< Back to H.R. 3867 (105th Congress, 1997–1998)

Text of the LEAF Act

This bill was introduced on May 14, 1998, in a previous session of Congress, but was not enacted. The text of the bill below is as of May 14, 1998 (Introduced).

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HR 3867 IH

105th CONGRESS

2d Session

H. R. 3867

To provide long-term economic assistance to tobacco farmers and workers and to communities dependent on tobacco production using funds contributed by tobacco product manufacturers and importers.

IN THE HOUSE OF REPRESENTATIVES

May 14, 1998

Mr. BAESLER introduced the following bill; which was referred to the Committee on Agriculture, and in addition to the Committees on Education and the Workforce, Ways and Means, and the Judiciary, 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 provide long-term economic assistance to tobacco farmers and workers and to communities dependent on tobacco production using funds contributed by tobacco product manufacturers and importers.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1001. SHORT TITLE; TABLE OF CONTENTS.

    (a) SHORT TITLE- This Act may be cited as the ‘Long-Term Economic Assistance for Farmers Act’ or the ‘LEAF Act’.

    (b) TABLE OF CONTENTS- The table of contents of this Act is as follows:

      Sec. 1001. Short title; table of contents.

      Sec. 1002. Definitions.

Subtitle A--Tobacco Community Revitalization Trust Fund

      Sec. 1011. Establishment of trust fund.

      Sec. 1012. Contributions by tobacco product manufacturers and importers.

Subtitle B--Tobacco Market Transition Assistance

      Sec. 1021. Payments for lost tobacco quota.

      Sec. 1022. Industry payments for all department costs associated with tobacco production.

      Sec. 1023. Tobacco community economic development grants.

      Sec. 1024. Flue-cured tobacco production permits.

      Sec. 1025. Modifications in Federal tobacco programs.

Subtitle C--Farmer and Worker Transition Assistance

      Sec. 1031. Tobacco worker transition program.

      Sec. 1032. Farmer opportunity grants.

Subtitle D--Immunity

      Sec. 1041. General immunity for tobacco producers and tobacco warehouse owners.

SEC. 1002. DEFINITIONS.

    In this Act:

      (1) PARTICIPATING TOBACCO PRODUCER- The term ‘participating 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 that--

        (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- The term ‘Secretary’ means--

        (A) in subtitles A and B, the Secretary of Agriculture; and

        (B) in section 1031, the Secretary of Labor.

      (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) TOBACCO WAREHOUSE OWNER- The term ‘tobacco warehouse owner’ means a warehouseman that participated in an auction market (as defined in the first section of the Tobacco Inspection Act (7 U.S.C. 511)) during the 1998 marketing year.

      (9) TRUST FUND- The term ‘Trust Fund’ means the Tobacco Community Revitalization Trust Fund established under section 1011.

Subtitle A--Tobacco Community Revitalization Trust Fund

SEC. 1011. ESTABLISHMENT OF TRUST FUND.

    (a) IN GENERAL- 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 Trust Fund. The Trust Fund shall be administered by the Secretary.

    (b) TRANSFERS TO TRUST FUND- There are appropriated and transferred to the Trust Fund for each fiscal year--

      (1) amounts contributed by tobacco product manufacturers and tobacco product importers under section 1012; and

      (2) an amount from the National Tobacco Settlement Trust Fund established by section 401 equal to the aggregate amount of assessments under section 1012 against participating tobacco manufacturers for that fiscal year.

    (c) REPAYABLE ADVANCES-

      (1) AUTHORIZATION- There are authorized to be appropriated to the Trust Fund, as repayable advances, such sums as may from time to time be necessary to make expenditures under subsection (d).

      (2) REPAYMENT WITH INTEREST- Repayable advances made to the 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 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 TRUST FUND- Amounts in the Trust Fund shall be available for making expenditures after October 1, 1998, to meet those necessary obligations of the Federal Government that are authorized to be paid under--

      (1) section 1021 for payments for lost tobacco quota for each of fiscal years 1999 through 2023, but not to exceed $1,650,000,000 for any fiscal year except to the extent the payments are made in accordance with subsection (d)(12) or (e)(9) of section 1021;

      (2) section 1022 for industry payments for all costs of the Department of Agriculture associated with the production of tobacco;

      (3) section 1023 for tobacco community economic development grants, but not to exceed--

        (A) $375,000,000 for each of fiscal years 1999 through 2008, less any amount required to be paid under section 1022 for the fiscal year; and

        (B) $450,000,000 for each of fiscal year 2009 through 2023, less any amount required to be paid under section 1022 during the fiscal year;

      (4) section 1031 for assistance provided under the tobacco worker transition program, but not to exceed $25,000,000 for any fiscal year; and

      (5) subpart 9 of part A of title IV of the Higher Education Act of 1965 for farmer opportunity grants, but not to exceed--

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

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

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

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

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

    (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. 1012. 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 Trust Fund for a fiscal year shall be equal to--

        (A) the amount of the contribution to the Trust Fund for the fiscal year required under paragraph (2); less

        (B) any amount made available during the preceding fiscal year to the Trust Fund out of funds transferred from National Tobacco Settlement Trust Fund under section 1011(b)(2).

      (2) TRUST FUND CONTRIBUTIONS- The amount of the contribution to the 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 section 1022.

    (d) INDIVIDUAL AMOUNT OF ASSESSMENTS- The amount of an assessment payable by each tobacco product manufacturer and tobacco product importer into the 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); and

      (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).

    (e) CREDIT FOR PAYMENTS BY PARTICIPATING TOBACCO PRODUCT MANUFACTURERS- There shall be allowed as a credit against the amount of any assessment under this section for a participating tobacco product manufacturer an amount equal to the amount paid by that manufacturer under section 403 of this Act (other than as penalty or interest) for the calendar year ending in that fiscal year.

Subtitle B--Tobacco Market Transition Assistance

SEC. 1021. PAYMENTS FOR LOST TOBACCO QUOTA.

    (a) IN GENERAL- Beginning with the 1999 marketing year, the Secretary shall make payments for lost tobacco quota to eligible quota holders, quota lessees, and quota tenants as reimbursement for lost tobacco quota as a result of a decrease in demand for domestically produced tobacco.

    (b) ELIGIBILITY- To be eligible to receive payments under this section, a quota holder, quota lessee, or quota tenant shall--

      (1) 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 paragraph (2); and

      (2) demonstrate to the satisfaction of the Secretary that, with respect to the 1997 marketing year--

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

          (i) the active production of tobacco;

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

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

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

        (B) the producer was a quota lessee; or

        (C) the producer was a quota tenant.

    (c) BASE QUOTA LEVEL-

      (1) IN GENERAL- The Secretary shall determine, for each quota holder, quota lessee, and quota tenant, the base quota level for the 1995 through 1997 marketing years.

      (2) 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 through 1997 marketing years.

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

        (A) 50 percent of the average number of pounds of tobacco quota established for a farm for the 1995 through 1997 marketing years--

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

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

        (B) 25 percent of the average number of pounds of tobacco quota described in subparagraph (A) for which a quota tenant was the principal producer of the tobacco quota.

