[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3264 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 3264

To stabilize tobacco quota fluctuations despite any comprehensive legal 
 settlement between cigarette manufacturers and State governments, to 
 require cigarette manufacturers to pay all Department of Agriculture 
  costs associated with tobacco regulation, to establish a voluntary 
 quota retirement system for tobacco quota holders, to provide market 
transition assistance for tobacco producers, tobacco industry workers, 
   and their communities, particularly in the event of tobacco quota 
                  reductions, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 25, 1998

  Mr. Baesler (for himself and Mr. Hamilton) introduced the following 
   bill; which was referred to the Committee on Agriculture, and in 
    addition to the Committees on Ways and Means, Education and the 
     Workforce, the Judiciary, and the Budget, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                                 A BILL


 
To stabilize tobacco quota fluctuations despite any comprehensive legal 
 settlement between cigarette manufacturers and State governments, to 
 require cigarette manufacturers to pay all Department of Agriculture 
  costs associated with tobacco regulation, to establish a voluntary 
 quota retirement system for tobacco quota holders, to provide market 
transition assistance for tobacco producers, tobacco industry workers, 
   and their communities, particularly in the event of tobacco quota 
                  reductions, and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Tobacco Community 
Economic Stabilization and Support Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
             TITLE I--FEDERAL TOBACCO PRICE SUPPORT PROGRAM

Sec. 101. Consistent purchase intention requirements for cigarette 
                            manufacturers.
Sec. 102. Penalties for failure to comply with purchase intentions and 
                            use of penalty payments.
Sec. 103. Trade advocacy to assist United States tobacco farmers.
Sec. 104. Program referenda regarding lease and transfer of tobacco 
                            quota.
Sec. 105. Elimination of tobacco marketing assessment.
         TITLE II--TOBACCO COMMUNITY REVITALIZATION TRUST FUND

Sec. 201. Establishment of Tobacco Community Economic Stabilization and 
                            Support Act.
Sec. 202. Contributions by tobacco product manufacturers and importers.
       TITLE III--INDUSTRY PAYMENTS FOR DEPARTMENT TOBACCO COSTS

Sec. 301. Industry payments for all Department costs associated with 
                            tobacco production and regulation.
Sec. 302. Industry responsibility for No Net Cost Tobacco Funds and 
                            Accounts.
TITLE IV--PERMANENT SALE, RETIREMENT, AND DISTRIBUTION OF TOBACCO QUOTA

Sec. 401. Funds for voluntary quota retirement.
Sec. 402. Tobacco quota retirement contracts for tobacco quota holders.
Sec. 403. Distribution of retired quota.
           TITLE V--AGRICULTURAL MARKET TRANSITION ASSISTANCE

Sec. 501. Payments for lost tobacco quota.
Sec. 502. Determination of base quota levels for tobacco producers.
Sec. 503. Determination of base quota volume and commission levels for 
                            tobacco warehousemen.
Sec. 504. Payment amounts.
Sec. 505. Effect of changes in quota or farm ownership.
Sec. 506. Acceleration of payments.
Sec. 508. Payment source and aggregate annual payments.
Sec. 509. Cost-of-living adjustment.
Sec. 510. Effective date.
     TITLE VI--COMMUNITY, FARMER, AND WORKER TRANSITION ASSISTANCE

Sec. 601. Tobacco community economic development grants.
Sec. 602. Tobacco worker transition program.
Sec. 603. Farmer opportunity grants.
Sec. 604. Research grants for alternative uses of tobacco production 
                            and processing equipment.
      TITLE VII--TAX TREATMENT FOR PAYMENTS FOR LOST TOBACCO QUOTA

Sec. 701. Payments for lost tobacco quota.
                          TITLE VIII--IMMUNITY

Sec. 801. General immunity for tobacco producers and warehousers.

SEC. 2. DEFINITIONS.

    In this Act:
            (1) Active tobacco producer.--The term ``active tobacco 
        producer'' means a quota holder, quota lessee, or quota tenant.
            (2) Quota holder.--The term ``quota holder'' means a 
        producer that owns a farm for which a tobacco farm marketing 
        quota or farm acreage allotment was established under the 
        Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.) for 
        any of the 1995, 1996, or 1997 crop years.
            (3) Quota lessee.--The term ``quota lessee'' means--
                    (A) a producer that owns a farm that produced 
                tobacco pursuant to a lease and transfer to that farm 
                of all or part of a tobacco farm marketing quota or 
                farm acreage allotment established under the 
                Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et 
                seq.) for any of the 1995, 1996, or 1997 crop years; or
                    (B) a producer that rented land from a farm 
                operator to produce tobacco under a tobacco farm 
                marketing quota or farm acreage allotment established 
                under the Agricultural Adjustment Act of 1938 (7 U.S.C. 
                1281 et seq.) for any of the 1995, 1996, or 1997 crop 
                years.
            (4) Quota tenant.--The term ``quota tenant'' means a 
        producer who--
                    (A) is the principal producer, as determined by the 
                Secretary, of tobacco on a farm where tobacco is 
                produced pursuant to a tobacco farm marketing quota or 
                farm acreage allotment established under the 
                Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et 
                seq.) for any of the 1995, 1996, or 1997 crop years; 
                and
                    (B) is not a quota holder or quota lessee.
            (5) Secretary.--Except in section 601, the term 
        ``Secretary'' means the Secretary of Agriculture.
            (6) Tobacco product importer.--The term ``tobacco product 
        importer'' has the meaning given the term ``importer'' in 
        section 5702 of the Internal Revenue Code of 1986.
            (7) Tobacco product manufacturer.--
                    (A) In general.--The term ``tobacco product 
                manufacturer'' has the meaning given the term 
                ``manufacturer of tobacco products'' in section 5702 of 
                the Internal Revenue Code of 1986.
                    (B) Exclusion.--The term ``tobacco product 
                manufacturer'' does not include a person that 
                manufactures cigars or pipe tobacco.
            (8) Historically black colleges and universities.--The term 
        ``historically black colleges and universities'' has the 
        meaning given the term ``part B institution'' in section 322 of 
        the Higher Education Act of 1965 (20 U.S.C. 1061).

             TITLE I--FEDERAL TOBACCO PRICE SUPPORT PROGRAM

SEC. 101. CONSISTENT PURCHASE INTENTION REQUIREMENTS FOR CIGARETTE 
              MANUFACTURERS.

    (a) Minimum Purchase Intentions.--Subsection (b) of section 320A of 
the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314g) is amended to 
read as follows:
    ``(b) Minimum Purchase Intentions.--
            ``(1) Minimum submission by each manufacturer.--The 
        quantity of intended purchases submitted by a domestic 
        cigarette manufacturer under subsection (a) for a marketing 
        year with respect to Flue-cured tobacco may not be less than 
        the quantity of intended purchases submitted by that 
        manufacturer for Flue-cured tobacco in the case of the 1997 
        crop. The quantity of intended purchases submitted by a 
        domestic cigarette manufacturer under subsection (a) for a 
        marketing year with respect to Burley tobacco may not be less 
        than the quantity of intended purchases submitted by that 
        manufacturer for Burley tobacco in the case of the 1997 crop.
            ``(2) Secretary establishment in case of failure to 
        submit.--If a domestic manufacturer of cigarettes fails to 
        submit a statement of the quantity of intended purchases of 
        that manufacturer, as required by subsection (a), or fails to 
        comply with paragraph (1) in the submission of the statement, 
        the Secretary shall establish the quantity of intended 
        purchases to be attributed to that manufacturer for purposes of 
        this Act, based on--
                    ``(A) the quantity of intended purchases submitted 
                by that manufacturer (or established by the Secretary 
                under this subsection) in the case of the 1997 crop of 
                Flue-cured tobacco or Burley tobacco, as the case may 
                be;
                    ``(B) the quantity of intended purchases submitted 
                by that manufacturer under this section for the 
                marketing year immediately preceding the marketing year 
                for which the determination is being made, if that 
                quantity of intended purchases exceeds the amount 
                otherwise determined under subparagraph (A) for that 
                manufacturer; or
                    ``(C) if that manufacturer did not submit a 
                statement of the quantity of intended purchases of the 
                manufacturer for the marketing year immediately 
                preceding the marketing year for which the 
                determination is being made, the most recent 
                information available to the Secretary, but not less 
                than the amount otherwise determined under subparagraph 
                (A) for that manufacturer.
            ``(3) Minimum purchase intention for all manufacturers.--If 
        the aggregate of the quantities of intended purchases for a 
        marketing year is less than 600,000,000 pounds, in the case of 
        Burley tobacco, or 900,000,000 pounds, in the case of Flue-
        cured tobacco, the Secretary shall modify the purchase 
        intentions regarding that type of tobacco of each domestic 
        manufacturer of cigarettes as necessary to ensure that the 
        minimum aggregate quantity specified in this paragraph is to be 
        purchased by the manufacturers.''.
    (b) Time for Submission.--Subsection (a)(1) of such section is 
amended by striking ``(or'' the first place it appears and all that 
follows through ``whichever is later)'' and inserting ``and January 15 
of any marketing year with respect to Burley tobacco''.
    (c) Effect on Calculation of National Marketing Quota.--
            (1) Flue-cured tobacco.--Section 317(a)(1)(B) of the 
        Agricultural Adjustment Act of 1938 (7 U.S.C. 1314c(a)(1)(B)) 
        is amended--
                    (A) in clause (i), by inserting after ``marketing 
                year,'' the following: ``whether for manufacture for 
                domestic or export sale or for export as unmanufactured 
                tobacco,''; and
                    (B) in clause (ii), by inserting before the 
                semicolon the following: ``, but excluding any exports 
                of unmanufactured tobacco counted under clause (i)''.
            (2) Burley tobacco.--Section 319(c)(3)(A) of such Act (7 
        U.S.C. 1314e(c)(3)(A)) is amended--
                    (A) in clause (i), by inserting after ``marketing 
                year,'' the following: ``whether for manufacture for 
                domestic or export sale or for export as unmanufactured 
                tobacco,''; and
                    (B) in clause (ii), by inserting before the 
                semicolon the following: ``, but excluding any exports 
                of unmanufactured tobacco counted under clause (i)''.

SEC. 102. PENALTIES FOR FAILURE TO COMPLY WITH PURCHASE INTENTIONS AND 
              USE OF PENALTY PAYMENTS.

