[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3867 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 3867

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


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 14, 1998

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

_______________________________________________________________________

                                 A BILL


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

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

SECTION 1001. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Long-Term Economic 
Assistance for Farmers Act'' or the ``LEAF Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1001. Short title; table of contents.
Sec. 1002. Definitions.
        Subtitle A--Tobacco Community Revitalization Trust Fund

Sec. 1011. Establishment of trust fund.
Sec. 1012. Contributions by tobacco product manufacturers and 
                            importers.
            Subtitle B--Tobacco Market Transition Assistance

Sec. 1021. Payments for lost tobacco quota.
Sec. 1022. Industry payments for all department costs associated with 
                            tobacco production.
Sec. 1023. Tobacco community economic development grants.
Sec. 1024. Flue-cured tobacco production permits.
Sec. 1025. Modifications in Federal tobacco programs.
          Subtitle C--Farmer and Worker Transition Assistance

Sec. 1031. Tobacco worker transition program.
Sec. 1032. Farmer opportunity grants.
                          Subtitle D--Immunity

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

SEC. 1002. DEFINITIONS.

    In this Act:
            (1) Participating tobacco producer.--The term 
        ``participating tobacco producer'' means a quota holder, quota 
        lessee, or quota tenant.
            (2) Quota holder.--The term ``quota holder'' means a 
        producer that owns a farm for which a tobacco farm marketing 
        quota or farm acreage allotment was established under the 
        Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.) for 
        any of the 1995, 1996, or 1997 crop years.
            (3) Quota lessee.--The term ``quota lessee'' means--
                    (A) a producer that owns a farm that produced 
                tobacco pursuant to a lease and transfer to that farm 
                of all or part of a tobacco farm marketing quota or 
                farm acreage allotment established under the 
                Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et 
                seq.) for any of the 1995, 1996, or 1997 crop years; or
                    (B) a producer that rented land from a farm 
                operator to produce tobacco under a tobacco farm 
                marketing quota or farm acreage allotment established 
                under the Agricultural Adjustment Act of 1938 (7 U.S.C. 
                1281 et seq.) for any of the 1995, 1996, or 1997 crop 
                years.
            (4) Quota tenant.--The term ``quota tenant'' means a 
        producer that--
                    (A) is the principal producer, as determined by the 
                Secretary, of tobacco on a farm where tobacco is 
                produced pursuant to a tobacco farm marketing quota or 
                farm acreage allotment established under the 
                Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et 
                seq.) for any of the 1995, 1996, or 1997 crop years; 
                and
                    (B) is not a quota holder or quota lessee.
            (5) Secretary.--The term ``Secretary'' means--
                    (A) in subtitles A and B, the Secretary of 
                Agriculture; and
                    (B) in section 1031, the Secretary of Labor.
            (6) Tobacco product importer.--The term ``tobacco product 
        importer'' has the meaning given the term ``importer'' in 
        section 5702 of the Internal Revenue Code of 1986.
            (7) Tobacco product manufacturer.--
                    (A) In general.--The term ``tobacco product 
                manufacturer'' has the meaning given the term 
                ``manufacturer of tobacco products'' in section 5702 of 
                the Internal Revenue Code of 1986.
                    (B) Exclusion.--The term ``tobacco product 
                manufacturer'' does not include a person that 
                manufactures cigars or pipe tobacco.
            (8) Tobacco warehouse owner.--The term ``tobacco warehouse 
        owner'' means a warehouseman that participated in an auction 
        market (as defined in the first section of the Tobacco 
        Inspection Act (7 U.S.C. 511)) during the 1998 marketing year.
            (9) Trust fund.--The term ``Trust Fund'' means the Tobacco 
        Community Revitalization Trust Fund established under section 
        1011.

        Subtitle A--Tobacco Community Revitalization Trust Fund

SEC. 1011. ESTABLISHMENT OF TRUST FUND.

    (a) In General.--There is established in the Treasury of the United 
States a trust fund to be known as the ``Tobacco Community 
Revitalization Trust Fund'', consisting of such amounts as may be 
appropriated or credited to the Trust Fund. The Trust Fund shall be 
administered by the Secretary.
    (b) Transfers to Trust Fund.--There are appropriated and 
transferred to the Trust Fund for each fiscal year--
            (1) amounts contributed by tobacco product manufacturers 
        and tobacco product importers under section 1012; and
            (2) an amount from the National Tobacco Settlement Trust 
        Fund established by section 401 equal to the aggregate amount 
        of assessments under section 1012 against participating tobacco 
        manufacturers for that fiscal year.
    (c) Repayable Advances.--
            (1) Authorization.--There are authorized to be appropriated 
        to the Trust Fund, as repayable advances, such sums as may from 
        time to time be necessary to make expenditures under subsection 
        (d).
            (2) Repayment with interest.--Repayable advances made to 
        the Trust Fund shall be repaid, and interest on the advances 
        shall be paid, to the general fund of the Treasury when the 
        Secretary of the Treasury determines that moneys are available 
        in the Trust Fund to make the payments.
            (3) Rate of interest.--Interest on an advance made under 
        this subsection shall be at a rate determined by the Secretary 
        of Treasury (as of the close of the calendar month preceding 
        the month in which the advance is made) that is equal to the 
        current average market yield on outstanding marketable 
        obligations of the United States with remaining period to 
        maturity comparable to the anticipated period during which the 
        advance will be outstanding.
    (d) Expenditures From Trust Fund.--Amounts in the Trust Fund shall 
be available for making expenditures after October 1, 1998, to meet 
those necessary obligations of the Federal Government that are 
authorized to be paid under--
            (1) section 1021 for payments for lost tobacco quota for 
        each of fiscal years 1999 through 2023, but not to exceed 
        $1,650,000,000 for any fiscal year except to the extent the 
        payments are made in accordance with subsection (d)(12) or 
        (e)(9) of section 1021;
            (2) section 1022 for industry payments for all costs of the 
        Department of Agriculture associated with the production of 
        tobacco;
            (3) section 1023 for tobacco community economic development 
        grants, but not to exceed--
                    (A) $375,000,000 for each of fiscal years 1999 
                through 2008, less any amount required to be paid under 
                section 1022 for the fiscal year; and
                    (B) $450,000,000 for each of fiscal year 2009 
                through 2023, less any amount required to be paid under 
                section 1022 during the fiscal year;
            (4) section 1031 for assistance provided under the tobacco 
        worker transition program, but not to exceed $25,000,000 for 
        any fiscal year; and
            (5) subpart 9 of part A of title IV of the Higher Education 
        Act of 1965 for farmer opportunity grants, but not to exceed--
                    (A) $42,500,000 for each of the academic years 
                1999-2000 through 2003-2004;
                    (B) $50,000,000 for each of the academic years 
                2004-2005 through 2008-2009;
                    (C) $57,500,000 for each of the academic years 
                2009-2010 through 2013-2014;
                    (D) $65,000,000 for each of the academic years 
                2014-2015 through 2018-2019; and
                    (E) $72,500,000 for each of the academic years 
                2019-2020 through 2023-2024.
    (e) Budgetary Treatment.--This section constitutes budget authority 
in advance of appropriations Acts and represents the obligation of the 
Federal Government to provide payments to States and eligible persons 
in accordance with this Act.

SEC. 1012. CONTRIBUTIONS BY TOBACCO PRODUCT MANUFACTURERS AND 
              IMPORTERS.

    (a) Definition of Market Share.--In this section, the term ``market 
share'' means the ratio of--
            (1) the tax liability of a tobacco product manufacturer or 
        tobacco product importer for a calendar year under section 5703 
        of the Internal Revenue Code of 1986; to
            (2) the tax liability of all tobacco product manufacturers 
        or tobacco product importers for the calendar year under 
        section 5703 of the Internal Revenue Code of 1986.
    (b) Determinations.--Not later than September 30 of each fiscal 
year, the Secretary of the Treasury shall--
            (1) determine--
                    (A) the market share of each tobacco product 
                manufacturer or tobacco product importer during the 
                most recent calendar year;
                    (B) the total amount of assessments payable for the 
                subsequent fiscal year under subsection (c); and
                    (C) the amount of an assessment payable by the 
                tobacco product manufacturer or tobacco product 
                importer for the fiscal year under subsection (d); and
            (2) notify each tobacco product manufacturer and tobacco 
        product importer of the determinations made under paragraph (1) 
        with respect to the manufacturer or importer.
    (c) Total Amount of Assessments.--
            (1) In general.--The total amount of assessments payable by 
        all tobacco product manufacturers and tobacco product importers 
        into the Trust Fund for a fiscal year shall be equal to--
                    (A) the amount of the contribution to the Trust 
                Fund for the fiscal year required under paragraph (2); 
                less
                    (B) any amount made available during the preceding 
                fiscal year to the Trust Fund out of funds transferred 
                from National Tobacco Settlement Trust Fund under 
                section 1011(b)(2).
            (2) Trust fund contributions.--The amount of the 
        contribution to the Trust Fund shall be--
                    (A) $2,100,000,000 for each of fiscal years 1999 
                through 2008;
                    (B) $500,000,000 for each of fiscal years 2009 
                through 2023; and
                    (C) for fiscal year 2024 and each subsequent fiscal 
                year, the amount payable under section 1022.
    (d) Individual Amount of Assessments.--The amount of an assessment 
payable by each tobacco product manufacturer and tobacco product 
importer into the Trust Fund for a fiscal year shall be equal to the 
product obtained by multiplying--
            (1) the total amount of assessments payable by all tobacco 
        product manufacturers and tobacco product importers for the 
        fiscal year under subsection (c); and
            (2) the market share of the tobacco product manufacturer or 
        tobacco product importer during the most recent calendar year 
        determined under subsection (b)(1)(A).
    (e) Credit for Payments by Participating Tobacco Product 
Manufacturers.--There shall be allowed as a credit against the amount 
of any assessment under this section for a participating tobacco 
product manufacturer an amount equal to the amount paid by that 
manufacturer under section 403 of this Act (other than as penalty or 
interest) for the calendar year ending in that fiscal year.

            Subtitle B--Tobacco Market Transition Assistance

SEC. 1021. PAYMENTS FOR LOST TOBACCO QUOTA.