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

        (A) 50 percent of the average number of pounds of tobacco quota established for a farm for the 1995 through 1997 marketing years--

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

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

        (B) 25 percent of the average number of pounds of tobacco quota for the 1995 through 1997 marketing years--

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

          (II) for which the rights to produce the tobacco were rented to the quota lessee; and

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

      (5) MARKETING QUOTAS OTHER THAN POUNDAGE QUOTAS-

        (A) IN GENERAL- For each type 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 subsection (based on a poundage conversion) by multiplying--

          (i) the average tobacco farm marketing quota or allotment for the 1995 through 1997 marketing years; and

          (ii) the average yield per acre for the farm for the type of tobacco for the marketing years.

        (B) YIELDS NOT AVAILABLE- If the average yield per acre is not available for a farm, the Secretary shall calculate the base quota for the quota holder, quota lessee, or quota tenant (based on a poundage conversion) by determining the amount equal to the product obtained by multiplying--

          (i) the average tobacco farm marketing quota or allotment for the 1995 through 1997 marketing years; and

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

    (d) PAYMENTS FOR LOST TOBACCO QUOTA FOR TYPES OF TOBACCO OTHER THAN FLUE-CURED TOBACCO-

      (1) ALLOCATION OF FUNDS- Of the amounts made available under section 1011(d)(1) for payments for lost tobacco quota, the Secretary shall make available for payments under this subsection an amount that bears the same ratio to the amounts made available as--

        (A) the sum of all national marketing quotas for all types of tobacco other than flue-cured tobacco during the 1995 through 1997 marketing years; bears to

        (B) the sum of all national marketing quotas for all types of tobacco during the 1995 through 1997 marketing years.

      (2) OPTION TO RELINQUISH QUOTA-

        (A) IN GENERAL- Each quota holder shall be given the option to relinquish the farm marketing quota or farm acreage allotment of the quota holder in exchange for a payment made under paragraph (3).

        (B) NOTIFICATION- A quota holder shall give notification of the intention of the quota holder to exercise the option at such time and in such manner as the Secretary may require, but not later than January 15, 1999.

      (3) PAYMENTS FOR LOST TOBACCO QUOTA TO QUOTA HOLDERS EXERCISING OPTIONS TO RELINQUISH QUOTA-

        (A) IN GENERAL- Subject to subparagraph (E), for each of fiscal years 1999 through 2008, the Secretary shall make annual payments for lost tobacco quota to each quota holder that has relinquished the farm marketing quota or farm acreage allotment of the quota holder under paragraph (2).

        (B) AMOUNT- The amount of a payment made to a quota holder described in subparagraph (A) for a marketing year shall equal 1/10 of the lifetime limitation established under subparagraph (E).

        (C) TIMING- The Secretary shall begin making annual payments under this paragraph for the marketing year in which the farm marketing quota or farm acreage allotment is relinquished.

        (D) ADDITIONAL PAYMENTS- The Secretary may increase annual payments under

this paragraph in accordance with paragraph (7)(E) to the extent that funding is available.

        (E) LIFETIME LIMITATION ON PAYMENTS- The total amount of payments made under this paragraph to a quota holder shall not exceed the product obtained by multiplying the base quota level for the quota holder by $8 per pound.

      (4) REISSUANCE OF QUOTA-

        (A) REALLOCATION TO LESSEE OR TENANT- If a quota holder exercises an option to relinquish a tobacco farm marketing quota or farm acreage allotment under paragraph (2), a quota lessee or quota tenant that was the primary producer during the 1997 marketing year of tobacco pursuant to the farm marketing quota or farm acreage allotment, as determined by the Secretary, shall be given the option of having an allotment of the farm marketing quota or farm acreage allotment reallocated to a farm owned by the quota lessee or quota tenant.

        (B) CONDITIONS FOR REALLOCATION-

          (i) TIMING- A quota lessee or quota tenant that is given the option of having an allotment of a farm marketing quota or farm acreage allotment reallocated to a farm owned by the quota lessee or quota tenant under subparagraph (A) shall have 1 year from the date on which a farm marketing quota or farm acreage allotment is relinquished under paragraph (2) to exercise the option.

          (ii) LIMITATION ON ACREAGE ALLOTMENT- In the case of a farm acreage allotment, the acreage allotment determined for any farm subsequent to any reallocation

under subparagraph (A) shall not exceed 50 percent of the acreage of cropland of the farm owned by the quota lessee or quota tenant.

          (iii) LIMITATION ON MARKETING QUOTA- In the case of a farm marketing quota, the marketing quota determined for any farm subsequent to any reallocation under subparagraph (A) shall not exceed an amount determined by multiplying--

            (I) the average county farm yield, as determined by the Secretary; and

            (II) 50 percent of the acreage of cropland of the farm owned by the quota lessee or quota tenant.

        (C) ELIGIBILITY OF LESSEE OR TENANT FOR PAYMENTS- If a farm marketing quota or farm acreage allotment is reallocated to a quota lessee or quota tenant under subparagraph (A)--

          (i) the quota lessee or quota tenant shall not be eligible for any additional payments under paragraph (5) or (6) as a result of the reallocation; and

          (ii) the base quota level for the quota lessee or quota tenant shall not be increased as a result of the reallocation.

        (D) REALLOCATION TO QUOTA HOLDERS WITHIN SAME COUNTY OR STATE-

          (i) IN GENERAL- Except as provided in clause (ii), if there was no quota lessee or quota tenant for the farm marketing quota or farm acreage allotment for a type of tobacco, or if no quota lessee or quota tenant exercises an option of having an allotment of the farm marketing quota or farm acreage allotment for a type of tobacco reallocated, the Secretary shall reapportion the farm marketing quota or farm acreage allotment among the remaining quota holders for the type of tobacco within the same county.

          (ii) CROSS-COUNTY LEASING- In a State in which cross-county leasing is authorized pursuant to section 319(l) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314e(l)), the Secretary shall reapportion the farm marketing quota among the remaining quota holders for the type of tobacco within the same State.

          (iii) ELIGIBILITY OF QUOTA HOLDER FOR PAYMENTS- If a farm marketing quota is reapportioned to a quota holder under this subparagraph--

            (I) the quota holder shall not be eligible for any additional payments under paragraph (5) or (6) as a result of the reapportionment; and

            (II) the base quota level for the quota holder shall not be increased as a result of the reapportionment.

        (E) SPECIAL RULE FOR TENANT OF LEASED TOBACCO- If a quota holder exercises an option to relinquish a tobacco farm marketing quota or farm acreage allotment under paragraph (2), the farm marketing quota or farm acreage allotment shall be divided evenly between, and the option of reallocating the farm marketing quota or farm acreage allotment shall be offered in equal portions to, the quota lessee and to the quota tenant, if--

          (i) during the 1997 marketing year, the farm marketing quota or farm acreage allotment was leased and transferred to a farm owned by the quota lessee; and

          (ii) the quota tenant was the primary producer, as determined by the Secretary, of tobacco pursuant to the farm marketing quota or farm acreage allotment.

      (5) PAYMENTS FOR LOST TOBACCO QUOTA TO QUOTA HOLDERS-

        (A) IN GENERAL- Except as otherwise provided in this subsection, during any marketing year in which the national marketing quota for a type of tobacco is less than the average national marketing quota for the 1995 through 1997 marketing years, the Secretary shall make payments for lost tobacco quota to each quota holder that is eligible under subsection (b), and has not exercised an option to relinquish a tobacco farm marketing quota or farm acreage allotment under paragraph (2), in an amount that is equal to the product obtained by multiplying--

          (i) the number of pounds by which the basic farm marketing quota (or poundage conversion) is less than the base quota level for the quota holder; and

          (ii) $4 per pound.