    (a) Determination of Failure To Comply With Purchase Intentions.--
Section 320B(b)(1) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 
1314h(b)(1)) is amended--
            (1) by striking ``from the 1985 and subsequent crops'';
            (2) by striking ``90 percent of''; and
            (3) by striking ``submitted by such manufacturer or 
        established by the Secretary for such manufacturer'' and 
        inserting ``in effect for that manufacturer''.
    (b) Purchase Requirement Penalties.--Subsection (c) of section 320B 
of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314h) is 
amended--
            (1) by striking paragraph (1) and inserting the following 
        new paragraph:
            ``(1) 110 percent of the price support rate in effect under 
        section 106 of the Agricultural Act of 1949 for the kind of 
        tobacco involved; by''; and
            (2) in paragraph (2)(B), by striking ``90 percent of the 
        quantity of intended purchases of such kinds of tobacco, 
        respectively, submitted by the manufacturer or established by 
        the Secretary for such manufacturer'' and inserting ``the 
        quantity of intended purchases of such kinds of tobacco, 
        respectively, in effect for that manufacturer''.
    (c) Use of Penalty Payments.--Subsection (d) of such section is 
amended to read as follows:
    ``(d) Use of Penalty Payments.--An amount equal to the amount of 
each penalty collected by the Secretary under this section shall be 
transmitted by the Secretary to the Secretary of the Treasury for 
deposit in the Tobacco Community Revitalization Trust Fund established 
under section 301 of the Tobacco Community Economic Stabilization and 
Support Act.''.

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

    (a) Requirements.--The United States Trade Representative, the 
Secretary of Commerce, and the Secretary of Agriculture may not 
advocate lower foreign trade barriers or increased market access for 
tobacco products that contain less than 75 percent United States 
domestic content.
    (b) Findings.--Congress finds the following:
            (1) The intersection of United States trade and health 
        policies should be based on a recognition that insisting on 
        nondiscriminatory treatment of United States products should 
        not have the effect of increasing smoking rates in any country.
            (2) United States officials should not interfere with or 
        object to the adoption or enforcement by a foreign country of 
        legitimate measures necessary to protect public health when 
        such restrictions are applied in a nondiscriminatory fashion.
            (3) The United States Government should continue to work to 
        eliminate discriminatory foreign practices that disadvantage 
        United States workers, farmers, or companies, and the United 
        States should continue to seek ``national treatment'' for 
        United States products so long as these activities are not 
        aimed at increasing overall demand for tobacco products.

SEC. 104. PROGRAM REFERENDA REGARDING LEASE AND TRANSFER OF TOBACCO 
              QUOTA.

    Section 312(c) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 
1312(c)) is amended--
            (1) by striking ``(c) Within thirty'' and inserting the 
        following:
    ``(c) Referenda Requirements.--
            ``(1) Referenda on use of national marketing quotas.--Not 
        later than 30''; and
            (2) by adding at the end the following new paragraph:
            ``(2) Referenda on lease and transfer of tobacco quota.--
                    ``(A) In general.--In the case of any kind of 
                tobacco for which marketing quotas are in effect, on 
                the receipt of a petition from more than 5 percent of 
                the producers of that kind of tobacco in a State, the 
                Secretary shall conduct a referendum in that State on 
                any proposal contained in the petition related to the 
                lease and transfer of tobacco quota within a State.
                    ``(B) Effect of approval of proposal.--If a 
                majority of producers of the kind of tobacco in the 
State approve a proposal in a referendum conducted under subparagraph 
(A), the Secretary shall implement the proposal in a manner that 
applies to all producers and quota holders of that kind of tobacco in 
the State.''.

SEC. 105. ELIMINATION OF TOBACCO MARKETING ASSESSMENT.

    (a) Repeal.--Section 106 of the Agricultural Act of 1949 (7 U.S.C. 
1445(g)) is amended by striking subsection (g).
    (b) Conforming Amendment.--Section 422(c) of the Uruguay Round 
Agreements Act (Public Law 103-465; 7 U.S.C. 1445 note) is amended by 
striking ``section 106(g), 106A, or 106B of the Agricultural Act of 
1949 (7 U.S.C. 1445(g), 1445-1, or 1445-2)'' and inserting ``section 
106A or 106B of the Agricultural Act of 1949 (7 U.S.C. 1445-1, 1445-
2)''.

         TITLE II--TOBACCO COMMUNITY REVITALIZATION TRUST FUND

SEC. 201. ESTABLISHMENT OF TOBACCO COMMUNITY REVITALIZATION TRUST FUND.

    (a) Establishment.--There is established in the Treasury of the 
United States a trust fund to be known as the ``Tobacco Community 
Revitalization Trust Fund'', consisting of such amounts as may be 
appropriated or credited to the Tobacco Community Revitalization Trust 
Fund. The Tobacco Community Revitalization Trust Fund shall be 
administered by the Secretary of Agriculture.
    (b) Transfers to Trust Fund.--There are appropriated and 
transferred to the Tobacco Community Revitalization Trust Fund for each 
fiscal year--
            (1) amounts contributed by tobacco product manufacturers 
        and tobacco product importers under section 202; and
            (2) amounts made available to the Tobacco Community 
        Revitalization Trust Fund out of funds allocated through 
        national tobacco settlement legislation.
    (c) Repayable Advances.--
            (1) Authorization.--There are authorized to be appropriated 
        to the Tobacco Community Revitalization Trust Fund, as 
        repayable advances, such sums as may from time to time be 
        necessary to make expenditures authorized under subsection (d).
            (2) Repayment with interest.--Repayable advances made to 
        the Tobacco Community Revitalization Trust Fund shall be 
        repaid, and interest on the advances shall be paid, to the 
        general fund of the Treasury when the Secretary of the Treasury 
        determines that moneys are available in the Tobacco Community 
        Revitalization Trust Fund to make the payments.
            (3) Rate of interest.--Interest on an advance made under 
        this subsection shall be at a rate determined by the Secretary 
        of Treasury (as of the close of the calendar month preceding 
        the month in which the advance is made) that is equal to the 
        current average market yield on outstanding marketable 
        obligations of the United States with remaining period to 
        maturity comparable to the anticipated period during which the 
        advance will be outstanding.
    (d) Expenditures From Tobacco Trust Fund.--Amounts in the Tobacco 
Community Revitalization Trust Fund shall be available after October 1, 
1998, to carry out this Act and the amendments made by this Act.
    (e) Budgetary Treatment.--This section constitutes budget authority 
in advance of appropriations Acts and represents the obligation of the 
Federal Government to provide payments to States and eligible persons 
in accordance with this Act.

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

    (a) Definition of Market Share.--In this section, the term ``market 
share'' means the ratio of--
            (1) the tax liability of a tobacco product manufacturer or 
        tobacco product importer for a calendar year under section 5703 
        of the Internal Revenue Code of 1986; to
            (2) the tax liability of all tobacco product manufacturers 
        or tobacco product importers for the calendar year under 
        section 5703 of the Internal Revenue Code of 1986.
    (b) Determinations.--Not later than September 30 of each fiscal 
year, the Secretary of the Treasury shall--
            (1) determine--
                    (A) the market share of each tobacco product 
                manufacturer or tobacco product importer during the 
                most recent calendar year;
                    (B) the total amount of assessments payable for the 
                subsequent fiscal year under subsection (c); and
                    (C) the amount of an assessment payable by the 
                tobacco product manufacturer or tobacco product 
                importer for the fiscal year under subsection (d); and
            (2) notify each tobacco product manufacturer and tobacco 
        product importer of the determinations made under paragraph (1) 
with respect to the manufacturer or importer.
    (c) Total Amount of Assessments.--
            (1) In general.--The total amount of assessments payable by 
        all tobacco product manufacturers and tobacco product importers 
        into the Tobacco Community Revitalization Trust Fund for a 
        fiscal year shall be equal to--
                    (A) the amount of the contribution to the Tobacco 
                Community Revitalization Trust Fund for the fiscal year 
                required under paragraph (2); less
                    (B) any amount made available during the preceding 
                fiscal year to the Tobacco Community Revitalization 
                Trust Fund out of funds allocated through national 
                tobacco settlement legislation.
            (2) Tobacco trust fund contributions.--The amount of the 
        contribution to the Tobacco Community Revitalization Trust Fund 
        shall be--
                    (A) $2,100,000,000 for each of fiscal years 1999 
                through 2008;
                    (B) $500,000,000 for each of fiscal years 2009 
                through 2023; and
                    (C) for fiscal year 2024 and each subsequent fiscal 
                year, the amount payable under sections 201 and 202.
    (d) Individual Amount of Assessments.--The amount of an assessment 
payable by each tobacco product manufacturer and tobacco product 
importer into the Tobacco Community Revitalization Trust Fund for a 
fiscal year shall be equal to the product obtained by multiplying--
            (1) the total amount of assessments payable by all tobacco 
        product manufacturers and tobacco product importers for the 
        fiscal year under subsection (c); by
            (2) the market share of the tobacco product manufacturer or 
        tobacco product importer during the most recent calendar year 
        determined under subsection (b)(1)(A).

       TITLE III--INDUSTRY PAYMENTS FOR DEPARTMENT TOBACCO COSTS

SEC. 301. INDUSTRY PAYMENTS FOR ALL DEPARTMENT COSTS ASSOCIATED WITH 
              TOBACCO PRODUCTION AND REGULATION.

    (a) Reimbursement Authority.--The Secretary shall use such amounts 
as are necessary from the Tobacco Community Revitalization Trust Fund 
at the end of each fiscal year to reimburse the Secretary for--
            (1) costs associated with the administration of programs 
        established under this Act and amendments made by this Act;
            (2) costs associated with the administration of the tobacco 
        quota program under subtitle B of title III of the Agricultural 
        Adjustment Act of 1938 (7 U.S.C. 1311 et seq.) and the tobacco 
        price support program under sections 106, 106A, and 106B of the 
        Agricultural Act of 1949 (7 U.S.C. 1445, 1445-1, 1445-2);
            (3) costs to the Federal Government of carrying out crop 
        insurance programs for tobacco, including the costs incurred by 
        the Federal Crop Insurance Corporation under section 508(e) of 
        the Federal Crop Insurance Act (7 U.S.C. 1508(e)) to pay the 
        premium for catastrophic risk protection for tobacco crops and 
        the Federal portion of the premium for various additional 
        coverages available for tobacco crops;
            (4) costs associated with all agricultural research, 
        extension, or education activities associated with tobacco;
            (5) costs associated with the administration of loan 
        association and cooperative programs for tobacco producers, as 
        approved by the Secretary; and
            (6) any other costs incurred by the Department of 
        Agriculture associated with the production of tobacco.
    (b) Limitations.--Amounts made available under subsection (a) may 
not be used--
            (1) to provide direct benefits to quota holders, quota 
        lessees, or quota tenants; or
            (2) in a manner that results in a decrease, or an increase 
        relative to other crops, in the amount of the crop insurance 
        premiums assessed to active tobacco producers under the Federal 
        Crop Insurance Act (7 U.S.C. 1501 et seq.).
    (c) Determinations.--Not later than September 30, 1998, and each 
fiscal year thereafter, the Secretary shall determine--
            (1) the amount of costs described in subsection (a); and
            (2) the amount that will be provided under this section as 
        reimbursement for the costs.

