Title 7, AgricultureRelease 119-110
§1445–3 Purchase of Inventory Stock
Title 7 › CHAPTER 35A — PRICE SUPPORT OF AGRICULTURAL COMMODITIES › SUBCHAPTER II — BASIC AGRICULTURAL COMMODITIES › § 1445–3
Summary
Requires certain coop marketing associations to sell old tobacco stocks and sets how they must be sold. Coops that had Commodity Credit Corporation (CCC) loans must offer Flue-cured tobacco from the 1976–1984 crops and Burley tobacco from the 1982 and 1984 crops for sale. The CCC must take title to Burley tobacco from the 1983 crop by calling the loans within 30 days after April 7, 1986, and then sell that tobacco when and how it chooses. If the CCC has not sold the 1983 Burley within 2 years after calling the loans, it may offer the remaining 1983 Burley to domestic cigarette manufacturers. Prices are set by specific rules: Flue-cured 1976–81 is offered at base price minus 90%, 1982–84 at base price minus 10%, with buyers paying carrying charges from the offer date; Burley 1982 at the listed base price on July 1, 1985; Burley 1984 at the association’s cost as of April 7, 1986, with carrying charges applied as stated; if CCC sells 1983 Burley after 2 years, it sells at association cost as of the loan call reduced by 90%, and no one is charged carrying costs after the loan call. Domestic cigarette manufacturers may agree to buy portions of these inventories. To get the price reductions, manufacturers must sign agreements promptly but no later than 90 days after April 7, 1986 (or 90 days after the 2-year period for 1983 Burley). Each manufacturer must buy a share based on its percentage of net cigarettes manufactured for use, as measured from ATF Form 3068 reports provided to the Secretary of Agriculture. Buy-out periods and annual withdrawal rates are set: Flue-cured buy-out up to 8 years from April 7, 1986 with 12½% withdrawn each year; Burley 1982 and 1984 up to 5 years from April 7, 1986 with 20% withdrawn each year; 1983 Burley up to 5 years from the end of the 2-year period with 20% withdrawn each year. Extra purchases count toward future obligations. Agreements must be approved by the Secretary of Agriculture, must not disrupt marketing, and must use uniform, nondiscriminatory terms. Data from manufacturers is protected under the disclosure limits in section 1314g, and Agriculture Department employees who break those limits face penalties.
Full Legal Text
Title 7, §1445–3
Agriculture, Source: USLM XML via OLRC
Notwithstanding any other provision of law, in order to reduce or eliminate the excessive inventories of Flue-cured and Burley tobacco held by associations from the 1976 through 1984 crops, and in order to provide for the orderly disposition of such excessive inventories of tobacco in a manner that will not disrupt the orderly marketing of new tobacco crops and will minimize any losses to the Federal Government:
(a)Sale of inventory stock
(1)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 shall offer to sell the stocks of Flue-cured tobacco of the association from the 1976 through 1984 crops as provided in this section.
(2)Each 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 Burley tobacco shall offer to sell its stocks of Burley tobacco from the 1982 and 1984 crops as provided in this section.
(3)(A)(i)Not later than 30 days after April 7, 1986, the Commodity Credit Corporation shall acquire title to the Burley tobacco from the 1983 crop that is pledged as security for loans on such tobacco by calling the loans on such tobacco.
(ii)The Corporation shall, then, offer such tobacco for sale at such times, in such quantities, and subject to such conditions as the Corporation considers appropriate.
(B)If the Commodity Credit Corporation has not sold all of the stocks of the 1983 crop of Burley tobacco within 2 years from the date the Corporation calls the loans on such tobacco, the Corporation may offer to sell to domestic manufacturers of cigarettes the remaining stocks of such tobacco as provided in this section.
(b)Sale prices
(1)(A)The stocks of Flue-cured tobacco from the 1976 through 1984 crops shall be offered for sale at the base prices, including carrying charges, in effect as of the date of the offer, reduced by—
(i)90 percent for Flue-cured tobacco from the 1976 through 1981 crops; and
(ii)10 percent for Flue-cured tobacco from the 1982 through 1984 crops.
(B)The purchasers of the stocks of Flue-cured tobacco from the 1976 through 1984 crops shall pay the full carrying charges that have accrued to such tobacco from the date of the offer made under this section to the date that such tobacco is removed from the inventory of the association.
(2)(A)The stocks of Burley tobacco from the 1982 crop shall be offered for sale at the listed base price in effect as of July 1, 1985.