    (a) In General.--Beginning with the 1999 marketing year, the 
Secretary shall make payments for lost tobacco quota to eligible quota 
holders, quota lessees, and quota tenants as reimbursement for lost 
tobacco quota as a result of a decrease in demand for domestically 
produced tobacco.
    (b) Eligibility.--To be eligible to receive payments under this 
section, a quota holder, quota lessee, or quota tenant shall--
            (1) prepare and submit to the Secretary an application at 
        such time, in such manner, and containing such information as 
        the Secretary may require, including information sufficient to 
        make the demonstration required under paragraph (2); and
            (2) demonstrate to the satisfaction of the Secretary that, 
        with respect to the 1997 marketing year--
                    (A) the producer was a quota holder and realized 
                income from the production of tobacco through--
                            (i) the active production of tobacco;
                            (ii) the lease and transfer of tobacco 
                        quota to another farm;
                            (iii) the rental of all or part of the farm 
                        of the quota holder, including the right to 
                        produce tobacco, to another tobacco producer; 
                        or
                            (iv) the hiring of a quota tenant to 
                        produce tobacco;
                    (B) the producer was a quota lessee; or
                    (C) the producer was a quota tenant.
    (c) Base Quota Level.--
            (1) In general.--The Secretary shall determine, for each 
        quota holder, quota lessee, and quota tenant, the base quota 
        level for the 1995 through 1997 marketing years.
            (2) Quota holders.--The base quota level for a quota holder 
        shall be equal to the average tobacco farm marketing quota 
        established for the farm owned by the quota holder for the 1995 
        through 1997 marketing years.
            (3) Quota lessees.--The base quota level for a quota lessee 
        shall be equal to--
                    (A) 50 percent of the average number of pounds of 
                tobacco quota established for a farm for the 1995 
                through 1997 marketing years--
                            (i) that was leased and transferred to a 
                        farm owned by the quota lessee; or
                            (ii) for which the rights to produce the 
                        tobacco were rented to the quota lessee; less
                    (B) 25 percent of the average number of pounds of 
                tobacco quota described in subparagraph (A) for which a 
                quota tenant was the principal producer of the tobacco 
                quota.
            (4) Quota tenants.--The base quota level for a quota tenant 
        shall be equal to the sum of--
                    (A) 50 percent of the average number of pounds of 
                tobacco quota established for a farm for the 1995 
                through 1997 marketing years--
                            (i) that was owned by a quota holder; and
                            (ii) for which the quota tenant was the 
                        principal producer of the tobacco on the farm; 
                        and
                    (B) 25 percent of the average number of pounds of 
                tobacco quota for the 1995 through 1997 marketing 
                years--
                            (i)(I) that was leased and transferred to a 
                        farm owned by the quota lessee; or
                            (II) for which the rights to produce the 
                        tobacco were rented to the quota lessee; and
                            (ii) for which the quota tenant was the 
                        principal producer of the tobacco on the farm.
            (5) Marketing quotas other than poundage quotas.--
                    (A) In general.--For each type of tobacco for which 
                there is a marketing quota or allotment (on an acreage 
                basis), the base quota level for each quota holder, 
                quota lessee, or quota tenant shall be determined in 
                accordance with this subsection (based on a poundage 
                conversion) by multiplying--
                            (i) the average tobacco farm marketing 
                        quota or allotment for the 1995 through 1997 
                        marketing years; and
                            (ii) the average yield per acre for the 
                        farm for the type of tobacco for the marketing 
                        years.
                    (B) Yields not available.--If the average yield per 
                acre is not available for a farm, the Secretary shall 
                calculate the base quota for the quota holder, quota 
                lessee, or quota tenant (based on a poundage 
                conversion) by determining the amount equal to the 
                product obtained by multiplying--
                            (i) the average tobacco farm marketing 
                        quota or allotment for the 1995 through 1997 
                        marketing years; and
                            (ii) the average county yield per acre for 
                        the county in which the farm is located for the 
                        type of tobacco for the marketing years.
    (d) Payments for Lost Tobacco Quota for Types of Tobacco Other Than 
Flue-Cured Tobacco.--
            (1) Allocation of funds.--Of the amounts made available 
        under section 1011(d)(1) for payments for lost tobacco quota, 
        the Secretary shall make available for payments under this 
        subsection an amount that bears the same ratio to the amounts 
        made available as--
                    (A) the sum of all national marketing quotas for 
                all types of tobacco other than flue-cured tobacco 
                during the 1995 through 1997 marketing years; bears to
                    (B) the sum of all national marketing quotas for 
                all types of tobacco during the 1995 through 1997 
                marketing years.
            (2) Option to relinquish quota.--
                    (A) In general.--Each quota holder shall be given 
                the option to relinquish the farm marketing quota or 
                farm acreage allotment of the quota holder in exchange 
                for a payment made under paragraph (3).
                    (B) Notification.--A quota holder shall give 
                notification of the intention of the quota holder to 
                exercise the option at such time and in such manner as 
                the Secretary may require, but not later than January 
                15, 1999.
            (3) Payments for lost tobacco quota to quota holders 
        exercising options to relinquish quota.--
                    (A) In general.--Subject to subparagraph (E), for 
                each of fiscal years 1999 through 2008, the Secretary 
                shall make annual payments for lost tobacco quota to 
                each quota holder that has relinquished the farm 
                marketing quota or farm acreage allotment of the quota 
                holder under paragraph (2).
                    (B) Amount.--The amount of a payment made to a 
                quota holder described in subparagraph (A) for a 
                marketing year shall equal \1/10\ of the lifetime 
                limitation established under subparagraph (E).
                    (C) Timing.--The Secretary shall begin making 
                annual payments under this paragraph for the marketing 
                year in which the farm marketing quota or farm acreage 
                allotment is relinquished.
                    (D) Additional payments.--The Secretary may 
                increase annual payments under this paragraph in 
accordance with paragraph (7)(E) to the extent that funding is 
available.
                    (E) Lifetime limitation on payments.--The total 
                amount of payments made under this paragraph to a quota 
                holder shall not exceed the product obtained by 
                multiplying the base quota level for the quota holder 
                by $8 per pound.
            (4) Reissuance of quota.--
                    (A) Reallocation to lessee or tenant.--If a quota 
                holder exercises an option to relinquish a tobacco farm 
                marketing quota or farm acreage allotment under 
                paragraph (2), a quota lessee or quota tenant that was 
                the primary producer during the 1997 marketing year of 
                tobacco pursuant to the farm marketing quota or farm 
                acreage allotment, as determined by the Secretary, 
                shall be given the option of having an allotment of the 
                farm marketing quota or farm acreage allotment 
                reallocated to a farm owned by the quota lessee or 
                quota tenant.
                    (B) Conditions for reallocation.--
                            (i) Timing.--A quota lessee or quota tenant 
                        that is given the option of having an allotment 
                        of a farm marketing quota or farm acreage 
                        allotment reallocated to a farm owned by the 
                        quota lessee or quota tenant under subparagraph 
                        (A) shall have 1 year from the date on which a 
                        farm marketing quota or farm acreage allotment 
                        is relinquished under paragraph (2) to exercise 
                        the option.
                            (ii) Limitation on acreage allotment.--In 
                        the case of a farm acreage allotment, the 
                        acreage allotment determined for any farm 
                        subsequent to any reallocation under 
subparagraph (A) shall not exceed 50 percent of the acreage of cropland 
of the farm owned by the quota lessee or quota tenant.
                            (iii) Limitation on marketing quota.--In 
                        the case of a farm marketing quota, the 
                        marketing quota determined for any farm 
                        subsequent to any reallocation under 
                        subparagraph (A) shall not exceed an amount 
                        determined by multiplying--
                                    (I) the average county farm yield, 
                                as determined by the Secretary; and
                                    (II) 50 percent of the acreage of 
                                cropland of the farm owned by the quota 
                                lessee or quota tenant.
                    (C) Eligibility of lessee or tenant for payments.--
                If a farm marketing quota or farm acreage allotment is 
                reallocated to a quota lessee or quota tenant under 
                subparagraph (A)--
                            (i) the quota lessee or quota tenant shall 
                        not be eligible for any additional payments 
                        under paragraph (5) or (6) as a result of the 
                        reallocation; and
                            (ii) the base quota level for the quota 
                        lessee or quota tenant shall not be increased 
                        as a result of the reallocation.
                    (D) Reallocation to quota holders within same 
                county or state.--
                            (i) In general.--Except as provided in 
                        clause (ii), if there was no quota lessee or 
                        quota tenant for the farm marketing quota or 
                        farm acreage allotment for a type of tobacco, 
                        or if no quota lessee or quota tenant exercises 
                        an option of having an allotment of the farm 
                        marketing quota or farm acreage allotment for a 
                        type of tobacco reallocated, the Secretary 
                        shall reapportion the farm marketing quota or 
                        farm acreage allotment among the remaining 
                        quota holders for the type of tobacco within 
                        the same county.
                            (ii) Cross-county leasing.--In a State in 
                        which cross-county leasing is authorized 
                        pursuant to section 319(l) of the Agricultural 
                        Adjustment Act of 1938 (7 U.S.C. 1314e(l)), the 
                        Secretary shall reapportion the farm marketing 
                        quota among the remaining quota holders for the 
                        type of tobacco within the same State.
                            (iii) Eligibility of quota holder for 
                        payments.--If a farm marketing quota is 
                        reapportioned to a quota holder under this 
                        subparagraph--
                                    (I) the quota holder shall not be 
                                eligible for any additional payments 
                                under paragraph (5) or (6) as a result 
                                of the reapportionment; and
                                    (II) the base quota level for the 
                                quota holder shall not be increased as 
                                a result of the reapportionment.
                    (E) Special rule for tenant of leased tobacco.--If 
                a quota holder exercises an option to relinquish a 
                tobacco farm marketing quota or farm acreage allotment 
                under paragraph (2), the farm marketing quota or farm 
                acreage allotment shall be divided evenly between, and 
                the option of reallocating the farm marketing quota or 
                farm acreage allotment shall be offered in equal 
                portions to, the quota lessee and to the quota tenant, 
                if--
                            (i) during the 1997 marketing year, the 
                        farm marketing quota or farm acreage allotment 
                        was leased and transferred to a farm owned by 
                        the quota lessee; and
                            (ii) the quota tenant was the primary 
                        producer, as determined by the Secretary, of 
                        tobacco pursuant to the farm marketing quota or 
                        farm acreage allotment.
            (5) Payments for lost tobacco quota to quota holders.--
                    (A) In general.--Except as otherwise provided in 
                this subsection, during any marketing year in which the 
                national marketing quota for a type of tobacco is less 
                than the average national marketing quota for the 1995 
                through 1997 marketing years, the Secretary shall make 
                payments for lost tobacco quota to each quota holder 
                that is eligible under subsection (b), and has not 
                exercised an option to relinquish a tobacco farm 
                marketing quota or farm acreage allotment under 
                paragraph (2), in an amount that is equal to the 
                product obtained by multiplying--
                            (i) the number of pounds by which the basic 
                        farm marketing quota (or poundage conversion) 
                        is less than the base quota level for the quota 
                        holder; and
                            (ii) $4 per pound.
                    (B) Poundage conversion for marketing quotas other 
                than poundage quotas.--
                            (i) In general.--For each type of tobacco 
                        for which there is a marketing quota or 
                        allotment (on an acreage basis), the poundage 
                        conversion for each quota holder during a 
                        marketing year shall be determined by 
                        multiplying--
                                    (I) the basic farm acreage 
                                allotment for the farm for the 
                                marketing year; and
                                    (II) the average yield per acre for 
                                the farm for the type of tobacco.
                            (ii) Yield not available.--If the average 
                        yield per acre is not available for a farm, the 
                        Secretary shall calculate the poundage 
                        conversion for each quota holder during a 
                        marketing year by multiplying--
                                    (I) the basic farm acreage 
                                allotment for the farm for the 
                                marketing year; and
                                    (II) the average county yield per 
                                acre for the county in which the farm 
                                is located for the type of tobacco.
            (6) Payments for lost tobacco quota to quota lessees and 
        quota tenants.--Except as otherwise provided in this 
        subsection, during any marketing year in which the national 
        marketing quota for a type of tobacco is less than the average 
        national marketing quota for the type of tobacco for the 1995 
        through 1997 marketing years, the Secretary shall make payments 
        for lost tobacco quota to each quota lessee and quota tenant 
        that is eligible under subsection (b) in an amount that is 
        equal to the product obtained by multiplying--
                    (A) the percentage by which the national marketing 
                quota for the type of tobacco is less than the average 
                national marketing quota for the type of tobacco for 
                the 1995 through 1997 marketing years;
                    (B) the base quota level for the quota lessee or 
                quota tenant; and
                    (C) $4 per pound.
            (7) Lifetime limitation on payments.--Except as otherwise 
        provided in this subsection, the total amount of payments made 
        under this subsection to a quota holder, quota lessee, or quota 
        tenant during the lifetime of the quota holder, quota lessee, 
        or quota tenant shall not exceed the product obtained by 
        multiplying--
                    (A) the base quota level for the quota holder, 
                quota lessee, or quota tenant; and
                    (B) $8 per pound.
            (8) Limitations on aggregate annual payments.--
                    (A) In general.--Except as otherwise provided in 
                this paragraph, the total amount payable under this 
                subsection for any marketing year shall not exceed the 
                amount made available under paragraph (1).
                    (B) Accelerated payments.--Paragraph (1) shall not 
                apply if accelerated payments for lost tobacco quota 
                are made in accordance with paragraph (12).
                    (C) Reductions.--If the sum of the amounts 
                determined under paragraphs (3), (5), and (6) for a 
                marketing year exceeds the amount made available under 
                paragraph (1), the Secretary shall make a pro rata 
                reduction in the amounts payable under paragraphs (5) 
                and (6) to quota holders, quota lessees, and quota 
                tenants under this subsection to ensure that the total 
                amount of payments for lost tobacco quota does not 
                exceed the amount made available under paragraph (1).
                    (D) Rollover of payments for lost tobacco quota.--
                Subject to subparagraph (A), if the Secretary makes a 
                reduction in accordance with subparagraph (C), the 