        (B) POUNDAGE CONVERSION FOR MARKETING QUOTAS OTHER THAN POUNDAGE QUOTAS-

          (i) IN GENERAL- For each type of tobacco for which there is a marketing quota or allotment (on an acreage basis), the poundage conversion for each quota holder during a marketing year shall be determined by multiplying--

            (I) the basic farm acreage allotment for the farm for the marketing year; and

            (II) the average yield per acre for the farm for the type of tobacco.

          (ii) YIELD NOT AVAILABLE- If the average yield per acre is not available for a farm, the Secretary shall calculate the poundage conversion for each quota holder during a marketing year by multiplying--

            (I) the basic farm acreage allotment for the farm for the marketing year; and

            (II) the average county yield per acre for the county in which the farm is located for the type of tobacco.

      (6) PAYMENTS FOR LOST TOBACCO QUOTA TO QUOTA LESSEES AND QUOTA TENANTS- Except as otherwise provided in this subsection, during any marketing year in which the national marketing quota for a type of tobacco is less than the average national marketing quota for the type of tobacco for the 1995 through 1997 marketing years, the Secretary shall make payments for lost tobacco quota to each quota lessee and quota tenant that is eligible under subsection (b) in an amount that is equal to the product obtained by multiplying--

        (A) the percentage by which the national marketing quota for the type of tobacco is less than the average national marketing quota for the type of tobacco for the 1995 through 1997 marketing years;

        (B) the base quota level for the quota lessee or quota tenant; and

        (C) $4 per pound.

      (7) LIFETIME LIMITATION ON PAYMENTS- Except as otherwise provided in this subsection, the total amount of payments made under this subsection to a quota holder, quota lessee, or quota tenant during the lifetime of the 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; and

        (B) $8 per pound.

      (8) LIMITATIONS ON AGGREGATE ANNUAL PAYMENTS-

        (A) IN GENERAL- Except as otherwise provided in this paragraph, the total amount payable under this subsection for any marketing year shall not exceed the amount made available under paragraph (1).

        (B) ACCELERATED PAYMENTS- Paragraph (1) shall not apply if accelerated payments for lost tobacco quota are made in accordance with paragraph (12).

        (C) REDUCTIONS- If the sum of the amounts determined under paragraphs (3), (5), and (6) for a marketing year exceeds the amount made available under paragraph (1), the Secretary shall make a pro rata reduction in the amounts payable under paragraphs (5) and (6) to quota holders, quota lessees, and quota tenants under this subsection to ensure that the total amount of payments for lost tobacco quota does not exceed the amount made available under paragraph (1).

        (D) ROLLOVER OF PAYMENTS FOR LOST TOBACCO QUOTA- Subject to subparagraph (A), if the Secretary makes a reduction in accordance with subparagraph (C), the amount of the reduction shall be applied to the next marketing year and added to the payments for lost tobacco quota for the marketing year.

        (E) ADDITIONAL PAYMENTS TO QUOTA HOLDERS EXERCISING OPTION TO RELINQUISH QUOTA- If the amount made available under paragraph (1) exceeds the sum of the amounts determined under paragraphs (3), (5), and (6) for a marketing year, the Secretary shall distribute the amount of the excess pro rata to quota holders that have exercised an option to relinquish a tobacco farm marketing quota or farm acreage allotment under paragraph (2) by increasing the amount payable to each such holder under paragraph (3).

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

        (A) the person that sold and transferred the quota or allotment shall have--

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

          (ii) the lifetime limitation on payments established under paragraph (7) attributable to the person reduced by the product obtained by multiplying--

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

            (II) $8 per pound; and

        (B) if the quota or allotment has never been relinquished by a previous quota holder under paragraph (2), the person that acquired the quota shall have--

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

          (ii) the lifetime limitation on payments established under paragraph (7) attributable to the person--

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

(aa) the base quota level attributable to the quota; and

(bb) $8 per pound; but

            (II) decreased by any payments under paragraph (5) for lost tobacco quota previously made that are attributable to the quota that is sold and transferred.

      (10) 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 subsection (c), the right to payments under paragraph (5), and the lifetime limitation on payments established under paragraph (7) shall transfer to the new owner of the farm to the same extent and in the same manner as those provisions applied to the previous quota holder.

      (11) DEATH OF QUOTA LESSEE OR QUOTA TENANT- If a quota lessee or quota tenant that is entitled to payments under this subsection dies and is survived by a spouse or 1 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.

      (12) ACCELERATION OF PAYMENTS-

        (A) IN GENERAL- On the occurrence of any of the events described in subparagraph (B), the Secretary shall make an accelerated lump sum payment for lost tobacco quota as established under paragraphs (5) and (6) to each quota holder, quota lessee, and quota tenant for any affected type of tobacco in accordance with subparagraph (C).

        (B) TRIGGERING EVENTS- The Secretary shall make accelerated payments under subparagraph (A) if after the date of enactment of this Act--

          (i) subject to subparagraph (D), for 3 consecutive marketing years, the national marketing quota or national acreage allotment for a type of tobacco is less than 50 percent of the national marketing quota or national acreage allotment for the type of tobacco for the 1998 marketing year; or

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

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

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

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

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

            (V) 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, and quota tenant under this subsection shall be equal to--

          (i) the amount of the lifetime limitation established for the quota holder, quota lessee, or quota tenant under paragraph (7); less

          (ii) any payments for lost tobacco quota received by the quota holder, quota lessee, or quota tenant before the occurrence of any of the events described in subparagraph (B).

        (D) REFERENDUM VOTE NOT A TRIGGERING EVENT- A referendum vote of producers for any type of tobacco that results in the national marketing quota or national acreage allotment not being in effect for the type of tobacco shall not be considered a triggering event under this paragraph.

      (13) BAN ON SUBSEQUENT SALE OR LEASING OF FARM MARKETING QUOTA OR FARM ACREAGE ALLOTMENT TO QUOTA HOLDERS EXERCISING OPTION TO RELINQUISH QUOTA- No quota holder that exercises the option to relinquish a farm marketing quota or farm acreage allotment for any type of tobacco under paragraph (2) shall be eligible to acquire a farm marketing quota or farm acreage allotment for the type of tobacco, or to obtain the lease or transfer of a farm marketing quota or farm acreage allotment for the type of tobacco, for a period of 25 crop years after the date on which the quota or allotment was relinquished.

    (e) PAYMENTS FOR LOST TOBACCO QUOTA FOR FLUE-CURED TOBACCO-

      (1) ALLOCATION OF FUNDS- Of the amounts made available under section 1011(d)(1) for payments for lost tobacco quota, the Secretary shall make available for payments under this subsection an amount that bears the same ratio to the amounts made available as--

        (A) the sum of all national marketing quotas for flue-cured tobacco during the 1995 through 1997 marketing years; bears to

        (B) the sum of all national marketing quotas for all types of tobacco during the 1995 through 1997 marketing years.

      (2) RELINQUISHMENT OF QUOTA-

        (A) IN GENERAL- Each quota holder of flue-cured tobacco during the 1998 marketing year shall relinquish the farm marketing quota or farm acreage allotment in exchange for a payment made under paragraph (3) or (4).

        (B) NOTIFICATION- The Secretary shall notify the quota holders of the relinquishment of their quota or allotment at such time and in such manner as the Secretary may require, but not later than November 15, 1998.

