[Congressional Record Volume 149, Number 53 (Wednesday, April 2, 2003)]
[Extensions of Remarks]
[Pages E652-E653]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    THE PHASE III IMPLEMENTATION ACT

                                 ______
                                 

                           HON. HOWARD COBLE

                           of north carolina

                    in the house of representatives

                        Wednesday, April 2, 2003

  Mr. COBLE. Mr. Speaker, I rise today to introduce the Phase III 
Implementation Act.
  I believe the time has come for Congress to find a way to break the 
current stalemate on the tobacco buyout issue. To that end, I am 
calling for the creation of a non-federal trust fund--similar to the 
Phase II trust fund created by the 1998 multi-state settlement 
agreement--to provide buyout payments to tobacco quota holders and 
growers. This new ``Phase III'' Trust Fund would be coupled with 
tobacco program modernization which is addressed in the legislation I 
am introducing today.
  There are three major objectives motivating this legislation. First, 
Congress needs to undertake major reform and modernization of the 
federal tobacco program. Second, we need to encourage a dialogue on 
alternative ways to fund a tobacco quota buyout. Third, the tobacco 
buyout and program reform debate needs to remain separate from a 
massive tobacco product regulatory debate like the one we saw in 1998.
  The current program has served tobacco-growing families quite well 
since the 1930's and has been modified and improved several times 
through the years; however, the last major overhaul was in 1986, and I 
believe it is time to take a new look at the program. Historically, the 
federal tobacco program has worked well to keep supply in line with 
demand. Since 1986, growers and buyers alike

[[Page E653]]

have paid an assessment on every pound of tobacco grown to keep the 
program operating at no net cost to the federal government. This 
approach has generally been strongly supported by quota holders, 
growers, manufacturers, dealers, and in recent years, even public 
health organizations; however, certain structural problems have emerged 
in the last few years to make the program less efficient.
  Tobacco quotas can be rented or leased by quota holders. This means 
that active tobacco growers seeking to increase their production can do 
so by obtaining the production rights from inactive quota holders. In 
the last few years, rent and lease costs have risen substantially, and 
the overall demand for tobacco leaf has been cut in half. Much of this 
reduction stems from the $268 billion multi-state settlement in 1998, 
and fears of excessive federal regulation of tobacco products by 
manufacturers which has driven export production overseas. In the past 
two years, there has been much speculation about a tobacco quota 
buyout. This speculation has caused many quota holders to hang on to 
their quotas longer than they otherwise might have, making quotas more, 
expensive to buy and driving up rent and lease costs. At the same time, 
the price of domestic tobacco leaf has been supported at levels that 
are incongruous with international prices, making domestic leaf less 
competitive in world markets. As a result, support for the current 
program has been falling among active tobacco growers, thereby creating 
the need for reform.

  Under my proposal, growers can opt for a modernized program or 
eliminate the program altogether, giving growers a vote on this issue. 
It calls for an up-front referendum for each type of tobacco to decide 
whether growers move forward with a licensing program that includes a 
cost-of-production safety net, or no program at all.
  This bill will eliminate the current tobacco quota program and create 
a modernized program in its place. Quota holders would be eligible for 
buyout payments from non-federal sources through the existing Phase II 
trust fund and additional amounts provided under a new Phase III trust 
fund. Active tobacco growers would also be eligible for payments from 
these non-federal sources and would be issued tobacco production 
licenses based on their actual production history. The new licensing 
program would be administered by the Department of Agriculture, 
establishing licenses that are non-transferable, except to the heirs of 
the tobacco grower. In other words, the renting or leasing of 
production rights would be eliminated and tobacco leaf would be sold 
with a new safety net formula based on costs of production. Finally, 
growers would be given a vote on a new modernized program or no program 
at all.
  The second objective of my legislation is to stimulate a discussion 
of alternative ways to fund a tobacco quota buyout. The current debate 
in Congress is at a stalemate, and I believe that it is well past time 
to look at alternative solutions. I continue to oppose all federal tax 
increases as a way to pay for a buyout including direct taxes, user 
fees, assessments, or new revenues by any other name.
  Before the Attorneys General from the major tobacco states would sign 
the multi-state settlement in 1998, they wanted guaranteed relief for 
tobacco growers, but they did not come to Congress looking for the 
money. The tobacco manufacturers and the states sat down and negotiated 
a separate $5.15 billion trust fund, known as Phase II, that did not 
require taxpayer dollars. In this same vein, I believe we should begin 
looking at non-federal ways to fund a buyout, like developing a new 
Phase III trust fund with buyout payments made over 5 years. This would 
require a willingness on the part of manufacturers and growers to come 
together to find a solution, and I think it is an idea worth trying 
given that such a solution could potentially be accomplished far faster 
than waiting on the legislative process.
  The third objective of my legislation is to keep the tobacco buyout 
and program reform debate separate from a massive tobacco product 
regulatory debate like the one experienced in 1998. I don't believe 
such a debate can be successfully concluded in the near future, yet 
group after group continues to meet with our tobacco growers and tell 
them that they need to accept FDA regulation of tobacco products if 
they want a tobacco buyout.
  One of my major concerns with FDA regulation is its application of 
medical device language to tobacco products. Language regulating each 
machine part of a medical device will not work when applied to a 
tobacco leaf. Instead, it could end up giving the federal government 
broad authority to reengineer the compounds in the tobacco plant. Our 
tobacco growers have been pawns in the FDA power struggle long enough, 
and we simply must separate this issue and move forward to help our 
growers.
  I hope my colleagues who represent tobacco-growing states will join 
with me in looking at the tobacco buyout issue in a different light. 
Tobacco growers cannot wait indefinitely for a solution. Let us find a 
non-federal, taxpayer friendly way to fund a buyout, enact sensible 
tobacco program reform that gives growers a choice, and move forward so 
that our farm families can enjoy a more stable future.

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