[Congressional Record Volume 143, Number 145 (Friday, October 24, 1997)]
[Senate]
[Pages S11193-S11197]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. FAIRCLOTH:
  S. 1315. A bill to establish an Office of National Security within 
the Securities and Exchange Commission, provide for the monitoring of 
the extent of foreign involvement in United States securities markets, 
financial institutions, and pension funds, and for other purposes; to 
the Committee on Banking, Housing, and Urban Affairs.


                       the tobacco transition act

  Mr. LUGAR. Mr. President, I rise today to introduce legislation to 
reform the federal tobacco quota and price support programs. This 
legislation would provide economic assistance to tobacco quota owners, 
tobacco producers, and tobacco-dependent communities as they make the 
transition to the free market.
  Nearly every American is aware of the global tobacco settlement 
between 40 States' attorneys general and cigarette companies. Tobacco 
farmers and their communities were conspicuously omitted from these 
negotiations. Yet the settlement offers Congress a unique opportunity 
to provide economic assistance to tobacco farmers while ending the 
federal government's support for tobacco production.
  My legislation would buy out tobacco marketing quotas, provide 
transition payments to tobacco producers, phase out the price support 
program, and provide economic assistance to tobacco-dependent 
communities. The cost of these reforms would be approximately $15 
billion and would be paid for with funds from the tobacco settlement. 
Because farmers were not considered in the negotiations that led to 
this settlement, this amount would be added to the current $368.5 
billion.
  Under my legislation, the tobacco quota program would end in 1999 
and, beginning that year, the price support program would be phased out 
over three years. In 1999, price supports would decline by 25 percent, 
then by an additional 10 percent in each of 2000 and 2001, and would 
end thereafter.
  Quota owners would receive $8 for every pound of quota they own. They 
could elect to receive either first, a lumpsum payment in 1999 if they 
agree to cease tobacco production altogether, or second, three equal 
annual payments beginning in 1999 if they choose to continue to produce 
tobacco.
  Tobacco producers would receive transition payments of 40 cents per 
pound over 3 consecutive years for tobacco quota that they lease or 
rent on a cash-rent or crop-share basis. Transition payments would be 
based on the average of at least 3 years of production over the 1993-97 
period. Producers who both own and lease quota would receive transition 
payments based on their leased quota and a buyout based on the quota 
they own.
  Under this legislation, producers would be able to grow whatever 
amounts of tobacco they choose--free of Government control. Most other 
farm programs went through a similar change just last year when 
Congress passed the freedom-to farm legislation. The global tobacco 
settlement would provide the funds to assist tobacco farmers as they 
join other farmers in the free market.
  Communities that are economically dependent on tobacco production 
would receive $300 million in economic assistance. Eligible States 
would receive block grants to facilitate the development of alternative 
crops, industries, and infrastructure. Recipient States would then 
determine the areas most in need of assistance.
  Mr. President, with or without a settlement, the forces to reform the 
tobacco program have been converging for some time now and they can no 
longer be ignored. High-domestic price supports have hurt the 
competitiveness of U.S.-grown tobacco. Exports of tobacco have fallen, 
while imports have grown. Congress has already ended Government control 
over nearly every other farm commodity. And, most importantly, Congress 
cannot ask Americans to accept Federal support for tobacco production 
when we are considering legislation to settle claims that stem directly 
from tobacco use.
  Clearly, the tobacco program may not be sustainable for much longer. 
With that reality facing all tobacco producers, we should not pass up 
this opportunity to provide economic assistance to farmers and their 
communities.
  Mr. President, I ask unanimous consent that the text of the bill be 
included in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1315

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

Sec. 1. Short title; table of contents.
Sec. 2. Purposes.
Sec. 3. Definitions.

                 TITLE I--TOBACCO PRODUCTION TRANSITION

                Subtitle A--Tobacco Transition Contracts

Sec. 101. Tobacco Transition Account.
Sec. 102. Offer and terms of tobacco transition contracts.
Sec. 103. Elements of contracts.
Sec. 104. Buyout payments to owners.
Sec. 105. Transition payments to producers.

           Subtitle B--Rural Economic Assistance Block Grants

Sec. 111. Rural economic assistance block grants.

   TITLE II--TOBACCO PRICE SUPPORT AND PRODUCTION ADJUSTMENT PROGRAMS

               Subtitle A--Tobacco Price Support Program

Sec. 201. Interim reform of tobacco price support program.
Sec. 202. Termination of tobacco price support program.

           Subtitle B--Tobacco Production Adjustment Programs

Sec. 211. Termination of tobacco production adjustment programs.

                           TITLE III--FUNDING

Sec. 301. Trust Fund.
Sec. 302. Commodity Credit Corporation.

     SEC. 2. PURPOSES.