      (3) PAYMENTS FOR LOST FLUE-CURED TOBACCO QUOTA TO QUOTA HOLDERS THAT RELINQUISH QUOTA-

        (A) IN GENERAL- For each of fiscal years 1999 through 2008, the Secretary shall make annual payments for lost flue-cured tobacco to each quota holder that has relinquished the farm marketing quota or farm acreage allotment of the quota holder under paragraph (2).

        (B) AMOUNT- The amount of a payment made to a quota holder described in subparagraph (A) for a marketing year shall equal 1/10 of the lifetime limitation established under paragraph (6).

        (C) TIMING- The Secretary shall begin making annual payments under this paragraph for the marketing year in which the farm marketing quota or farm acreage allotment is relinquished.

        (D) ADDITIONAL PAYMENTS- The Secretary may increase annual payments under this paragraph in accordance with paragraph (7)(E) to the extent that funding is available.

      (4) PAYMENTS FOR LOST FLUE-CURED TOBACCO QUOTA TO QUOTA LESSEES AND QUOTA TENANTS THAT HAVE NOT RELINQUISHED PERMITS-

        (A) IN GENERAL- Except as otherwise provided in this subsection, during any marketing year in which the national marketing quota for flue-cured tobacco is less than the average national marketing quota for the 1995 through 1997 marketing years, the Secretary shall make payments for lost tobacco quota to each quota lessee or quota tenant that--

          (i) is eligible under subsection (b);

          (ii) has been issued an individual tobacco production permit under section 317A(b) of the Agricultural Adjustment Act of 1938; and

          (iii) has not exercised an option to relinquish the permit.

        (B) AMOUNT- The amount of a payment made to a quota holder described in subparagraph (A) for a marketing year shall be equal to the product obtained by multiplying--

          (i) the number of pounds by which the individual marketing limitation established for the permit is less than twice the base quota level for the quota holder; and

          (ii) $2 per pound.

      (5) PAYMENTS FOR LOST FLUE-CURED TOBACCO QUOTA TO QUOTA LESSEES AND QUOTA TENANTS THAT HAVE RELINQUISHED PERMITS-

        (A) IN GENERAL- For each of fiscal years 1999 through 2008, the Secretary shall make annual payments for lost flue-cured tobacco quota to each quota lessee and quota tenant that has relinquished an individual tobacco production permit under section 317A(b)(5) of the Agricultural Adjustment Act of 1938.

        (B) AMOUNT- The amount of a payment made to a quota holder described in subparagraph (A) for a marketing year shall be equal to 1/10 of the lifetime limitation established under paragraph (6).

        (C) TIMING- The Secretary shall begin making annual payments under this paragraph for the marketing year in which the individual tobacco production permit is relinquished.

        (D) ADDITIONAL PAYMENTS- The Secretary may increase annual payments under this

paragraph in accordance with paragraph (7)(E) to the extent that funding is available.

        (E) PROHIBITION AGAINST PERMIT EXPANSION- A quota lessee or quota tenant that receives a payment under this paragraph shall be ineligible to receive any new or increased tobacco production permit from the county production pool established under section 317A(b)(8) of the Agricultural Adjustment Act of 1938.

      (6) LIFETIME LIMITATION ON PAYMENTS- Except as otherwise provided in this subsection, the total amount of payments made under this subsection to a quota holder, quota lessee, or quota tenant during the lifetime of the 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; and

        (B) $8 per pound.

      (7) LIMITATIONS ON AGGREGATE ANNUAL PAYMENTS-

        (A) IN GENERAL- Except as otherwise provided in this paragraph, the total amount payable under this subsection for any marketing year shall not exceed the amount made available under paragraph (1).

        (B) ACCELERATED PAYMENTS- Paragraph (1) shall not apply if accelerated payments for lost flue-cured tobacco quota are made in accordance with paragraph (9).

        (C) REDUCTIONS- If the sum of the amounts determined under paragraphs (3), (4), and (5) for a marketing year exceeds the amount made available under paragraph (1), the Secretary shall make a pro rata reduction in the amounts payable under paragraph (4) to quota lessees and quota tenants under this subsection to ensure that the total amount of payments for lost flue-cured tobacco quota does not exceed the amount made available under paragraph (1).

        (D) ROLLOVER OF PAYMENTS FOR LOST FLUE-CURED TOBACCO QUOTA- Subject to subparagraph (A), if the Secretary makes a reduction in accordance with subparagraph (C), the amount of the reduction shall be applied to the next marketing year and added to the payments for lost flue-cured tobacco quota for the marketing year.

        (E) ADDITIONAL PAYMENTS TO QUOTA HOLDERS EXERCISING OPTION TO RELINQUISH QUOTAS OR PERMITS, OR TO QUOTA LESSEES OR QUOTA TENANTS RELINQUISHING PERMITS- If the amount made available under paragraph (1) exceeds the sum of the amounts determined under paragraphs (3), (4), and (5) for a marketing year, the Secretary shall distribute the amount of the excess pro rata to quota holders by increasing the amount payable to each such holder under paragraphs (3) and (5).

      (8) DEATH OF QUOTA HOLDER, QUOTA LESSEE, OR QUOTA TENANT- If a quota holder, quota lessee or quota tenant that is entitled to payments under paragraph (4) or (5) dies and is survived by a spouse or 1 or more descendants, the right to receive the payments shall transfer to the surviving spouse or, if there is no surviving spouse, to the surviving descendants in equal shares.

      (9) ACCELERATION OF PAYMENTS-

        (A) IN GENERAL- On the occurrence of any of the events described in subparagraph (B), the Secretary shall make an accelerated lump sum payment for lost flue-cured tobacco quota as established under paragraphs (3), (4), and (5) to each quota holder, quota lessee, and quota tenant for flue-cured tobacco in accordance with subparagraph (C).

        (B) TRIGGERING EVENTS- The Secretary shall make accelerated payments under subparagraph (A) if after the date of enactment of this Act--

          (i) subject to subparagraph (D), for 3 consecutive marketing years, the national marketing quota or national acreage allotment for flue-cured tobacco is less than 50 percent of the national marketing quota or national acreage allotment for flue-cured tobacco for the 1998 marketing year; or

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

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

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

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

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

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

            (VI) section 317A of the Agricultural Adjustment Act of 1938.

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

          (i) the amount of the lifetime limitation established for the quota holder, quota lessee, or quota tenant under paragraph (6); less

          (ii) any payments for lost flue-cured tobacco quota received by the quota holder, quota lessee, or quota tenant before the occurrence of any of the events described in subparagraph (B).

        (D) REFERENDUM VOTE NOT A TRIGGERING EVENT- A referendum vote of producers for flue-cured tobacco that results in the national marketing quota or national acreage allotment not being in effect for flue-cured tobacco shall not be considered a triggering event under this paragraph.

SEC. 1022. INDUSTRY PAYMENTS FOR ALL DEPARTMENT COSTS ASSOCIATED WITH TOBACCO PRODUCTION.

    (a) IN GENERAL- The Secretary shall use such amounts as are necessary from the 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 and price support programs administered by the Secretary;

      (3) costs to the Federal Government of carrying out crop insurance programs for tobacco;

      (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 participating 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. 1023. 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).

    (c) AMOUNT OF GRANT-

      (1) IN GENERAL- 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 farm income of the State derived from the production of tobacco during the 1995 through 1997 marketing years (as determined under paragraph (2)) bears to the total farm income of all States derived from the production of tobacco during the 1995 through 1997 marketing years.

