUND- There are appropriated and transferred to the Tobacco Community Revitalization 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 legislation.

    (c) REPAYABLE ADVANCES-

      (1) AUTHORIZATION- There are authorized to be appropriated to the Tobacco Community Revitalization 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 Revitalization 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 determines that moneys are available in the Tobacco Community Revitalization Trust Fund to make the payments.

      (3) RATE OF INTEREST- Interest on an advance 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 current average market yield on outstanding marketable obligations of the United States with remaining period to maturity comparable to the anticipated period 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 constitutes budget authority in advance of appropriations Acts and represents the obligation of the Federal Government to provide payments to States and eligible persons in accordance with this Act.

SEC. 202. CONTRIBUTIONS BY TOBACCO PRODUCT MANUFACTURERS AND IMPORTERS.

    (a) DEFINITION OF MARKET SHARE- In this section, the term ‘market share’ means the ratio of--

      (1) the tax liability of a tobacco product manufacturer 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 manufacturers or tobacco product importers for the calendar year under section 5703 of the Internal Revenue 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 product manufacturer or tobacco product importer during the most recent calendar year;

        (B) the total amount of assessments payable for the subsequent fiscal year under subsection (c); and

        (C) the amount of an assessment payable by the tobacco product manufacturer or tobacco product importer for the fiscal year under subsection (d); and

      (2) notify each tobacco product manufacturer and tobacco product importer of the determinations

made under paragraph (1) with respect to the manufacturer or importer.

    (c) TOTAL AMOUNT OF ASSESSMENTS-

      (1) IN GENERAL- The total amount of assessments 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 allocated through national tobacco settlement legislation.

      (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 subsequent 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 Tobacco Community Revitalization Trust Fund for a fiscal year shall be equal to the product obtained by multiplying--

      (1) the total amount of assessments payable by all tobacco product manufacturers and tobacco product 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 subsection (b)(1)(A).

TITLE III--INDUSTRY PAYMENTS FOR DEPARTMENT TOBACCO COSTS

SEC. 301. INDUSTRY PAYMENTS FOR ALL DEPARTMENT COSTS ASSOCIATED WITH TOBACCO PRODUCTION 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 amendments 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 research, extension, or education activities associated with tobacco;

      (5) costs associated with the administration of loan association and cooperative programs for tobacco producers, as approved by the Secretary; and

      (6) any other costs incurred by the Department of Agriculture associated with the production of tobacco.

    (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 tobacco 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 association 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 agency and instrumentality of the United States within the Department of Agriculture through which the Secretary makes price support available to producers.

      ‘(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 support loan exceeds the principal amount of the price support loan made by the Corporation to the association 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 account 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 tobacco’ means any kind of tobacco for which marketing quotas are in effect or for which marketing quotas are not disapproved by producers.

      ‘(7) TOBACCO COMMUNITY REVITALIZATION TRUST FUND- The term ‘Tobacco Community Revitalization Trust Fund’ means the Tobacco Community Revitalization Trust Fund established under the Tobacco Community Economic Stabilization and Support Act.

    ‘(b) PRICE SUPPORT PROGRAM; LOANS TO ASSOCIATIONS- The Secretary may carry out the tobacco price support program through the Corporation. Except as otherwise provided by this section, the Secretary shall continue to make price support available to producers through loans to associations that, under agreements with the Corporation, agree to make loan advances to producers.

    ‘(c) ESTABLISHMENT OF NO NET COST TOBACCO FUND-

      ‘(1) IN GENERAL- Each association shall establish within the association a No Net Cost Tobacco Fund.

      ‘(2) AMOUNT- There shall be transferred from the Tobacco Community Economic Stabilization 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 association for the 1983 crop of burley quota tobacco;

        ‘(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 Secretary 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 (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 paragraph (3), except that, notwithstanding 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 association’s outstanding indebtedness to the Corporation associated with a crop of quota tobacco and making loan advances to producers as authorized; and

        ‘(B) any other purposes that will be mutually 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 Secretary 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 security 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 Secretary 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 Secretary 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 refuses to comply with this section (including regulations 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 ASSOCIATION- 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 determined 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 account 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 Revitalization 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 TOBACCO FUND- Notwithstanding section 106A, the Secretary shall, on the request of any association, and may, if the Secretary determines, after consultation with the association, that the accumulation of the No Net Cost Tobacco Fund for the association under section 106A is, and is likely to remain, inadequate to reimburse the Corporation 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 Corporation 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 subsection (b)(2) shall be established within the Corporation.

      ‘(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 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 association for the 1983 crop of burley quota tobacco;

        ‘(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 association 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 established 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 Tobacco 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 agreements 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 ASSOCIATION- 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 support available to producers of the kind of tobacco involved, or if the No Net Cost Tobacco Account terminates by operation of law, amounts in the No Net Cost Tobacco Account and the net gains referred to in subsection (g) shall be applied to or disposed of in such manner as the Secretary 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 entered 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 repealed.

TITLE IV--PERMANENT SALE, RETIREMENT, AND DISTRIBUTION OF TOBACCO QUOTA

SEC. 401. FUNDS FOR VOLUNTARY QUOTA RETIREMENT.

    From amounts in the Tobacco Community Revitalization 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 relinquish 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 tobacco 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 payments under quota retirement contracts is insufficient, 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 between--

      (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 received 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 Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.).

    (b) CONDITIONS ON DISTRIBUTION- Tobacco quota received under this section may be leased as provided in

the Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.), but may not be sold to the Secretary under a quota retirement contract.

TITLE V--AGRICULTURAL MARKET TRANSITION ASSISTANCE

SEC. 501. PAYMENTS FOR LOST TOBACCO QUOTA.

    (a) PAYMENTS REQUIRED- During any marketing year in which the national marketing quota for a kind of tobacco is less than the average national marketing quota level for that kind of tobacco for the 1995 through 1997 marketing years, the Secretary shall make payments--

      (1) to eligible quota holders, quota lessees, and quota tenants as reimbursement for lost tobacco quota as a result of the decrease in demand for domestically produced tobacco; and

      (2) to eligible tobacco warehousemen as reimbursement for the reduced quantities of tobacco to be marketed by producers through warehousemen as a result of the decrease in demand for domestically produced tobacco.