SEC. 302. INDUSTRY RESPONSIBILITY FOR NO NET COST TOBACCO FUNDS AND 
              ACCOUNTS.

    (a) No Net Cost Tobacco Fund.--Section 106A of the Agricultural Act 
of 1949 (7 U.S.C. 1445-1) is amended to read as follows:

``SEC. 106A. NO NET COST TOBACCO FUND.

    ``(a) Definitions.--In this section:
            ``(1) Association.--The term `association' means a 
        producer-owned cooperative marketing association that has 
        entered into a loan agreement with the Corporation to make 
        price support available to producers of a kind of tobacco.
            ``(2) Corporation.--The term `Corporation' means the 
        Commodity Credit Corporation, an agency and instrumentality of 
        the United States within the Department of Agriculture through 
        which the Secretary makes price support available to producers.
            ``(3) Net gains.--The term `net gains' means the amount by 
        which the total proceeds obtained from the sale by an 
        association of a crop of quota tobacco pledged to the 
        Corporation for a price support loan exceeds the principal 
        amount of the price support loan made by the Corporation to the 
        association on the crop, plus interest, charges, and costs of 
        administering the price support program.
            ``(4) No net cost tobacco fund.--The term `No Net Cost 
        Tobacco Fund' means the capital account established within each 
        association under this section.
            ``(5) Purchaser.--The term `purchaser' means any person who 
        purchases in the United States, either directly or indirectly 
        for the account of the person or another person, Flue-cured or 
        burley quota tobacco.
            ``(6) Quota tobacco.--The term `quota tobacco' means any 
        kind of tobacco for which marketing quotas are in effect or for 
        which marketing quotas are not disapproved by producers.
            ``(7) Tobacco community revitalization trust fund.--The 
        term `Tobacco Community Revitalization Trust Fund' means the 
        Tobacco Community Revitalization Trust Fund established under 
        the Tobacco Community Economic Stabilization and Support Act.
    ``(b) Price Support Program; Loans to Associations.--The Secretary 
may carry out the tobacco price support program through the 
Corporation. Except as otherwise provided by this section, the 
Secretary shall continue to make price support available to producers 
through loans to associations that, under agreements with the 
Corporation, agree to make loan advances to producers.
    ``(c) Establishment of No Net Cost Tobacco Fund.--
            ``(1) In general.--Each association shall establish within 
        the association a No Net Cost Tobacco Fund.
            ``(2) Amount.--There shall be transferred from the Tobacco 
        Community Economic Stabilization and Support Act to each No Net 
        Cost Tobacco Fund such amount as the Secretary determines will 
        be adequate to reimburse the Corporation for any net losses 
        that the Corporation may sustain under its loan agreements with 
        the association, based on--
                    ``(A) reasonable estimates of the amounts that the 
                Corporation has lent or will lend to the association 
                for price support for a crop of quota tobacco, except 
                that, in the case of burley quota tobacco, the 
                Secretary shall determine the transfer amount without 
                regard to any net losses that the Corporation sustained 
                under the loan agreements of the Corporation with the 
                association for the 1983 crop of burley quota tobacco;
                    ``(B) the cost of administering the tobacco price 
                support program (as determined by the Secretary); and
                    ``(C) the proceeds that will be realized from the 
                sales of tobacco that are pledged to the Corporation by 
                the association as security for loans.
    ``(d) Administrative Provisions.--
            ``(1) Separate administration.--The Secretary shall require 
        that the No Net Cost Tobacco Fund established by each 
        association be kept and maintained separately from all other 
        accounts of the association and be used exclusively, as 
        prescribed by the Secretary, for the purpose of ensuring, 
        insofar as practicable, that the Corporation, under its loan 
        agreements with the association with respect to a crop of quota 
        tobacco, will suffer no net losses (including recovery of the 
        amount of loans extended to cover the overhead costs of the 
        association), after any net gains are applied to net losses of 
        the Corporation under paragraph (3), except that, 
        notwithstanding any other provision of law, the association 
        may, with the approval of the Secretary, use funds in the No 
        Net Cost Tobacco Fund, including interest and other earnings, 
        for--
                    ``(A) the purposes of reducing the association's 
                outstanding indebtedness to the Corporation associated 
                with a crop of quota tobacco and making loan advances 
                to producers as authorized; and
                    ``(B) any other purposes that will be mutually 
                beneficial to producers and purchasers and to the 
                Corporation;
            ``(2) Investment authority.--The Secretary shall permit an 
        association to invest amounts in the No Net Cost Tobacco Fund 
        in such manner as the Secretary may approve, and require that 
        the interest or other earnings on the investment shall become a 
        part of the No Net Cost Tobacco Fund;
            ``(3) Treatment of net gains.--The Secretary shall require 
        that loan agreements between the Corporation and the 
        association provide that the Corporation shall retain the net 
        gains from each crop of tobacco pledged by the association as 
        security for price support loans, and that the net gains will 
        be used for the purpose of--
                    ``(A) offsetting any losses sustained by the 
                Corporation under its loan agreements with the 
                association for any crop of tobacco; or
                    ``(B) reducing the outstanding balance of any price 
                support loan made by the Corporation to the association 
                under the loan agreements for a crop of tobacco; and
            ``(4) Suspension of transfers.--If the Secretary determines 
        that the amount in the No Net Cost Tobacco Fund or the net 
        gains referred to in paragraph (3) exceeds the total amount 
        necessary for the purposes specified in this section, the 
        Secretary shall suspend the transfer of amounts from the 
        Tobacco Community Economic Stabilization and Support Act to the 
        No Net Cost Tobacco Fund under this section.
    ``(e) Noncompliance.--
            ``(1) In general.--If any association that has entered into 
        a loan agreement with the Corporation with respect to a crop of 
        quota tobacco fails or refuses to comply with this section 
        (including regulations promulgated under this section) or the 
        terms of the agreement, the Secretary may terminate the 
        agreement or provide that no additional loan funds may be made 
        available under the agreement to the association.
            ``(2) Price support.--If the Secretary takes action under 
        paragraph (1), the Secretary shall make price support available 
        to producers of the kind or kinds of tobacco, the price of 
        which had been supported through loans to the association, 
        through such other means as are authorized by this Act or the 
        Commodity Credit Corporation Charter Act (15 U.S.C. 714 et 
        seq.).
    ``(f) Termination of Agreement or Association.--If, under 
subsection (e), a loan agreement with an association is terminated, or 
if an association having a loan agreement with the Corporation is 
dissolved, merges with another association, or otherwise ceases to 
operate, the No Net Cost Tobacco Fund or the net gains referred to in 
subsection (d)(3) shall be applied or disposed of in such manner as the 
Secretary may approve or prescribe, except that the net gains shall, to 
the extent necessary, first be applied or used for the purposes 
specified in this section.
    ``(g) Regulations.--The Secretary shall issue such regulations as 
are necessary to carry out this section.''.
    (b) No Net Cost Tobacco Account.--Section 106B of the Agricultural 
Act of 1949 (7 U.S.C. 1445-2) is amended to read as follows:

``SEC. 106B. NO NET COST TOBACCO ACCOUNT.

    ``(a) Definitions.--In this section:
            ``(1) Area.--The term `area', when used in connection with 
        an association, means the general geographical area in which 
        farms of the producer-members of the association are located, 
        as determined by the Secretary.
            ``(2) Association.--The term `association' has the meaning 
        given the term in section 106A(a)(1).
            ``(3) Corporation.--The term `Corporation' has the meaning 
        given the term in section 106A(a)(2).
            ``(4) Net gains.--The term `net gains' has the meaning 
        given the term in section 106A(a)(3).
            ``(5) No net cost tobacco account.--The term `No Net Cost 
        Tobacco Account' means an account established by and in the 
        Corporation for an association under this section.
            ``(6) Purchaser.--The term `purchaser' has the meaning 
        given the term in section 106A(a)(5).
            ``(7) Tobacco.--The term `tobacco' means any kind of 
        tobacco (as defined in section 301(b) of the Agricultural 
        Adjustment Act of 1938 (7 U.S.C. 1301(b))) for which marketing 
        quotas are in effect or for which marketing quotas are not 
        disapproved by producers.
            ``(8) Tobacco community revitalization trust fund.--The 
        term `Tobacco Community Revitalization Trust Fund' has the 
        meaning given the term in section 106A(a)(7).
    ``(b) Price Support Program; Use of No Net Cost Tobacco Account In 
Lieu of No Net Cost Tobacco Fund.--Notwithstanding section 106A, the 
Secretary shall, on the request of any association, and may, if the 
Secretary determines, after consultation with the association, that the 
accumulation of the No Net Cost Tobacco Fund for the association under 
section 106A is, and is likely to remain, inadequate to reimburse the 
Corporation for net losses that the Corporation sustains under its loan 
agreements with the association--
            ``(1) continue to make price support available to producers 
        through the association in accordance with loan agreements 
        entered into between the Corporation and the association; and
            ``(2) establish and maintain in accordance with this 
        section a No Net Cost Tobacco Account for the association in 
        lieu of the No Net Cost Tobacco Fund established within the 
        association under section 106A.
    ``(c) Establishment of No Net Cost Tobacco Account.--
            ``(1) In general.--A No Net Cost Tobacco Account 
        established for an association under subsection (b)(2) shall be 
        established within the Corporation.
            ``(2) Amount.--There shall be transferred from the Tobacco 
        Community Revitalization Trust Fund to each No Net Cost Tobacco 
        Account such amount as the Secretary determines will be 
        adequate to reimburse the Corporation for any net losses that 
        the Corporation may sustain under its loan agreements with the 
        association, based on--
                    ``(A) reasonable estimates of the amounts that the 
                Corporation has lent or will lend to the association 
                for price support for a crop of quota tobacco, except 
                that, in the case of burley quota tobacco, the 
                Secretary shall determine the transfer amount without 
                regard to any net losses that the Corporation sustained 
                under the loan agreements of the Corporation with the 
                association for the 1983 crop of burley quota tobacco;
                    ``(B) the cost of administering the tobacco price 
                support program (as determined by the Secretary); and
                    ``(C) the proceeds that will be realized from the 
                sales of the kind of tobacco involved that are pledged 
                to the Corporation by the association as security for 
                loans.
            ``(3) Treatment of no net cost tobacco fund amounts.--On 
        the establishment of a No Net Cost Tobacco Account for an 
        association, any amount in the No Net Cost Tobacco Fund 
        established within the association under section 106A shall be 
        applied or disposed of in such manner as the Secretary may 
        approve or prescribe, except that the amount shall, to the 
        extent necessary, first be applied or used for the purposes 
        specified in that section.
    ``(d) Use.--Amounts deposited in a No Net Cost Tobacco Account 
established for an association shall be used by the Secretary for the 
purpose of ensuring, insofar as practicable, that the Corporation under 
its loan agreements with the association will suffer, with respect to 
the crop involved, no net losses (including recovery of the amount of 
loans extended to cover the overhead costs of the association), after 
any net gains are applied to net losses of the Corporation under 
subsection (g).
    ``(e) Excess Amounts.--If the Secretary determines that the amount 
in the No Net Cost Tobacco Account or the net gains referred to in 
subsection (g) exceed the total amount necessary to carry out this 
section, the Secretary shall suspend the transfer of amounts from the 
Tobacco Community Revitalization Trust Fund to the No Net Cost Tobacco 
Account under this section.
    ``(f) Termination of Agreement or Association.--In the case of an 
association for which a No Net Cost Tobacco Account is established 
under subsection (b)(2), if a loan agreement between the Corporation 
and the association is terminated, if the association is dissolved or 
merges with another association that has entered into a loan agreement 
with the Corporation to make price support available to producers of 
the kind of tobacco involved, or if the No Net Cost Tobacco Account 
terminates by operation of law, amounts in the No Net Cost Tobacco 
Account and the net gains referred to in subsection (g) shall be 
applied to or disposed of in such manner as the Secretary may 
prescribe, except that the net gains shall, to the extent necessary, 
first be applied to or used for the purposes specified in this section.
    ``(g) Net Gains.--The provisions of section 106A(d)(3) relating to 
net gains shall apply to any loan agreement between an association and 
the Corporation entered into on or after the establishment of a No Net 
Cost Tobacco Account for the association under subsection (b)(2).
    ``(h) Regulations.--The Secretary shall issue such regulations as 
are necessary to carry out this section.''.
    (c) Conforming Amendments.--(1) Section 314(a) of the Agricultural 
Adjustment Act of 1938 (7 U.S.C. 1314(a)) is amended in the first 
sentence--
            (A) by striking ``(1)''; and
            (B) by striking ``, or (2)'' and all that follows through 
        ``106B(d)(1) of that Act''.
    (2) Section 1109 of the Agriculture and Food Act of 1981 (Public 
Law 97-98; 7 U.S.C. 1445 note) is repealed.