      (2) TOBACCO INCOME- For the 1995 through 1997 marketing years, the Secretary shall determine the amount of farm income derived from the production of tobacco in each State and in all States.

    (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 that is equal to its allotment 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) REALLOTMENTS- 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 participating 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;

        (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); and

        (H) initiatives designed to partially compensate tobacco warehouse owners for lost revenues and assist the tobacco warehouse owners in establishing successful business enterprises.

      (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 1 or more of the 1995 through 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 WAREHOUSE OWNER INITIATIVES-

          (i) IN GENERAL- Not less than 6 percent of the amounts received by a State under this section during each of fiscal years 1999 through 2008 shall be used to carry out initiatives described in paragraph (1)(H).

          (ii) DIRECT PAYMENTS- Of the amount made available under clause (i), not less than 80 percent of the amount shall be used to provide direct payments to tobacco warehouse owners based on any decline in the annual volume of tobacco sales as compared to the volume of tobacco sales during the 1998 marketing year.

        (D) 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); and

          (ii) 50 percent of the total amounts received by a State under this section during the 5-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 1998 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 1031; or

      (2) an individual who--

        (A) during the 1998 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) MAINTENANCE OF EFFORT-

      (1) IN GENERAL- Subject to paragraph (2), a State shall provide an assurance to the Secretary that the amount of funds expended by the State and all counties in the State described in subsection (e)(2) for any activities funded under this section for a fiscal year is not less than 90 percent of the amount of funds expended by the State and counties for the activities for the preceding fiscal year.

      (2) REDUCTION OF GRANT AMOUNT- If a State does not provide an assurance described in paragraph (1), the Secretary shall reduce the amount of the grant determined under subsection (c) by an amount equal to the amount by which the amount of funds expended by the State and counties for the activities is less than 90 percent of the amount of funds expended by the State and counties for the activities for the preceding fiscal year, as determined by the Secretary.

      (3) FEDERAL FUNDS- For purposes of this subsection, the amount of funds expended by a State or county shall not include any amounts made available by the Federal Government.

SEC. 1024. FLUE-CURED TOBACCO PRODUCTION PERMITS.

    The Agricultural Adjustment Act of 1938 is amended by inserting after section 317 (7 U.S.C. 1314c) the following:

‘SEC. 317A. FLUE-CURED TOBACCO PRODUCTION PERMITS.

    ‘(a) DEFINITIONS- In this section:

      ‘(1) INDIVIDUAL ACREAGE LIMITATION- The term ‘individual acreage limitation’ means the number of acres of flue-cured tobacco that may be planted by the holder of a permit during a marketing year, calculated--

        ‘(A) prior to--

          ‘(i) any increase or decrease in the number due to undermarketings or overmarketings; and

          ‘(ii) any reduction under subsection (i); and

        ‘(B) in a manner that ensures that--

          ‘(i) the total of all individual acreage limitations is equal to the national acreage allotment, less the reserve provided under subsection (h); and

          ‘(ii) the individual acreage limitation for a marketing year bears the same ratio to the individual acreage limitation for the previous marketing year as the ratio that the national acreage allotment for the marketing year bears to the national acreage allotment for the previous marketing year, subject to adjustments by the Secretary to account for any reserve provided under subsection (h).

      ‘(2) INDIVIDUAL MARKETING LIMITATION- The term ‘individual marketing limitation’ means the number of pounds of flue-cured tobacco that may be marketed by the holder of a permit during a marketing year, calculated--

        ‘(A) prior to--

          ‘(i) any increase or decrease in the number due to undermarketings or overmarketings; and

          ‘(ii) any reduction under subsection (i); and

        ‘(B) in a manner that ensures that--

          ‘(i) the total of all individual marketing limitations is equal to the national marketing quota, less the reserve provided under subsection (h); and

          ‘(ii) the individual marketing limitation for a marketing year is obtained by multiplying the individual acreage limitation by the permit yield, prior to any adjustment for undermarketings or overmarketings.

      ‘(3) INDIVIDUAL TOBACCO PRODUCTION PERMIT- The term ‘individual tobacco production permit’ means a permit issued by the Secretary to a person authorizing the production of flue-cured tobacco for any marketing year during which this section is effective.

      ‘(4) NATIONAL ACREAGE ALLOTMENT- The term ‘national acreage allotment’ means the quantity determined by dividing--

        ‘(A) the national marketing quota; by

        ‘(B) the national average yield goal.

      ‘(5) NATIONAL AVERAGE YIELD GOAL- The term ‘national average yield goal’ means the national average yield for flue-cured tobacco during the 5 marketing years immediately preceding the marketing year for which the determination is being made.

      ‘(6) NATIONAL MARKETING QUOTA- For the 1999 and each subsequent crop of flue-cured tobacco, the term ‘national marketing quota’ for a marketing year means the quantity of flue-cured tobacco, as determined by the Secretary, that is not more than 103 percent nor less than 97 percent of the total of--

        ‘(A) the aggregate of the quantities of flue-cured tobacco that domestic manufacturers of cigarettes estimate that the manufacturers intend to purchase on the United States auction markets or from producers during the marketing year, as compiled and determined under section 320A;

        ‘(B) the average annual quantity of flue-cured tobacco exported from the United States during the 3 marketing years immediately preceding the marketing year for which the determination is being made; and

        ‘(C) the quantity, if any, of flue-cured tobacco that the Secretary, in the discretion of the Secretary, determines is necessary to increase or decrease the inventory of the producer-owned cooperative marketing association that has entered into a loan agreement with the Commodity Credit Corporation to make price support available to producers of flue-cured tobacco to establish or maintain the inventory at the reserve stock level for flue-cured tobacco.

      ‘(7) PERMIT YIELD- The term ‘permit yield’ means the yield of tobacco per acre for an individual tobacco production permit holder that is--

        ‘(A) based on a preliminary permit yield that is equal to the average yield during the 5 marketing years immediately preceding the marketing year for which the determination is made in the county where the holder of the permit is authorized to plant flue-cured tobacco, as determined by the Secretary, on the basis of actual yields of farms in the county; and

        ‘(B) adjusted by a weighted national yield factor calculated by--

          ‘(i) multiplying each preliminary permit yield by the individual acreage limitation, prior to adjustments for overmarketings, undermarketings, or reductions required under subsection (i); and

          ‘(ii) dividing the sum of the products under clause (i) for all flue-cured individual tobacco production permit holders by the national acreage allotment.

    ‘(b) INITIAL ISSUANCE OF PERMITS-

      ‘(1) TERMINATION OF FLUE-CURED MARKETING QUOTAS- On approval through referendum under subsection (c), farm marketing quotas as provided under section 317 shall no longer be in effect for flue-cured tobacco.

      ‘(2) ISSUANCE OF PERMITS TO QUOTA HOLDERS THAT WERE PRINCIPAL PRODUCERS-

        ‘(A) IN GENERAL- On approval through a referendum under subsection (c), each individual quota holder under section 317 that was a principal producer of flue-cured tobacco during the 1998 marketing year, as determined by the Secretary, shall be issued an individual tobacco production permit under this section.

        ‘(B) NOTIFICATION- The Secretary shall notify the holder of each permit of the individual acreage limitation and the individual marketing limitation applicable to the holder for each marketing year.

        ‘(C) INDIVIDUAL ACREAGE LIMITATION FOR 1999 MARKETING YEAR- In establishing the individual acreage limitation for the 1999 marketing year under this section, the farm acreage allotment that was allotted to a farm owned by the quota holder during the 1997 marketing year shall be considered the individual acreage limitation for the previous marketing year.