    (b) ELIGIBILITY- To be eligible to receive payments under this title, a quota holder, quota lessee, quota tenant, or tobacco warehouseman shall demonstrate to the satisfaction of the Secretary that, with respect to the 1995, 1996, or 1997 marketing year--

      (1) the person was a quota holder and realized income from the production of tobacco through--

        (A) the active production of tobacco;

        (B) the lease and transfer of tobacco quota to another farm;

        (C) the rental of all or part of the farm of the quota holder, including the right to produce tobacco, to another tobacco producer; or

        (D) the hiring of a quota tenant to produce tobacco;

      (2) the person was a quota lessee;

      (3) the person was a quota tenant; or

      (4) the person was a warehouseman that marketed tobacco on behalf of active tobacco producers.

    (c) APPLICATION REQUIRED- A quota holder, quota lessee, quota tenant, or tobacco warehouseman shall prepare and submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require, including information sufficient to make the demonstration required under subsection (b).

SEC. 502. DETERMINATION OF BASE QUOTA LEVELS FOR TOBACCO PRODUCERS.

    (a) DETERMINATION REQUIRED- The Secretary shall determine, for each quota holder, quota lessee, and quota tenant eligible to receive payments under this title, the base quota level for the 1995, 1996, and 1997 marketing years.

    (b) QUOTA HOLDERS- The base quota level for a quota holder shall be equal to the average tobacco farm marketing quota established for the farm owned by the quota holder for the 1995, 1996,and 1997 marketing years.

    (c) QUOTA LESSEES- The base quota level for a quota lessee shall be equal to--

      (1) 50 percent of the average number of pounds of tobacco quota established for a farm for the 1995, 1996, and 1997 marketing years--

        (A) that was leased and transferred to a farm owned by the quota lessee; or

        (B) for which the rights to produce the tobacco were rented to the quota lessee; less

      (2) 25 percent of the average number of pounds of tobacco quota described in paragraph (1) for which a quota tenant was the principal producer of the tobacco quota.

    (d) QUOTA TENANTS- The base quota level for a quota tenant shall be equal to the sum of--

      (1) 50 percent of the average number of pounds of tobacco quota established for a farm for the 1995, 1996, and 1997 marketing years--

        (A) that was owned by a quota holder; and

        (B) for which the quota tenant was the principal producer of the tobacco on the farm; and

      (2) 25 percent of the average number of pounds of tobacco quota for the 1995, 1996, and 1997 marketing years--

        (A) that was leased and transferred to a farm owned by a quota lessee or for which the rights to produce the tobacco were rented to a quota lessee; and

        (B) for which the quota tenant was the principal producer of the tobacco on the farm.

    (e) MARKETING QUOTAS OTHER THAN POUNDAGE QUOTAS- For each kind of tobacco for which there is a marketing quota or allotment (on an acreage basis), the base quota level for each quota holder, quota lessee, or quota tenant shall be determined in accordance with this section (based on a poundage conversion) in an amount equal to the product obtained by multiplying--

      (1) the average tobacco farm marketing quota or allotment for the 1995, 1996, and 1997 marketing years; by

      (2) the average county yield per acre for the county in which the farm is located for the kind of tobacco for the marketing years.

SEC. 503. DETERMINATION OF BASE QUOTA VOLUME AND COMMISSION LEVELS FOR TOBACCO WAREHOUSEMEN.

    (a) DETERMINATION REQUIRED- The Secretary shall determine for each tobacco warehouseman eligible to receive payments under this title the base quota volume level and commission level for the 1995, 1996, and 1997 marketing years.

    (b) BASE QUOTA VOLUME- The base quota volume level for a tobacco warehouseman shall be determined using data collected by the Agricultural Marketing Service of the Department of Agriculture and shall be equal to the product obtained by multiplying--

      (1) the average volume of net sales of the tobacco warehouseman for the 1995, 1996, and 1997 marketing years; by

      (2) the average percentage for that tobacco warehouseman of the total full season net sales for a particular type of tobacco sold by tobacco warehousemen for the 1995, 1996, and 1997 marketing years; by

      (3) the average basic quota for producers for that type of tobacco for the 1995, 1996, and 1997 marketing years.

    (c) BASE COMMISSION- The base commission level for a tobacco warehouseman shall be equal to the average amount of commission and fees imposed by the tobacco warehouseman for marketing tobacco on behalf of active tobacco producers for the 1995, 1996, and 1997 marketing years, as determined using data collected by the Agricultural Marketing Service of the Department of Agriculture.

SEC. 504. PAYMENT AMOUNTS.

    (a) PRODUCER PAYMENTS- During any marketing year in which payments are required to be made under section 501 with respect to a kind of tobacco, the Secretary shall make payments to each quota holder, quota lessee, and quota tenant that is eligible to receive payments for lost tobacco quota with respect to that kind of tobacco in an amount that is equal to the product obtained by multiplying--

      (1) the percentage by which the national marketing quota for the kind of tobacco involved is less than the average national marketing quota level for that kind of tobacco for the 1995, 1996, and 1997 marketing years; by

      (2) the base quota level for the quota holder, quota lessee, or quota tenant with respect to that kind of tobacco; by

      (3) $4.00.

    (b) TOBACCO WAREHOUSEMAN PAYMENTS- During any marketing year in which payments are required to be made under section 501 with respect to a kind of tobacco, the Secretary shall make payments to each tobacco warehouseman that is eligible to receive payments for reduced tobacco marketing with respect to that kind of tobacco in an amount that is equal to the product obtained by multiplying--

      (1) the percentage by which the national marketing quota for the kind of tobacco involved is less than the average national marketing quota level for that kind of tobacco for the 1995, 1996, and 1997 marketing years; by

      (2) the base quota volume level for the tobacco warehouseman with respect to that kind of tobacco; by

      (3) the base commission level for the tobacco warehouseman with respect to that kind of tobacco; by

      (4) $4.00.

    (c) LIFETIME LIMITATION ON PAYMENTS-

      (1) PRODUCER LIMITS- The total amount of payments made under this section to a quota holder, quota lessee, or quota tenant shall not exceed the product obtained by multiplying--

        (A) the base quota level for the quota holder, quota lessee, or quota tenant; by

        (B) $8.00 per pound.

      (2) SPECIAL RULE FOR QUOTA HOLDERS WHO ARE ACTIVE PRODUCERS- In the case of quota holders who receive income from the active production of tobacco, the amount specified in paragraph (1)(B) shall be $10,00 per pound rather than $8.00 per pound.

      (3) TOBACCO WAREHOUSEMAN- The total amount of payments made under this section to a tobacco warehouseman shall not exceed the product obtained by multiplying--

        (A) the base quota volume level for the tobacco warehouseman with respect to the kind of tobacco involved; by

        (B) the base commission level for the tobacco warehouseman with respect to that kind of tobacco; and

        (C) $10.00.