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

SEC. 401. FUNDS FOR VOLUNTARY QUOTA RETIREMENT.

    From amounts in the Tobacco Community Revitalization Trust Fund, 
there shall be available to the Secretary $400,000,000 for each fiscal 
year to make payments to quota holders who enter into a tobacco quota 
retirement contract under this title. Amounts unobligated for quota 
retirement contracts by the end of the fiscal year for which the 
amounts are made available shall be returned to the Tobacco Community 
Revitalization Trust Fund.

SEC. 402. TOBACCO QUOTA RETIREMENT CONTRACTS FOR TOBACCO QUOTA HOLDERS.

    (a) Offer.--The Secretary shall offer to enter into a quota 
retirement contract with quota holders under which a quota holder shall 
agree, in exchange for a lump-sum payment under the contract, to 
permanently relinquish to the Secretary all or a portion of the tobacco 
quota on the quota holder's farm.
    (b) Annual Retirement Limits.--
            (1) Per quota holder.--A quota holder may not enter into a 
        quota retirement contract under this section for any fiscal 
        year for the retirement of more than--
                    (A) 25,000 pounds of tobacco, in the case of Burley 
                tobacco; and
                    (B) 50,000 pounds of tobacco, in the case of Flue-
                cured tobacco.
            (2) For all quota holders.--The maximum pounds purchased by 
        the Secretary each fiscal year using quota retirement contracts 
        from all types of tobacco may not exceed 100,000,000 pounds.
    (c) Contract Payments.--
            (1) Calculation.--Subject to paragraph (2) and subsection 
        (d), the amount of the payment to be made to a quota holder who 
        enters into in a quota retirement contract under this section 
        shall be equal to the product obtained by multiplying--
                    (A) the total quantity, in pounds, of tobacco quota 
                relinquished by the quota holder under the contract; by
                    (B) $4.00.
            (2) Pro rata distribution.--If the amount available for a 
        fiscal year under section 401 for payments under quota 
        retirement contracts is insufficient, the Secretary shall make 
        payments under the contracts entered into during that fiscal 
        year on a pro rata basis.
    (d) Payment Limitation.--The amount paid under subsection (b) to a 
quota holder under one or more quota retirement contracts may not 
exceed the difference between--
            (1) the lifetime limitation on payments under title V that 
        applies to the quota holder under such title; and
            (2) the total amount of any payments actually received by 
        the quota holder under such section.
    (e) Prohibition on Leasing of Quota.--A quota holder that enters 
into a quota retirement contract may not acquire tobacco quota, after 
the date the contract is entered into, for the purpose of producing 
tobacco on the quota holder's farm or for leasing the quota to a 
another person to produce tobacco.
    (f) Noncompliance.--If a quota holder who is a party to a quota 
retirement contract under this section fails to comply with the terms 
of the contract, the quota holder shall repay to the Secretary the 
entire amount received under the contract, including interest payable 
at a rate prescribed by the Secretary to reflect the cost to the 
Commodity Credit Corporation of its borrowings from the Treasury of the 
United States, commencing on the date payment is made under the 
contract.

SEC. 403. DISTRIBUTION OF RETIRED QUOTA.

    (a) Redistribution Within Same County.--The Secretary shall 
distribute tobacco quota received by the Secretary under a quota 
retirement contract to farms--
            (1) that are located in the same county as the farm subject 
        to the contract;
            (2) that are not themselves subject to a quota retirement 
        contract; and
            (3) for which a tobacco farm marketing quota or farm 
        acreage allotment is established under the Agricultural 
        Adjustment Act of 1938 (7 U.S.C. 1281 et seq.).
    (b) Conditions on Distribution.--Tobacco quota received under this 
section may be leased as provided in the Agricultural Adjustment Act of 
1938 (7 U.S.C. 1281 et seq.), but may not be sold to the Secretary 
under a quota retirement contract.

           TITLE V--AGRICULTURAL MARKET TRANSITION ASSISTANCE

SEC. 501. PAYMENTS FOR LOST TOBACCO QUOTA.

    (a) Payments Required.--During any marketing year in which the 
national marketing quota for a kind of tobacco is less than the average 
national marketing quota level for that kind of tobacco for the 1995 
through 1997 marketing years, the Secretary shall make payments--
            (1) to eligible quota holders, quota lessees, and quota 
        tenants as reimbursement for lost tobacco quota as a result of 
        the decrease in demand for domestically produced tobacco; and
            (2) to eligible tobacco warehousemen as reimbursement for 
        the reduced quantities of tobacco to be marketed by producers 
        through warehousemen as a result of the decrease in demand for 
        domestically produced tobacco.
    (b) Eligibility.--To be eligible to receive payments under this 
title, a quota holder, quota lessee, quota tenant, or tobacco 
warehouseman shall demonstrate to the satisfaction of the Secretary 
that, with respect to the 1995, 1996, or 1997 marketing year--
            (1) the person was a quota holder and realized income from 
        the production of tobacco through--
                    (A) the active production of tobacco;
                    (B) the lease and transfer of tobacco quota to 
                another farm;
                    (C) the rental of all or part of the farm of the 
                quota holder, including the right to produce tobacco, 
                to another tobacco producer; or
                    (D) the hiring of a quota tenant to produce 
                tobacco;
            (2) the person was a quota lessee;
            (3) the person was a quota tenant; or
            (4) the person was a warehouseman that marketed tobacco on 
        behalf of active tobacco producers.
    (c) Application Required.--A quota holder, quota lessee, quota 
tenant, or tobacco warehouseman shall prepare and submit to the 
Secretary an application at such time, in such manner, and containing 
such information as the Secretary may require, including information 
sufficient to make the demonstration required under subsection (b).

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

    (a) Determination Required.--The Secretary shall determine, for 
each quota holder, quota lessee, and quota tenant eligible to receive 
payments under this title, the base quota level for the 1995, 1996, and 
1997 marketing years.
    (b) Quota Holders.--The base quota level for a quota holder shall 
be equal to the average tobacco farm marketing quota established for 
the farm owned by the quota holder for the 1995, 1996,and 1997 
marketing years.
    (c) Quota Lessees.--The base quota level for a quota lessee shall 
be equal to--
            (1) 50 percent of the average number of pounds of tobacco 
        quota established for a farm for the 1995, 1996, and 1997 
        marketing years--
                    (A) that was leased and transferred to a farm owned 
                by the quota lessee; or
                    (B) for which the rights to produce the tobacco 
                were rented to the quota lessee; less
            (2) 25 percent of the average number of pounds of tobacco 
        quota described in paragraph (1) for which a quota tenant was 
        the principal producer of the tobacco quota.
    (d) Quota Tenants.--The base quota level for a quota tenant shall 
be equal to the sum of--
            (1) 50 percent of the average number of pounds of tobacco 
        quota established for a farm for the 1995, 1996, and 1997 
        marketing years--
                    (A) that was owned by a quota holder; and
                    (B) for which the quota tenant was the principal 
                producer of the tobacco on the farm; and
            (2) 25 percent of the average number of pounds of tobacco 
        quota for the 1995, 1996, and 1997 marketing years--
                    (A) that was leased and transferred to a farm owned 
                by a quota lessee or for which the rights to produce 
                the tobacco were rented to a quota lessee; and
                    (B) for which the quota tenant was the principal 
                producer of the tobacco on the farm.
    (e) Marketing Quotas Other Than Poundage Quotas.--For each kind of 
tobacco for which there is a marketing quota or allotment (on an 
acreage basis), the base quota level for each quota holder, quota 
lessee, or quota tenant shall be determined in accordance with this 
section (based on a poundage conversion) in an amount equal to the 
product obtained by multiplying--
            (1) the average tobacco farm marketing quota or allotment 
        for the 1995, 1996, and 1997 marketing years; by
            (2) the average county yield per acre for the county in 
        which the farm is located for the kind of tobacco for the 
        marketing years.

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

    (a) Determination Required.--The Secretary shall determine for each 
tobacco warehouseman eligible to receive payments under this title the 
base quota volume level and commission level for the 1995, 1996, and 
1997 marketing years.
    (b) Base Quota Volume.--The base quota volume level for a tobacco 
warehouseman shall be determined using data collected by the 
Agricultural Marketing Service of the Department of Agriculture and 
shall be equal to the product obtained by multiplying--
            (1) the average volume of net sales of the tobacco 
        warehouseman for the 1995, 1996, and 1997 marketing years; by
            (2) the average percentage for that tobacco warehouseman of 
        the total full season net sales for a particular type of 
        tobacco sold by tobacco warehousemen for the 1995, 1996, and 
        1997 marketing years; by
            (3) the average basic quota for producers for that type of 
        tobacco for the 1995, 1996, and 1997 marketing years.
    (c) Base Commission.--The base commission level for a tobacco 
warehouseman shall be equal to the average amount of commission and 
fees imposed by the tobacco warehouseman for marketing tobacco on 
behalf of active tobacco producers for the 1995, 1996, and 1997 
marketing years, as determined using data collected by the Agricultural 
Marketing Service of the Department of Agriculture.