       The purposes of this Act are--
       (1) to authorize the use of binding contracts between the 
     United States and tobacco quota owners and tobacco producers 
     to compensate them for the termination of Federal programs 
     that support the production of tobacco in the United States;
       (2) to make available to States funds for economic 
     assistance initiatives in counties of States that are 
     dependent on the production of tobacco; and
       (3) to terminate Federal programs that support the 
     production of tobacco in the United States.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Association.--The term ``association'' means a 
     producer-owned cooperative marketing association that has 
     entered into a loan agreement with the Commodity Credit 
     Corporation to make price support available to producers.
       (2) Buyout payment.--The term ``buyout payment'' means a 
     payment made to a quota owner under section 104 in 1 or more 
     installments in accordance with section 102(c)(1).

[[Page S11194]]

       (3) Contract.--The term ``contract'' or ``tobacco 
     transition contract'' means a contract entered into under 
     section 102.
       (4) Governor.--The term ``Governor'' means the chief 
     executive officer of a State.
       (5) Lease.--The term ``lease'' means a rental of quota on 
     either a cash rent or crop share basis.
       (6) Marketing year.--The term ``marketing year'' means--
       (A) in the case of Flue-cured tobacco, the period beginning 
     July 1 and ending the following June 30; and
       (B) in the case of each other kind of tobacco, the period 
     beginning October 1 and ending the following September 30.
       (7) Owner.--The term ``owner'' means a person who, at the 
     time of entering into a tobacco transition contract, owns 
     quota provided by the Secretary.
       (8) Phaseout period.--The term ``phaseout period'' means 
     the 3-year period consisting of the 1999 through 2001 
     marketing years.
       (9) Price support.--The term ``price support'' means a 
     nonrecourse loan provided by the Commodity Credit Corporation 
     through an association for the kind of tobacco involved.
       (10) Producer.--The term ``producer'' means a person who 
     during at least 3 of the 1993 through 1997 crops of tobacco 
     (as determined by the Secretary) that were subject to quota--
       (A) leased quota;
       (B) shared in the risk of producing a crop of tobacco; and
       (C) marketed the tobacco subject to quota.
       (11) Quota.--The term ``quota'' means the quantity of 
     tobacco produced in the United States, and marketed during a 
     marketing year, that will be used in, or exported from, the 
     United States during the marketing year (including an 
     adjustment for stocks), as estimated by the Secretary.
       (12) Secretary.--The term ``Secretary'' means the Secretary 
     of Agriculture.
       (13) State.--The term ``State'' means each of the several 
     States of the United States, the District of Columbia, the 
     Commonwealth of Puerto Rico, and any other territory or 
     possession of the United States.
       (14) Tobacco.--The term ``tobacco'' means any kind of 
     tobacco for which a marketing quota is in effect or for which 
     a marketing quota is not disapproved by producers.
       (15) Tobacco transition account.--The term ``Tobacco 
     Transition Account'' means the Tobacco Transition Account 
     established by section 101(a).
       (16) Transition payment.--The term ``transition payment'' 
     means a payment made to a producer under section 105 for each 
     of the 1999 through 2001 marketing years.
       (17) Trust fund.--The term ``Trust Fund'' means the 
     National Tobacco Settlement Trust Fund established in the 
     Treasury of the United States consisting of amounts that are 
     appropriated or credited to the Trust Fund from the tobacco 
     settlement approved by Congress.
       (18) United states.--The term ``United States'', when used 
     in a geographical sense, means all of the States.
                 TITLE I--TOBACCO PRODUCTION TRANSITION
                Subtitle A--Tobacco Transition Contracts

     SEC. 101. TOBACCO TRANSITION ACCOUNT.

       (a) Establishment.--There is established in the Trust Fund 
     a Tobacco Transition Account.
       (b) Use.--Funds appropriated or credited to the Tobacco 
     Transition Account shall be available for providing buyout 
     payments and transition payments authorized under this 
     subtitle.
       (c) Termination.--The Tobacco Transition Account terminates 
     effective September 30, 2001.

     SEC. 102. OFFER AND TERMS OF TOBACCO TRANSITION CONTRACTS.

       (a) Offer.--The Secretary shall offer to enter into a 
     tobacco transition contract with each owner and producer of 
     tobacco.
       (b) Terms.--Under the terms of a contract, the owner or 
     producer shall agree, in exchange for a payment made pursuant 
     to section 104 or 105, as applicable, to relinquish the value 
     of quota that is owned or leased.
       (c) Rights of Owners and Producers.--
       (1) Owners.--An owner shall elect to receive a buyout 
     payment in--
       (A) 1 installment for the kind of tobacco involved, in 
     exchange for permanently foregoing production of tobacco; or
       (B) 3 equal installments, 1 installment for each of the 
     1999 through 2001 crops of tobacco, in which case the owner 
     shall have the right to continue production of each of those 
     crops.
       (2) Producers.--In the case of each of the 1999 through 
     2001 crops for the kind of tobacco involved, a producer who 
     is not an owner during the 1998 marketing year for the kind 
     of tobacco involved shall not be subject to any restrictions 
     on the quantity of tobacco produced or marketed.

     SEC. 103. ELEMENTS OF CONTRACTS.

