Pa. Tobacco Farmers Could Reap $11M Gain

Source from:  bizjournals.com Pittsburgh Business Times - August 21, 2007 08/22/2007

A ruling last week by a North Carolina court could generate $11 million for Pennsylvania's tobacco farmers, the state's attorney general said Tuesday. The ruling calls for Philip Morris USA Inc., R.J. Reynolds Tobacco Co. and Lorillard Tobacco Co. to make payments totaling roughly $11 million through 2010, as well as $13 million to Maryland tobacco farmers, according to a news release from Attorney General Tom Corbett. Corbett said the ruling resolved a dispute regarding payments under the Tobacco Growers Trust Agreement of 1999, which resulted from the tobacco industry's multi-state settlement the year before. Under the trust agreement, tobacco farmers in 14 states were to receive payments from the major tobacco companies "to compensate for reduced demand for tobacco leaf, as cigarette consumption declines," Corbett said in the release. However, following Congress' 2004 passage of the Fair and Equitable Tobacco Reform Act, which provides for payments to tobacco farmers in all grower states excluding Pennsylvania and Maryland, the tobacco industry maintained that it no longer had to make payments to farmers in those two states. Pennsylvania and Maryland went to court to force them to continue. The North Carolina court, whose ruling could be appealed by the tobacco companies, determined that the act did not affect the industry's obligation under the 1999 trust agreement. "We are disappointed with the recent decision, and we are reviewing our options," said Philip Morris spokesman Bill Phelps. "We continue to maintain that the grower trust has always contained a provision allowing the companies that funded the trust to offset their payment obligations related to the trust by the amount of any assessments imposed on them to fund buyouts for growers and quota holders." Spokespeople for R.J. Reynolds and Lorillard were not immediately available for comment. Enditem