SEC. 504. PAYMENT AMOUNTS.

    (a) Producer Payments.--During any marketing year in which payments 
are required to be made under section 501 with respect to a kind of 
tobacco, the Secretary shall make payments to each quota holder, quota 
lessee, and quota tenant that is eligible to receive payments for lost 
tobacco quota with respect to that kind of tobacco in an amount that is 
equal to the product obtained by multiplying--
            (1) the percentage by which the national marketing quota 
        for the kind of tobacco involved is less than the average 
        national marketing quota level for that kind of tobacco for the 
        1995, 1996, and 1997 marketing years; by
            (2) the base quota level for the quota holder, quota 
        lessee, or quota tenant with respect to that kind of tobacco; 
        by
            (3) $4.00.
    (b) Tobacco Warehouseman Payments.--During any marketing year in 
which payments are required to be made under section 501 with respect 
to a kind of tobacco, the Secretary shall make payments to each tobacco 
warehouseman that is eligible to receive payments for reduced tobacco 
marketing with respect to that kind of tobacco in an amount that is 
equal to the product obtained by multiplying--
            (1) the percentage by which the national marketing quota 
        for the kind of tobacco involved is less than the average 
        national marketing quota level for that kind of tobacco for the 
        1995, 1996, and 1997 marketing years; by
            (2) the base quota volume level for the tobacco 
        warehouseman with respect to that kind of tobacco; by
            (3) the base commission level for the tobacco warehouseman 
        with respect to that kind of tobacco; by
            (4) $4.00.
    (c) Lifetime Limitation on Payments.--
            (1) Producer limits.--The total amount of payments made 
        under this section to a quota holder, quota lessee, or quota 
        tenant shall not exceed the product obtained by multiplying--
                    (A) the base quota level for the quota holder, 
                quota lessee, or quota tenant; by
                    (B) $8.00 per pound.
            (2) Special rule for quota holders who are active 
        producers.--In the case of quota holders who receive income 
        from the active production of tobacco, the amount specified in 
        paragraph (1)(B) shall be $10,00 per pound rather than $8.00 
        per pound.
            (3) Tobacco warehouseman.--The total amount of payments 
        made under this section to a tobacco warehouseman shall not 
        exceed the product obtained by multiplying--
                    (A) the base quota volume level for the tobacco 
                warehouseman with respect to the kind of tobacco 
                involved; by
                    (B) the base commission level for the tobacco 
                warehouseman with respect to that kind of tobacco; and
                    (C) $10.00.

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

    (a) Sale and Transfer of Quota.--Effective beginning January 1, 
1999, on the sale and transfer of a farm marketing quota under section 
316(g) or 319(g) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 
1314b(g), 1314e(g))--
            (1) the person who sold and transferred the quota shall 
        have--
                    (A) the base quota level attributable to the person 
                reduced by the base quota level attributable to the 
                quota that is sold and transferred; and
                    (B) the lifetime limitation on payments established 
                under section 504 attributable to the person reduced by 
                the product obtained by multiplying--
                            (i) the base quota level attributable to 
                        the quota; by
                            (ii) $8.00 per pound (or $10.00 per pound 
                        if the person is an active tobacco producer); 
                        and
            (2) the person who acquired the quota shall have--
                    (A) the base quota level attributable to the person 
                increased by the base quota level attributable to the 
                quota that was sold and transferred; and
                    (B) the lifetime limitation on payments established 
                under section 504 attributable to the person--
                            (i) increased by the product obtained by 
                        multiplying--
                                    (I) the base quota level 
                                attributable to the quota; by
                                    (II) $8.00 per pound (or $10.00 per 
                                pound if the person is an active 
                                tobacco producer); but
                            (ii) decreased by any payments for lost 
                        tobacco quota previously made that are 
                        attributable to the quota that was sold and 
                        transferred.
    (b) Sale or Transfer of Farm.--On the sale or transfer of ownership 
of a farm that is owned by a quota holder, the base quota level 
established under section 502, the right to payments under subsection 
504, and the lifetime limitation on payments established under section 
504 shall transfer to the new owner of the farm to the same extent and 
in the same manner as those subsections applied to the previous quota 
holder.
    (c) Death of Quota Lessee or Quota Tenant.--If a quota lessee or 
quota tenant who is entitled to payments under this section dies and is 
survived by a spouse or one or more dependents, the right to receive 
the payments shall transfer to the surviving spouse or, if there is no 
surviving spouse, to the surviving dependents in equal shares.

SEC. 506. ACCELERATION OF PAYMENTS.

    (a) Acceleration Required.--On the occurrence of any of the events 
described in subsection (b), the Secretary shall make an accelerated 
lump sum payment in accordance with subsection (c)--
            (1) to each quota holder, quota lessee, and quota tenant 
        for any affected kind of tobacco to compensate such persons for 
        lost tobacco quota and market disruption resulting from the 
        event; and
            (2) to each tobacco warehouseman to compensate tobacco 
        warehousemen for market disruption resulting from the event.
    (b) Triggering Events.--The Secretary shall make accelerated 
payments under subsection (a) if after the date of enactment of this 
Act--
            (1) for three consecutive marketing years, the national 
        marketing quota for a kind of tobacco is less than 50 percent 
        of the national marketing quota for the kind of tobacco for the 
        1997 marketing year; or
            (2) Congress repeals or makes ineffective, directly or 
        indirectly, any provision of--
                    (A) section 316(g) of the Agricultural Adjustment 
                Act of 1938 (7 U.S.C. 1314b(g));
                    (B) section 319(g) of the Agricultural Adjustment 
                Act of 1938 (7 U.S.C. 1314e(g));
                    (C) section 106 of the Agricultural Act of 1949 (7 
                U.S.C. 1445);
                    (D) section 106A of the Agricultural Act of 1949 (7 
                U.S.C. 1445-1); or
                    (E) section 106B of the Agricultural Act of 1949 (7 
                U.S.C. 1445-2).
    (c) Amount.--The amount of the accelerated payments made to each 
quota holder, quota lessee, quota tenant, and tobacco warehouseman 
under this section shall be equal to--
            (1) the amount of the lifetime limitation established for 
        the quota holder, quota lessee, quota tenant, or tobacco 
        warehouseman under section 504(c); less
            (2) any payments previously made under section 504 to the 
        quota holder, quota lessee, quota tenant, or tobacco 
        warehouseman.
    (d) Effect of Acceleration.--If accelerated payments are required 
under this section, the Secretary shall no longer make payments on an 
annual basis under section 504.

SEC. 508. PAYMENT SOURCE AND AGGREGATE ANNUAL PAYMENTS.

    (a) Payment Source and Administration.--The Secretary shall use 
amounts in the Tobacco Community Revitalization Trust Fund to make 
payments under this title. The payment of compensation to quota 
holders, quota lessees, and quota tenants under this title shall be 
administered separately from the payment of compensation to tobacco 
warehousemen.
    (b) Annual Payment Limitation to Producers.--Except as provided in 
subsection (c), the total amount payable under this title for any 
marketing year to quota holders, quota lessees, and quota tenants shall 
not exceed $1,600,000,000. Amounts paid to tobacco warehousemen under 
this title shall not be counted toward this limitation.
    (c) Accelerated Payments.--The annual limitation in subsection (b) 
shall not apply if accelerated payments for lost tobacco quota are made 
in accordance with section 506.
    (d) Reductions.--If the total amount required to be paid under 
section 504 to quota holders, quota lessees, and quota tenants for a 
marketing year exceeds the annual limitation specified in subsection 
(b), the Secretary shall make a pro rata reduction in the amounts 
payable to quota holders, quota lessees, and quota tenants under such 
section to ensure that the total amount of the payments for lost 
tobacco quota does not exceed the specified limitation.
    (e) Rollover of Payments for Lost Tobacco Quota.--Subject to 
subsection (b), if the Secretary makes a reduction in accordance with 
subsection (d), the amount of the reduction shall be applied to the 
next marketing year and added to the payments for lost tobacco quota to 
quota holders, quota lessees, and quota tenants for the marketing year.

SEC. 509. COST-OF-LIVING ADJUSTMENT.

    (a) Definitions.--In this section:
            (1) Base quarter.--The term ``base quarter'', means the 
        last three months of a marketing year.
            (2) Price index.--The term ``price index'' means the 
        Consumer Price Index (all items--United States city average) 
        published monthly by the Bureau of Labor Statistics. The price 
        index for a base quarter is the arithmetical mean of the index 
        for the 3 months comprising that base quarter.
    (b) Adjustment Required.--Beginning with the 2000 marketing year 
for a kind of tobacco, the amounts described in subsection (c) shall 
each be increased by the percent change in the price index for the base 
quarter of the preceding marketing year over the price index for the 
base quarter of the second preceding marketing year, adjusted to the 
nearest \1/10\ of 1 percent.
    (c) Covered Amounts.--The adjustments required by subsection (b) 
shall be made to--
            (1) the amounts specified in subsections (a)(3) and (c) of 
        section 504;
            (2) the amounts specified in subsections (a)(1)(B)(ii) and 
        (a)(2)(B)(i)(II) of section 505;
            (3) the amount specified in section 508(b); and
            (4) the base commission level for each tobacco 
        warehouseman.

SEC. 510. EFFECTIVE DATE.

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

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

SEC. 601. TOBACCO COMMUNITY ECONOMIC DEVELOPMENT GRANTS.