       (a) Deadlines for Contracting.--
       (1) Commencement.--To the maximum extent practicable, the 
     Secretary shall commence entering into contracts under this 
     subtitle not later than 90 days after the date of enactment 
     of this Act.
       (2) Deadline.--The Secretary may not enter into a contract 
     under this subtitle after June 31, 1999.
       (b) Duration of Contract.--
       (1) Beginning date.--The term of a contract shall begin on 
     the date that is the beginning of the 1999 marketing year for 
     the kind of tobacco involved.
       (2) Termination date.--
       (A) In general.--Except as provided in subparagraph (B), 
     the term of a contract shall terminate on the date that is 
     the end of the 2001 marketing year for the kind of tobacco 
     involved.
       (B) Exception.--In the case of an owner who enters into a 
     contract and elects to receive a buyout payment in 1 
     installment under section 102(c)(1)(A), the contract shall be 
     permanent.
       (c) Time for Payment.--
       (1) In general.--A buyout payment or transition payment 
     shall be made not later than the date that is the beginning 
     of the marketing year for the kind of tobacco involved for 
     each year of the term of a tobacco transition contract of an 
     owner or producer of tobacco.
       (2) Applicability.--This subsection shall be applicable to 
     all payments covered by section 102(c).

     SEC. 104. BUYOUT PAYMENTS TO OWNERS.

       (a) In General.--During the phaseout period, the Secretary 
     shall make buyout payments to owners in accordance with 
     section 102(c)(1).
       (b) Compensation for Lost Value.--The payment shall 
     constitute compensation for the lost value to the owner of 
     the quota.
       (c) Payment Calculation.--Under this section, the total 
     amount of the buyout payment made to an owner shall be 
     determined by multiplying--
       (1) $8.00; by
       (2) the average annual quantity of quota owned by the owner 
     during the 1995 through 1997 crop years.

     SEC. 105. TRANSITION PAYMENTS TO PRODUCERS.

       (a) In General.--The Secretary shall make transition 
     payments during each of the 1999 through 2001 marketing years 
     for a kind of tobacco that was subject to a quota to a 
     producer who--
       (1) produced the kind of tobacco during at least 3 of the 
     1993 through 1997 crop years; and
       (2) entered into a tobacco transition contract.
       (b) Transition Payments Limited to Leased Quota.--A 
     producer shall be eligible for transition payments only for 
     the portion of the production of the producer that is subject 
     to quota that is leased during the 3 crop years described in 
     subsection (a)(1).
       (c) Compensation for Lost Revenue.--The payments shall 
     constitute compensation for the lost revenue incurred by a 
     tobacco producer during each of the 1999 through 2001 
     marketing years for the kind of tobacco involved.
       (d) Election by Producer; Production.--
       (1) Election.--The producer may elect which 3 of the 1993 
     through 1997 crop years shall be used for the calculation 
     under subsection (e).
       (2) Production.--The producer shall have the burden of 
     demonstrating to the Secretary the production of tobacco for 
     each year of the election.
       (e) Payment Calculation.--Under this section, each of the 3 
     transition payments made to a producer for the kind of 
     tobacco involved shall be determined by multiplying--
       (1) 40 cents; by
       (2) the average quantity of the kind of tobacco produced by 
     the producer during the 3 crop years elected by the producer 
     under subsection (d).
           Subtitle B--Rural Economic Assistance Block Grants

     SEC. 111. RURAL ECONOMIC ASSISTANCE BLOCK GRANTS.

       (a) In General.--For each of fiscal years 1999 through 
     2001, the Secretary shall use funds in the Tobacco Transition 
     Account to provide block grants to tobacco-growing States to 
     assist areas of such a State that are economically dependent 
     on the production of tobacco.
       (b) Funding.--To carry out this section, there shall be 
     credited to the Tobacco Transition Account, from the Trust 
     Fund, $100,000,000 for each of fiscal years 1999 through 
     2001.
       (c) Payments by Secretary to Tobacco-Growing States.--
       (1) In general.--The Secretary shall use the amount 
     available for a fiscal year under subsection (b) to make 
     block grant payments to the Governors of tobacco-growing 
     States.
       (2) Amount.--The amount of a block grant paid to a tobacco-
     growing State shall be based on--
       (A) the number of counties in the State in which tobacco 
     production is a significant part of the county's economy; and
       (B) the level of economic dependence of the county on 
     tobacco production.
       (d) Grants by States to Assist Tobacco-Growing Areas.--
       (1) In general.--A Governor of a tobacco-growing State 
     shall use the amount of the block grant to the State under 
     subsection (c) to make grants to counties or other public or 
     private entities in the State to assist areas that are 
     dependent on the production of tobacco, as determined by the 
     Governor.
       (2) Amount.--The amount of a grant paid to a county or 
     other entity to assist an area shall be based on (as 
     determined by the Secretary)--
       (A) the ratio of gross tobacco sales receipts in the area 
     to the total farm income in the area; and
       (B) the ratio of all tobacco related receipts in the area 
     to the total income in the area.