        ‘(D) INDIVIDUAL MARKETING LIMITATION FOR 1999 MARKETING YEAR- In establishing the individual marketing limitation for the 1999 marketing year under this section, the farm marketing quota that was allotted to a farm owned by the quota holder during the 1997 marketing year shall be considered the individual marketing limitation for the previous marketing year.

      ‘(3) QUOTA HOLDERS THAT WERE NOT PRINCIPAL PRODUCERS-

        ‘(A) IN GENERAL- Except as provided in subparagraph (B), on approval through a referendum under subsection (c)--

          ‘(i) each person that was a quota holder under section 317 but that was not a principal producer of flue-cured tobacco during the 1997 marketing year, as determined by the Secretary, shall not be eligible to own a permit; and

          ‘(ii) the Secretary shall not issue any permit during the 25-year period beginning on the date of enactment of this Act to any person that was a quota holder and was not the principal producer of flue-cured tobacco during the 1997 marketing year.

        ‘(B) MEDICAL HARDSHIPS AND CROP DISASTERS- Subparagraph (A) shall not apply to a person that would have been the principal producer of flue-cured tobacco during the 1997 marketing year but for a medical hardship or

crop disaster that occurred during the 1997 marketing year.

        ‘(C) ADMINISTRATION- The Secretary shall issue regulations--

          ‘(i) defining the term ‘person’ for the purpose of this paragraph; and

          ‘(ii) prescribing such rules as the Secretary determines are necessary to ensure a fair and reasonable application of the prohibition established under this paragraph.

      ‘(4) ISSUANCE OF PERMITS TO PRINCIPAL PRODUCERS OF FLUE-CURED TOBACCO-

        ‘(A) IN GENERAL- On approval through a referendum under subsection (c), each individual quota lessee or quota tenant (as defined in section 1002 of the LEAF Act) that was the principal producer of flue-cured tobacco during the 1997 marketing year, as determined by the Secretary, shall be issued an individual tobacco production permit under this section.

        ‘(B) INDIVIDUAL ACREAGE LIMITATIONS- In establishing the individual acreage limitation for the 1999 marketing year under this section, the farm acreage allotment that was allotted to a farm owned by a quota holder for whom the quota lessee or quota tenant was the principal producer of flue-cured tobacco during the 1997 marketing year shall be considered the individual acreage limitation for the previous marketing year.

        ‘(C) INDIVIDUAL MARKETING LIMITATIONS- In establishing the individual marketing limitation for the 1999 marketing year under this section, the individual marketing limitation for the previous year for an individual described in this paragraph shall be calculated by multiplying--

          ‘(i) the farm marketing quota that was allotted to a farm owned by a quota holder for whom the quota lessee or quota holder was the principal producer of flue-cured tobacco during the 1997 marketing year, by

          ‘(ii) the ratio that--

            ‘(I) the sum of all flue-cured tobacco farm marketing quotas for the 1997 marketing year prior to adjusting for undermarketing and overmarketing; bears to

            ‘(II) the sum of all flue-cured tobacco farm marketing quotas for the 1998 marketing year, after adjusting for undermarketing and overmarketing.

        ‘(D) SPECIAL RULE FOR TENANT OF LEASED FLUE-CURED TOBACCO- If the farm marketing quota or farm acreage allotment of a quota holder was produced pursuant to an agreement under which a quota lessee rented land from a quota holder and a quota tenant was the primary producer, as determined by the Secretary, of flue-cured tobacco pursuant to the farm marketing quota or farm acreage allotment, the farm marketing quota or farm acreage allotment shall be divided proportionately between the quota lessee and quota tenant for purposes of issuing individual tobacco production permits under this paragraph.

      ‘(5) OPTION OF QUOTA LESSEE OR QUOTA TENANT TO RELINQUISH PERMIT-

        ‘(A) IN GENERAL- Each quota lessee or quota tenant that is issued an individual tobacco production permit under paragraph (4) shall be given the option of relinquishing the permit in exchange for payments made under section 1021(e)(5) of the LEAF Act.

        ‘(B) NOTIFICATION- A quota lessee or quota tenant that is issued an individual tobacco production permit shall give notification of the intention to exercise the option at such time and in such manner as the Secretary may require, but not later than 30 days after the permit is issued.

        ‘(C) REALLOCATION OF PERMIT- The Secretary shall add the authority to produce flue-cured tobacco under the individual tobacco production permit relinquished under this paragraph to the county production pool established under paragraph (8) for reallocation by the appropriate county committee.

      ‘(6) ACTIVE PRODUCER REQUIREMENT-

        ‘(A) REQUIREMENT FOR SHARING RISK- No individual tobacco production permit shall be issued to, or maintained by, a person that does not fully share in the risk of producing a crop of flue-cured tobacco.

        ‘(B) CRITERIA FOR SHARING RISK- For purposes of this paragraph, a person shall be

considered to have fully shared in the risk of production of a crop if--

          ‘(i) the investment of the person in the production of the crop is not less than 100 percent of the costs of production associated with the crop;

          ‘(ii) the amount of the person’s return on the investment is dependent solely on the sale price of the crop; and

          ‘(iii) the person may not receive any of the return before the sale of the crop.

        ‘(C) PERSONS NOT SHARING RISK-

          ‘(i) FORFEITURE- Any person that fails to fully share in the risks of production under this paragraph shall forfeit an individual tobacco production permit if, after notice and opportunity for a hearing, the appropriate county committee determines that the conditions for forfeiture exist.

          ‘(ii) REALLOCATION- The Secretary shall add the authority to produce flue-cured tobacco under the individual tobacco production permit forfeited under this subparagraph to the county production pool established under paragraph (8) for reallocation by the appropriate county committee.

        ‘(D) NOTICE- Notice of any determination made by a county committee under subparagraph (C) shall be mailed, as soon as practicable, to the person involved.

        ‘(E) REVIEW- If the person is dissatisfied with the determination, the person may request, not later than 15 days after notice of the determination is received, a review of the determination by a local review committee under the procedures established under section 363 for farm marketing quotas.

      ‘(7) COUNTY OF ORIGIN REQUIREMENT- For the 1999 and each subsequent crop of flue-cured tobacco, all tobacco produced pursuant to an individual tobacco production permit shall be produced in the same county in which was produced the tobacco produced during the 1997 marketing year pursuant to the farm marketing quota or farm acreage allotment on which the individual tobacco production permit is based.

      ‘(8) COUNTY PRODUCTION POOL-

        ‘(A) IN GENERAL- The authority to produce flue-cured tobacco under an individual tobacco production permit that is forfeited, relinquished, or surrendered within a county may be reallocated by the appropriate county committee to tobacco producers located in the same county that apply to the committee to produce flue-cured tobacco under the authority.

        ‘(B) PRIORITY- In reallocating individual tobacco production permits under this paragraph, a county committee shall provide a priority to--

          ‘(i) an active tobacco producer that controls the authority to produce a quantity of flue-cured tobacco under an individual tobacco production permit that is equal to or less than the average number of pounds of flue-cured tobacco that was produced by the producer during each of the 1995 through 1997 marketing years, as determined by the Secretary; and

          ‘(ii) a new tobacco producer.