SEC. 505. EFFECT OF CHANGES IN QUOTA OR FARM OWNERSHIP.

    (a) SALE AND TRANSFER OF QUOTA- Effective beginning January 1, 1999, on the sale and transfer of a farm marketing quota under section 316(g) or 319(g) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314b(g), 1314e(g))--

      (1) the person who sold and transferred the quota shall have--

        (A) the base quota level attributable to the person reduced by the base quota level attributable to the quota that is sold and transferred; and

        (B) the lifetime limitation on payments established under section 504 attributable to the person reduced by the product obtained by multiplying--

          (i) the base quota level attributable to the quota; by

          (ii) $8.00 per pound (or $10.00 per pound if the person is an active tobacco producer); and

      (2) the person who acquired the quota shall have--

        (A) the base quota level attributable to the person increased by the base quota level attributable to the quota that was sold and transferred; and

        (B) the lifetime limitation on payments established under section 504 attributable to the person--

          (i) increased by the product obtained by multiplying--

            (I) the base quota level attributable to the quota; by

            (II) $8.00 per pound (or $10.00 per pound if the person is an active tobacco producer); but

          (ii) decreased by any payments for lost tobacco quota previously made that are attributable to the quota that was sold and transferred.

    (b) SALE OR TRANSFER OF FARM- On the sale or transfer of ownership of a farm that is owned by a quota holder, the base quota level established under section 502, the right to payments under subsection 504, and the lifetime limitation on payments established under section 504 shall transfer to the new owner of the farm to the same extent and in the same manner as those subsections applied to the previous quota holder.

    (c) DEATH OF QUOTA LESSEE OR QUOTA TENANT- If a quota lessee or quota tenant who is entitled to payments under this section dies and is survived by a spouse or one or more dependents, the right to receive the payments shall transfer to the surviving spouse or, if there is no surviving spouse, to the surviving dependents in equal shares.

SEC. 506. ACCELERATION OF PAYMENTS.

    (a) ACCELERATION REQUIRED- On the occurrence of any of the events described in subsection (b), the Secretary shall make an accelerated lump sum payment in accordance with subsection (c)--

      (1) to each quota holder, quota lessee, and quota tenant for any affected kind of tobacco to compensate such persons for lost tobacco quota and market disruption resulting from the event; and

      (2) to each tobacco warehouseman to compensate tobacco warehousemen for market disruption resulting from the event.

    (b) TRIGGERING EVENTS- The Secretary shall make accelerated payments under subsection (a) if after the date of enactment of this Act--

      (1) for three consecutive marketing years, the national marketing quota for a kind of tobacco is less than 50 percent of the national marketing quota for the kind of tobacco for the 1997 marketing year; or

      (2) Congress repeals or makes ineffective, directly or indirectly, any provision of--

        (A) section 316(g) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314b(g));

        (B) section 319(g) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314e(g));

        (C) section 106 of the Agricultural Act of 1949 (7 U.S.C. 1445);

        (D) section 106A of the Agricultural Act of 1949 (7 U.S.C. 1445-1); or

        (E) section 106B of the Agricultural Act of 1949 (7 U.S.C. 1445-2).

    (c) AMOUNT- The amount of the accelerated payments made to each quota holder, quota lessee, quota tenant, and tobacco warehouseman under this section shall be equal to--

      (1) the amount of the lifetime limitation established for the quota holder, quota lessee, quota tenant, or tobacco warehouseman under section 504(c); less

      (2) any payments previously made under section 504 to the quota holder, quota lessee, quota tenant, or tobacco warehouseman.

    (d) EFFECT OF ACCELERATION- If accelerated payments are required under this section, the Secretary shall no longer make payments on an annual basis under section 504.

SEC. 508. PAYMENT SOURCE AND AGGREGATE ANNUAL PAYMENTS.

    (a) PAYMENT SOURCE AND ADMINISTRATION- The Secretary shall use amounts in the Tobacco Community Revitalization Trust Fund to make payments under this title. The payment of compensation to quota holders, quota lessees, and quota tenants under this title shall be administered separately from the payment of compensation to tobacco warehousemen.

    (b) ANNUAL PAYMENT LIMITATION TO PRODUCERS- Except as provided in subsection (c), the total amount payable under this title for any marketing year to quota holders, quota lessees, and quota tenants shall not exceed $1,600,000,000. Amounts paid to tobacco warehousemen under this title shall not be counted toward this limitation.

    (c) ACCELERATED PAYMENTS- The annual limitation in subsection (b) shall not apply if accelerated payments for lost tobacco quota are made in accordance with section 506.

    (d) REDUCTIONS- If the total amount required to be paid under section 504 to quota holders, quota lessees, and quota tenants for a marketing year exceeds the annual limitation specified in subsection (b), the Secretary shall make a pro rata reduction in the amounts payable to quota holders, quota lessees, and quota tenants under such section to ensure that the total amount of the payments for lost tobacco quota does not exceed the specified limitation.

    (e) ROLLOVER OF PAYMENTS FOR LOST TOBACCO QUOTA- Subject to subsection (b), if the Secretary makes a reduction in accordance with subsection (d), the amount of the reduction shall be applied to the next marketing year and added to the payments for lost tobacco quota to quota holders, quota lessees, and quota tenants for the marketing year.

SEC. 509. COST-OF-LIVING ADJUSTMENT.

    (a) DEFINITIONS- In this section:

      (1) BASE QUARTER- The term ‘base quarter’, means the last three months of a marketing year.

      (2) PRICE INDEX- The term ‘price index’ means the Consumer Price Index (all items--United States city average) published monthly by the Bureau of Labor Statistics. The price index for a base quarter is the arithmetical mean of the index for the 3 months comprising that base quarter.

    (b) ADJUSTMENT REQUIRED- Beginning with the 2000 marketing year for a kind of tobacco, the amounts described in subsection (c) shall each be increased by the percent change in the price index for the base quarter of the preceding marketing year over the price index for the base quarter of the second preceding marketing year, adjusted to the nearest 1/10 of 1 percent.

    (c) COVERED AMOUNTS- The adjustments required by subsection (b) shall be made to--

      (1) the amounts specified in subsections (a)(3) and (c) of section 504;

      (2) the amounts specified in subsections (a)(1)(B)(ii) and (a)(2)(B)(i)(II) of section 505;

      (3) the amount specified in section 508(b); and

      (4) the base commission level for each tobacco warehouseman.

SEC. 510. EFFECTIVE DATE.