    (a) Authority.--The Secretary shall make grants to tobacco-growing 
States in accordance with this section to enable the States to carry 
out economic development initiatives in tobacco-growing communities.
    (b) Application.--To be eligible to receive payments under this 
section, a State shall prepare and submit to the Secretary an 
application at such time, in such manner, and containing such 
information as the Secretary may require, including--
            (1) a description of the activities that the State will 
        carry out using amounts received under the grant;
            (2) a designation of an appropriate State agency to 
        administer amounts received under the grant; and
            (3) a description of the steps to be taken to ensure that 
        the funds are distributed in accordance with subsection (e), 
        including the manner in which the State proposes to use 
        historically black colleges and universities in the 
distribution and use of the funds.
    (c) Amount of Grant.--
            (1) Allotment method.--From the amounts available to carry 
        out this section for a fiscal year, the Secretary shall allot 
        to each State an amount that bears the same ratio to the 
        amounts available as the total income of the State derived from 
        the production of tobacco during the 1995, 1996, and 1997 
        marketing years bears to the total income of all States derived 
        from the production of tobacco during the 1995, 1996, and 1997 
        marketing years. For the 1995, 1996, and 1997 marketing years, 
        the Secretary shall determine the amount of income derived from 
        the production of tobacco in each State and in all States.
            (2) Matching funds requirement.--A State may not receive 
        more than 50 percent of the allotment determined for the State 
        under paragraph (1) for a fiscal year unless the State makes 
        available, out of non-Federal funds, matching funds in an 
        amount equal to not less than 50 percent of the allotment for 
        the same purposes for which the allotted funds may be used 
        under subsection (e).
            (3) Failure to provide matching funds.--If a State fails to 
        comply with the requirement to provide matching funds for a 
        fiscal year under paragraph (2), the Secretary shall withhold 
        from payment to the State for that fiscal year an amount equal 
        to the difference between--
                    (A) the 50 percent of the amount that would be 
                allotted and paid to the State under paragraph (1) (if 
                the full amount of matching funds were provided by the 
                State); and
                    (B) the amount of matching funds actually provided 
                by the State.
            (4) Reapportionment.--The Secretary shall reapportion 
        amounts withheld under paragraph (3) for a fiscal year among 
        the States satisfying the matching requirement for that fiscal 
        year. Any reapportionment of funds under this paragraph shall 
        be subject to the matching requirement specified in paragraph 
        (2).
    (d) Payments.--
            (1) In general.--A State that has an application approved 
        by the Secretary under subsection (b) shall be entitled to a 
        payment under this section in an amount determined under 
        subsection (c).
            (2) Form of payments.--The Secretary may make payments 
        under this section to a State in installments, and in advance 
        or by way of reimbursement, with necessary adjustments on 
        account of overpayments or underpayments, as the Secretary may 
        determine.
            (3) Reallotment.--Any portion of the allotment of a State 
        under subsection (c) that the Secretary determines will not be 
        used to carry out this section in accordance with an approved 
        State application required under subsection (b), shall be 
        reallotted by the Secretary to other States in proportion to 
        the original allotments to the other States.
    (e) Use and Distribution of Funds.--
            (1) In general.--Amounts received by a State under this 
        section shall be used to carry out economic development 
        activities, including--
                    (A) rural business enterprise activities described 
                in subsections (c) and (e) of section 310B of the 
                Consolidated Farm and Rural Development Act (7 U.S.C. 
                1932);
                    (B) down payment loan assistance programs that are 
                similar to the program described in section 310E of the 
                Consolidated Farm and Rural Development Act (7 U.S.C. 
                1935);
                    (C) activities designed to help create productive 
                farm or off-farm employment in rural areas to provide a 
                more viable economic base and enhance opportunities for 
                improved incomes, living standards, and contributions 
                by rural individuals to the economic and social 
                development of tobacco communities;
                    (D) activities that expand existing infrastructure, 
                facilities, and services to capitalize on opportunities 
                to diversify economies in tobacco communities and that 
                support the development of new industries or commercial 
                ventures;
                    (E) activities by agricultural organizations that 
                provide assistance directly to active tobacco producers 
                to assist in developing other agricultural activities 
                that supplement tobacco-producing activities;
                    (F) initiatives designed to create or expand 
                locally owned value-added processing and marketing 
                operations in tobacco communities; and
                    (G) technical assistance activities by persons to 
                support farmer-owned enterprises, or agriculture-based 
                rural development enterprises, of the type described in 
                section 252 or 253 of the Trade Act of 1974 (19 U.S.C. 
                2342, 2343).
            (2) Tobacco-growing counties.--Assistance may be provided 
        by a State under this section only to assist a county in the 
        State that has been determined by the Secretary to have in 
        excess of $100,000 in income derived from the production of 
        tobacco during one or more of the 1995, 1996, or 1997 marketing 
        years.
            (3) Distribution.--
                    (A) Economic development activities.--Not less than 
                20 percent of the amounts received by a State under 
                this section shall be used to carry out--
                            (i) economic development activities 
                        described in subparagraph (E) or (F) of 
                        paragraph (1); or
                            (ii) agriculture-based rural development 
                        activities described in paragraph (1)(G).
                    (B) Technical assistance activities.--Not less than 
                4 percent of the amounts received by a State under this 
                section shall be used to carry out technical assistance 
                activities described in paragraph (1)(G).
                    (C) Tobacco-growing counties.--To be eligible to 
                receive payments under this section, a State shall 
                demonstrate to the Secretary that funding will be 
                provided, during each 5-year period for which funding 
                is provided under this section, for activities in each 
                county in the State that has been determined under 
                paragraph (2) to have in excess of $100,000 in income 
                derived from the production of tobacco, in amounts that 
                are at least equal to the product obtained by 
                multiplying--
                            (i) the ratio that the tobacco production 
                        income in the county determined under paragraph 
                        (2) bears to the total tobacco production 
                        income for the State determined under 
                        subsection (c); by
                            (ii) 50 percent of the total amounts 
                        received by a State under this section during 
                        the five-year period.
    (f) Preferences in Hiring.--A State may require recipients of funds 
under this section to provide a preference in employment to--
            (1) an individual who--
                    (A) during the 1996 calendar year, was employed in 
                the manufacture, processing, or warehousing of tobacco 
                or tobacco products, or resided, in a county described 
                in subsection (e)(2); and
                    (B) is eligible for assistance under the tobacco 
                worker transition program established under section 
                602; or
            (2) an individual who--
                    (A) during the 1996 marketing year, carried out 
                tobacco quota or relevant tobacco production activities 
                in a county described in subsection (e)(2);
                    (B) is eligible for a farmer opportunity grant 
                under subpart 9 of part A of title IV of the Higher 
                Education Act of 1965; and
                    (C) has successfully completed a course of study at 
                an institution of higher education.
    (g) Available Funds.--Amounts in the Tobacco Community 
Revitalization Trust Fund shall be available for making expenditures 
after October 1, 1998, for tobacco community economic development 
grants, but not to exceed--
            (1) $400,000,000 for each of fiscal years 1999 through 
        2008, less any amount required to be paid under title III for 
        the fiscal year; and
            (2) $450,000,000 for each of fiscal year 2009 through 2023, 
        less any amount required to be paid under title III during the 
        fiscal year.

SEC. 602. TOBACCO WORKER TRANSITION PROGRAM.

    (a) Group Eligibility Requirements.--
            (1) Criteria.--A group of workers (including workers in any 
        firm or subdivision of a firm involved in the manufacture, 
        processing, or warehousing of tobacco or tobacco products) 
        shall be certified as eligible to apply for adjustment 
        assistance under this section pursuant to a petition filed 
        under subsection (b) if the Secretary of Labor determines that 
        a significant number or proportion of the workers in such 
        workers' firm or an appropriate subdivision of the firm have 
        become totally or partially separated, or are threatened to 
        become totally or partially separated, and--
                    (A) the sales or production, or both, of such firm 
                or subdivision have decreased absolutely; and
                    (B) the implementation of the national tobacco 
                settlement contributed importantly to such workers' 
                separation or threat of separation and to the decline 
                in the sales or production of such firm or subdivision.
            (2) Definition of contributed importantly.--In paragraph 
        (1)(B), the term ``contributed importantly'' means a cause that 
        is important but not necessarily more important than any other 
        cause.
            (3) Regulations.--The Secretary of Labor shall issue 
        regulations relating to the application of the criteria 
        described in paragraph (1) in making preliminary findings under 
        subsection (b) and determinations under subsection (c).
    (b) Preliminary Findings and Basic Assistance.--
            (1) Filing of petitions.--A petition for certification of 
        eligibility to apply for adjustment assistance under this 
        section may be filed by a group of workers (including workers 
        in any firm or subdivision of a firm involved in the 
        manufacture, processing, or warehousing of tobacco or tobacco 
        products) or by their certified or recognized union or other 
        duly authorized representative with the Governor of the State 
        in which such workers' firm or subdivision thereof is located.
            (2) Findings and assistance.--Upon receipt of a petition 
        under paragraph (1), the Governor shall--
                    (A) notify the Secretary of Labor that the Governor 
                has received the petition;
                    (B) within 10 days after receiving the petition--
                            (i) make a preliminary finding as to 
                        whether the petition meets the criteria 
                        described in subsection (a)(1); and
                            (ii) transmit the petition, together with a 
                        statement of the finding under clause (i) and 
                        reasons for the finding, to the Secretary of 
                        Labor for action under subsection (c); and
                    (C) if the preliminary finding under subparagraph 
                (B)(i) is affirmative, ensure that rapid response and 
                basic readjustment services authorized under other 
                Federal laws are made available to the workers.
    (c) Review of Petitions by Secretary; Certifications.--
            (1) In general.--The Secretary of Labor, within 30 days 
        after receiving a petition under subsection (b)(2)(B)(ii), 
        shall determine whether the petition meets the criteria 
        described in subsection (a)(1). Upon a determination that the 
        petition meets such criteria, the Secretary of Labor shall 
        issue to workers covered by the petition a certification of 
        eligibility to apply for the assistance described in subsection 
        (d).
            (2) Denial of certification.--Upon the denial of a 
        certification with respect to a petition under paragraph (1), 
        the Secretary of Labor shall review the petition in accordance 
        with the requirements of other applicable assistance programs 
        to determine if the workers may be certified under such other 
        provisions.
    (d) Comprehensive Assistance.--
            (1) In general.--Workers covered by a certification issued 
        by the Secretary of Labor under subsection (c)(1) shall be 
        provided with benefits and services described in paragraph (2) 
        in the same manner and to the same extent as workers covered 
        under a certification under subchapter A of title II of the 
        Trade Act of 1974 (19 U.S.C. 2271 et seq.), except that the 
        total amount of payments under this section for any fiscal year 
        shall not exceed $50,000,000.
            (2) Benefits and services.--The benefits and services 
        described in this paragraph are the following:
                    (A) Employment services of the type described in 
                section 235 of the Trade Act of 1974 (19 U.S.C. 2295).
                    (B) Training described in section 236 of the Trade 
                Act of 1974 (19 U.S.C. 2296), except that 
                notwithstanding the provisions of section 236(a)(2)(A) 
                of such Act, the total amount of payments for training 
                under this section for any fiscal year shall not exceed 
                $25,000,000.
                    (C) Tobacco worker readjustment allowances, which 
                shall be provided in the same manner as trade 
                readjustment allowances are provided under part I of 
                subchapter B of chapter 2 of title II of the Trade Act 
                of 1974 (19 U.S.C. 2291 et seq.), except that--
                            (i) the provisions of sections 231(a)(5)(C) 
                        and 231(c) of such Act (19 U.S.C. 
                        2291(a)(5)(C), 2291(c)), authorizing the 
                        payment of trade readjustment allowances upon a 
                        finding that it is not feasible or appropriate 
                        to approve a training program for a worker, 
                        shall not be applicable to payment of 
                        allowances under this section; and
                            (ii) notwithstanding the provisions of 
                        section 233(b) of such Act (19 U.S.C. 2293(b)), 
                        in order for a worker to qualify for tobacco 
                        readjustment allowances under this section, the 
                        worker shall be enrolled in a training program 
                        approved by the Secretary of Labor of the type 
                        described in section 236(a) of such Act (19 
                        U.S.C. 2296(a)) by the later of--
                                    (I) the last day of the 16th week 
                                of such worker's initial unemployment 
                                compensation benefit period; or
                                    (II) the last day of the 6th week 
                                after the week in which the Secretary 
                                of Labor issues a certification 
                                covering such worker.
                        In cases of extenuating circumstances relating 
                        to enrollment of a worker in a training program 
                        under this section, the Secretary of Labor may 
                        extend the time for enrollment for a period of 
                        not to exceed 30 days.
                    (D) Job search allowances of the type described in 
                section 237 of the Trade Act of 1974 (19 U.S.C. 2297).
                    (E) Relocation allowances of the type described in 
                section 238 of the Trade Act of 1974 (19 U.S.C. 2298).
    (e) Ineligibility of Individuals Receiving Payments for Lost 
Tobacco Quota.--No benefits or services may be provided under this 
section to any individual who has received payments for lost tobacco 
quota under section 201.
    (f) Effective Date.--This section shall take effect on the date 
that is the later of--
            (1) October l, 1998; or
            (2) the date on which legislation implementing the national 
        tobacco settlement is enacted.
    (g) Termination Date.--No assistance, vouchers, allowances, or 
other payments may be provided under this section after the date that 
is the earlier of--
            (1) the date that is 10 years after the effective date of 
        this section under subsection (g); or
            (2) the date on which legislation establishing a program 
        providing dislocated workers with comprehensive assistance 
        substantially similar to the assistance provided by this 
        section becomes effective.
    (h) Available Funds.--Amounts in the Tobacco Community 
Revitalization Trust Fund shall be available for making expenditures 
after October 1, 1998, for assistance provided under the tobacco worker 
transition program, but not to exceed $50,000,000 for any fiscal year.

