--- kind: "section" citation: "7 U.S.C. § 518b" title: "7" title_heading: "Agriculture" number: "518b" heading: "Contract payments for producers of quota tobacco" release: "119-102" date: "2026-07-12" url: "https://uscodex.org/usc/7/518b" units: - "Chapter 21C — Tobacco Reform" - "Subchapter I — Transitional Payments to Tobacco Quota Holders and Producers of Tobacco" --- # §518b. Contract payments for producers of quota tobacco - (a) **Contract offered—** The [Secretary](/usc/7/518.md?p=11) shall offer to enter into a [contract](/usc/7/518.md?p=4) with each [producer of quota tobacco](/usc/7/518.md?p=6) under which the [producer of quota tobacco](/usc/7/518.md?p=6) shall be entitled to receive payments under this section in exchange for the termination of [tobacco](/usc/7/518.md?p=8) marketing quotas and related price support under the amendments made by sections 611 and 612.[^1] The [contract payments](/usc/7/518.md?p=5) shall constitute full and fair consideration for the termination of such [tobacco](/usc/7/518.md?p=8) marketing quotas and related price support. - (b) **Eligibility—** - (1) **Application and determination—** To be eligible to enter into a [contract](/usc/7/518.md?p=4) to receive a [contract payment](/usc/7/518.md?p=5) under this section, a [person](/usc/7/499a.md?p=b-1) shall submit to the [Secretary](/usc/7/518.md?p=11) an application containing such information as the [Secretary](/usc/7/518.md?p=11) may require to demonstrate to the satisfaction of the [Secretary](/usc/7/518.md?p=11) that the [person](/usc/7/499a.md?p=b-1) is a [producer of quota tobacco](/usc/7/518.md?p=6). The application shall be submitted within such time, in such form, and in such manner as the [Secretary](/usc/7/518.md?p=11) may require. - (2) **Effect of multiple producers for same quota tobacco—** If, on the basis of the applications submitted under [paragraph (1)](#b-1) or other information, the [Secretary](/usc/7/518.md?p=11) determines that two or more [persons](/usc/7/499a.md?p=b-1) are a producer of the same [quota tobacco](/usc/7/518.md?p=7), the [Secretary](/usc/7/518.md?p=11) shall provide for an equitable distribution among the [persons](/usc/7/499a.md?p=b-1) of the [contract payments](/usc/7/518.md?p=5) made under this section with respect to that [quota tobacco](/usc/7/518.md?p=7), based on relative share of such [persons](/usc/7/499a.md?p=b-1) in the risk of producing the [quota tobacco](/usc/7/518.md?p=7) and such other factors as the [Secretary](/usc/7/518.md?p=11) considers appropriate. - (c) **Base quota level—** - (1) **Establishment—** The [Secretary](/usc/7/518.md?p=11) shall establish a base quota level applicable to each [producer of quota tobacco](/usc/7/518.md?p=6), as determined under this subsection. - (2) **Flue-cured and burley tobacco—** In the case of Flue-cured [tobacco](/usc/7/518.md?p=8) (types 11, 12, 13, and 14) and Burley [tobacco](/usc/7/518.md?p=8) (type 31), the base quota level for each [producer of quota tobacco](/usc/7/518.md?p=6) shall be equal to the effective [tobacco](/usc/7/518.md?p=8) marketing quota (irrespective of disaster lease and transfers) under part I of subtitle B of title III of the Agriculture[^2] Adjustment Act of 1938 [[7 U.S.C. 1311](https://uscode.house.gov/view.xhtml?req=(/us/usc/t7/s1311)) et seq.] for the 2002 marketing year for [quota tobacco](/usc/7/518.md?p=7) produced on the farm. - (3) **Other kinds of tobacco—** In the case of each kind of [tobacco](/usc/7/518.md?p=8) (other than [tobacco](/usc/7/518.md?p=8) covered by [paragraph (2)](#c-2)), for the purpose of calculating a [contract payment](/usc/7/518.md?p=5) to a [producer of quota tobacco](/usc/7/518.md?p=6), the base quota level for the [producer of quota tobacco](/usc/7/518.md?p=6) shall be the quantity obtained by multiplying— - (A) the basic [tobacco](/usc/7/518.md?p=8) farm acreage allotment for the 2002 marketing year established by the [Secretary](/usc/7/518.md?p=11) for [quota tobacco](/usc/7/518.md?p=7) produced on the farm; by - (B) the average annual yield, per acre, of [quota tobacco](/usc/7/518.md?p=7) produced on the farm for the period covering the 2001, 2002, and 2003 crop years. - (d) **Contract payments—** - (1) **Calculation of total payment amount—** Subject to [subsection (b)(2)](#b-2), the total amount of [contract payments](/usc/7/518.md?p=5) to which an eligible [producer of quota tobacco](/usc/7/518.md?p=6) is entitled under this section, with respect to a kind of [tobacco](/usc/7/518.md?p=8), shall be equal to the product obtained by multiplying— - (A) subject to [paragraph (2)](#d-2), $3.00 per pound; by - (B) the base quota level of the [producer of quota tobacco](/usc/7/518.md?p=6) determined under [subsection (c)](#c) with respect to that kind of [tobacco](/usc/7/518.md?p=8). - (2) **Annual payment—** During each of fiscal years 2005 through 2014, the [Secretary](/usc/7/518.md?p=11) shall make a [contract payment](/usc/7/518.md?p=5) under this section to each eligible producer of [tobacco](/usc/7/518.md?p=8), with respect to a kind of [tobacco](/usc/7/518.md?p=8), in an amount equal to ⅒ of the amount determined under [paragraph (1)](#d-1) for the producer for that kind of [tobacco](/usc/7/518.md?p=8). - (3) **Variable payment rates—** The rate for payments to a [producer of quota tobacco](/usc/7/518.md?p=6) under [paragraph (1)(A)](#d-1-A) shall be equal to— - (A) in the case of a [producer of quota tobacco](/usc/7/518.md?p=6) that produced [quota tobacco](/usc/7/518.md?p=7) marketed, or [considered planted](/usc/7/518.md?p=3), under a marketing quota in all three of the 2002, 2003, or 2004 [tobacco](/usc/7/518.md?p=8) marketing years, the rate prescribed under [paragraph (1)(A)](#d-1-A); - (B) in the case of a [producer of quota tobacco](/usc/7/518.md?p=6) that produced [quota tobacco](/usc/7/518.md?p=7) marketed, or [considered planted](/usc/7/518.md?p=3), under a marketing quota in only two of those [tobacco](/usc/7/518.md?p=8) marketing years, ⅔ of the rate prescribed under [paragraph (1)(A)](#d-1-A); - (C) in the case of a [producer of quota tobacco](/usc/7/518.md?p=6) that produced [quota tobacco](/usc/7/518.md?p=7) marketed, or [considered planted](/usc/7/518.md?p=3), under a marketing quota in only one of those [tobacco](/usc/7/518.md?p=8) marketing years, ⅓ of the rate prescribed under [paragraph (1)(A)](#d-1-A). - (e) **Death of tobacco producer—** If a [producer of quota tobacco](/usc/7/518.md?p=6) who is entitled to [contract payments](/usc/7/518.md?p=5) under this section dies and is survived by a spouse or one or more dependents, the right to receive the [contract payments](/usc/7/518.md?p=5) shall transfer to the surviving spouse or, if there is no surviving spouse, to the estate of the producer. ## Footnotes [^1]: See References in Text note below. [^2]: So in original. Probably should be “Agricultural”. ## Source credit (Pub. L. 108–357, title VI, § 623, Oct. 22, 2004, 118 Stat. 1527.) ## Notes ### Editorial Notes ### References in Text Sections 611 and 612, referred to in subsec. (a), are sections 611 and 612 of Pub. L. 108–357, which amended sections 609, 1282, 1301, 1303, 1361, 1371, 1373, 1375, 1378, 1379, 1428, 1433c–1, and 1441 of this title and section 714c of Title 15, Commerce and Trade, repealed sections 511r, 515, 515a to 515k, 625, 1311 to 1314, 1314–1, 1314b, 1314b–1, 1314b–2, 1314c to 1314j, 1315, 1316, 1445, 1445–1, and 1445–2 of this title, and repealed provisions set out as a note under section 1314c of this title. Part I of subtitle B of title III of the Agricultural Adjustment Act of 1938, referred to in subsec. (c)(2), was classified to subpart I (§ 1311 et seq.) of part B of subchapter II of chapter 35 of this title prior to repeal by Pub. L. 108–357, title VI, § 611(a), Oct. 22, 2004, 118 Stat. 1522. For complete classification of this Act to the Code, see section 1281 of this title and Tables. ### Statutory Notes and Related Subsidiaries ### Effective Date Section applicable to the 2005 and subsequent crops of tobacco, see section 643 of Pub. L. 108–357, set out as a note under section 518 of this title.