[[Page S11195]]

       (3) Use of grants.--A county or other entity that receives 
     a grant under this subsection shall use the grant in a manner 
     determined appropriate by the county or entity (with the 
     approval of the State) to assist producers and other persons 
     who are economically dependent on the production of tobacco, 
     including use for--
       (A) on-farm diversification and alternatives to the 
     production of tobacco and risk management; and
       (B) off-farm activities such as development of non-tobacco 
     related jobs.
       (e) Termination of Authority.--The authority provided by 
     this section terminates October 1, 2001.
   TITLE II--TOBACCO PRICE SUPPORT AND PRODUCTION ADJUSTMENT PROGRAMS
               Subtitle A--Tobacco Price Support Program

     SEC. 201. INTERIM REFORM OF TOBACCO PRICE SUPPORT PROGRAM.

       (a) Price Support Rates.--Section 106 of the Agricultural 
     Act of 1949 (7 U.S.C. 1445) is amended--
       (1) by striking subsection (a) and inserting the following:
       ``(a) In General.--The price support rate for each kind of 
     tobacco for which quotas have been approved shall be reduced 
     by--
       ``(1) for the 1999 crop, 25 percent from the 1998 support 
     rate for the kind of tobacco involved;
       ``(2) for the 2000 crop, 10 percent from the 1999 support 
     rate for the kind of tobacco involved; and
       ``(3) for the 2001 crop, 10 percent from the 2000 support 
     rate for the kind of tobacco involved.'';
       (2) by striking subsections (b) and (f); and
       (3) by redesignating subsection (c), (d), and (g) as 
     subsections (b), (c), and (d), respectively.
       (b) Budget Deficit Assessment.--Section 106 of the 
     Agricultural Act of 1949 (7 U.S.C. 1445) (as amended by 
     subsection (a)(3)) is amended by striking subsection (d) and 
     inserting the following:
       ``(d) Tobacco Transition Payment.--Effective only for the 
     1998 crop of tobacco, the Secretary of the Treasury shall 
     transfer from the Tobacco Transition Account of the National 
     Tobacco Settlement Trust Fund an amount equal to the product 
     obtained by multiplying--
       ``(1) the amount per pound equal to 2 percent of the 
     national price support level for each kind of tobacco for 
     which price support is made available under this Act; and
       ``(2) the total quantity of the kind of tobacco that is 
     produced or purchased in, or imported into, the United 
     States.''.
       (c) No Net Cost Tobacco Fund and Account.--
       (1) No net cost tobacco fund.--Section 106A of the 
     Agricultural Act of 1949 (7 U.S.C. 1445-1) is amended to read 
     as follows:

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

       ``(a) Definitions.--In this section:
       ``(1) Association.--The term `association' means a 
     producer-owned cooperative marketing association that has 
     entered into a loan agreement with the Corporation to make 
     price support available to producers of a kind of tobacco.
       ``(2) Corporation.--The term `Corporation' means the 
     Commodity Credit Corporation, an agency and instrumentality 
     of the United States within the Department of Agriculture 
     through which the Secretary makes price support available to 
     producers.
       ``(3) Net gains.--The term `net gains' means the amount by 
     which the total proceeds obtained from the sale by an 
     association of a crop of quota tobacco pledged to the 
     Corporation for a price support loan exceeds the principal 
     amount of the price support loan made by the Corporation to 
     the association on the crop, plus interest, charges, and 
     costs of administering the price support program.
       ``(4) No net cost tobacco fund.--The term `No Net Cost 
     Tobacco Fund' means the capital account established within 
     each association under this section.
       ``(5) Purchaser.--The term `purchaser' means any person who 
     purchases in the United States, either directly or indirectly 
     for the account of the person or another person, Flue-cured 
     or burley quota tobacco.
       ``(6) Quota tobacco.--The term `quota tobacco' means any 
     kind of tobacco for which marketing quotas are in effect or 
     for which marketing quotas are not disapproved by producers.
       ``(7) Trust fund.--The term `Trust Fund' means the National 
     Tobacco Settlement Trust Fund established in the Treasury of 
     the United States consisting of amounts that are appropriated 
     or credited to the Trust Fund from the tobacco settlement 
     approved by Congress.
       ``(b) Price Support Program; Loans.--The Secretary--
       ``(1) may carry out the tobacco price support program 
     through the Corporation; and
       ``(2) shall, except as otherwise provided by this section, 
     continue to make price support available to producers through 
     loans to associations that, under agreements with the 
     Corporation, agree to make loan advances to producers.
       ``(c) Establishment of Fund.--
       ``(1) In general.--Each association shall establish within 
     the association a No Net Cost Tobacco Fund.
       ``(2) Amount.--There shall be transferred from the Trust 
     Fund to each No Net Cost Tobacco Fund such amount as the 
     Secretary determines will be adequate to reimburse the 
     Corporation for any net losses that the Corporation may 
     sustain under its loan agreements with the association, based 
     on--
       ``(A) reasonable estimates of the amounts that the 
     Corporation has lent or will lend to the association for 
     price support for the 1982 and subsequent crops of quota 
     tobacco, except that for the 1986 and subsequent crops of 
     burley quota tobacco, the Secretary shall determine the 
     amount of assessments without regard to any net losses that 
     the Corporation may sustain under the loan agreements of the 
     Corporation with the association for the 1983 crop of burley 
     quota tobacco;
       ``(B) the cost of administering the tobacco price support 
     program (as determined by the Secretary); and
       ``(C) the proceeds that will be realized from the sales of 
     tobacco that are pledged to the Corporation by the 
     association as security for loans.
       ``(d) Administration.--The Secretary shall--
       ``(1) require that the No Net Cost Tobacco Fund established 
     by each association be kept and maintained separately from 
     all other accounts of the association and be used 
     exclusively, as prescribed by the Secretary, for the purpose 
     of ensuring, insofar as practicable, that the Corporation, 
     under its loan agreements with the association with respect 
     to 1982 and subsequent crops of quota tobacco, will suffer no 
     net losses (including recovery of the amount of loans 
     extended to cover the overhead costs of the association), 
     after any net gains are applied to net losses of the 
     Corporation under paragraph (3), except that, notwithstanding 
     any other provision of law, the association may, with the 
     approval of the Secretary, use funds in the No Net Cost 
     Tobacco Fund, including interest and other earnings, for--
       ``(A) the purposes of reducing the association's 
     outstanding indebtedness to the Corporation associated with 
     1982 and subsequent crops of quota tobacco and making loan 
     advances to producers as authorized; and
       ``(B) any other purposes that will be mutually beneficial 
     to producers and purchasers and to the Corporation;
       ``(2) permit an association to invest the funds in the No 
     Net Cost Tobacco Fund in such manner as the Secretary may 
     approve, and require that the interest or other earnings on 
     the investment shall become a part of the No Net Cost Tobacco 
     Fund;
       ``(3) require that loan agreements between the Corporation 
     and the association provide that the Corporation shall retain 
     the net gains from each of the 1982 and subsequent crops of 
     tobacco pledged by the association as security for price 
     support loans, and that the net gains will be used for the 
     purpose of--
       ``(A) offsetting any losses sustained by the Corporation 
     under its loan agreements with the association for any of the 
     1982 and subsequent crops of tobacco; or
       ``(B) reducing the outstanding balance of any price support 
     loan made by the Corporation to the association under the 
     loan agreements for 1982 and subsequent crops of tobacco; and
       ``(4) effective for the 1986 and subsequent crops of quota 
     tobacco, if the Secretary determines that the amount in the 
     No Net Cost Tobacco Fund or the net gains referred to in 
     paragraph (3) exceeds the total amount necessary for the 
     purposes specified in this section, suspend the transfer of 
     amounts from the Trust Fund to the No Net Cost Tobacco Fund 
     under this section.
       ``(e) Noncompliance.--
       ``(1) In general.--If any association that has entered into 
     a loan agreement with the Corporation with respect to any of 
     the 1982 or subsequent crops of quota tobacco fails or 
     refuses to comply with this section (including regulations 
     promulgated under this section) or the terms of the 
     agreement, the Secretary may terminate the agreement or 
     provide that no additional loan funds may be made available 
     under the agreement to the association.
       ``(2) Price support.--If the Secretary takes action under 
     paragraph (1), the Secretary shall make price support 
     available to producers of the kind or kinds of tobacco, the 
     price of which had been supported through loans to the 
     association, through such other means as are authorized by 
     this Act or the Commodity Credit Corporation Charter Act (15 
     U.S.C. 714 et seq.).
       ``(f) Termination of Agreement or Association.--If, under 
     subsection (e), a loan agreement with an association is 
     terminated, or if an association having a loan agreement with 
     the Corporation is dissolved, merges with another 
     association, or otherwise ceases to operate, the No Net Cost 
     Tobacco Fund or the net gains referred to in subsection 
     (d)(3) shall be applied or disposed of in such manner as the 
     Secretary may approve or prescribe, except that the net gains 
     shall, to the extent necessary, first be applied or used for 
     the purposes specified in this section.
       ``(g) Regulations.--The Secretary shall issue such 
     regulations as are necessary to carry out this section.''.
       (2) No net cost tobacco account.--Section 106B of the 
     Agricultural Act of 1949 (7 U.S.C. 1445-2) is amended to read 
     as follows:

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

       ``(a) Definitions.--In this section:
       ``(1) Area.--The term `area', when used in connection with 
     an association, means the general geographical area in which 
     farms of the producer-members of the association are located, 
     as determined by the Secretary.
       ``(2) Association.--The term `association' has the meaning 
     given the term in section 106A(a)(1).