SEC. 603. FARMER OPPORTUNITY GRANTS.

    (a) Authority to Provide Farmer Opportunity Grants.--Part A of 
title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.) 
is amended by adding at the end the following:

                 ``Subpart 9--Farmer Opportunity Grants

``SEC. 420D. STATEMENT OF PURPOSE.

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

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

    ``(a) Program Authority and Method of Distribution.--
            ``(1) Program authority.--From amounts made available under 
        section 603(b) of the Tobacco Community Economic Stabilization 
        and Support Act, the Secretary, during the period beginning 
        July 1, 1999, and ending September 30, 2024, shall pay to each 
        eligible institution such sums as may be necessary to pay to 
        each eligible student (determined in accordance with section 
        420F) for each academic year during which that student is in 
        attendance at an institution of higher education, as an 
        undergraduate, a farmer opportunity grant in the amount for 
        which that student is eligible, as determined pursuant to 
        subsection (b). Not less than 85 percent of such sums shall be 
        advanced to eligible institutions prior to the start of each 
        payment period and shall be based upon an amount requested by 
        the institution as needed to pay eligible students, except that 
        this sentence shall not be construed to limit the authority of 
        the Secretary to place an institution on a reimbursement system 
        of payment.
            ``(2) Construction.--Nothing in this section shall be 
        construed to prohibit the Secretary from paying directly to 
        students, in advance of the beginning of the academic term, an 
        amount for which the students are eligible, in cases where the 
        eligible institution elects not to participate in the 
        disbursement system required by paragraph (1).
            ``(3) Designation.--Grants made under this subpart shall be 
        known as `farmer opportunity grants'.
    ``(b) Amount of Grants.--
            ``(1) Amounts.--
                    ``(A) In general.--The amount of the grant for a 
                student eligible under this subpart shall be--
                            ``(i) $1,700 for each of the academic years 
                        1999-2000 through 2003-2004;
                            ``(ii) $2,000 for each of the academic 
                        years 2004-2005 through 2008-2009;
                            ``(iii) $2,300 for each of the academic 
                        years 2009-2010 through 2013-2014;
                            ``(iv) $2,600 for each of the academic 
                        years 2014-2015 through 2018-2019; and
                            ``(v) $2,900 for each of the academic years 
                        2019-2020 through 2023-2024.
                    ``(B) Part-time rule.--In any case where a student 
                attends an institution of higher education on less than 
                a full-time basis (including a student who attends an 
                institution of higher education on less than a half-
                time basis) during any academic year, the amount of the 
                grant for which that student is eligible shall be 
                reduced in proportion to the degree to which that 
                student is not so attending on a full-time basis, in 
                accordance with a schedule of reductions established by 
                the Secretary for the purposes of this subparagraph, 
                computed in accordance with this subpart. Such schedule 
                of reductions shall be established by regulation and 
                published in the Federal Register.
            ``(2) Maximum.--No grant under this subpart shall exceed 
        the cost of attendance (as described in section 472) at the 
        institution at which that student is in attendance. If, with 
        respect to any student, it is determined that the amount of a 
        grant exceeds the cost of attendance for that year, the amount 
        of the grant shall be reduced to an amount equal to the cost of 
        attendance at such institution.
            ``(3) Prohibition.--No grant shall be awarded under this 
        subpart to any individual who is incarcerated in any Federal, 
        State, or local penal institution.
    ``(c) Period of Eligibility for Grants.--
            ``(1) In general.--The period during which a student may 
        receive grants shall be the period required for the completion 
        of the first undergraduate baccalaureate course of study being 
        pursued by that student at the institution at which the student 
        is in attendance, except that any period during which the 
        student is enrolled in a noncredit or remedial course of study 
        as described in paragraph (2) shall not be counted for the 
        purpose of this paragraph.
            ``(2) Construction.--Nothing in this section shall be 
        construed to--
                    ``(A) exclude from eligibility courses of study 
                that are noncredit or remedial in nature and that are 
                determined by the institution to be necessary to help 
                the student be prepared for the pursuit of a first 
                undergraduate baccalaureate degree or certificate or, 
                in the case of courses in English language instruction, 
                to be necessary to enable the student to utilize 
                already existing knowledge, training, or skills; and
                    ``(B) exclude from eligibility programs of study 
                abroad that are approved for credit by the home 
                institution at which the student is enrolled.
            ``(3) Prohibition.--No student is entitled to receive 
        farmer opportunity grant payments concurrently from more than 1 
        institution or from the Secretary and an institution.
    ``(d) Applications for Grants.--
            ``(1) In general.--The Secretary shall from time to time 
        set dates by which students shall file applications for grants 
        under this subpart. The filing of applications under this 
        subpart shall be coordinated with the filing of applications 
        under section 401(c).
            ``(2) Information and assurances.--Each student desiring a 
        grant for any year shall file with the Secretary an application 
        for the grant containing such information and assurances as the 
        Secretary may deem necessary to enable the Secretary to carry 
        out the Secretary's functions and responsibilities under this 
        subpart.
    ``(e) Distribution of Grants to Students.--Payments under this 
section shall be made in accordance with regulations promulgated by the 
Secretary for such purpose, in such manner as will best accomplish the 
purpose of this section. Any disbursement allowed to be made by 
crediting the student's account shall be limited to tuition and fees 
and, in the case of institutionally owned housing, room and board. The 
student may elect to have the institution provide other such goods and 
services by crediting the student's account.
    ``(f) Insufficient Funding.--If, for any fiscal year, the funds 
made available to carry out this subpart from the Tobacco Community 
Revitalization Trust Fund are insufficient to satisfy fully all grants 
for students determined to be eligible under section 420F, the 
amount of the grant provided under subsection (b) shall be reduced on a 
pro rata basis among all eligible students.
    ``(g) Treatment of Institutions and Students Under Other Laws.--Any 
institution of higher education that enters into an agreement with the 
Secretary to disburse to students attending that institution the 
amounts those students are eligible to receive under this subpart shall 
not be deemed, by virtue of such agreement, to be a contractor 
maintaining a system of records to accomplish a function of the 
Secretary. Recipients of farmer opportunity grants shall not be 
considered to be individual grantees for purposes of the Drug-Free 
Workplace Act of 1988 (41 U.S.C. 701 et seq.).

``SEC. 420F. STUDENT ELIGIBILITY.

