The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“THE PHASE III IMPLEMENTATION ACT” mentioning the U.S. Dept of Agriculture was published in the Extensions of Remarks section on pages E652-E653 on April 2, 2003.
The publication is reproduced in full below:
THE PHASE III IMPLEMENTATION ACT
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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 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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