        ‘(C) CRITERIA- Individual tobacco production permits shall be reallocated by the appropriate county committee under this paragraph in a fair and equitable manner after taking into consideration--

          ‘(i) the experience of the producer;

          ‘(ii) the availability of land, labor, and equipment for the production of tobacco;

          ‘(iii) crop rotation practices; and

          ‘(iv) the soil and other physical factors affecting the production of tobacco.

        ‘(D) MEDICAL HARDSHIPS AND CROP DISASTERS- Notwithstanding any other provision of this Act, the Secretary may issue an individual tobacco production permit under this paragraph to a producer that is otherwise ineligible for the permit due to a medical hardship or crop disaster that occurred during the 1997 marketing year.

    ‘(c) REFERENDUM-

      ‘(1) ANNOUNCEMENT OF QUOTA AND ALLOTMENT- Not later than December 15, 1998, the Secretary pursuant to subsection (b) shall determine and announce--

        ‘(A) the quantity of the national marketing quota for flue-cured tobacco for the 1999 marketing year; and

        ‘(B) the national acreage allotment and national average yield goal for the 1999 crop of flue-cured tobacco.

      ‘(2) SPECIAL REFERENDUM- Not later than 30 days after the announcement of the quantity of the national marketing quota, the Secretary shall conduct a special referendum of the producers that were the principal producers of flue-cured tobacco of the 1997 crop to determine whether the producers approve or oppose the establishment of individual tobacco production permits on an acreage-poundage basis as provided in this section for the 1999 through 2001 marketing years.

      ‘(3) APPROVAL OF PERMITS- If the Secretary determines that more than 66 2/3 percent of the producers voting in the special referendum approve the establishment of individual tobacco production permits on an acreage-poundage basis--

        ‘(A) individual tobacco production permits on an acreage-poundage basis as provided in this section shall be in effect for the 1999 through 2001 marketing years; and

        ‘(B) marketing quotas on an acreage-poundage basis shall cease to be in effect for the 1999 through 2001 marketing years.

      ‘(4) DISAPPROVAL OF PERMITS- If individual tobacco production permits on an acreage-poundage basis are not approved by more than 66 2/3 percent of the producers voting in the referendum, no marketing quotas on an acreage-poundage basis shall continue in effect that were proclaimed under section 317 prior to the referendum.

      ‘(5) APPLICABLE MARKETING YEARS- If individual tobacco production permits have been made effective for flue-cured tobacco on an acreage-poundage basis pursuant to this subsection, the Secretary shall, not later than December 15 of any future marketing year, announce a national marketing quota for that type of tobacco for the next 3 succeeding marketing years if the marketing year is the last year of 3 consecutive years for which individual tobacco production permits previously proclaimed will be in effect.

    ‘(d) ANNUAL ANNOUNCEMENT OF NATIONAL MARKETING QUOTA- The Secretary shall determine and announce the national marketing quota, national acreage allotment, and national average yield goal for the second and third marketing years of any 3-year period for which individual tobacco production permits are in effect on or before the December 15 immediately preceding the beginning of the marketing year to which the quota, allotment, and goal apply.

    ‘(e) ANNUAL ANNOUNCEMENT OF INDIVIDUAL TOBACCO PRODUCTION PERMITS- If a national marketing quota, national acreage allotment, and national average yield goal are determined and announced, the Secretary shall provide for the determination of individual tobacco production permits, individual acreage limitations, and individual marketing limitations under this section for the crop and marketing year covered by the determinations.

    ‘(f) ASSIGNMENT OF TOBACCO PRODUCTION PERMITS-

      ‘(1) LIMITATION TO SAME COUNTY- Each individual tobacco production permit holder shall assign the individual acreage limitation and individual marketing limitation to 1 or more farms located within the county of origin of the individual tobacco production permit.

      ‘(2) FILING WITH COUNTY COMMITTEE- The assignment of an individual acreage limitation and individual marketing limitation shall not be effective until evidence of the assignment, in such form as required by the Secretary, is filed with and determined by the county committee for the county in which the farm involved is located.

      ‘(3) LIMITATION ON TILLABLE CROPLAND- The total acreage assigned to any farm under this subsection shall not exceed the acreage of cropland on the farm.

    ‘(g) PROHIBITION ON SALE OR LEASING OF INDIVIDUAL TOBACCO PRODUCTION PERMITS-

      ‘(1) IN GENERAL- Except as provided in paragraphs (2) and (3), the Secretary shall not permit the sale and transfer, or lease and transfer, of an individual tobacco production permit issued under this section.

      ‘(2) TRANSFER TO DESCENDANTS-

        ‘(A) DEATH- In the case of the death of a person to whom an individual tobacco production permit has been issued under this section, the permit shall transfer to the surviving spouse of the person or, if there is no surviving spouse, to surviving direct descendants of the person.

        ‘(B) TEMPORARY INABILITY TO FARM- In the case of the death of a person to whom an individual tobacco production permit has been issued under this section and whose descendants are temporarily unable to produce a crop of tobacco, the Secretary may hold the license in the name of the descendants for a period of not more than 18 months.

      ‘(3) VOLUNTARY TRANSFERS- A person that is eligible to obtain an individual tobacco production permit under this section may at any time transfer all or part of the permit to the person’s spouse or direct descendants that are actively engaged in the production of tobacco.

    ‘(h) RESERVE-

      ‘(1) IN GENERAL- For each marketing year for which individual tobacco production permits are in effect under this section, the Secretary may establish a reserve from the national marketing quota in a quantity equal to not more than 1 percent of the national marketing quota to be available for--

        ‘(A) making corrections of errors in individual acreage limitations and individual marketing limitations;

        ‘(B) adjusting inequities; and

        ‘(C) establishing individual tobacco production permits for new tobacco producers (except that not less than two-thirds of the reserve shall be for establishing such permits for new tobacco producers).

      ‘(2) ELIGIBLE PERSONS- To be eligible for a new individual tobacco production permit, a producer must have owned a farm on which tobacco was not produced or considered produced during the immediately preceding 5 years.

      ‘(3) APPORTIONMENT FOR NEW PRODUCERS- The part of the reserve held for apportionment to new individual tobacco producers shall be allotted on the basis of--

        ‘(A) land, labor, and equipment available for the production of tobacco;

        ‘(B) crop rotation practices;

        ‘(C) soil and other physical factors affecting the production of tobacco; and

        ‘(D) the past tobacco-producing experience of the producer.

      ‘(4) PERMIT YIELD- The permit yield for any producer for which a new individual tobacco production permit is established shall be determined on the basis of available productivity data for the land involved and yields for similar farms in the same county.

    ‘(i) PENALTIES-

      ‘(1) PRODUCTION ON OTHER FARMS- If any quantity of tobacco is marketed as having been produced under an individual acreage limitation or individual marketing limitation assigned to a farm but was produced on a different farm, the individual acreage limitation or individual marketing limitation for the following marketing year shall be forfeited.

      ‘(2) FALSE REPORT- If a person to which an individual tobacco production permit is issued files, or aids or acquiesces in the filing of, a false report with respect to the assignment of an individual acreage limitation or individual marketing limitation for a quantity of tobacco, the individual acreage limitation or individual marketing limitation for the following marketing year shall be forfeited.

    ‘(j) MARKETING PENALTIES-

      ‘(1) IN GENERAL- When individual tobacco production permits under this section are in effect, provisions with respect to penalties for the marketing of excess tobacco and the other provisions contained in section 314 shall apply in the same manner and to the same extent as they would apply under section 317(g) if farm marketing quotas were in effect.