    This title shall take effect beginning with the 1999 marketing year of each kind of tobacco for which a national marketing quota is in effect.

TITLE VI--COMMUNITY, FARMER, AND WORKER TRANSITION ASSISTANCE

SEC. 601. TOBACCO COMMUNITY ECONOMIC DEVELOPMENT GRANTS.

    (a) AUTHORITY- The Secretary shall make grants to tobacco-growing States in accordance with this section to enable the States to carry out economic development initiatives in tobacco-growing communities.

    (b) APPLICATION- To be eligible to receive payments under this section, a State shall prepare and submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require, including--

      (1) a description of the activities that the State will carry out using amounts received under the grant;

      (2) a designation of an appropriate State agency to administer amounts received under the grant; and

      (3) a description of the steps to be taken to ensure that the funds are distributed in accordance with subsection (e), including the manner in which the State proposes to use historically black colleges

and universities in the distribution and use of the funds.

    (c) AMOUNT OF GRANT-

      (1) ALLOTMENT METHOD- From the amounts available to carry out this section for a fiscal year, the Secretary shall allot to each State an amount that bears the same ratio to the amounts available as the total income of the State derived from the production of tobacco during the 1995, 1996, and 1997 marketing years bears to the total income of all States derived from the production of tobacco during the 1995, 1996, and 1997 marketing years. For the 1995, 1996, and 1997 marketing years, the Secretary shall determine the amount of income derived from the production of tobacco in each State and in all States.

      (2) MATCHING FUNDS REQUIREMENT- A State may not receive more than 50 percent of the allotment determined for the State under paragraph (1) for a fiscal year unless the State makes available, out of non-Federal funds, matching funds in an amount equal to not less than 50 percent of the allotment for the same purposes for which the allotted funds may be used under subsection (e).

      (3) FAILURE TO PROVIDE MATCHING FUNDS- If a State fails to comply with the requirement to provide matching funds for a fiscal year under paragraph (2), the Secretary shall withhold from payment to the State for that fiscal year an amount equal to the difference between--

        (A) the 50 percent of the amount that would be allotted and paid to the State under paragraph (1) (if the full amount of matching funds were provided by the State); and

        (B) the amount of matching funds actually provided by the State.

      (4) REAPPORTIONMENT- The Secretary shall reapportion amounts withheld under paragraph (3) for a fiscal year among the States satisfying the matching requirement for that fiscal year. Any reapportionment of funds under this paragraph shall be subject to the matching requirement specified in paragraph (2).

    (d) PAYMENTS-

      (1) IN GENERAL- A State that has an application approved by the Secretary under subsection (b) shall be entitled to a payment under this section in an amount determined under subsection (c).

      (2) FORM OF PAYMENTS- The Secretary may make payments under this section to a State in installments, and in advance or by way of reimbursement, with necessary adjustments on account of overpayments or underpayments, as the Secretary may determine.

      (3) REALLOTMENT- Any portion of the allotment of a State under subsection (c) that the Secretary determines will not be used to carry out this section in accordance with an approved State application required under subsection (b), shall be reallotted by the Secretary to other States in proportion to the original allotments to the other States.

    (e) USE AND DISTRIBUTION OF FUNDS-

      (1) IN GENERAL- Amounts received by a State under this section shall be used to carry out economic development activities, including--

        (A) rural business enterprise activities described in subsections (c) and (e) of section 310B of the Consolidated Farm and Rural Development Act (7 U.S.C. 1932);

        (B) down payment 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);

        (C) activities designed to help create productive farm or off-farm employment in rural areas to provide a more viable economic base and enhance opportunities for improved incomes, living standards, and contributions by rural individuals to the economic and social development of tobacco communities;

        (D) activities that expand existing infrastructure, facilities, and services to capitalize on opportunities to diversify economies in tobacco communities and that support the development of new industries or commercial ventures;

        (E) activities by agricultural organizations that provide assistance directly to active tobacco producers to assist in developing other agricultural activities that supplement tobacco-producing activities;

        (F) initiatives designed to create or expand locally owned value-added processing and marketing operations in tobacco communities; and

        (G) technical assistance activities by persons 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) TOBACCO-GROWING COUNTIES- Assistance may be provided by a State under this section only to assist a county in the State that has been determined by the Secretary to have in excess of $100,000 in income derived from the production of tobacco during one or more of the 1995, 1996, or 1997 marketing years.

      (3) DISTRIBUTION-

        (A) ECONOMIC DEVELOPMENT ACTIVITIES- Not less than 20 percent of the amounts received by a State under this section shall be used to carry out--

          (i) economic development activities described in subparagraph (E) or (F) of paragraph (1); or

          (ii) agriculture-based rural development activities described in paragraph (1)(G).

        (B) TECHNICAL ASSISTANCE ACTIVITIES- Not less than 4 percent of the amounts received by a State under this section shall be used to carry out technical assistance activities described in paragraph (1)(G).

        (C) TOBACCO-GROWING COUNTIES- To be eligible to receive payments under this section, a State shall demonstrate to the Secretary that funding will be provided, during each 5-year period for which funding is provided under this section, for activities in each county in the State that has been determined under paragraph (2) to have in excess of $100,000 in income derived from the production of tobacco, in amounts that are at least equal to the product obtained by multiplying--

          (i) the ratio that the tobacco production income in the county determined under paragraph (2) bears to the total tobacco production income for the State determined under subsection (c); by

          (ii) 50 percent of the total amounts received by a State under this section during the five-year period.

    (f) PREFERENCES IN HIRING- A State may require recipients of funds under this section to provide a preference in employment to--

      (1) an individual who--

        (A) during the 1996 calendar year, was employed in the manufacture, processing, or warehousing of tobacco or tobacco products, or resided, in a county described in subsection (e)(2); and

        (B) is eligible for assistance under the tobacco worker transition program established under section 602; or

      (2) an individual who--

        (A) during the 1996 marketing year, carried out tobacco quota or relevant tobacco production activities in a county described in subsection (e)(2);

        (B) is eligible for a farmer opportunity grant under subpart 9 of part A of title IV of the Higher Education Act of 1965; and

        (C) has successfully completed a course of study at an institution of higher education.

    (g) AVAILABLE FUNDS- Amounts in the Tobacco Community Revitalization Trust Fund shall be available for making expenditures after October 1, 1998, for tobacco community economic development grants, but not to exceed--

      (1) $400,000,000 for each of fiscal years 1999 through 2008, less any amount required to be paid under title III for the fiscal year; and

      (2) $450,000,000 for each of fiscal year 2009 through 2023, less any amount required to be paid under title III during the fiscal year.