                amount of the reduction shall be applied to the next 
                marketing year and added to the payments for lost 
                tobacco quota for the marketing year.
                    (E) Additional payments to quota holders exercising 
                option to relinquish quota.--If the amount made 
                available under paragraph (1) exceeds the sum of the 
                amounts determined under paragraphs (3), (5), and (6) 
                for a marketing year, the Secretary shall distribute 
                the amount of the excess pro rata to quota holders that 
                have exercised an option to relinquish a tobacco farm 
                marketing quota or farm acreage allotment under 
                paragraph (2) by increasing the amount payable to each 
                such holder under paragraph (3).
            (9) Subsequent sale and transfer of quota.--Effective 
        beginning with the 1999 marketing year, on the sale and 
        transfer of a farm marketing quota or farm acreage allotment 
        under section 316(g) or 319(g) of the Agricultural Adjustment 
        Act of 1938 (7 U.S.C. 1314b(g), 1314e(g))--
                    (A) the person that sold and transferred the quota 
                or allotment shall have--
                            (i) the base quota level attributable to 
                        the person reduced by the base quota level 
                        attributable to the quota that is sold and 
                        transferred; and
                            (ii) the lifetime limitation on payments 
                        established under paragraph (7) attributable to 
                        the person reduced by the product obtained by 
                        multiplying--
                                    (I) the base quota level 
                                attributable to the quota; and
                                    (II) $8 per pound; and
                    (B) if the quota or allotment has never been 
                relinquished by a previous quota holder under paragraph 
                (2), the person that acquired the quota shall have--
                            (i) the base quota level attributable to 
                        the person increased by the base quota level 
                        attributable to the quota that is sold and 
                        transferred; and
                            (ii) the lifetime limitation on payments 
                        established under paragraph (7) attributable to 
                        the person--
                                    (I) increased by the product 
                                obtained by multiplying--
                                            (aa) the base quota level 
                                        attributable to the quota; and
                                            (bb) $8 per pound; but
                                    (II) decreased by any payments 
                                under paragraph (5) for lost tobacco 
                                quota previously made that are 
                                attributable to the quota that is sold 
                                and transferred.
            (10) Sale or transfer of farm.--On the sale or transfer of 
        ownership of a farm that is owned by a quota holder, the base 
        quota level established under subsection (c), the right to 
        payments under paragraph (5), and the lifetime limitation on 
        payments established under paragraph (7) shall transfer to the 
        new owner of the farm to the same extent and in the same manner 
        as those provisions applied to the previous quota holder.
            (11) Death of quota lessee or quota tenant.--If a quota 
        lessee or quota tenant that is entitled to payments under this 
        subsection dies and is survived by a spouse or 1 or more 
        dependents, the right to receive the payments shall transfer to 
        the surviving spouse or, if there is no surviving spouse, to 
        the surviving dependents in equal shares.
            (12) Acceleration of payments.--
                    (A) In general.--On the occurrence of any of the 
                events described in subparagraph (B), the Secretary 
                shall make an accelerated lump sum payment for lost 
                tobacco quota as established under paragraphs (5) and 
                (6) to each quota holder, quota lessee, and quota 
                tenant for any affected type of tobacco in accordance 
                with subparagraph (C).
                    (B) Triggering events.--The Secretary shall make 
                accelerated payments under subparagraph (A) if after 
                the date of enactment of this Act--
                            (i) subject to subparagraph (D), for 3 
                        consecutive marketing years, the national 
                        marketing quota or national acreage allotment 
                        for a type of tobacco is less than 50 percent 
                        of the national marketing quota or national 
                        acreage allotment for the type of tobacco for 
                        the 1998 marketing year; or
                            (ii) Congress repeals or makes ineffective, 
                        directly or indirectly, any provision of--
                                    (I) section 316 of the Agricultural 
                                Adjustment Act of 1938 (7 U.S.C. 
                                1314b);
                                    (II) section 319 of the 
                                Agricultural Adjustment Act of 1938 (7 
                                U.S.C. 1314e);
                                    (III) section 106 of the 
                                Agricultural Act of 1949 (7 U.S.C. 
                                1445);
                                    (IV) section 106A of the 
                                Agricultural Act of 1949 (7 U.S.C. 
                                1445-1); or
                                    (V) section 106B of the 
                                Agricultural Act of 1949 (7 U.S.C. 
                                1445-2).
                    (C) Amount.--The amount of the accelerated payments 
                made to each quota holder, quota lessee, and quota 
                tenant under this subsection shall be equal to--
                            (i) the amount of the lifetime limitation 
                        established for the quota holder, quota lessee, 
                        or quota tenant under paragraph (7); less
                            (ii) any payments for lost tobacco quota 
                        received by the quota holder, quota lessee, or 
                        quota tenant before the occurrence of any of 
                        the events described in subparagraph (B).
                    (D) Referendum vote not a triggering event.--A 
                referendum vote of producers for any type of tobacco 
                that results in the national marketing quota or 
                national acreage allotment not being in effect for the 
                type of tobacco shall not be considered a triggering 
                event under this paragraph.
            (13) Ban on subsequent sale or leasing of farm marketing 
        quota or farm acreage allotment to quota holders exercising 
        option to relinquish quota.--No quota holder that exercises the 
        option to relinquish a farm marketing quota or farm acreage 
        allotment for any type of tobacco under paragraph (2) shall be 
        eligible to acquire a farm marketing quota or farm acreage 
        allotment for the type of tobacco, or to obtain the lease or 
        transfer of a farm marketing quota or farm acreage allotment 
        for the type of tobacco, for a period of 25 crop years after 
        the date on which the quota or allotment was relinquished.
    (e) Payments for Lost Tobacco Quota for Flue-Cured Tobacco.--
            (1) Allocation of funds.--Of the amounts made available 
        under section 1011(d)(1) for payments for lost tobacco quota, 
        the Secretary shall make available for payments under this 
        subsection an amount that bears the same ratio to the amounts 
        made available as--
                    (A) the sum of all national marketing quotas for 
                flue-cured tobacco during the 1995 through 1997 
                marketing years; bears to
                    (B) the sum of all national marketing quotas for 
                all types of tobacco during the 1995 through 1997 
                marketing years.
            (2) Relinquishment of quota.--
                    (A) In general.--Each quota holder of flue-cured 
                tobacco during the 1998 marketing year shall relinquish 
                the farm marketing quota or farm acreage allotment in 
                exchange for a payment made under paragraph (3) or (4).
                    (B) Notification.--The Secretary shall notify the 
                quota holders of the relinquishment of their quota or 
                allotment at such time and in such manner as the 
                Secretary may require, but not later than November 15, 
                1998.
            (3) Payments for lost flue-cured tobacco quota to quota 
        holders that relinquish quota.--
                    (A) In general.--For each of fiscal years 1999 
                through 2008, the Secretary shall make annual payments 
                for lost flue-cured tobacco to each quota holder that 
                has relinquished the farm marketing quota or farm 
                acreage allotment of the quota holder under paragraph 
                (2).
                    (B) Amount.--The amount of a payment made to a 
                quota holder described in subparagraph (A) for a 
                marketing year shall equal \1/10\ of the lifetime 
                limitation established under paragraph (6).
                    (C) Timing.--The Secretary shall begin making 
                annual payments under this paragraph for the marketing 
                year in which the farm marketing quota or farm acreage 
                allotment is relinquished.
                    (D) Additional payments.--The Secretary may 
                increase annual payments under this paragraph in 
                accordance with paragraph (7)(E) to the extent that 
                funding is available.
            (4) Payments for lost flue-cured tobacco quota to quota 
        lessees and quota tenants that have not relinquished permits.--
                    (A) In general.--Except as otherwise provided in 
                this subsection, during any marketing year in which the 
                national marketing quota for flue-cured tobacco is less 
                than the average national marketing quota for the 1995 
                through 1997 marketing years, the Secretary shall make 
                payments for lost tobacco quota to each quota lessee or 
                quota tenant that--
                            (i) is eligible under subsection (b);
                            (ii) has been issued an individual tobacco 
                        production permit under section 317A(b) of the 
                        Agricultural Adjustment Act of 1938; and
                            (iii) has not exercised an option to 
                        relinquish the permit.
                    (B) Amount.--The amount of a payment made to a 
                quota holder described in subparagraph (A) for a 
                marketing year shall be equal to the product obtained 
                by multiplying--
                            (i) the number of pounds by which the 
                        individual marketing limitation established for 
                        the permit is less than twice the base quota 
                        level for the quota holder; and
                            (ii) $2 per pound.
            (5) Payments for lost flue-cured tobacco quota to quota 
        lessees and quota tenants that have relinquished permits.--
                    (A) In general.--For each of fiscal years 1999 
                through 2008, the Secretary shall make annual payments 
                for lost flue-cured tobacco quota to each quota lessee 
                and quota tenant that has relinquished an individual 
                tobacco production permit under section 317A(b)(5) of 
                the Agricultural Adjustment Act of 1938.
                    (B) Amount.--The amount of a payment made to a 
                quota holder described in subparagraph (A) for a 
                marketing year shall be equal to \1/10\ of the lifetime 
                limitation established under paragraph (6).
                    (C) Timing.--The Secretary shall begin making 
                annual payments under this paragraph for the marketing 
                year in which the individual tobacco production permit 
                is relinquished.
                    (D) Additional payments.--The Secretary may 
                increase annual payments under this paragraph in 
accordance with paragraph (7)(E) to the extent that funding is 
available.
                    (E) Prohibition against permit expansion.--A quota 
                lessee or quota tenant that receives a payment under 
                this paragraph shall be ineligible to receive any new 
                or increased tobacco production permit from the county 
                production pool established under section 317A(b)(8) of 
                the Agricultural Adjustment Act of 1938.
            (6) Lifetime limitation on payments.--Except as otherwise 
        provided in this subsection, the total amount of payments made 
        under this subsection to a quota holder, quota lessee, or quota 
        tenant during the lifetime of the quota holder, quota lessee, 
        or quota tenant shall not exceed the product obtained by 
        multiplying--
                    (A) the base quota level for the quota holder, 
                quota lessee, or quota tenant; and
                    (B) $8 per pound.
            (7) Limitations on aggregate annual payments.--
                    (A) In general.--Except as otherwise provided in 
                this paragraph, the total amount payable under this 
                subsection for any marketing year shall not exceed the 
                amount made available under paragraph (1).
                    (B) Accelerated payments.--Paragraph (1) shall not 
                apply if accelerated payments for lost flue-cured 
                tobacco quota are made in accordance with paragraph 
                (9).
                    (C) Reductions.--If the sum of the amounts 
                determined under paragraphs (3), (4), and (5) for a 
                marketing year exceeds the amount made available under 
                paragraph (1), the Secretary shall make a pro rata 
                reduction in the amounts payable under paragraph (4) to 
                quota lessees and quota tenants under this subsection 
                to ensure that the total amount of payments for lost 
                flue-cured tobacco quota does not exceed the amount 
                made available under paragraph (1).
                    (D) Rollover of payments for lost flue-cured 
                tobacco quota.--Subject to subparagraph (A), if the 
                Secretary makes a reduction in accordance with 
                subparagraph (C), the amount of the reduction shall be 
                applied to the next marketing year and added to the 
                payments for lost flue-cured tobacco quota for the 
                marketing year.
                    (E) Additional payments to quota holders exercising 
                option to relinquish quotas or permits, or to quota 
                lessees or quota tenants relinquishing permits.--If the 
                amount made available under paragraph (1) exceeds the 
                sum of the amounts determined under paragraphs (3), 
                (4), and (5) for a marketing year, the Secretary shall 
                distribute the amount of the excess pro rata to quota 
                holders by increasing the amount payable to each such 
                holder under paragraphs (3) and (5).
            (8) Death of quota holder, quota lessee, or quota tenant.--
        If a quota holder, quota lessee or quota tenant that is 
        entitled to payments under paragraph (4) or (5) dies and is 
        survived by a spouse or 1 or more descendants, the right to 
        receive the payments shall transfer to the surviving spouse or, 
        if there is no surviving spouse, to the surviving descendants 
        in equal shares.
            (9) Acceleration of payments.--
                    (A) In general.--On the occurrence of any of the 
                events described in subparagraph (B), the Secretary 
                shall make an accelerated lump sum payment for lost 
                flue-cured tobacco quota as established under 
                paragraphs (3), (4), and (5) to each quota holder, 
                quota lessee, and quota tenant for flue-cured tobacco 
                in accordance with subparagraph (C).
                    (B) Triggering events.--The Secretary shall make 
                accelerated payments under subparagraph (A) if after 
                the date of enactment of this Act--
                            (i) subject to subparagraph (D), for 3 
                        consecutive marketing years, the national 
                        marketing quota or national acreage allotment 
                        for flue-cured tobacco is less than 50 percent 
                        of the national marketing quota or national 
                        acreage allotment for flue-cured tobacco for 
                        the 1998 marketing year; or
                            (ii) Congress repeals or makes ineffective, 
                        directly or indirectly, any provision of--
                                    (I) section 316 of the Agricultural 
                                Adjustment Act of 1938 (7 U.S.C. 
                                1314b);
                                    (II) section 319 of the 
                                Agricultural Adjustment Act of 1938 (7 
                                U.S.C. 1314e);
                                    (III) section 106 of the 
                                Agricultural Act of 1949 (7 U.S.C. 
                                1445);
                                    (IV) section 106A of the 
                                Agricultural Act of 1949 (7 U.S.C. 
                                1445-1);
                                    (V) section 106B of the 
                                Agricultural Act of 1949 (7 U.S.C. 
                                1445-2); or
                                    (VI) section 317A of the 
                                Agricultural Adjustment Act of 1938.
                    (C) Amount.--The amount of the accelerated payments 
                made to each quota holder, quota lessee, and quota 
                tenant under this subsection shall be equal to--
                            (i) the amount of the lifetime limitation 
                        established for the quota holder, quota lessee, 
                        or quota tenant under paragraph (6); less
                            (ii) any payments for lost flue-cured 
                        tobacco quota received by the quota holder, 
                        quota lessee, or quota tenant before the 
                        occurrence of any of the events described in 
                        subparagraph (B).
                    (D) Referendum vote not a triggering event.--A 
                referendum vote of producers for flue-cured tobacco 
                that results in the national marketing quota or 
                national acreage allotment not being in effect for 
                flue-cured tobacco shall not be considered a triggering 
                event under this paragraph.