      ‘(2) PRODUCTION ON OTHER FARMS- If a producer falsely identifies tobacco as having been produced on or marketed from a farm to which an individual acreage limitation or individual marketing limitation has been assigned, future individual acreage limitations and individual marketing limitations shall be forfeited.’.

SEC. 1025. MODIFICATIONS IN FEDERAL TOBACCO PROGRAMS.

    (a) PROGRAM REFERENDA- 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 ON QUOTAS-

      ‘(1) IN GENERAL- Not later than 30’; and

      (2) by adding at the end the following:

      ‘(2) REFERENDA ON PROGRAM CHANGES-

        ‘(A) IN GENERAL- In the case of any type 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 type of tobacco in a State, the Secretary shall conduct a statewide referendum on any proposal related to the lease and transfer of tobacco quota within a State requested by the petition that is authorized under this part.

        ‘(B) APPROVAL OF PROPOSALS- If a majority of producers of the type 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 type of tobacco in the State.’.

    (b) PURCHASE REQUIREMENTS- Section 320B of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314h) is amended--

      (1) in subsection (c)--

        (A) by striking ‘(c) The amount’ and inserting ‘(c) AMOUNT OF PENALTY- For the 1998 and subsequent marketing years, the amount’; and

        (B) by striking paragraph (1) and inserting the following:

      ‘(1) 105 percent of the average market price for the type of tobacco involved during the preceding marketing year; and’; and

      (2) by striking subsection (d) and inserting the following:

    ‘(d) USE OF PENALTY PAYMENTS- An amount equivalent to 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 1011 of the LEAF Act.’.

    (c) ELIMINATION OF TOBACCO MARKETING ASSESSMENT-

      (1) IN GENERAL- Section 106 of the Agricultural Act of 1949 (7 U.S.C. 1445) is amended by striking subsection (g).

      (2) 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)’.

    (d) ADJUSTMENT FOR LAND RENTAL COSTS- Section 106 of the Agricultural Act of 1949 (7 U.S.C. 1445) is amended by adding at the end the following:

    ‘(h) ADJUSTMENT FOR LAND RENTAL COSTS- For each of the 1999 and 2000 marketing years for flue-cured tobacco, after consultation with producers, State farm organizations and cooperative associations, the Secretary shall make an adjustment in the price support level for flue-cured tobacco equal to the annual change in the average cost per pound to flue-cured producers, as determined by the Secretary, under agreements through which producers rent land to produce flue-cured tobacco.’.

    (e) FIRE-CURED AND DARK AIR-CURED TOBACCO PROGRAMS-

      (1) LIMITATION ON TRANSFERS- Section 318(g) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 13l4d(g)) is amended--

        (A) by striking ‘ten’ and inserting ‘30’; and

        (B) by inserting ‘during any crop year’ after ‘transferred to any farm’.

      (2) LOSS OF ALLOTMENT OR QUOTA THROUGH UNDERPLANTING- Section 318 of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314d) is amended by adding at the end the following:

    ‘(k) LOSS OF ALLOTMENT OR QUOTA THROUGH UNDERPLANTING- Effective for the 1999 and subsequent marketing years, no acreage allotment or acreage-poundage quota, other than a new marketing quota, shall be established for a farm on which no fire-cured or dark air-cured tobacco was planted or considered planted during at least 2 of the 3 crop years immediately preceding the crop year for which the acreage allotment or acreage-poundage quota would otherwise be established.’.

    (f) EXPANSION OF TYPES OF TOBACCO SUBJECT TO NO NET COST ASSESSMENT-

      (1) NO NET COST TOBACCO FUND- Section 106A(d)(1)(A) of the Agricultural Act of 1949 (7 U.S.C. 1445-1(d)(1)(A)) is amended--

        (A) in clause (ii), by inserting after ‘Burley quota tobacco’ the following: ‘and fire-cured and dark air-cured quota tobacco’; and

        (B) in clause (iii)--

          (i) in the matter preceding subclause (I), by striking ‘Flue-cured or Burley tobacco’ and inserting ‘each kind of tobacco for which price support is made available under this Act, and each kind of like tobacco,’; and

          (ii) by striking subclause (II) and inserting the following:

            ‘(II) the sum of the amount of the per pound producer contribution and purchaser assessment (if any) for the kind of tobacco payable under clauses (i) and (ii); and’.

      (2) NO NET COST TOBACCO ACCOUNT- Section 106B(d)(1) of the Agricultural Act of 1949 (7 U.S.C. 1445-2(d)(1)) is amended--

        (A) in subparagraph (B), by inserting after ‘Burley quota tobacco’ the following: ‘and fire-cured and dark air-cured tobacco’; and

        (B) in subparagraph (C), by striking ‘Flue-cured and Burley tobacco’ and inserting ‘each kind of tobacco for which price support is made available under this Act, and each kind of like tobacco,’.

Subtitle C--Farmer and Worker Transition Assistance

SEC. 1031. 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 the 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 the firm or subdivision have decreased absolutely; and

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

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

        (A) notify the Secretary 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 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, 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). On a determination that the petition meets the criteria, the Secretary 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- On the denial of a certification with respect to a petition under paragraph (1), the Secretary shall review the petition in accordance with the requirements of other applicable assistance programs to determine if the workers may be certified under the other programs.

    (d) COMPREHENSIVE ASSISTANCE-

      (1) IN GENERAL- Workers covered by a certification issued by the Secretary 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 $25,000,000.

      (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 that Act, the total amount of payments for training under this section for any fiscal year shall not exceed $12,500,000.

        (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 that Act (19 U.S.C. 2291(a)(5)(C), 2291(c)), authorizing the payment of trade readjustment allowances on 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 that 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 the type described in section 236(a) of that Act (19 U.S.C. 2296(a)) by the later of--

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

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

          In cases of extenuating circumstances relating to enrollment of a worker in a training program under this section, the Secretary 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 1021.

    (f) FUNDING- Of the amounts in the Trust Fund, the Secretary may use not to exceed $25,000,000 for each of fiscal years 1999 through 2008 to provide assistance under this section.

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

      (1) October l, 1998; or

      (2) the date of enactment of this Act.

    (h) 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.

SEC. 1032. 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 1011(d)(5) of the LEAF 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 the sums shall be advanced to eligible institutions prior to the start of each payment period and shall be based on 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. The 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 the 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 the 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 the 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 the grant will be used solely for expenses related to attendance or continued attendance at the institution; and

        ‘(B) the 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 1998 the student was--

        ‘(A) an individual who--

          ‘(i) is a participating tobacco producer (as defined in section 1002 of the LEAF 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 the 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 the student can benefit from the education or training being offered. The 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 the process. In determining whether to approve or disapprove the process, the Secretary shall take into account the effectiveness of the process in enabling students without secondary school diplomas or the recognized equivalent to benefit from the instruction offered by institutions utilizing the 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 the 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 the institution shall not be considered to be enrolled in correspondence courses unless the total amount of telecommunications and correspondence courses at the institution equals or exceeds 50 percent of the 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 the 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 the term does not include a course that is delivered using video cassette or disc recordings at the 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 the 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 the 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 the error was a result of fraud on the part of the student.’.

Subtitle D--Immunity

SEC. 1041. GENERAL IMMUNITY FOR TOBACCO PRODUCERS AND TOBACCO WAREHOUSE OWNERS.

    Notwithstanding any other provision of this Act, a participating 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 the National Tobacco Policy and Youth Smoking Reduction Act.