SEC. 602. TOBACCO WORKER TRANSITION PROGRAM.

    (a) GROUP ELIGIBILITY REQUIREMENTS-

      (1) CRITERIA- A group of workers (including workers in any firm or subdivision of a firm involved in the manufacture, processing, or warehousing of tobacco or tobacco products) shall be certified as eligible to apply for adjustment assistance under this section pursuant to a petition filed under subsection (b) if the Secretary of Labor determines that a significant number or proportion of the workers in such workers’ firm or an appropriate subdivision of the firm have become totally or partially separated, or are threatened to become totally or partially separated, and--

        (A) the sales or production, or both, of such firm or subdivision have decreased absolutely; and

        (B) the implementation of the national tobacco settlement contributed importantly to such workers’ separation or threat of separation and to the decline in the sales or production of such firm or subdivision.

      (2) DEFINITION OF CONTRIBUTED IMPORTANTLY- In paragraph (1)(B), the term ‘contributed importantly’ means a cause that is important but not necessarily more important than any other cause.

      (3) REGULATIONS- The Secretary of Labor shall issue regulations relating to the application of the criteria described in paragraph (1) in making preliminary findings under subsection (b) and determinations under subsection (c).

    (b) PRELIMINARY FINDINGS AND BASIC ASSISTANCE-

      (1) FILING OF PETITIONS- A petition for certification of eligibility to apply for adjustment assistance under this section may be filed by a group of workers (including workers in any firm or subdivision of a firm involved in the manufacture, processing, or warehousing of tobacco or tobacco products) or by their certified or recognized union or other duly authorized representative with the Governor of the State in which such workers’ firm or subdivision thereof is located.

      (2) FINDINGS AND ASSISTANCE- Upon receipt of a petition under paragraph (1), the Governor shall--

        (A) notify the Secretary of Labor that the Governor has received the petition;

        (B) within 10 days after receiving the petition--

          (i) make a preliminary finding as to whether the petition meets the criteria described in subsection (a)(1); and

          (ii) transmit the petition, together with a statement of the finding under clause (i) and reasons for the finding, to the Secretary of Labor for action under subsection (c); and

        (C) if the preliminary finding under subparagraph (B)(i) is affirmative, ensure that rapid response and basic readjustment services authorized under other Federal laws are made available to the workers.

    (c) REVIEW OF PETITIONS BY SECRETARY; CERTIFICATIONS-

      (1) IN GENERAL- The Secretary of Labor, within 30 days after receiving a petition under subsection (b)(2)(B)(ii), shall determine whether the petition meets the criteria described in subsection (a)(1). Upon a determination that the petition meets such criteria, the Secretary of Labor shall issue to workers covered by the petition a certification of eligibility to apply for the assistance described in subsection (d).

      (2) DENIAL OF CERTIFICATION- Upon the denial of a certification with respect to a petition under paragraph (1), the Secretary of Labor shall review the petition in accordance with the requirements of other applicable assistance programs to determine if the workers may be certified under such other provisions.

    (d) COMPREHENSIVE ASSISTANCE-

      (1) IN GENERAL- Workers covered by a certification issued by the Secretary of Labor under subsection (c)(1) shall be provided with benefits and services described in paragraph (2) in the same manner and to the same extent as workers covered under a certification under subchapter A of title II of the Trade Act of 1974 (19 U.S.C. 2271 et seq.), except that the total amount of payments under this section for any fiscal year shall not exceed $50,000,000.

      (2) BENEFITS AND SERVICES- The benefits and services described in this paragraph are the following:

        (A) Employment services of the type described in section 235 of the Trade Act of 1974 (19 U.S.C. 2295).

        (B) Training described in section 236 of the Trade Act of 1974 (19 U.S.C. 2296), except that notwithstanding the provisions of section 236(a)(2)(A) of such Act, the total amount of payments for training under this section for any fiscal year shall not exceed $25,000,000.

        (C) Tobacco worker readjustment allowances, which shall be provided in the same manner as trade readjustment allowances are provided under part I of subchapter B of chapter 2 of title II of the Trade Act of 1974 (19 U.S.C. 2291 et seq.), except that--

          (i) the provisions of sections 231(a)(5)(C) and 231(c) of such Act (19 U.S.C. 2291(a)(5)(C), 2291(c)), authorizing the payment of trade readjustment allowances upon a finding that it is not feasible or appropriate to approve a training program for a worker, shall not be applicable to payment of allowances under this section; and

          (ii) notwithstanding the provisions of section 233(b) of such Act (19 U.S.C. 2293(b)), in order for a worker to qualify for tobacco readjustment allowances under this section, the worker shall be enrolled in a training program approved by the Secretary of Labor of the type described in section 236(a) of such Act (19 U.S.C. 2296(a)) by the later of--

            (I) the last day of the 16th week of such worker’s initial unemployment compensation benefit period; or

            (II) the last day of the 6th week after the week in which the Secretary of Labor issues a certification covering such worker.

          In cases of extenuating circumstances relating to enrollment of a worker in a training program under this section, the Secretary of Labor may extend the time for enrollment for a period of not to exceed 30 days.

        (D) Job search allowances of the type described in section 237 of the Trade Act of 1974 (19 U.S.C. 2297).

        (E) Relocation allowances of the type described in section 238 of the Trade Act of 1974 (19 U.S.C. 2298).

    (e) INELIGIBILITY OF INDIVIDUALS RECEIVING PAYMENTS FOR LOST TOBACCO QUOTA- No benefits or services may be provided under this section to any individual who has received payments for lost tobacco quota under section 201.

    (f) EFFECTIVE DATE- This section shall take effect on the date that is the later of--

      (1) October l, 1998; or

      (2) the date on which legislation implementing the national tobacco settlement is enacted.

    (g) TERMINATION DATE- No assistance, vouchers, allowances, or other payments may be provided under this section after the date that is the earlier of--

      (1) the date that is 10 years after the effective date of this section under subsection (g); or

      (2) the date on which legislation establishing a program providing dislocated workers with comprehensive assistance substantially similar to the assistance provided by this section becomes effective.

    (h) AVAILABLE FUNDS- Amounts in the Tobacco Community Revitalization Trust Fund shall be available for making expenditures after October 1, 1998, for assistance provided under the tobacco worker transition program, but not to exceed $50,000,000 for any fiscal year.

SEC. 603. FARMER OPPORTUNITY GRANTS.