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

    (a) In General.--The Secretary shall use such amounts as are 
necessary from the Trust Fund at the end of each fiscal year to 
reimburse the Secretary for--
            (1) costs associated with the administration of programs 
        established under this Act and amendments made by this Act;
            (2) costs associated with the administration of the tobacco 
        quota and price support programs administered by the Secretary;
            (3) costs to the Federal Government of carrying out crop 
        insurance programs for tobacco;
            (4) costs associated with all agricultural research, 
        extension, or education activities associated with tobacco;
            (5) costs associated with the administration of loan 
        association and cooperative programs for tobacco producers, as 
        approved by the Secretary; and
            (6) any other costs incurred by the Department of 
        Agriculture associated with the production of tobacco.
    (b) Limitations.--Amounts made available under subsection (a) may 
not be used--
            (1) to provide direct benefits to quota holders, quota 
        lessees, or quota tenants; or
            (2) in a manner that results in a decrease, or an increase 
        relative to other crops, in the amount of the crop insurance 
        premiums assessed to participating tobacco producers under the 
        Federal Crop Insurance Act (7 U.S.C. 1501 et seq.).
    (c) Determinations.--Not later than September 30, 1998, and each 
fiscal year thereafter, the Secretary shall determine--
            (1) the amount of costs described in subsection (a); and
            (2) the amount that will be provided under this section as 
        reimbursement for the costs.

SEC. 1023. TOBACCO COMMUNITY ECONOMIC DEVELOPMENT GRANTS.

    (a) Authority.--The Secretary shall make grants to tobacco-growing 
States in accordance with this section to enable the States to carry 
out economic development initiatives in tobacco-growing communities.
    (b) Application.--To be eligible to receive payments under this 
section, a State shall prepare and submit to the Secretary an 
application at such time, in such manner, and containing such 
information as the Secretary may require, including--
            (1) a description of the activities that the State will 
        carry out using amounts received under the grant;
            (2) a designation of an appropriate State agency to 
        administer amounts received under the grant; and
            (3) a description of the steps to be taken to ensure that 
        the funds are distributed in accordance with subsection (e).
    (c) Amount of Grant.--
            (1) In general.--From the amounts available to carry out 
        this section for a fiscal year, the Secretary shall allot to 
        each State an amount that bears the same ratio to the amounts 
        available as the total farm income of the State derived from 
        the production of tobacco during the 1995 through 1997 
        marketing years (as determined under paragraph (2)) bears to 
        the total farm income of all States derived from the production 
        of tobacco during the 1995 through 1997 marketing years.
            (2) Tobacco income.--For the 1995 through 1997 marketing 
        years, the Secretary shall determine the amount of farm income 
        derived from the production of tobacco in each State and in all 
        States.
    (d) Payments.--
            (1) In general.--A State that has an application approved 
        by the Secretary under subsection (b) shall be entitled to a 
        payment under this section in an amount that is equal to its 
        allotment under subsection (c).
            (2) Form of payments.--The Secretary may make payments 
        under this section to a State in installments, and in advance 
        or by way of reimbursement, with necessary adjustments on 
        account of overpayments or underpayments, as the Secretary may 
        determine.
            (3) Reallotments.--Any portion of the allotment of a State 
        under subsection (c) that the Secretary determines will not be 
        used to carry out this section in accordance with an approved 
        State application required under subsection (b), shall be 
        reallotted by the Secretary to other States in proportion to 
        the original allotments to the other States.
    (e) Use and Distribution of Funds.--
            (1) In general.--Amounts received by a State under this 
        section shall be used to carry out economic development 
        activities, including--
                    (A) rural business enterprise activities described 
                in subsections (c) and (e) of section 310B of the 
                Consolidated Farm and Rural Development Act (7 U.S.C. 
                1932);
                    (B) down payment loan assistance programs that are 
                similar to the program described in section 310E of the 
                Consolidated Farm and Rural Development Act (7 U.S.C. 
                1935);
                    (C) activities designed to help create productive 
                farm or off-farm employment in rural areas to provide a 
                more viable economic base and enhance opportunities for 
                improved incomes, living standards, and contributions 
                by rural individuals to the economic and social 
                development of tobacco communities;
                    (D) activities that expand existing infrastructure, 
                facilities, and services to capitalize on opportunities 
                to diversify economies in tobacco communities and that 
                support the development of new industries or commercial 
                ventures;
                    (E) activities by agricultural organizations that 
                provide assistance directly to participating tobacco 
                producers to assist in developing other agricultural 
                activities that supplement tobacco-producing 
                activities;
                    (F) initiatives designed to create or expand 
                locally owned value-added processing and marketing 
                operations in tobacco communities;
                    (G) technical assistance activities by persons to 
                support farmer-owned enterprises, or agriculture-based 
                rural development enterprises, of the type described in 
                section 252 or 253 of the Trade Act of 1974 (19 U.S.C. 
                2342, 2343); and
                    (H) initiatives designed to partially compensate 
                tobacco warehouse owners for lost revenues and assist 
                the tobacco warehouse owners in establishing successful 
                business enterprises.
            (2) Tobacco-growing counties.--Assistance may be provided 
        by a State under this section only to assist a county in the 
        State that has been determined by the Secretary to have in 
        excess of $100,000 in income derived from the production of 
        tobacco during 1 or more of the 1995 through 1997 marketing 
        years.
            (3) Distribution.--
                    (A) Economic development activities.--Not less than 
                20 percent of the amounts received by a State under 
                this section shall be used to carry out--
                            (i) economic development activities 
                        described in subparagraph (E) or (F) of 
                        paragraph (1); or
                            (ii) agriculture-based rural development 
                        activities described in paragraph (1)(G).
                    (B) Technical assistance activities.--Not less than 
                4 percent of the amounts received by a State under this 
                section shall be used to carry out technical assistance 
                activities described in paragraph (1)(G).
                    (C) Tobacco warehouse owner initiatives.--
                            (i) In general.--Not less than 6 percent of 
                        the amounts received by a State under this 
                        section during each of fiscal years 1999 
                        through 2008 shall be used to carry out 
                        initiatives described in paragraph (1)(H).
                            (ii) Direct payments.--Of the amount made 
                        available under clause (i), not less than 80 
                        percent of the amount shall be used to provide 
                        direct payments to tobacco warehouse owners 
                        based on any decline in the annual volume of 
                        tobacco sales as compared to the volume of 
                        tobacco sales during the 1998 marketing year.
                    (D) Tobacco-growing counties.--To be eligible to 
                receive payments under this section, a State shall 
                demonstrate to the Secretary that funding will be 
                provided, during each 5-year period for which funding 
                is provided under this section, for activities in each 
                county in the State that has been determined under 
                paragraph (2) to have in excess of $100,000 in income 
                derived from the production of tobacco, in amounts that 
                are at least equal to the product obtained by 
                multiplying--
                            (i) the ratio that the tobacco production 
                        income in the county determined under paragraph 
                        (2) bears to the total tobacco production 
                        income for the State determined under 
                        subsection (c); and
                            (ii) 50 percent of the total amounts 
                        received by a State under this section during 
                        the 5-year period.
    (f) Preferences in Hiring.--A State may require recipients of funds 
under this section to provide a preference in employment to--
            (1) an individual who--
                    (A) during the 1998 calendar year, was employed in 
                the manufacture, processing, or warehousing of tobacco 
                or tobacco products, or resided, in a county described 
                in subsection (e)(2); and
                    (B) is eligible for assistance under the tobacco 
                worker transition program established under section 
                1031; or
            (2) an individual who--
                    (A) during the 1998 marketing year, carried out 
                tobacco quota or relevant tobacco production activities 
                in a county described in subsection (e)(2);
                    (B) is eligible for a farmer opportunity grant 
                under subpart 9 of part A of title IV of the Higher 
                Education Act of 1965; and
                    (C) has successfully completed a course of study at 
                an institution of higher education.
    (g) Maintenance of Effort.--
            (1) In general.--Subject to paragraph (2), a State shall 
        provide an assurance to the Secretary that the amount of funds 
        expended by the State and all counties in the State described 
        in subsection (e)(2) for any activities funded under this 
        section for a fiscal year is not less than 90 percent of the 
        amount of funds expended by the State and counties for the 
        activities for the preceding fiscal year.
            (2) Reduction of grant amount.--If a State does not provide 
        an assurance described in paragraph (1), the Secretary shall 
        reduce the amount of the grant determined under subsection (c) 
        by an amount equal to the amount by which the amount of funds 
        expended by the State and counties for the activities is less 
        than 90 percent of the amount of funds expended by the State 
        and counties for the activities for the preceding fiscal year, 
        as determined by the Secretary.
            (3) Federal funds.--For purposes of this subsection, the 
        amount of funds expended by a State or county shall not include 
        any amounts made available by the Federal Government.

SEC. 1024. FLUE-CURED TOBACCO PRODUCTION PERMITS.