[[Page S11196]]

       ``(3) Corporation.--The term `Corporation' has the meaning 
     given the term in section 106A(a)(2).
       ``(4) Net gains.--The term `net gains' has the meaning 
     given the term in section 106A(a)(3).
       ``(5) No net cost tobacco account.--The term `No Net Cost 
     Tobacco Account' means an account established by and in the 
     Corporation for an association under this section.
       ``(6) Purchaser.--The term `purchaser' has the meaning 
     given the term in section 106A(a)(5).
       ``(7) Tobacco.--The term `tobacco' means any kind of 
     tobacco (as defined in section 301(b) of the Agricultural 
     Adjustment Act of 1938 (7 U.S.C. 1301(b))) for which 
     marketing quotas are in effect or for which marketing quotas 
     are not disapproved by producers.
       ``(8) Trust fund.--The term `Trust Fund' has the meaning 
     given the term in section 106A(a)(7).
       ``(b) Price Support Program; Loans.--Notwithstanding 
     section 106A, the Secretary shall, on the request of any 
     association, and may, if the Secretary determines, after 
     consultation with the association, that the accumulation of 
     the No Net Cost Tobacco Fund for the association under 
     section 106A is, and is likely to remain, inadequate to 
     reimburse the Corporation for net losses that the Corporation 
     sustains under its loan agreements with the association--
       ``(1) continue to make price support available to producers 
     through the association in accordance with loan agreements 
     entered into between the Corporation and the association; and
       ``(2) establish and maintain in accordance with this 
     section a No Net Cost Tobacco Account for the association in 
     lieu of the No Net Cost Tobacco Fund established within the 
     association under section 106A.
       ``(c) Establishment of Account.--
       ``(1) In general.--A No Net Cost Tobacco Account 
     established for an association under subsection (b)(2) shall 
     be established within the Corporation.
       ``(2) Amount.--There shall be transferred from the Trust 
     Fund to each No Net Cost Tobacco Account such amount as the 
     Secretary determines will be adequate to reimburse the 
     Corporation for any net losses that the Corporation may 
     sustain under its loan agreements with the association, based 
     on--
       ``(A) reasonable estimates of the amounts that the 
     Corporation has lent or will lend to the association for 
     price support for the 1982 and subsequent crops of quota 
     tobacco, except that for the 1986 and subsequent crops of 
     burley quota tobacco, the Secretary shall determine the 
     amount of assessments without regard to any net losses that 
     the Corporation may sustain under the loan agreements of the 
     Corporation with the association for the 1983 crop of burley 
     quota tobacco;
       ``(B) the cost of administering the tobacco price support 
     program (as determined by the Secretary); and
       ``(C) the proceeds that will be realized from the sales of 
     the kind of tobacco involved that are pledged to the 
     Corporation by the association as security for loans.
       ``(3) Administration.--On the establishment of a No Net 
     Cost Tobacco Account for an association, any amount in the No 
     Net Cost Tobacco Fund established within the association 
     under section 106A shall be applied or disposed of in such 
     manner as the Secretary may approve or prescribe, except that 
     the amount shall, to the extent necessary, first be applied 
     or used for the purposes specified in that section.
       ``(d) Use.--Amounts deposited in a No Net Cost Tobacco 
     Account established for an association shall be used by the 
     Secretary for the purpose of ensuring, insofar as 
     practicable, that the Corporation under its loan agreements 
     with the association will suffer, with respect to the crop 
     involved, no net losses (including recovery of the amount of 
     loans extended to cover the overhead costs of the 
     association), after any net gains are applied to net losses 
     of the Corporation under subsection (g).
       ``(e) Excess Amounts.--If the Secretary determines that the 
     amount in the No Net Cost Tobacco Account or the net gains 
     referred to in subsection (g) exceed the total amount 
     necessary to carry out this section, the Secretary shall 
     suspend the transfer of amounts from the Trust Fund to the No 
     Net Cost Tobacco Account under this section.
       ``(f) Termination of Agreement or Association.--In the case 
     of an association for which a No Net Cost Tobacco Account is 
     established under subsection (b)(2), if a loan agreement 
     between the Corporation and the association is terminated, if 
     the association is dissolved or merges with another 
     association that has entered into a loan agreement with the 
     Corporation to make price support available to producers of 
     the kind of tobacco involved, or if the No Net Cost Tobacco 
     Account terminates by operation of law, amounts in the No Net 
     Cost Tobacco Account and the net gains referred to in 
     subsection (g) shall be applied to or disposed of in such 
     manner as the Secretary may prescribe, except that the net 
     gains shall, to the extent necessary, first be applied to or 
     used for the purposes specified in this section.
       ``(g) Net Gains.--The provisions of section 106A(d)(3) 
     relating to net gains shall apply to any loan agreement 
     between an association and the Corporation entered into on or 
     after the establishment of a No Net Cost Tobacco Account for 
     the association under subsection (b)(2).
       ``(h) Regulations.--The Secretary shall issue such 
     regulations as are necessary to carry out this section.''.
       (3) Conforming amendments.--
       (A) Section 314(a) of the Agricultural Adjustment Act of 
     1938 (7 U.S.C. 1314(a)) is amended in the first sentence--
       (i) by striking ``(1)''; and
       (ii) by striking ``, or (2)'' and all that follows through 
     ``106B(d)(1) of that Act''.
       (B) Section 320B(c)(1) of the Agricultural Adjustment Act 
     of 1938 (7 U.S.C. 1314h(c)(1)) is amended by inserting after 
     ``1445-2)'' the following: ``(as in effect before the 
     effective date of the amendments made by section 201(c) of 
     the Tobacco Transition Act)''.
       (d) Administrative Costs.--Section 1109 of the Agriculture 
     and Food Act of 1981 (Public Law 97-98; 7 U.S.C. 1445 note) 
     is repealed.
       (e) Crops.--This section and the amendments made by this 
     section shall apply with respect to the 1999 and subsequent 
     crops of the kind of tobacco involved.