    (a) AUTHORITY TO PROVIDE FARMER OPPORTUNITY GRANTS- Part A of title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.) is amended by adding at the end the following:

‘Subpart 9--Farmer Opportunity Grants

‘SEC. 420D. STATEMENT OF PURPOSE.

    ‘It is the purpose of this subpart to assist in making available the benefits of postsecondary education to eligible students (determined in accordance with section 420F) in institutions of higher education by providing farmer opportunity grants to all eligible students.

‘SEC. 420E. PROGRAM AUTHORITY; AMOUNT AND DETERMINATIONS; APPLICATIONS.

    ‘(a) PROGRAM AUTHORITY AND METHOD OF DISTRIBUTION-

      ‘(1) PROGRAM AUTHORITY- From amounts made available under section 603(b) of the Tobacco Community Economic Stabilization and Support Act, the Secretary, during the period beginning July 1, 1999, and ending September 30, 2024, shall pay to each eligible institution such sums as may be necessary to pay to each eligible student (determined in accordance with section 420F) for each academic year during which that student is in attendance at an institution of higher education, as an undergraduate, a farmer opportunity grant in the amount for which that student is eligible, as determined pursuant to subsection (b). Not less than 85 percent of such sums shall be advanced to eligible institutions prior to the start of each payment period and shall be based upon an amount requested by the institution as needed to pay eligible students, except that this sentence shall not be construed to limit the authority of the Secretary to place an institution on a reimbursement system of payment.

      ‘(2) CONSTRUCTION- Nothing in this section shall be construed to prohibit the Secretary from paying directly to students, in advance of the beginning of the academic term, an amount for which the students are eligible, in cases where the eligible institution elects not to participate in the disbursement system required by paragraph (1).

      ‘(3) DESIGNATION- Grants made under this subpart shall be known as ‘farmer opportunity grants’.

    ‘(b) AMOUNT OF GRANTS-

      ‘(1) AMOUNTS-

        ‘(A) IN GENERAL- The amount of the grant for a student eligible under this subpart shall be--

          ‘(i) $1,700 for each of the academic years 1999-2000 through 2003-2004;

          ‘(ii) $2,000 for each of the academic years 2004-2005 through 2008-2009;

          ‘(iii) $2,300 for each of the academic years 2009-2010 through 2013-2014;

          ‘(iv) $2,600 for each of the academic years 2014-2015 through 2018-2019; and

          ‘(v) $2,900 for each of the academic years 2019-2020 through 2023-2024.

        ‘(B) PART-TIME RULE- In any case where a student attends an institution of higher education on less than a full-time basis (including a student who attends an institution of higher education on less than a half-time basis) during any academic year, the amount of the grant for which that student is eligible shall be reduced in proportion to the degree to which that student is not so attending on a full-time basis, in accordance with a schedule of reductions established by the Secretary for the purposes of this subparagraph, computed in accordance with this subpart. Such schedule of reductions shall be established by regulation and published in the Federal Register.

      ‘(2) MAXIMUM- No grant under this subpart shall exceed the cost of attendance (as described in section 472) at the institution at which that student is in attendance. If, with respect to any student, it is determined that the amount of a grant exceeds the cost of attendance for that year, the amount of the grant shall be reduced to an amount equal to the cost of attendance at such institution.

      ‘(3) PROHIBITION- No grant shall be awarded under this subpart to any individual who is incarcerated in any Federal, State, or local penal institution.

    ‘(c) PERIOD OF ELIGIBILITY FOR GRANTS-

      ‘(1) IN GENERAL- The period during which a student may receive grants shall be the period required for the completion of the first undergraduate baccalaureate course of study being pursued by that student at the institution at which the student is in attendance, except that any period during which the student is enrolled in a noncredit or remedial course of study as described in paragraph (2) shall not be counted for the purpose of this paragraph.

      ‘(2) CONSTRUCTION- Nothing in this section shall be construed to--

        ‘(A) exclude from eligibility courses of study that are noncredit or remedial in nature and that are determined by the institution to be necessary to help the student be prepared for the pursuit of a first undergraduate baccalaureate degree or certificate or, in the case of courses in English language instruction, to be necessary to enable the student to utilize already existing knowledge, training, or skills; and

        ‘(B) exclude from eligibility programs of study abroad that are approved for credit by the home institution at which the student is enrolled.

      ‘(3) PROHIBITION- No student is entitled to receive farmer opportunity grant payments concurrently from more than 1 institution or from the Secretary and an institution.

    ‘(d) APPLICATIONS FOR GRANTS-

      ‘(1) IN GENERAL- The Secretary shall from time to time set dates by which students shall file applications for grants under this subpart. The filing of applications under this subpart shall be coordinated with the filing of applications under section 401(c).

      ‘(2) INFORMATION AND ASSURANCES- Each student desiring a grant for any year shall file with the Secretary an application for the grant containing such information and assurances as the Secretary may deem necessary to enable the Secretary to carry out the Secretary’s functions and responsibilities under this subpart.

    ‘(e) DISTRIBUTION OF GRANTS TO STUDENTS- Payments under this section shall be made in accordance with regulations promulgated by the Secretary for such purpose, in such manner as will best accomplish the purpose of this section. Any disbursement allowed to be made by crediting the student’s account shall be limited to tuition and fees and, in the case of institutionally owned housing, room and board. The student may elect to have the institution provide other such goods and services by crediting the student’s account.

    ‘(f) INSUFFICIENT FUNDING- If, for any fiscal year, the funds made available to carry out this subpart from the Tobacco Community Revitalization Trust Fund are insufficient to satisfy fully all grants for students determined to be eligible under section 420F, the amount

of the grant provided under subsection (b) shall be reduced on a pro rata basis among all eligible students.

    ‘(g) TREATMENT OF INSTITUTIONS AND STUDENTS UNDER OTHER LAWS- Any institution of higher education that enters into an agreement with the Secretary to disburse to students attending that institution the amounts those students are eligible to receive under this subpart shall not be deemed, by virtue of such agreement, to be a contractor maintaining a system of records to accomplish a function of the Secretary. Recipients of farmer opportunity grants shall not be considered to be individual grantees for purposes of the Drug-Free Workplace Act of 1988 (41 U.S.C. 701 et seq.).

‘SEC. 420F. STUDENT ELIGIBILITY.