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

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

    ``(a) Definitions.--In this section:
            ``(1) Individual acreage limitation.--The term `individual 
        acreage limitation' means the number of acres of flue-cured 
        tobacco that may be planted by the holder of a permit during a 
        marketing year, calculated--
                    ``(A) prior to--
                            ``(i) any increase or decrease in the 
                        number due to undermarketings or 
                        overmarketings; and
                            ``(ii) any reduction under subsection (i); 
                        and
                    ``(B) in a manner that ensures that--
                            ``(i) the total of all individual acreage 
                        limitations is equal to the national acreage 
                        allotment, less the reserve provided under 
                        subsection (h); and
                            ``(ii) the individual acreage limitation 
                        for a marketing year bears the same ratio to 
                        the individual acreage limitation for the 
                        previous marketing year as the ratio that the 
                        national acreage allotment for the marketing 
                        year bears to the national acreage allotment 
                        for the previous marketing year, subject to 
                        adjustments by the Secretary to account for any 
                        reserve provided under subsection (h).
            ``(2) Individual marketing limitation.--The term 
        `individual marketing limitation' means the number of pounds of 
        flue-cured tobacco that may be marketed by the holder of a 
        permit during a marketing year, calculated--
                    ``(A) prior to--
                            ``(i) any increase or decrease in the 
                        number due to undermarketings or 
                        overmarketings; and
                            ``(ii) any reduction under subsection (i); 
                        and
                    ``(B) in a manner that ensures that--
                            ``(i) the total of all individual marketing 
                        limitations is equal to the national marketing 
                        quota, less the reserve provided under 
                        subsection (h); and
                            ``(ii) the individual marketing limitation 
                        for a marketing year is obtained by multiplying 
                        the individual acreage limitation by the permit 
                        yield, prior to any adjustment for 
                        undermarketings or overmarketings.
            ``(3) Individual tobacco production permit.--The term 
        `individual tobacco production permit' means a permit issued by 
        the Secretary to a person authorizing the production of flue-
        cured tobacco for any marketing year during which this section 
        is effective.
            ``(4) National acreage allotment.--The term `national 
        acreage allotment' means the quantity determined by dividing--
                    ``(A) the national marketing quota; by
                    ``(B) the national average yield goal.
            ``(5) National average yield goal.--The term `national 
        average yield goal' means the national average yield for flue-
        cured tobacco during the 5 marketing years immediately 
        preceding the marketing year for which the determination is 
        being made.
            ``(6) National marketing quota.--For the 1999 and each 
        subsequent crop of flue-cured tobacco, the term `national 
        marketing quota' for a marketing year means the quantity of 
        flue-cured tobacco, as determined by the Secretary, that is not 
        more than 103 percent nor less than 97 percent of the total 
        of--
                    ``(A) the aggregate of the quantities of flue-cured 
                tobacco that domestic manufacturers of cigarettes 
                estimate that the manufacturers intend to purchase on 
                the United States auction markets or from producers 
                during the marketing year, as compiled and determined 
                under section 320A;
                    ``(B) the average annual quantity of flue-cured 
                tobacco exported from the United States during the 3 
                marketing years immediately preceding the marketing 
                year for which the determination is being made; and
                    ``(C) the quantity, if any, of flue-cured tobacco 
                that the Secretary, in the discretion of the Secretary, 
                determines is necessary to increase or decrease the 
                inventory of the producer-owned cooperative marketing 
                association that has entered into a loan agreement with 
                the Commodity Credit Corporation to make price support 
                available to producers of flue-cured tobacco to 
                establish or maintain the inventory at the reserve 
                stock level for flue-cured tobacco.
            ``(7) Permit yield.--The term `permit yield' means the 
        yield of tobacco per acre for an individual tobacco production 
        permit holder that is--
                    ``(A) based on a preliminary permit yield that is 
                equal to the average yield during the 5 marketing years 
                immediately preceding the marketing year for which the 
                determination is made in the county where the holder of 
                the permit is authorized to plant flue-cured tobacco, 
                as determined by the Secretary, on the basis of actual 
                yields of farms in the county; and
                    ``(B) adjusted by a weighted national yield factor 
                calculated by--
                            ``(i) multiplying each preliminary permit 
                        yield by the individual acreage limitation, 
                        prior to adjustments for overmarketings, 
                        undermarketings, or reductions required under 
                        subsection (i); and
                            ``(ii) dividing the sum of the products 
                        under clause (i) for all flue-cured individual 
                        tobacco production permit holders by the 
                        national acreage allotment.
    ``(b) Initial Issuance of Permits.--
            ``(1) Termination of flue-cured marketing quotas.--On 
        approval through referendum under subsection (c), farm 
        marketing quotas as provided under section 317 shall no longer 
        be in effect for flue-cured tobacco.
            ``(2) Issuance of permits to quota holders that were 
        principal producers.--
                    ``(A) In general.--On approval through a referendum 
                under subsection (c), each individual quota holder 
                under section 317 that was a principal producer of 
                flue-cured tobacco during the 1998 marketing year, as 
                determined by the Secretary, shall be issued an 
                individual tobacco production permit under this 
                section.
                    ``(B) Notification.--The Secretary shall notify the 
                holder of each permit of the individual acreage 
                limitation and the individual marketing limitation 
                applicable to the holder for each marketing year.
                    ``(C) Individual acreage limitation for 1999 
                marketing year.--In establishing the individual acreage 
                limitation for the 1999 marketing year under this 
                section, the farm acreage allotment that was allotted 
                to a farm owned by the quota holder during the 1997 
                marketing year shall be considered the individual 
                acreage limitation for the previous marketing year.
                    ``(D) Individual marketing limitation for 1999 
                marketing year.--In establishing the individual 
                marketing limitation for the 1999 marketing year under 
                this section, the farm marketing quota that was 
                allotted to a farm owned by the quota holder during the 
                1997 marketing year shall be considered the individual 
                marketing limitation for the previous marketing year.
            ``(3) Quota holders that were not principal producers.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), on approval through a referendum 
                under subsection (c)--
                            ``(i) each person that was a quota holder 
                        under section 317 but that was not a principal 
                        producer of flue-cured tobacco during the 1997 
                        marketing year, as determined by the Secretary, 
                        shall not be eligible to own a permit; and
                            ``(ii) the Secretary shall not issue any 
                        permit during the 25-year period beginning on 
                        the date of enactment of this Act to any person 
                        that was a quota holder and was not the 
                        principal producer of flue-cured tobacco during 
                        the 1997 marketing year.
                    ``(B) Medical hardships and crop disasters.--
                Subparagraph (A) shall not apply to a person that would 
                have been the principal producer of flue-cured tobacco 
                during the 1997 marketing year but for a medical 
                hardship or crop disaster that occurred during the 1997 
marketing year.
                    ``(C) Administration.--The Secretary shall issue 
                regulations--
                            ``(i) defining the term `person' for the 
                        purpose of this paragraph; and
                            ``(ii) prescribing such rules as the 
                        Secretary determines are necessary to ensure a 
                        fair and reasonable application of the 
                        prohibition established under this paragraph.
            ``(4) Issuance of permits to principal producers of flue-
        cured tobacco.--
                    ``(A) In general.--On approval through a referendum 
                under subsection (c), each individual quota lessee or 
                quota tenant (as defined in section 1002 of the LEAF 
                Act) that was the principal producer of flue-cured 
                tobacco during the 1997 marketing year, as determined 
                by the Secretary, shall be issued an individual tobacco 
                production permit under this section.
                    ``(B) Individual acreage limitations.--In 
                establishing the individual acreage limitation for the 
                1999 marketing year under this section, the farm 
                acreage allotment that was allotted to a farm owned by 
                a quota holder for whom the quota lessee or quota 
                tenant was the principal producer of flue-cured tobacco 
                during the 1997 marketing year shall be considered the 
                individual acreage limitation for the previous 
                marketing year.
                    ``(C) Individual marketing limitations.--In 
                establishing the individual marketing limitation for 
                the 1999 marketing year under this section, the 
                individual marketing limitation for the previous year 
                for an individual described in this paragraph shall be 
                calculated by multiplying--
                            ``(i) the farm marketing quota that was 
                        allotted to a farm owned by a quota holder for 
                        whom the quota lessee or quota holder was the 
                        principal producer of flue-cured tobacco during 
                        the 1997 marketing year, by
                            ``(ii) the ratio that--
                                    ``(I) the sum of all flue-cured 
                                tobacco farm marketing quotas for the 
                                1997 marketing year prior to adjusting 
                                for undermarketing and overmarketing; 
                                bears to
                                    ``(II) the sum of all flue-cured 
                                tobacco farm marketing quotas for the 
                                1998 marketing year, after adjusting 
                                for undermarketing and overmarketing.
                    ``(D) Special rule for tenant of leased flue-cured 
                tobacco.--If the farm marketing quota or farm acreage 
                allotment of a quota holder was produced pursuant to an 
                agreement under which a quota lessee rented land from a 
                quota holder and a quota tenant was the primary 
                producer, as determined by the Secretary, of flue-cured 
                tobacco pursuant to the farm marketing quota or farm 
                acreage allotment, the farm marketing quota or farm 
                acreage allotment shall be divided proportionately 
                between the quota lessee and quota tenant for purposes 
                of issuing individual tobacco production permits under 
                this paragraph.
            ``(5) Option of quota lessee or quota tenant to relinquish 
        permit.--
                    ``(A) In general.--Each quota lessee or quota 
                tenant that is issued an individual tobacco production 
                permit under paragraph (4) shall be given the option of 
                relinquishing the permit in exchange for payments made 
                under section 1021(e)(5) of the LEAF Act.
                    ``(B) Notification.--A quota lessee or quota tenant 
                that is issued an individual tobacco production permit 
                shall give notification of the intention to exercise 
                the option at such time and in such manner as the 
                Secretary may require, but not later than 30 days after 
                the permit is issued.
                    ``(C) Reallocation of permit.--The Secretary shall 
                add the authority to produce flue-cured tobacco under 
                the individual tobacco production permit relinquished 
                under this paragraph to the county production pool 
                established under paragraph (8) for reallocation by the 
                appropriate county committee.
            ``(6) Active producer requirement.--
                    ``(A) Requirement for sharing risk.--No individual 
                tobacco production permit shall be issued to, or 
                maintained by, a person that does not fully share in 
                the risk of producing a crop of flue-cured tobacco.
                    ``(B) Criteria for sharing risk.--For purposes of 
                this paragraph, a person shall be considered to have 
fully shared in the risk of production of a crop if--
                            ``(i) the investment of the person in the 
                        production of the crop is not less than 100 
                        percent of the costs of production associated 
                        with the crop;
                            ``(ii) the amount of the person's return on 
                        the investment is dependent solely on the sale 
                        price of the crop; and
                            ``(iii) the person may not receive any of 
                        the return before the sale of the crop.
                    ``(C) Persons not sharing risk.--
                            ``(i) Forfeiture.--Any person that fails to 
                        fully share in the risks of production under 
                        this paragraph shall forfeit an individual 
                        tobacco production permit if, after notice and 
                        opportunity for a hearing, the appropriate 
                        county committee determines that the conditions 
                        for forfeiture exist.
                            ``(ii) Reallocation.--The Secretary shall 
                        add the authority to produce flue-cured tobacco 
                        under the individual tobacco production permit 
                        forfeited under this subparagraph to the county 
                        production pool established under paragraph (8) 
                        for reallocation by the appropriate county 
                        committee.
                    ``(D) Notice.--Notice of any determination made by 
                a county committee under subparagraph (C) shall be 
                mailed, as soon as practicable, to the person involved.
                    ``(E) Review.--If the person is dissatisfied with 
                the determination, the person may request, not later 
                than 15 days after notice of the determination is 
                received, a review of the determination by a local 
                review committee under the procedures established under 
                section 363 for farm marketing quotas.
            ``(7) County of origin requirement.--For the 1999 and each 
        subsequent crop of flue-cured tobacco, all tobacco produced 
        pursuant to an individual tobacco production permit shall be 
        produced in the same county in which was produced the tobacco 
        produced during the 1997 marketing year pursuant to the farm 
        marketing quota or farm acreage allotment on which the 
        individual tobacco production permit is based.
            ``(8) County production pool.--
                    ``(A) In general.--The authority to produce flue-
                cured tobacco under an individual tobacco production 
                permit that is forfeited, relinquished, or surrendered 
                within a county may be reallocated by the appropriate 
                county committee to tobacco producers located in the 
                same county that apply to the committee to produce 
                flue-cured tobacco under the authority.
                    ``(B) Priority.--In reallocating individual tobacco 
                production permits under this paragraph, a county 
                committee shall provide a priority to--
                            ``(i) an active tobacco producer that 
                        controls the authority to produce a quantity of 
                        flue-cured tobacco under an individual tobacco 
                        production permit that is equal to or less than 
                        the average number of pounds of flue-cured 
                        tobacco that was produced by the producer 
                        during each of the 1995 through 1997 marketing 
                        years, as determined by the Secretary; and
                            ``(ii) a new tobacco producer.
                    ``(C) Criteria.--Individual tobacco production 
                permits shall be reallocated by the appropriate county 
                committee under this paragraph in a fair and equitable 
                manner after taking into consideration--
                            ``(i) the experience of the producer;
                            ``(ii) the availability of land, labor, and 
                        equipment for the production of tobacco;
                            ``(iii) crop rotation practices; and
                            ``(iv) the soil and other physical factors 
                        affecting the production of tobacco.
                    ``(D) Medical hardships and crop disasters.--
                Notwithstanding any other provision of this Act, the 
                Secretary may issue an individual tobacco production 
                permit under this paragraph to a producer that is 
                otherwise ineligible for the permit due to a medical 
                hardship or crop disaster that occurred during the 1997 
                marketing year.
    ``(c) Referendum.--
            ``(1) Announcement of quota and allotment.--Not later than 
        December 15, 1998, the Secretary pursuant to subsection (b) 
        shall determine and announce--
                    ``(A) the quantity of the national marketing quota 
                for flue-cured tobacco for the 1999 marketing year; and
                    ``(B) the national acreage allotment and national 
                average yield goal for the 1999 crop of flue-cured 
                tobacco.
            ``(2) Special referendum.--Not later than 30 days after the 
        announcement of the quantity of the national marketing quota, 
        the Secretary shall conduct a special referendum of the 
        producers that were the principal producers of flue-cured 
        tobacco of the 1997 crop to determine whether the producers 
        approve or oppose the establishment of individual tobacco 
        production permits on an acreage-poundage basis as provided in 
        this section for the 1999 through 2001 marketing years.
            ``(3) Approval of permits.--If the Secretary determines 
        that more than 66\2/3\ percent of the producers voting in the 
        special referendum approve the establishment of individual 
        tobacco production permits on an acreage-poundage basis--
                    ``(A) individual tobacco production permits on an 
                acreage-poundage basis as provided in this section 
                shall be in effect for the 1999 through 2001 marketing 
                years; and
                    ``(B) marketing quotas on an acreage-poundage basis 
                shall cease to be in effect for the 1999 through 2001 
                marketing years.
            ``(4) Disapproval of permits.--If individual tobacco 
        production permits on an acreage-poundage basis are not 
        approved by more than 66\2/3\ percent of the producers voting 
        in the referendum, no marketing quotas on an acreage-poundage 
        basis shall continue in effect that were proclaimed under 
        section 317 prior to the referendum.
            ``(5) Applicable marketing years.--If individual tobacco 
        production permits have been made effective for flue-cured 
        tobacco on an acreage-poundage basis pursuant to this 
        subsection, the Secretary shall, not later than December 15 of 
        any future marketing year, announce a national marketing quota 
        for that type of tobacco for the next 3 succeeding marketing 
        years if the marketing year is the last year of 3 consecutive 
        years for which individual tobacco production permits 
        previously proclaimed will be in effect.
    ``(d) Annual Announcement of National Marketing Quota.--The 
Secretary shall determine and announce the national marketing quota, 
national acreage allotment, and national average yield goal for the 
second and third marketing years of any 3-year period for which 
individual tobacco production permits are in effect on or before the 
December 15 immediately preceding the beginning of the marketing year 
to which the quota, allotment, and goal apply.
    ``(e) Annual Announcement of Individual Tobacco Production 
Permits.--If a national marketing quota, national acreage allotment, 
and national average yield goal are determined and announced, the 
Secretary shall provide for the determination of individual tobacco 
production permits, individual acreage limitations, and individual 
marketing limitations under this section for the crop and marketing 
year covered by the determinations.
    ``(f) Assignment of Tobacco Production Permits.--
            ``(1) Limitation to same county.--Each individual tobacco 
        production permit holder shall assign the individual acreage 
        limitation and individual marketing limitation to 1 or more 
        farms located within the county of origin of the individual 
        tobacco production permit.
            ``(2) Filing with county committee.--The assignment of an 
        individual acreage limitation and individual marketing 
        limitation shall not be effective until evidence of the 
        assignment, in such form as required by the Secretary, is filed 
        with and determined by the county committee for the county in 
        which the farm involved is located.
            ``(3) Limitation on tillable cropland.--The total acreage 
        assigned to any farm under this subsection shall not exceed the 
        acreage of cropland on the farm.
    ``(g) Prohibition on Sale or Leasing of Individual Tobacco 
Production Permits.--
            ``(1) In general.--Except as provided in paragraphs (2) and 
        (3), the Secretary shall not permit the sale and transfer, or 
        lease and transfer, of an individual tobacco production permit 
        issued under this section.
            ``(2) Transfer to descendants.--
                    ``(A) Death.--In the case of the death of a person 
                to whom an individual tobacco production permit has 
                been issued under this section, the permit shall 
                transfer to the surviving spouse of the person or, if 
                there is no surviving spouse, to surviving direct 
                descendants of the person.
                    ``(B) Temporary inability to farm.--In the case of 
                the death of a person to whom an individual tobacco 
                production permit has been issued under this section 
                and whose descendants are temporarily unable to produce 
                a crop of tobacco, the Secretary may hold the license 
                in the name of the descendants for a period of not more 
                than 18 months.
            ``(3) Voluntary transfers.--A person that is eligible to 
        obtain an individual tobacco production permit under this 
        section may at any time transfer all or part of the permit to 
        the person's spouse or direct descendants that are actively 
        engaged in the production of tobacco.
    ``(h) Reserve.--
            ``(1) In general.--For each marketing year for which 
        individual tobacco production permits are in effect under this 
        section, the Secretary may establish a reserve from the 
        national marketing quota in a quantity equal to not more than 1 
        percent of the national marketing quota to be available for--
                    ``(A) making corrections of errors in individual 
                acreage limitations and individual marketing 
                limitations;
                    ``(B) adjusting inequities; and
                    ``(C) establishing individual tobacco production 
                permits for new tobacco producers (except that not less 
                than two-thirds of the reserve shall be for 
                establishing such permits for new tobacco producers).
            ``(2) Eligible persons.--To be eligible for a new 
        individual tobacco production permit, a producer must have 
        owned a farm on which tobacco was not produced or considered 
        produced during the immediately preceding 5 years.
            ``(3) Apportionment for new producers.--The part of the 
        reserve held for apportionment to new individual tobacco 
        producers shall be allotted on the basis of--
                    ``(A) land, labor, and equipment available for the 
                production of tobacco;
                    ``(B) crop rotation practices;
                    ``(C) soil and other physical factors affecting the 
                production of tobacco; and
                    ``(D) the past tobacco-producing experience of the 
                producer.
            ``(4) Permit yield.--The permit yield for any producer for 
        which a new individual tobacco production permit is established 
        shall be determined on the basis of available productivity data 
        for the land involved and yields for similar farms in the same 
        county.
    ``(i) Penalties.--
            ``(1) Production on other farms.--If any quantity of 
        tobacco is marketed as having been produced under an individual 
        acreage limitation or individual marketing limitation assigned 
        to a farm but was produced on a different farm, the individual 
        acreage limitation or individual marketing limitation for the 
        following marketing year shall be forfeited.
            ``(2) False report.--If a person to which an individual 
        tobacco production permit is issued files, or aids or 
        acquiesces in the filing of, a false report with respect to the 
        assignment of an individual acreage limitation or individual 
        marketing limitation for a quantity of tobacco, the individual 
        acreage limitation or individual marketing limitation for the 
        following marketing year shall be forfeited.
    ``(j) Marketing Penalties.--
            ``(1) In general.--When individual tobacco production 
        permits under this section are in effect, provisions with 
        respect to penalties for the marketing of excess tobacco and 
        the other provisions contained in section 314 shall apply in 
        the same manner and to the same extent as they would apply 
        under section 317(g) if farm marketing quotas were in effect.
            ``(2) Production on other farms.--If a producer falsely 
        identifies tobacco as having been produced on or marketed from 
        a farm to which an individual acreage limitation or individual 
        marketing limitation has been assigned, future individual 
        acreage limitations and individual marketing limitations shall 
        be forfeited.''.