     SEC. 202. TERMINATION OF TOBACCO PRICE SUPPORT PROGRAM.

       (a) Parity Price Support.--Section 101 of the Agricultural 
     Act of 1949 (7 U.S.C. 1441) is amended--
       (1) in the first sentence of subsection (a), by striking 
     ``tobacco (except as otherwise provided herein), corn,'' and 
     inserting ``corn'';
       (2) by striking subsections (c), (g), (h), and (i);
       (3) in subsection (d)(3)--
       (A) by striking ``, except tobacco,''; and
       (B) by striking ``and no price support shall be made 
     available for any crop of tobacco for which marketing quotas 
     have been disapproved by producers;''; and
       (4) by redesignating subsections (d) and (e) as subsections 
     (c) and (d), respectively.
       (b) Termination of Tobacco Price Support and No Net Cost 
     Provisions.--Sections 106, 106A, and 106B of the Agricultural 
     Act of 1949 (7 U.S.C. 1445, 1445-1, 1445-2) are repealed.
       (c) Definition of Basic Agricultural Commodity.--Section 
     408(c) of the Agricultural Act of 1949 (7 U.S.C. 1428(c)) is 
     amended by striking ``tobacco,''.
       (d) Review of Burley Tobacco Imports.--Section 3 of Public 
     Law 98-59 (7 U.S.C. 625) is repealed.
       (e) Powers of Commodity Credit Corporation.--Section 5 of 
     the Commodity Credit Corporation Charter Act (15 U.S.C. 714c) 
     is amended by inserting ``(other than tobacco)'' after 
     ``agricultural commodities'' each place it appears.
       (f) Transition Provisions.--
       (1) Liability.--The amendments made by this section shall 
     not affect the liability of any person under any provision of 
     law as in effect before the effective date of this section.
       (2) Tobacco stocks and loans.--The Secretary shall issue 
     regulations that require--
       (A) the orderly disposition of tobacco stocks; and
       (B) the repayment of all tobacco price support loans by not 
     later than 1 year after the effective date of this section.
       (g) Crops.--This section and the amendments made by this 
     section shall apply with respect to the 2002 and subsequent 
     crops of the kind of tobacco involved.
           Subtitle B--Tobacco Production Adjustment Programs

     SEC. 211. TERMINATION OF TOBACCO PRODUCTION ADJUSTMENT 
                   PROGRAMS.

       (a) Declaration of Policy.--Section 2 of the Agricultural 
     Adjustment Act of 1938 (7 U.S.C. 1282) is amended by striking 
     ``tobacco,''.
       (b) Definitions.--Section 301(b) of the Agricultural 
     Adjustment Act of 1938 (7 U.S.C. 1301(b)) is amended--
       (1) in paragraph (3)--
       (A) by striking subparagraph (C); and
       (B) by redesignating subparagraph (D) as subparagraph (C);
       (2) in paragraph (6)(A), by striking ``tobacco,'';
       (3) in paragraph (7), by striking the following:
       ``tobacco (flue-cured), July 1--June 30;
       ``tobacco (other than flue-cured), October 1-September 
     30;'';
       (4) in paragraph (10)--
       (A) by striking subparagraph (B); and
       (B) by redesignating subparagraph (C) as subparagraph (B);
       (5) in paragraph (11)(B), by striking ``and tobacco'';
       (6) in paragraph (12), by striking ``tobacco,'';
       (7) in paragraph (14)--
       (A) in subparagraph (A), by striking ``(A)''; and
       (B) by striking subparagraphs (B), (C), and (D);
       (8) by striking paragraph (15);
       (9) in paragraph (16)--
       (A) by striking subparagraph (B); and
       (B) by redesignating subparagraph (C) as subparagraph (B); 
     and
       (10) by redesignating paragraphs (16) and (17) as 
     paragraphs (15) and (16), respectively.
       (c) Parity Payments.--Section 303 of the Agricultural 
     Adjustment Act of 1938 (7 U.S.C. 1303) is amended in the 
     first sentence by striking ``rice, or tobacco,'' and 
     inserting ``or rice,''.
       (d) Marketing Quotas.--Part I of subtitle B of title III of 
     the Agricultural Adjustment Act of 1938 (7 U.S.C. 1311 et 
     seq.) is repealed.
       (e) Administrative Provisions.--Section 361 of the 
     Agricultural Adjustment Act of 1938 (7 U.S.C. 1361) is 
     amended by striking ``tobacco,''.
       (f) Adjustment of Quotas.--Section 371 of the Agricultural 
     Adjustment Act of 1938 (7 U.S.C. 1371) is amended--