(B)The stocks of Burley tobacco from the 1984 crop shall be offered for sale at the costs of the association for such tobacco as of April 7, 1986.
(C)The purchasers of the stocks of Burley tobacco from the 1982 crop shall pay the full carrying charges that have accrued to such tobacco.
(D)The purchasers of the stocks of Burley tobacco from the 1984 crop shall pay the full carrying charges that have accrued to such tobacco from April 7, 1986, to the date such tobacco is removed from the inventories of the associations.
(3)(A)After the 2-year period specified in subsection (a)(3)(B) has expired, if the Commodity Credit Corporation offers to sell the stocks of the Corporation of Burley tobacco from the 1983 crop to domestic manufacturers of cigarettes, such stocks shall be offered for sale at the costs of the association, including carrying charges, as of the date on which the Corporation calls the loans on such tobacco, reduced by 90 percent.
(B)Neither tobacco producers nor tobacco purchasers shall be responsible for carrying charges that accrue to the 1983 crop of Burley tobacco after the date on which the Commodity Credit Corporation calls the loans on such tobacco.
(c)Terms of agreements
(1)(A)Each domestic manufacturer of cigarettes may enter into agreements to purchase inventory stocks of Flue-cured and Burley tobacco, in accordance with this section.
(B)To be eligible for the reductions in price specified in this section, such manufacturer shall enter into such agreements as soon as practicable, but not later than 90 days after April 7, 1986, except that, with respect to the 1983 crop of Burley tobacco, if the Corporation offers to sell the stocks of such tobacco pursuant to subsection (b)(3)(A), such agreements shall be entered into as soon as practicable, but not later than 90 days after the end of the 2-year period referred to in subsection (a)(3)(B).
(C)(i)Such agreements shall provide that, over a period of time, each participating domestic manufacturer of cigarettes shall purchase a percentage of the stocks of Flue-cured and Burley tobacco held—
(I)by the producer-owned cooperative marketing associations at the close of the 1984 marketing year; or
(II)in the case of the 1983 crop of Burley tobacco, by the Commodity Credit Corporation at the time the Corporation offers such tobacco for sale to domestic manufacturers of cigarettes under this section.
(ii)The period of time referred to in clause (i) may not exceed—
(I)in the case of Flue-cured tobacco, 8 years from April 7, 1986;
(II)in the case of Burley tobacco from the 1982 and 1984 crops, 5 years from April 7, 1986; and
(III)in the case of the 1983 crop of Burley tobacco, 5 years from the end of the 2-year period referred to in subsection (a)(3)(B).
(2)(A)(i)The percentage to be purchased by each participating manufacturer shall be at least equal to the respective percentage of the participating manufacturer of the total quantity of net cigarettes manufactured for use as determined by the Secretary of Agriculture under this paragraph on the basis of the monthly reports (“Manufacturer of Tobacco Products—Monthly Reports”) submitted by manufacturers of tobacco products to the Tax and Trade Bureau of the Department of the Treasury.
(ii)The Secretary of Agriculture shall request from the Secretary of the Treasury copies of such monthly reports necessary to make the determinations required under this section.
(iii)Notwithstanding any other provision of law, the Secretary of the Treasury may release and disclose such information to the Secretary of Agriculture.
(B)“Net cigarettes manufactured for use” shall be computed by subtracting—
(i)the cumulative figures entered for large and small cigarettes in item 16f of ATF Form 3068 (“Reduction to tobacco”); from
(ii)the cumulative figures entered for large and small cigarettes in item 7 of such form (“Manufactured”).
(C)(i)The percentage to be purchased by each participating manufacturer shall be determined—
(I)on April 7, 1986; and
(II)annually thereafter over the course of the respective buy-out periods specified in this subsection.
(ii)Such percentage shall be determined by dividing—
(I)the average net cigarettes manufactured by a manufacturer for use for the 12-month period immediately preceding the appropriate determination date (April 7, 1986, and annually thereafter over the course of the respective buy-out periods specified in this subsection); by
(II)the aggregate average net cigarettes manufactured by all domestic cigarette manufacturers for use for such 12-month period.
(D)(i)The quantity of tobacco to be purchased by each participating manufacturer shall be determined annually.
(ii)Such quantity shall be based on—
(I)the percentage of net cigarettes of a manufacturer manufactured for use, as determined under subparagraph (C); multiplied by
(II)the appropriate annual quantity to be withdrawn from the inventories of the associations or the Commodity Credit Corporation.