SEC. 1025. MODIFICATIONS IN FEDERAL TOBACCO PROGRAMS.

    (a) Program Referenda.--Section 312(c) of the Agricultural 
Adjustment Act of 1938 (7 U.S.C. 1312(c)) is amended--
            (1) by striking ``(c) Within thirty'' and inserting the 
        following:
    ``(c) Referenda on Quotas.--
            ``(1) In general.--Not later than 30''; and
            (2) by adding at the end the following:
            ``(2) Referenda on program changes.--
                    ``(A) In general.--In the case of any type of 
                tobacco for which marketing quotas are in effect, on 
                the receipt of a petition from more than 5 percent of 
                the producers of that type of tobacco in a State, the 
                Secretary shall conduct a statewide referendum on any 
                proposal related to the lease and transfer of tobacco 
                quota within a State requested by the petition that is 
                authorized under this part.
                    ``(B) Approval of proposals.--If a majority of 
                producers of the type of tobacco in the State approve a 
                proposal in a referendum conducted under subparagraph 
                (A), the Secretary shall implement the proposal in a 
                manner that applies to all producers and quota holders 
                of that type of tobacco in the State.''.
    (b) Purchase Requirements.--Section 320B of the Agricultural 
Adjustment Act of 1938 (7 U.S.C. 1314h) is amended--
            (1) in subsection (c)--
                    (A) by striking ``(c) The amount'' and inserting 
                ``(c) Amount of Penalty.--For the 1998 and subsequent 
                marketing years, the amount''; and
                    (B) by striking paragraph (1) and inserting the 
                following:
            ``(1) 105 percent of the average market price for the type 
        of tobacco involved during the preceding marketing year; and''; 
        and
            (2) by striking subsection (d) and inserting the following:
    ``(d) Use of Penalty Payments.--An amount equivalent to each 
penalty collected by the Secretary under this section shall be 
transmitted by the Secretary to the Secretary of the Treasury for 
deposit in the Tobacco Community Revitalization Trust Fund established 
under section 1011 of the LEAF Act.''.
    (c) Elimination of Tobacco Marketing Assessment.--
            (1) In general.--Section 106 of the Agricultural Act of 
        1949 (7 U.S.C. 1445) is amended by striking subsection (g).
            (2) Conforming amendment.--Section 422(c) of the Uruguay 
        Round Agreements Act (Public Law 103-465; 7 U.S.C. 1445 note) 
        is amended by striking ``section 106(g), 106A, or 106B of the 
        Agricultural Act of 1949 (7 U.S.C. 1445(g), 1445-1, or 1445-
        2)'' and inserting ``section 106A or 106B of the Agricultural 
        Act of 1949 (7 U.S.C. 1445-1, 1445-2)''.
    (d) Adjustment for Land Rental Costs.--Section 106 of the 
Agricultural Act of 1949 (7 U.S.C. 1445) is amended by adding at the 
end the following:
    ``(h) Adjustment for Land Rental Costs.--For each of the 1999 and 
2000 marketing years for flue-cured tobacco, after consultation with 
producers, State farm organizations and cooperative associations, the 
Secretary shall make an adjustment in the price support level for flue-
cured tobacco equal to the annual change in the average cost per pound 
to flue-cured producers, as determined by the Secretary, under 
agreements through which producers rent land to produce flue-cured 
tobacco.''.
    (e) Fire-Cured and Dark Air-Cured Tobacco Programs.--
            (1) Limitation on transfers.--Section 318(g) of the 
        Agricultural Adjustment Act of 1938 (7 U.S.C. 13l4d(g)) is 
        amended--
                    (A) by striking ``ten'' and inserting ``30''; and
                    (B) by inserting ``during any crop year'' after 
                ``transferred to any farm''.
            (2) Loss of allotment or quota through underplanting.--
        Section 318 of the Agricultural Adjustment Act of 1938 (7 
        U.S.C. 1314d) is amended by adding at the end the following:
    ``(k) Loss of Allotment or Quota Through Underplanting.--Effective 
for the 1999 and subsequent marketing years, no acreage allotment or 
acreage-poundage quota, other than a new marketing quota, shall be 
established for a farm on which no fire-cured or dark air-cured tobacco 
was planted or considered planted during at least 2 of the 3 crop years 
immediately preceding the crop year for which the acreage allotment or 
acreage-poundage quota would otherwise be established.''.
    (f) Expansion of Types of Tobacco Subject to No Net Cost 
Assessment.--
            (1) No net cost tobacco fund.--Section 106A(d)(1)(A) of the 
        Agricultural Act of 1949 (7 U.S.C. 1445-1(d)(1)(A)) is 
        amended--
                    (A) in clause (ii), by inserting after ``Burley 
                quota tobacco'' the following: ``and fire-cured and 
                dark air-cured quota tobacco''; and
                    (B) in clause (iii)--
                            (i) in the matter preceding subclause (I), 
                        by striking ``Flue-cured or Burley tobacco'' 
                        and inserting ``each kind of tobacco for which 
                        price support is made available under this Act, 
                        and each kind of like tobacco,''; and
                            (ii) by striking subclause (II) and 
                        inserting the following:
                                    ``(II) the sum of the amount of the 
                                per pound producer contribution and 
                                purchaser assessment (if any) for the 
                                kind of tobacco payable under clauses 
                                (i) and (ii); and''.
            (2) No net cost tobacco account.--Section 106B(d)(1) of the 
        Agricultural Act of 1949 (7 U.S.C. 1445-2(d)(1)) is amended--
                    (A) in subparagraph (B), by inserting after 
                ``Burley quota tobacco'' the following: ``and fire-
                cured and dark air-cured tobacco''; and
                    (B) in subparagraph (C), by striking ``Flue-cured 
                and Burley tobacco'' and inserting ``each kind of 
                tobacco for which price support is made available under 
                this Act, and each kind of like tobacco,''.