    ``(a) In General.--In order to receive any grant under this 
subpart, a student shall--
            ``(1) be a member of a tobacco farm family in accordance 
        with subsection (b);
            ``(2) be enrolled or accepted for enrollment in a degree, 
        certificate, or other program (including a program of study 
        abroad approved for credit by the eligible institution at which 
        such student is enrolled) leading to a recognized educational 
        credential at an institution of higher education that is an 
        eligible institution in accordance with section 487, and not be 
        enrolled in an elementary or secondary school;
            ``(3) if the student is presently enrolled at an 
        institution of higher education, be maintaining satisfactory 
        progress in the course of study the student is pursuing in 
        accordance with subsection (c);
            ``(4) not owe a refund on grants previously received at any 
        institution of higher education under this title, or be in 
        default on any loan from a student loan fund at any institution 
        provided for in part D, or a loan made, insured, or guaranteed 
        by the Secretary under this title for attendance at any 
        institution;
            ``(5) file with the institution of higher education that 
        the student intends to attend, or is attending, a document, 
        that need not be notarized, but that shall include--
                    ``(A) a statement of educational purpose stating 
                that the money attributable to such grant will be used 
                solely for expenses related to attendance or continued 
                attendance at such institution; and
                    ``(B) such student's social security number; and
            ``(6) be a citizen of the United States.
    ``(b) Tobacco Farm Families.--
            ``(1) In general.--For the purpose of subsection (a)(1), a 
        student is a member of a tobacco farm family if during calendar 
        year 1996 the student was--
                    ``(A) an individual who--
                            ``(i) is an active tobacco producer (as 
                        defined in section 2 of the Tobacco Community 
                        Economic Stabilization and Support Act); or
                            ``(ii) is otherwise actively engaged in the 
                        production of tobacco;
                    ``(B) a spouse, son, daughter, stepson, or 
                stepdaughter of an individual described in subparagraph 
                (A);
                    ``(C) an individual--
                            ``(i) who was a brother, sister, 
                        stepbrother, stepsister, son-in-law, or 
                        daughter-in-law of an individual described in 
                        subparagraph (A); and
                            ``(ii) whose principal place of residence 
                        was the home of the individual described in 
                        subparagraph (A); or
                    ``(D) an individual who was a dependent (within the 
                meaning of section 152 of the Internal Revenue Code of 
                1986) of an individual described in subparagraph (A).
            ``(2) Administration.--On request, the Secretary of 
        Agriculture shall provide to the Secretary such information as 
        is necessary to carry out this subsection.
    ``(c) Satisfactory Progress.--
            ``(1) In general.--For the purpose of subsection (a)(3), a 
        student is maintaining satisfactory progress if--
                    ``(A) the institution at which the student is in 
                attendance reviews the progress of the student at the 
                end of each academic year, or its equivalent, as 
                determined by the institution; and
                    ``(B) the student has at least a cumulative C 
                average or its equivalent, or academic standing 
                consistent with the requirements for graduation, as 
                determined by the institution, at the end of the second 
                such academic year.
            ``(2) Special rule.--Whenever a student fails to meet the 
        eligibility requirements of subsection (a)(3) as a result of 
        the application of this subsection and subsequent to that 
        failure the student has academic standing consistent with the 
        requirements for graduation, as determined by the institution, 
        for any grading period, the student may, subject to this 
        subsection, again be eligible under subsection (a)(3) for a 
        grant under this subpart.
            ``(3) Waiver.--Any institution of higher education at which 
        the student is in attendance may waive paragraph (1) or (2) for 
        undue hardship based on--
                    ``(A) the death of a relative of the student;
                    ``(B) the personal injury or illness of the 
                student; or
                    ``(C) special circumstances as determined by the 
                institution.
    ``(d) Students Who Are Not Secondary School Graduates.--In order 
for a student who does not have a certificate of graduation from a 
school providing secondary education, or the recognized equivalent of 
such certificate, to be eligible for any assistance under this subpart, 
the student shall meet either 1 of the following standards:
            ``(1) Examination.--The student shall take an independently 
        administered examination and shall achieve a score, specified 
        by the Secretary, demonstrating that such student can benefit 
        from the education or training being offered. Such examination 
        shall be approved by the Secretary on the basis of compliance 
with such standards for development, administration, and scoring as the 
Secretary may prescribe in regulations.
            ``(2) Determination.--The student shall be determined as 
        having the ability to benefit from the education or training in 
        accordance with such process as the State shall prescribe. Any 
        such process described or approved by a State for the purposes 
        of this section shall be effective 6 months after the date of 
        submission to the Secretary unless the Secretary disapproves 
        such process. In determining whether to approve or disapprove 
        such process, the Secretary shall take into account the 
        effectiveness of such process in enabling students without 
        secondary school diplomas or the recognized equivalent to 
        benefit from the instruction offered by institutions utilizing 
        such process, and shall also take into account the cultural 
        diversity, economic circumstances, and educational preparation 
        of the populations served by the institutions.
    ``(e) Special Rule for Correspondence Courses.--A student shall not 
be eligible to receive a grant under this subpart for a correspondence 
course unless such course is part of a program leading to an associate, 
bachelor, or graduate degree.
    ``(f) Courses Offered Through Telecommunications.--
            ``(1) Relation to correspondence courses.--A student 
        enrolled in a course of instruction at an eligible institution 
        of higher education (other than an institute or school that 
        meets the definition in section 521(4)(C) of the Carl D. 
        Perkins Vocational and Applied Technology Education Act (20 
        U.S.C. 2471(4)(C))) that is offered in whole or in part through 
        telecommunications and leads to a recognized associate, 
        bachelor, or graduate degree conferred by such institution 
        shall not be considered to be enrolled in correspondence 
        courses unless the total amount of telecommunications and 
        correspondence courses at such institution equals or exceeds 50 
        percent of such courses.
            ``(2) Restriction or reductions of financial aid.--A 
        student's eligibility to receive a grant under this subpart may 
        be reduced if a financial aid officer determines under the 
        discretionary authority provided in section 479A that 
        telecommunications instruction results in a substantially 
        reduced cost of attendance to such student.
            ``(3) Definition.--For the purposes of this subsection, the 
        term `telecommunications' means the use of television, audio, 
        or computer transmission, including open broadcast, closed 
        circuit, cable, microwave, or satellite, audio conferencing, 
        computer conferencing, or video cassettes or discs, except that 
        such term does not include a course that is delivered using 
        video cassette or disc recordings at such institution and that 
        is not delivered in person to other students of that 
        institution.
    ``(g) Study Abroad.--Nothing in this subpart shall be construed to 
limit or otherwise prohibit access to study abroad programs approved by 
the home institution at which a student is enrolled. An otherwise 
eligible student who is engaged in a program of study abroad approved 
for academic credit by the home institution at which the student is 
enrolled shall be eligible to receive a grant under this subpart, 
without regard to whether such study abroad program is required as part 
of the student's degree program.
    ``(h) Verification of Social Security Number.--The Secretary, in 
cooperation with the Commissioner of Social Security, shall verify any 
social security number provided by a student to an eligible institution 
under subsection (a)(5)(B) and shall enforce the following conditions:
            ``(1) Pending verification.--Except as provided in 
        paragraphs (2) and (3), an institution shall not deny, reduce, 
        delay, or terminate a student's eligibility for assistance 
        under this subpart because social security number verification 
        is pending.
            ``(2) Denial or termination.--If there is a determination 
        by the Secretary that the social security number provided to an 
        eligible institution by a student is incorrect, the institution 
        shall deny or terminate the student's eligibility for any grant 
        under this subpart until such time as the student provides 
        documented evidence of a social security number that is 
        determined by the institution to be correct.
            ``(3) Construction.--Nothing in this subsection shall be 
        construed to permit the Secretary to take any compliance, 
        disallowance, penalty, or other regulatory action against--
                    ``(A) any institution of higher education with 
                respect to any error in a social security number, 
                unless such error was a result of fraud on the part of 
                the institution; or
                    ``(B) any student with respect to any error in a 
                social security number, unless such error was a result 
                of fraud on the part of the student.''.
    (b) Available Funds.--Amounts in the Tobacco Community 
Revitalization Trust Fund shall be available for making expenditures 
after October 1, 1998, under subpart 9 of part A of title IV of the 
Higher Education Act of 1965, as added by this section, for farmer 
opportunity grants, but not to exceed--
            (1) $42,500,000 for each of the academic years 1999-2000 
        through 2003-2004;
            (2) $50,000,000 for each of the academic years 2004-2005 
        through 2008-2009;
            (3) $57,500,000 for each of the academic years 2009-2010 
        through 2013-2014;
            (4) $65,000,000 for each of the academic years 2014-2015 
        through 2018-2019; and
            (5) $72,500,000 for each of the academic years 2019-2020 
        through 2023-2024.

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

    (a) Research Grants Authorized.--The Secretary of Agriculture may 
make grants under this section on the basis of a competitive 
application process (and in accordance with such regulations that the 
Secretary may promulgate) to an eligible institution to assist the 
institution to conduct research regarding alternative uses for tobacco 
production and processing equipment.
    (b) Eligible Institutions.--A land-grant college or university (as 
defined in section 1404(10) of the National Agricultural Research, 
Extension, and Teaching Policy Act of 1977 (7 U.S.C. 3103(10))) and 
historically black colleges and universities shall be eligible for 
grants under this section.
    (c) Period of Grant.--The Secretary may award a grant under this 
section for a period not to exceed five years.
    (d) Preferences.--In making grants under this section, the 
Secretary shall give preference to proposals that--
            (1) demonstrate linkages with--
                    (A) agencies of the Department of Agriculture;
                    (B) other related Federal research laboratories and 
                agencies;
                    (C) other colleges and universities; and
                    (D) private industry; and
            (2) guarantee matching funds in excess of the amounts 
        required by subsection (e).
    (e) Matching Funds.--An eligible institution shall contribute an 
amount of non-Federal funds that is at least equal to the amount of 
grant funds received under this section.
    (f) Limitation on Use of Grant Funds.--Funds provided under this 
section may not be used for the planning, repair, rehabilitation, 
acquisition, or construction of a building or facility.
    (g) Available Funds.--Amounts in the Tobacco Community 
Revitalization Trust Fund shall be available for making expenditures 
after October 1, 1998, for research grants regarding alternative uses 
of tobacco production and processing equipment, but not to exceed 
$3,000,000 for any fiscal year.

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

SEC. 701. PAYMENTS FOR LOST TOBACCO QUOTA.

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

``SEC. 139. PAYMENTS FOR LOST TOBACCO QUOTA.

    ``(a) Exclusion From Gross Income.--In the case of an eligible 
person, gross income does not include any amount which (but for this 
subsection) would be includible in gross income by reason of receipt of 
a payment for lost tobacco quota.
    ``(b) Reduction in Basis of Farm Property.--The amount excluded 
from gross income under subsection (a) shall be applied to reduce the 
basis of the real property of the taxpayer to which the tobacco quota 
relates. Such reduction shall be applied at the beginning of the 
taxable year following the taxable year in which such exclusion occurs.
    ``(c) Limitation.--The amount excluded under subsection (a) shall 
not exceed the aggregate adjusted bases of depreciable real property 
(determined after any reductions under subsection (b)) held by the 
taxpayer immediately before the receipt of the payment for lost tobacco 
quota.
    ``(d) Loss.--No loss shall be allowed under this subtitle on a sale 
or other disposition of a tobacco quota with respect to which a payment 
for lost tobacco quota is excluded from gross income under this 
section.
    ``(e) Definitions.--For purposes of this section--
            ``(1) Eligible person.--The term `eligible person' means a 
        quota holder, quota lessee, or quota tenant.
            ``(2) Quota holder, quota lessee, quota tenant.--The terms 
        `quota holder', `quota lessee', and `quota tenant' have the 
        meanings given such terms by section 2 of the Tobacco Community 
        Economic Stabilization and Support Act.
            ``(3) Payment for lost tobacco quota.--The term `payment 
        for lost tobacco quota' means a payment under title IV or V of 
        the Tobacco Community Economic Stabilization and Support Act.
            ``(4) Tobacco quota.--The term `tobacco quota' means a 
        tobacco farm marketing quota or farm acreage allotment that was 
        established under the Agricultural Adjustment Act of 1938 for 
        any of the 1995, 1996, or 1997 crop years.''.
    (b) Clerical Amendments.--The table of sections for part III of 
subchapter B of chapter 1 of such Code is amended by striking the item 
relating to section 139 and inserting after the item relating to 
section 138 the following new items:

                              ``Sec. 139. Payments for lost tobacco 
                                        quota.
                              ``Sec. 140. Cross references to other 
                                        Acts.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the beginning of the 1999 marketing 
year for any kind of tobacco.

                          TITLE VIII--IMMUNITY

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

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