(iii)The appropriate annual quantity to be withdrawn from inventories shall be—
(I)12½ percent of the inventories of Flue-cured tobacco from the 1976 through 1984 crops on hand on April 7, 1986;
(II)20 percent of the inventories of Burley tobacco from the 1982 and 1984 crops on hand on April 7, 1986; and
(III)20 percent of the inventories of Burley tobacco from the 1983 crop held by the Commodity Credit Corporation on the date that is 2 years after the call of the loans on such tobacco by the Corporation.
(E)Any purchases by a manufacturer from the inventories of the associations or from the Commodity Credit Corporation for a crop covered by this section in any year of the buy-out period that exceed the quantity of the purchases of the manufacturer required under the agreement, as determined under this section, shall be applied against future purchases required of such manufacturer.
(3)In carrying out this section, manufacturers may confer with one another and, separately or collectively, with associations, the Secretary of Agriculture, and the Commodity Credit Corporation, as may be necessary or appropriate to carry out this section and the purposes of this subtitle.
(d)Approval of agreements
(1)(A)Each agreement entered into under this section shall be submitted to the Secretary of Agriculture for review and approval.
(B)In the case of an agreement to purchase tobacco from the inventory of a producer association, the agreement shall be submitted by the association.
(C)No agreement may become effective until approved by the Secretary.
(2)The Secretary of Agriculture shall not approve any agreement submitted under this section unless the Secretary has determined that—
(A)the agreement—
(i)will not unduly impair or disrupt the orderly marketing of current and future tobacco crops during the term of the agreement; and
(ii)is otherwise consistent with the purposes of this subtitle; 1 and
(B)the price and other terms of sale are uniform and nondiscriminatory among various purchasers.
(e)Disclosure
The limitations on disclosure set forth in subsections (c) and (d) of section 1314g 1 of this title shall apply to information submitted by domestic manufacturers of cigarettes under this section with respect to net cigarettes manufactured for use, including information provided on ATF Form 3068. Any officer or employee of the Department of Agriculture who violates such limitations on disclosure shall be subject to the penalties set forth in section 1314g(c)(4) 1 of this title.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
References in Text
This subtitle, referred to in subsecs. (c)(3) and (d)(2)(A)(ii), is subtitle B (§§ 1101–1112) of title I of Pub. L. 99–272, Apr. 7, 1986, 100 Stat. 83, which enacted section 1314g, 1314h, and 1445–3 of this title, amended section 511d, 1301, 1312, 1314c, 1314e, 1372, 1445, 1445–1, and 1445–2 of this title, and enacted provisions set out as notes under section 1301, 1314c, 1314e, 1314g, 1314h, 1372, 1445, 1445–1, and 1445–2 of this title. For complete classification of this subtitle to the Code, see Tables. section 1314g of this title, referred to in subsec. (e), was repealed by Pub. L. 108–357, title VI, § 611(a), Oct. 22, 2004, 118 Stat. 1522. Codification Section was enacted as part of the Consolidated Omnibus Budget Reconciliation Act of 1985, and not as part of the Agricultural Act of 1949 which is classified principally to this chapter. For complete classification of the 1949 Act to the Code, see
Short Title
note set out under section 1421 of this title and Tables.
Amendments
2002—Subsec. (c)(2)(A)(i). Pub. L. 107–296 substituted “by manufacturers of tobacco products to the Tax and Trade Bureau” for “(on ATF Form 3068) by manufacturers of tobacco products to the Bureau of Alcohol, Tobacco and Firearms”.
Statutory Notes and Related Subsidiaries
Effective Date
of 2002 AmendmentAmendment by Pub. L. 107–296 effective 60 days after Nov. 25, 2002, see section 4 of Pub. L. 107–296, set out as an
Effective Date
note under section 101 of Title 6, Domestic Security. Rulemaking ProceduresFor implementation of this section by the Secretary of Agriculture without regard to provisions requiring notice and other procedures for public participation in rulemaking contained in section 553 of Title 5, Government Organization and Employees, or in any other directive of the Secretary, see section 1108(c) of Pub. L. 99–272, set out as a note under section 1301 of this title.
Reference
Citations & Metadata
Citation
7 U.S.C. § 1445–3
Title 7, Agriculture
Last Updated
Sep 23, 2026
Release point: 119-110