          Subtitle C--Farmer and Worker Transition Assistance

SEC. 1031. TOBACCO WORKER TRANSITION PROGRAM.

    (a) Group Eligibility Requirements.--
            (1) Criteria.--A group of workers (including workers in any 
        firm or subdivision of a firm involved in the manufacture, 
        processing, or warehousing of tobacco or tobacco products) 
        shall be certified as eligible to apply for adjustment 
        assistance under this section pursuant to a petition filed 
        under subsection (b) if the Secretary of Labor determines that 
        a significant number or proportion of the workers in the 
        workers' firm or an appropriate subdivision of the firm have 
        become totally or partially separated, or are threatened to 
        become totally or partially separated, and--
                    (A) the sales or production, or both, of the firm 
                or subdivision have decreased absolutely; and
                    (B) the implementation of the national tobacco 
                settlement contributed importantly to the workers' 
                separation or threat of separation and to the decline 
                in the sales or production of the firm or subdivision.
            (2) Definition of contributed importantly.--In paragraph 
        (1)(B), the term ``contributed importantly'' means a cause that 
        is important but not necessarily more important than any other 
        cause.
            (3) Regulations.--The Secretary shall issue regulations 
        relating to the application of the criteria described in 
        paragraph (1) in making preliminary findings under subsection 
        (b) and determinations under subsection (c).
    (b) Preliminary Findings and Basic Assistance.--
            (1) Filing of petitions.--A petition for certification of 
        eligibility to apply for adjustment assistance under this 
        section may be filed by a group of workers (including workers 
        in any firm or subdivision of a firm involved in the 
        manufacture, processing, or warehousing of tobacco or tobacco 
        products) or by their certified or recognized union or other 
        duly authorized representative with the Governor of the State 
        in which the workers' firm or subdivision thereof is located.
            (2) Findings and assistance.--On receipt of a petition 
        under paragraph (1), the Governor shall--
                    (A) notify the Secretary that the Governor has 
                received the petition;
                    (B) within 10 days after receiving the petition--
                            (i) make a preliminary finding as to 
                        whether the petition meets the criteria 
                        described in subsection (a)(1); and
                            (ii) transmit the petition, together with a 
                        statement of the finding under clause (i) and 
                        reasons for the finding, to the Secretary for 
                        action under subsection (c); and
                    (C) if the preliminary finding under subparagraph 
                (B)(i) is affirmative, ensure that rapid response and 
                basic readjustment services authorized under other 
                Federal laws are made available to the workers.
    (c) Review of Petitions by Secretary; Certifications.--
            (1) In general.--The Secretary, within 30 days after 
        receiving a petition under subsection (b)(2)(B)(ii), shall 
        determine whether the petition meets the criteria described in 
        subsection (a)(1). On a determination that the petition meets 
        the criteria, the Secretary shall issue to workers covered by 
        the petition a certification of eligibility to apply for the 
        assistance described in subsection (d).
            (2) Denial of certification.--On the denial of a 
        certification with respect to a petition under paragraph (1), 
        the Secretary shall review the petition in accordance with the 
        requirements of other applicable assistance programs to 
        determine if the workers may be certified under the other 
        programs.
    (d) Comprehensive Assistance.--
            (1) In general.--Workers covered by a certification issued 
        by the Secretary under subsection (c)(1) shall be provided with 
        benefits and services described in paragraph (2) in the same 
        manner and to the same extent as workers covered under a 
        certification under subchapter A of title II of the Trade Act 
        of 1974 (19 U.S.C. 2271 et seq.), except that the total amount 
        of payments under this section for any fiscal year shall not 
        exceed $25,000,000.
            (2) Benefits and services.--The benefits and services 
        described in this paragraph are the following:
                    (A) Employment services of the type described in 
                section 235 of the Trade Act of 1974 (19 U.S.C. 2295).
                    (B) Training described in section 236 of the Trade 
                Act of 1974 (19 U.S.C. 2296), except that 
                notwithstanding the provisions of section 236(a)(2)(A) 
                of that Act, the total amount of payments for training 
                under this section for any fiscal year shall not exceed 
                $12,500,000.
                    (C) Tobacco worker readjustment allowances, which 
                shall be provided in the same manner as trade 
                readjustment allowances are provided under part I of 
                subchapter B of chapter 2 of title II of the Trade Act 
                of 1974 (19 U.S.C. 2291 et seq.), except that--
                            (i) the provisions of sections 231(a)(5)(C) 
                        and 231(c) of that Act (19 U.S.C. 
                        2291(a)(5)(C), 2291(c)), authorizing the 
                        payment of trade readjustment allowances on a 
                        finding that it is not feasible or appropriate 
                        to approve a training program for a worker, 
                        shall not be applicable to payment of 
                        allowances under this section; and
                            (ii) notwithstanding the provisions of 
                        section 233(b) of that Act (19 U.S.C. 2293(b)), 
                        in order for a worker to qualify for tobacco 
                        readjustment allowances under this section, the 
                        worker shall be enrolled in a training program 
                        approved by the Secretary of the type described 
                        in section 236(a) of that Act (19 U.S.C. 
                        2296(a)) by the later of--
                                    (I) the last day of the 16th week 
                                of the worker's initial unemployment 
                                compensation benefit period; or
                                    (II) the last day of the 6th week 
                                after the week in which the Secretary 
                                issues a certification covering the 
                                worker.
                        In cases of extenuating circumstances relating 
                        to enrollment of a worker in a training program 
                        under this section, the Secretary may extend 
                        the time for enrollment for a period of not to 
                        exceed 30 days.
                    (D) Job search allowances of the type described in 
                section 237 of the Trade Act of 1974 (19 U.S.C. 2297).
                    (E) Relocation allowances of the type described in 
                section 238 of the Trade Act of 1974 (19 U.S.C. 2298).
    (e) Ineligibility of Individuals Receiving Payments for Lost 
Tobacco Quota.--No benefits or services may be provided under this 
section to any individual who has received payments for lost tobacco 
quota under section 1021.
    (f) Funding.--Of the amounts in the Trust Fund, the Secretary may 
use not to exceed $25,000,000 for each of fiscal years 1999 through 
2008 to provide assistance under this section.
    (g) Effective Date.--This section shall take effect on the date 
that is the later of--
            (1) October l, 1998; or
            (2) the date of enactment of this Act.
    (h) Termination Date.--No assistance, vouchers, allowances, or 
other payments may be provided under this section after the date that 
is the earlier of--
            (1) the date that is 10 years after the effective date of 
        this section under subsection (g); or
            (2) the date on which legislation establishing a program 
        providing dislocated workers with comprehensive assistance 
        substantially similar to the assistance provided by this 
        section becomes effective.

SEC. 1032. FARMER OPPORTUNITY GRANTS.

    Part A of title IV of the Higher Education Act of 1965 (20 U.S.C. 
1070 et seq.) is amended by adding at the end the following:

                 ``Subpart 9--Farmer Opportunity Grants

``SEC. 420D. STATEMENT OF PURPOSE.