[[Page S11197]]

       (1) in the first sentence of subsection (a), by striking 
     ``peanuts, or tobacco'' and inserting ``or peanuts''; and
       (2) in the first sentence of subsection (b), by striking 
     ``peanuts or tobacco'' and inserting ``or peanuts''.
       (g) Reports and Records.--Section 373 of the Agricultural 
     Adjustment Act of 1938 (7 U.S.C. 1373) is amended--
       (1) by striking ``peanuts, or tobacco'' each place it 
     appears in subsections (a) and (b) and inserting ``or 
     peanuts''; and
       (2) in subsection (a)--
       (A) in the first sentence, by striking ``all persons 
     engaged in the business of redrying, prizing, or stemming 
     tobacco for producers,''; and
       (B) in the last sentence, by striking ``$500;'' and all 
     that follows through the period at the end of the sentence 
     and inserting ``$500.''.
       (h) Regulations.--Section 375(a) of the Agricultural 
     Adjustment Act of 1938 (7 U.S.C. 1375(a)) is amended by 
     striking ``peanuts, or tobacco'' and inserting ``or 
     peanuts''.
       (i) Eminent Domain.--Section 378 of the Agricultural 
     Adjustment Act of 1938 (7 U.S.C. 1378) is amended--
       (1) in the first sentence of subsection (c), by striking 
     ``cotton, tobacco, and peanuts'' and inserting ``cotton and 
     peanuts''; and
       (2) by striking subsections (d), (e), and (f).
       (j) Burley Tobacco Farm Reconstitution.--Section 379 of the 
     Agricultural Adjustment Act of 1938 (7 U.S.C. 1379) is 
     amended--
       (1) in subsection (a)--
       (A) by striking ``(a)''; and
       (B) in paragraph (6), by striking ``, but this clause (6) 
     shall not be applicable in the case of burley tobacco''; and
       (2) by striking subsections (b) and (c).
       (k) Acreage-Poundage Quotas.--Section 4 of the Act entitled 
     ``An Act to amend the Agricultural Adjustment Act of 1938, as 
     amended, to provide for acreage-poundage marketing quotas for 
     tobacco, to amend the tobacco price support provisions of the 
     Agricultural Act of 1949, as amended, and for other 
     purposes'', approved April 16, 1965 (Public Law 89-12; 7 
     U.S.C. 1314c note), is repealed.
       (l) Burley Tobacco Acreage Allotments.--The Act entitled 
     ``An Act relating to burley tobacco farm acreage allotments 
     under the Agricultural Adjustment Act of 1938, as amended'', 
     approved July 12, 1952 (7 U.S.C. 1315), is repealed.
       (m) Transfer of Allotments.--Section 703 of the Food and 
     Agriculture Act of 1965 (7 U.S.C. 1316) is repealed.
       (n) Advance Recourse Loans.--Section 13(a)(2)(B) of the 
     Food Security Improvements Act of 1986 (7 U.S.C. 1433c-
     1(a)(2)(B)) is amended by striking ``tobacco and''.
       (o) Tobacco Field Measurement.--Section 1112 of the Omnibus 
     Budget Reconciliation Act of 1987 (Public Law 100-203) is 
     amended by striking subsection (c).
       (p) Liability.--The amendments made by this section shall 
     not affect the liability of any person under any provision of 
     law as in effect before the effective date under subsection 
     (q).
       (q) Crops.--This section and the amendments made by this 
     section shall apply with respect to the 1999 and subsequent 
     crops of the kind of tobacco involved.
                           TITLE III--FUNDING

     SEC. 301. TRUST FUND.

       (a) Request.--The Secretary of Agriculture shall request 
     the Secretary of the Treasury to transfer, from the Tobacco 
     Transition Account in the Trust Fund, amounts authorized 
     under sections 104, 105, and 111, and the amendments made by 
     section 201, to the account of the Commodity Credit 
     Corporation.
       (b) Transfer.--On receipt of such a request, the Secretary 
     of the Treasury shall transfer amounts requested under 
     subsection (a).
       (c) Use.--The Secretary of Agriculture shall use the 
     amounts transferred under subsection (b) to carry out the 
     activities described in subsection (a).
       (d) Termination of Authority.--The authority provided under 
     this section shall expire on September 30, 2001.

     SEC. 302. COMMODITY CREDIT CORPORATION.

       The Secretary may use the funds, facilities, and 
     authorities of the Commodity Credit Corporation to carry out 
     this Act and the amendments made by this Act.
                                 ______