    ‘(a) IN GENERAL- In order to receive any grant under this subpart, a student shall--

      ‘(1) be a member of a tobacco farm family in accordance with subsection (b);

      ‘(2) be enrolled or accepted for enrollment in a degree, certificate, or other program (including a program of study abroad approved for credit by the eligible institution at which such student is enrolled) leading to a recognized educational credential at an institution of higher education that is an eligible institution in accordance with section 487, and not be enrolled in an elementary or secondary school;

      ‘(3) if the student is presently enrolled at an institution of higher education, be maintaining satisfactory progress in the course of study the student is pursuing in accordance with subsection (c);

      ‘(4) not owe a refund on grants previously received at any institution of higher education under this title, or be in default on any loan from a student loan fund at any institution provided for in part D, or a loan made, insured, or guaranteed by the Secretary under this title for attendance at any institution;

      ‘(5) file with the institution of higher education that the student intends to attend, or is attending, a document, that need not be notarized, but that shall include--

        ‘(A) a statement of educational purpose stating that the money attributable to such grant will be used solely for expenses related to attendance or continued attendance at such institution; and

        ‘(B) such student’s social security number; and

      ‘(6) be a citizen of the United States.

    ‘(b) TOBACCO FARM FAMILIES-

      ‘(1) IN GENERAL- For the purpose of subsection (a)(1), a student is a member of a tobacco farm family if during calendar year 1996 the student was--

        ‘(A) an individual who--

          ‘(i) is an active tobacco producer (as defined in section 2 of the Tobacco Community Economic Stabilization and Support Act); or

          ‘(ii) is otherwise actively engaged in the production of tobacco;

        ‘(B) a spouse, son, daughter, stepson, or stepdaughter of an individual described in subparagraph (A);

        ‘(C) an individual--

          ‘(i) who was a brother, sister, stepbrother, stepsister, son-in-law, or daughter-in-law of an individual described in subparagraph (A); and

          ‘(ii) whose principal place of residence was the home of the individual described in subparagraph (A); or

        ‘(D) an individual who was a dependent (within the meaning of section 152 of the Internal Revenue Code of 1986) of an individual described in subparagraph (A).

      ‘(2) ADMINISTRATION- On request, the Secretary of Agriculture shall provide to the Secretary such information as is necessary to carry out this subsection.

    ‘(c) SATISFACTORY PROGRESS-

      ‘(1) IN GENERAL- For the purpose of subsection (a)(3), a student is maintaining satisfactory progress if--

        ‘(A) the institution at which the student is in attendance reviews the progress of the student at the end of each academic year, or its equivalent, as determined by the institution; and

        ‘(B) the student has at least a cumulative C average or its equivalent, or academic standing consistent with the requirements for graduation, as determined by the institution, at the end of the second such academic year.

      ‘(2) SPECIAL RULE- Whenever a student fails to meet the eligibility requirements of subsection (a)(3) as a result of the application of this subsection and subsequent to that failure the student has academic standing consistent with the requirements for graduation, as determined by the institution, for any grading period, the student may, subject to this subsection, again be eligible under subsection (a)(3) for a grant under this subpart.

      ‘(3) WAIVER- Any institution of higher education at which the student is in attendance may waive paragraph (1) or (2) for undue hardship based on--

        ‘(A) the death of a relative of the student;

        ‘(B) the personal injury or illness of the student; or

        ‘(C) special circumstances as determined by the institution.

    ‘(d) STUDENTS WHO ARE NOT SECONDARY SCHOOL GRADUATES- In order for a student who does not have a certificate of graduation from a school providing secondary education, or the recognized equivalent of such certificate, to be eligible for any assistance under this subpart, the student shall meet either 1 of the following standards:

      ‘(1) EXAMINATION- The student shall take an independently administered examination and shall achieve a score, specified by the Secretary, demonstrating that such student can benefit from the education or training being offered. Such examination shall be approved by the Secretary on the basis

of compliance with such standards for development, administration, and scoring as the Secretary may prescribe in regulations.

      ‘(2) DETERMINATION- The student shall be determined as having the ability to benefit from the education or training in accordance with such process as the State shall prescribe. Any such process described or approved by a State for the purposes of this section shall be effective 6 months after the date of submission to the Secretary unless the Secretary disapproves such process. In determining whether to approve or disapprove such process, the Secretary shall take into account the effectiveness of such process in enabling students without secondary school diplomas or the recognized equivalent to benefit from the instruction offered by institutions utilizing such process, and shall also take into account the cultural diversity, economic circumstances, and educational preparation of the populations served by the institutions.

    ‘(e) SPECIAL RULE FOR CORRESPONDENCE COURSES- A student shall not be eligible to receive a grant under this subpart for a correspondence course unless such course is part of a program leading to an associate, bachelor, or graduate degree.

    ‘(f) COURSES OFFERED THROUGH TELECOMMUNICATIONS-

      ‘(1) RELATION TO CORRESPONDENCE COURSES- A student enrolled in a course of instruction at an eligible institution of higher education (other than an institute or school that meets the definition in section 521(4)(C) of the Carl D. Perkins Vocational and Applied Technology Education Act (20 U.S.C. 2471(4)(C))) that is offered in whole or in part through telecommunications and leads to a recognized associate, bachelor, or graduate degree conferred by such institution shall not be considered to be enrolled in correspondence courses unless the total amount of telecommunications and correspondence courses at such institution equals or exceeds 50 percent of such courses.

      ‘(2) RESTRICTION OR REDUCTIONS OF FINANCIAL AID- A student’s eligibility to receive a grant under this subpart may be reduced if a financial aid officer determines under the discretionary authority provided in section 479A that telecommunications instruction results in a substantially reduced cost of attendance to such student.

      ‘(3) DEFINITION- For the purposes of this subsection, the term ‘telecommunications’ means the use of television, audio, or computer transmission, including open broadcast, closed circuit, cable, microwave, or satellite, audio conferencing, computer conferencing, or video cassettes or discs, except that such term does not include a course that is delivered using video cassette or disc recordings at such institution and that is not delivered in person to other students of that institution.

    ‘(g) STUDY ABROAD- Nothing in this subpart shall be construed to limit or otherwise prohibit access to study abroad programs approved by the home institution at which a student is enrolled. An otherwise eligible student who is engaged in a program of study abroad approved for academic credit by the home institution at which the student is enrolled shall be eligible to receive a grant under this subpart, without regard to whether such study abroad program is required as part of the student’s degree program.

    ‘(h) VERIFICATION OF SOCIAL SECURITY NUMBER- The Secretary, in cooperation with the Commissioner of Social Security, shall verify any social security number provided by a student to an eligible institution under subsection (a)(5)(B) and shall enforce the following conditions:

      ‘(1) PENDING VERIFICATION- Except as provided in paragraphs (2) and (3), an institution shall not deny, reduce, delay, or terminate a student’s eligibility for assistance under this subpart because social security number verification is pending.