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

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

    ``(a) Program Authority and Method of Distribution.--
            ``(1) Program authority.--From amounts made available under 
        section 1011(d)(5) of the LEAF Act, the Secretary, during the 
        period beginning July 1, 1999, and ending September 30, 2024, 
        shall pay to each eligible institution such sums as may be 
        necessary to pay to each eligible student (determined in 
        accordance with section 420F) for each academic year during 
        which that student is in attendance at an institution of higher 
        education, as an undergraduate, a farmer opportunity grant in 
        the amount for which that student is eligible, as determined 
        pursuant to subsection (b). Not less than 85 percent of the 
        sums shall be advanced to eligible institutions prior to the 
        start of each payment period and shall be based on an amount 
        requested by the institution as needed to pay eligible 
        students, except that this sentence shall not be construed to 
        limit the authority of the Secretary to place an institution on 
        a reimbursement system of payment.
            ``(2) Construction.--Nothing in this section shall be 
        construed to prohibit the Secretary from paying directly to 
        students, in advance of the beginning of the academic term, an 
        amount for which the students are eligible, in cases where the 
        eligible institution elects not to participate in the 
        disbursement system required by paragraph (1).
            ``(3) Designation.--Grants made under this subpart shall be 
        known as `farmer opportunity grants'.
    ``(b) Amount of Grants.--
            ``(1) Amounts.--
                    ``(A) In general.--The amount of the grant for a 
                student eligible under this subpart shall be--
                            ``(i) $1,700 for each of the academic years 
                        1999-2000 through 2003-2004;
                            ``(ii) $2,000 for each of the academic 
                        years 2004-2005 through 2008-2009;
                            ``(iii) $2,300 for each of the academic 
                        years 2009-2010 through 2013-2014;
                            ``(iv) $2,600 for each of the academic 
                        years 2014-2015 through 2018-2019; and
                            ``(v) $2,900 for each of the academic years 
                        2019-2020 through 2023-2024.
                    ``(B) Part-time rule.--In any case where a student 
                attends an institution of higher education on less than 
                a full-time basis (including a student who attends an 
                institution of higher education on less than a half-
                time basis) during any academic year, the amount of the 
                grant for which that student is eligible shall be 
                reduced in proportion to the degree to which that 
                student is not so attending on a full-time basis, in 
                accordance with a schedule of reductions established by 
                the Secretary for the purposes of this subparagraph, 
                computed in accordance with this subpart. The schedule 
                of reductions shall be established by regulation and 
                published in the Federal Register.
            ``(2) Maximum.--No grant under this subpart shall exceed 
        the cost of attendance (as described in section 472) at the 
        institution at which that student is in attendance. If, with 
        respect to any student, it is determined that the amount of a 
        grant exceeds the cost of attendance for that year, the amount 
        of the grant shall be reduced to an amount equal to the cost of 
        attendance at the institution.
            ``(3) Prohibition.--No grant shall be awarded under this 
        subpart to any individual who is incarcerated in any Federal, 
        State, or local penal institution.
    ``(c) Period of Eligibility for Grants.--
            ``(1) In general.--The period during which a student may 
        receive grants shall be the period required for the completion 
        of the first undergraduate baccalaureate course of study being 
        pursued by that student at the institution at which the student 
        is in attendance, except that any period during which the 
        student is enrolled in a noncredit or remedial course of study 
        as described in paragraph (2) shall not be counted for the 
        purpose of this paragraph.
            ``(2) Construction.--Nothing in this section shall be 
        construed to--
                    ``(A) exclude from eligibility courses of study 
                that are noncredit or remedial in nature and that are 
                determined by the institution to be necessary to help 
                the student be prepared for the pursuit of a first 
                undergraduate baccalaureate degree or certificate or, 
                in the case of courses in English language instruction, 
                to be necessary to enable the student to utilize 
                already existing knowledge, training, or skills; and
                    ``(B) exclude from eligibility programs of study 
                abroad that are approved for credit by the home 
                institution at which the student is enrolled.
            ``(3) Prohibition.--No student is entitled to receive 
        farmer opportunity grant payments concurrently from more than 1 
        institution or from the Secretary and an institution.
    ``(d) Applications for Grants.--
            ``(1) In general.--The Secretary shall from time to time 
        set dates by which students shall file applications for grants 
        under this subpart. The filing of applications under this 
        subpart shall be coordinated with the filing of applications 
        under section 401(c).
            ``(2) Information and assurances.--Each student desiring a 
        grant for any year shall file with the Secretary an application 
        for the grant containing such information and assurances as the 
        Secretary may deem necessary to enable the Secretary to carry 
        out the Secretary's functions and responsibilities under this 
        subpart.
    ``(e) Distribution of Grants to Students.--Payments under this 
section shall be made in accordance with regulations promulgated by the 
Secretary for such purpose, in such manner as will best accomplish the 
purpose of this section. Any disbursement allowed to be made by 
crediting the student's account shall be limited to tuition and fees 
and, in the case of institutionally owned housing, room and board. The 
student may elect to have the institution provide other such goods and 
services by crediting the student's account.
    ``(f) Insufficient Funding.--If, for any fiscal year, the funds 
made available to carry out this subpart from the Tobacco Community 
Revitalization Trust Fund are insufficient to satisfy fully all grants 
for students determined to be eligible under section 420F, the amount 
of the grant provided under subsection (b) shall be reduced on a pro 
rata basis among all eligible students.
    ``(g) Treatment of Institutions and Students Under Other Laws.--Any 
institution of higher education that enters into an agreement with the 
Secretary to disburse to students attending that institution the 
amounts those students are eligible to receive under this subpart shall 
not be deemed, by virtue of the agreement, to be a contractor 
maintaining a system of records to accomplish a function of the 
Secretary. Recipients of farmer opportunity grants shall not be 
considered to be individual grantees for purposes of the Drug-Free 
Workplace Act of 1988 (41 U.S.C. 701 et seq.).

``SEC. 420F. STUDENT ELIGIBILITY.

    ``(a) In General.--In order to receive any grant under this 
subpart, a student shall--
            ``(1) be a member of a tobacco farm family in accordance 
        with subsection (b);
            ``(2) be enrolled or accepted for enrollment in a degree, 
        certificate, or other program (including a program of study 
        abroad approved for credit by the eligible institution at which 
        the student is enrolled) leading to a recognized educational 
        credential at an institution of higher education that is an 
        eligible institution in accordance with section 487, and not be 
        enrolled in an elementary or secondary school;
            ``(3) if the student is presently enrolled at an 
        institution of higher education, be maintaining satisfactory 
        progress in the course of study the student is pursuing in 
        accordance with subsection (c);
            ``(4) not owe a refund on grants previously received at any 
        institution of higher education under this title, or be in 
        default on any loan from a student loan fund at any institution 
        provided for in part D, or a loan made, insured, or guaranteed 
        by the Secretary under this title for attendance at any 
        institution;
            ``(5) file with the institution of higher education that 
        the student intends to attend, or is attending, a document, 
        that need not be notarized, but that shall include--
                    ``(A) a statement of educational purpose stating 
                that the money attributable to the grant will be used 
                solely for expenses related to attendance or continued 
                attendance at the institution; and
                    ``(B) the student's social security number; and
            ``(6) be a citizen of the United States.
    ``(b) Tobacco Farm Families.--
            ``(1) In general.--For the purpose of subsection (a)(1), a 
        student is a member of a tobacco farm family if during calendar 
        year 1998 the student was--
                    ``(A) an individual who--
                            ``(i) is a participating tobacco producer 
                        (as defined in section 1002 of the LEAF Act); 
                        or
                            ``(ii) is otherwise actively engaged in the 
                        production of tobacco;
                    ``(B) a spouse, son, daughter, stepson, or 
                stepdaughter of an individual described in subparagraph 
                (A);
                    ``(C) an individual--
                            ``(i) who was a brother, sister, 
                        stepbrother, stepsister, son-in-law, or 
                        daughter-in-law of an individual described in 
                        subparagraph (A); and
                            ``(ii) whose principal place of residence 
                        was the home of the individual described in 
                        subparagraph (A); or
                    ``(D) an individual who was a dependent (within the 
                meaning of section 152 of the Internal Revenue Code of 
                1986) of an individual described in subparagraph (A).
            ``(2) Administration.--On request, the Secretary of 
        Agriculture shall provide to the Secretary such information as 
        is necessary to carry out this subsection.
    ``(c) Satisfactory Progress.--
            ``(1) In general.--For the purpose of subsection (a)(3), a 
        student is maintaining satisfactory progress if--
                    ``(A) the institution at which the student is in 
                attendance reviews the progress of the student at the 
                end of each academic year, or its equivalent, as 
                determined by the institution; and
                    ``(B) the student has at least a cumulative C 
                average or its equivalent, or academic standing 
                consistent with the requirements for graduation, as 
                determined by the institution, at the end of the second 
                such academic year.
            ``(2) Special rule.--Whenever a student fails to meet the 
        eligibility requirements of subsection (a)(3) as a result of 
        the application of this subsection and subsequent to that 
        failure the student has academic standing consistent with the 
        requirements for graduation, as determined by the institution, 
        for any grading period, the student may, subject to this 
        subsection, again be eligible under subsection (a)(3) for a 
        grant under this subpart.
            ``(3) Waiver.--Any institution of higher education at which 
        the student is in attendance may waive paragraph (1) or (2) for 
        undue hardship based on--
                    ``(A) the death of a relative of the student;
                    ``(B) the personal injury or illness of the 
                student; or
                    ``(C) special circumstances as determined by the 
                institution.
    ``(d) Students Who Are Not Secondary School Graduates.--In order 
for a student who does not have a certificate of graduation from a 
school providing secondary education, or the recognized equivalent of 
the certificate, to be eligible for any assistance under this subpart, 
the student shall meet either 1 of the following standards:
            ``(1) Examination.--The student shall take an independently 
        administered examination and shall achieve a score, specified 
        by the Secretary, demonstrating that the student can benefit 
        from the education or training being offered. The examination 
        shall be approved by the Secretary on the basis of compliance 
        with such standards for development, administration, and 
        scoring as the Secretary may prescribe in regulations.
            ``(2) Determination.--The student shall be determined as 
        having the ability to benefit from the education or training in 
        accordance with such process as the State shall prescribe. Any 
        such process described or approved by a State for the purposes 
        of this section shall be effective 6 months after the date of 
        submission to the Secretary unless the Secretary disapproves 
        the process. In determining whether to approve or disapprove 
        the process, the Secretary shall take into account the 
        effectiveness of the process in enabling students without 
        secondary school diplomas or the recognized equivalent to 
        benefit from the instruction offered by institutions utilizing 
        the process, and shall also take into account the cultural 
        diversity, economic circumstances, and educational preparation 
        of the populations served by the institutions.
    ``(e) Special Rule for Correspondence Courses.--A student shall not 
be eligible to receive a grant under this subpart for a correspondence 
course unless the course is part of a program leading to an associate, 
bachelor, or graduate degree.
    ``(f) Courses Offered Through Telecommunications.--
            ``(1) Relation to correspondence courses.--A student 
        enrolled in a course of instruction at an eligible institution 
        of higher education (other than an institute or school that 
        meets the definition in section 521(4)(C) of the Carl D. 
        Perkins Vocational and Applied Technology Education Act (20 
        U.S.C. 2471(4)(C))) that is offered in whole or in part through 
        telecommunications and leads to a recognized associate, 
        bachelor, or graduate degree conferred by the institution shall 
        not be considered to be enrolled in correspondence courses 
        unless the total amount of telecommunications and 
        correspondence courses at the institution equals or exceeds 50 
        percent of the courses.
            ``(2) Restriction or reductions of financial aid.--A 
        student's eligibility to receive a grant under this subpart may 
be reduced if a financial aid officer determines under the 
discretionary authority provided in section 479A that 
telecommunications instruction results in a substantially reduced cost 
of attendance to the student.
            ``(3) Definition.--For the purposes of this subsection, the 
        term `telecommunications' means the use of television, audio, 
        or computer transmission, including open broadcast, closed 
        circuit, cable, microwave, or satellite, audio conferencing, 
        computer conferencing, or video cassettes or discs, except that 
        the term does not include a course that is delivered using 
        video cassette or disc recordings at the institution and that 
        is not delivered in person to other students of that 
        institution.
    ``(g) Study Abroad.--Nothing in this subpart shall be construed to 
limit or otherwise prohibit access to study abroad programs approved by 
the home institution at which a student is enrolled. An otherwise 
eligible student who is engaged in a program of study abroad approved 
for academic credit by the home institution at which the student is 
enrolled shall be eligible to receive a grant under this subpart, 
without regard to whether the study abroad program is required as part 
of the student's degree program.
    ``(h) Verification of Social Security Number.--The Secretary, in 
cooperation with the Commissioner of Social Security, shall verify any 
social security number provided by a student to an eligible institution 
under subsection (a)(5)(B) and shall enforce the following conditions:
            ``(1) Pending verification.--Except as provided in 
        paragraphs (2) and (3), an institution shall not deny, reduce, 
        delay, or terminate a student's eligibility for assistance 
        under this subpart because social security number verification 
        is pending.
            ``(2) Denial or termination.--If there is a determination 
        by the Secretary that the social security number provided to an 
        eligible institution by a student is incorrect, the institution 
        shall deny or terminate the student's eligibility for any grant 
        under this subpart until such time as the student provides 
        documented evidence of a social security number that is 
        determined by the institution to be correct.
            ``(3) Construction.--Nothing in this subsection shall be 
        construed to permit the Secretary to take any compliance, 
        disallowance, penalty, or other regulatory action against--
                    ``(A) any institution of higher education with 
                respect to any error in a social security number, 
                unless the error was a result of fraud on the part of 
                the institution; or
                    ``(B) any student with respect to any error in a 
                social security number, unless the error was a result 
                of fraud on the part of the student.''.

                          Subtitle D--Immunity

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

    Notwithstanding any other provision of this Act, a participating 
tobacco producer, tobacco-related growers association, or tobacco 
warehouse owner or employee may not be subject to liability in any 
Federal or State court for any cause of action resulting from the 
failure of any tobacco product manufacturer, distributor, or retailer 
to comply with the National Tobacco Policy and Youth Smoking Reduction 
Act.
                                 <all>