Tobacco Quota Buyout Proposals in the 108th Congress (CRS Report for Congress)
Premium Purchase PDF for $24.95 (22 pages)
add to cart or
subscribe for unlimited access
Pro Premium subscribers have free access to our full library of CRS reports.
Subscribe today, or
request a demo to learn more.
| Release Date |
Revised Nov. 12, 2004 |
| Report Number |
RL31790 |
| Report Type |
Report |
| Authors |
Jasper Womach, Resources, Science, and Industry Division |
| Source Agency |
Congressional Research Service |
| Older Revisions |
-
Premium Revised June 10, 2004 (16 pages, $24.95)
add
-
Premium April 6, 2004 (16 pages, $24.95)
add
|
Summary:
On October 22, 2004, the tobacco quota buyout was signed into law. Title VI of P.L. 108-357
is
known as the Fair and Equitable Tobacco Reform Act of 2004. This legislation eliminated the
tobacco quota program and compensated active producers and absentee quota owners for the lost
value. The concept of a quota buyout was not new, but it gained political momentum after being
endorsed in the final report of a presidential commission on tobacco, Tobacco at a Crossroads,
A
Call for Action (May 14, 2001), and by the leading U.S. cigarette manufacturer, Philip Morris.
Several quota bills were introduced in the 107th Congress without subsequent legislative action.
Supporters of a buyout and legislative sponsors again put the proposal on the legislative agenda of
the 108th Congress by introducing several differing bills.
Eventually, H.R. 4033 (Jenkins; March 25, 2004) and S. 1490
(McConnell; July 30, 2003) were attached to unrelated tax legislation ( H.R. 4520 in the
House and S. 1637 in the Senate), which was taken up by conferees on October 5, 2004.
These bills proposed to eliminate tobacco quotas and the price support loan program. As
compensation, quota owners (including absentee owners) and active producers would receive lump
sum payments. Active producers were to receive $7 per pound in the House version or $8 per pound
in the Senate version for the quota they owned in 2002, plus $3 per pound in the House version or
$4 per pound in the Senate version for the quantity of tobacco they were allowed to produce. Most
producers grow more than the quota they own because they lease quota from other landlords. The
absentee landlords also were be paid for the quota they owned in 2002.
The estimated cost of the House and Senate bills was, respectively, $9.6 billion and $12 billion.
The source of funding for the two bills differed, coming from the federal treasury in the House bill
and from tobacco product manufacturers and importers in the Senate bill.
Many public health advocates and Philip Morris strongly supported a tobacco quota buyout
accompanied by new legal authority for the Food and Drug Administration (FDA) to regulate
tobacco products. The proposed FDA authority was included in identical bills in the House and
Senate ( H.R. 4433 , Davis-Waxman; and S. 2461 , DeWine-Kennedy). The
FDA authority also was included in the Senate version of the tax bill, but not in the House version,
where there was strong opposition.
The Chairman's mark for the conference committee on H.R. 4520 included a
tobacco title (Title VI) that closely matched the House version, H.R. 4033 , with quota
buyout payments of $7 per pound and active producer payments of $3 per pound. Under the
conference agreement, funding would come from assessments on tobacco product manufacturers and
importers (as proposed in S. 1490 ). FDA regulatory authority over tobacco products,
however, was not included.
This report is intended to serve as a history and evolution of the tobacco buyout. It will not be
updated.