      ‘(2) DENIAL OR TERMINATION- If there is a determination by the Secretary that the social security number provided to an eligible institution by a student is incorrect, the institution shall deny or terminate the student’s eligibility for any grant under this subpart until such time as the student provides documented evidence of a social security number that is determined by the institution to be correct.

      ‘(3) CONSTRUCTION- Nothing in this subsection shall be construed to permit the Secretary to take any compliance, disallowance, penalty, or other regulatory action against--

        ‘(A) any institution of higher education with respect to any error in a social security number, unless such error was a result of fraud on the part of the institution; or

        ‘(B) any student with respect to any error in a social security number, unless such error was a result of fraud on the part of the student.’.

    (b) AVAILABLE FUNDS- Amounts in the Tobacco Community Revitalization Trust Fund shall be available for making expenditures after October 1, 1998, under subpart 9 of part A of title IV of the Higher Education Act of 1965, as added by this section, for farmer opportunity grants, but not to exceed--

      (1) $42,500,000 for each of the academic years 1999-2000 through 2003-2004;

      (2) $50,000,000 for each of the academic years 2004-2005 through 2008-2009;

      (3) $57,500,000 for each of the academic years 2009-2010 through 2013-2014;

      (4) $65,000,000 for each of the academic years 2014-2015 through 2018-2019; and

      (5) $72,500,000 for each of the academic years 2019-2020 through 2023-2024.

SEC. 604. RESEARCH GRANTS FOR ALTERNATIVE USES OF TOBACCO PRODUCTION AND PROCESSING EQUIPMENT.

    (a) RESEARCH GRANTS AUTHORIZED- The Secretary of Agriculture may make grants under this section on the basis of a competitive application process (and in accordance with such regulations that the Secretary may promulgate) to an eligible institution to assist the institution to conduct research regarding alternative uses for tobacco production and processing equipment.

    (b) ELIGIBLE INSTITUTIONS- A land-grant college or university (as defined in section 1404(10) of the National Agricultural Research, Extension, and Teaching Policy Act of 1977 (7 U.S.C. 3103(10))) and historically black colleges and universities shall be eligible for grants under this section.

    (c) PERIOD OF GRANT- The Secretary may award a grant under this section for a period not to exceed five years.

    (d) PREFERENCES- In making grants under this section, the Secretary shall give preference to proposals that--

      (1) demonstrate linkages with--

        (A) agencies of the Department of Agriculture;

        (B) other related Federal research laboratories and agencies;

        (C) other colleges and universities; and

        (D) private industry; and

      (2) guarantee matching funds in excess of the amounts required by subsection (e).

    (e) MATCHING FUNDS- An eligible institution shall contribute an amount of non-Federal funds that is at least equal to the amount of grant funds received under this section.

    (f) LIMITATION ON USE OF GRANT FUNDS- Funds provided under this section may not be used for the planning, repair, rehabilitation, acquisition, or construction of a building or facility.

    (g) AVAILABLE FUNDS- Amounts in the Tobacco Community Revitalization Trust Fund shall be available for making expenditures after October 1, 1998, for research grants regarding alternative uses of tobacco production and processing equipment, but not to exceed $3,000,000 for any fiscal year.

TITLE VII--TAX TREATMENT FOR PAYMENTS FOR LOST TOBACCO QUOTA

SEC. 701. PAYMENTS FOR LOST TOBACCO QUOTA.

    (a) IN GENERAL- Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 (relating to items specifically excluded from gross income) is amended by redesignating section 139 as section 140 and by inserting after section 138 the following new section:

‘SEC. 139. PAYMENTS FOR LOST TOBACCO QUOTA.

    ‘(a) EXCLUSION FROM GROSS INCOME- In the case of an eligible person, gross income does not include any amount which (but for this subsection) would be includible in gross income by reason of receipt of a payment for lost tobacco quota.

    ‘(b) REDUCTION IN BASIS OF FARM PROPERTY- The amount excluded from gross income under subsection (a) shall be applied to reduce the basis of the real property of the taxpayer to which the tobacco quota relates. Such reduction shall be applied at the beginning of the taxable year following the taxable year in which such exclusion occurs.

    ‘(c) LIMITATION- The amount excluded under subsection (a) shall not exceed the aggregate adjusted bases of depreciable real property (determined after any reductions under subsection (b)) held by the taxpayer immediately before the receipt of the payment for lost tobacco quota.

    ‘(d) LOSS- No loss shall be allowed under this subtitle on a sale or other disposition of a tobacco quota with respect to which a payment for lost tobacco quota is excluded from gross income under this section.

    ‘(e) DEFINITIONS- For purposes of this section--

      ‘(1) ELIGIBLE PERSON- The term ‘eligible person’ means a quota holder, quota lessee, or quota tenant.

      ‘(2) QUOTA HOLDER, QUOTA LESSEE, QUOTA TENANT- The terms ‘quota holder’, ‘quota lessee’, and ‘quota tenant’ have the meanings given such terms by section 2 of the Tobacco Community Economic Stabilization and Support Act.

      ‘(3) PAYMENT FOR LOST TOBACCO QUOTA- The term ‘payment for lost tobacco quota’ means a payment under title IV or V of the Tobacco Community Economic Stabilization and Support Act.

      ‘(4) TOBACCO QUOTA- The term ‘tobacco quota’ means a tobacco farm marketing quota or farm acreage allotment that was established under the Agricultural Adjustment Act of 1938 for any of the 1995, 1996, or 1997 crop years.’.

    (b) CLERICAL AMENDMENTS- The table of sections for part III of subchapter B of chapter 1 of such Code is amended by striking the item relating to section 139 and inserting after the item relating to section 138 the following new items:

‘Sec. 139. Payments for lost tobacco quota.

‘Sec. 140. Cross references to other Acts.’

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years ending after the beginning of the 1999 marketing year for any kind of tobacco.

TITLE VIII--IMMUNITY

SEC. 801. GENERAL IMMUNITY FOR TOBACCO PRODUCERS AND WAREHOUSERS.

    Notwithstanding any other provision of this Act, an active tobacco producer, tobacco-related growers association, or tobacco warehouse owner or employee may not be subject to liability in any Federal or State court for any cause of action resulting from the failure of any tobacco product manufacturer, distributor, or retailer to comply with national tobacco settlement legislation.