Phase II Ruling Costs Tobacco Growers Cash

Source from:  News Democrat & Leader By CHRIS MILAM 01/12/2005

On Dec. 22, Judge Tennille, a North Carolina business court judge, ruled in favor of the tobacco companies in the 2004 Phase II case. The tobacco-quota buyout approved by Congress this year releases cigarette companies from making payments to Kentucky farmers and others that had been required by a landmark 1998 settlement. The millions of dollars in Phase II payments have compensated tobacco growers for losses they were expected to suffer under higher cigarette prices resulting from the agreement between Big Tobacco and the states. Cigarette companies contend they weren't obligated to make a final $189 million payment this month to farmers in 14 states because Congress approved a $10.1 billion tobacco buyout this fall. Judge Tennille agreed and also ruled that the companies should get a refund on payments made earlier this year. An appeal of the ruling is likely, which would delay a final decision for months. Attorneys for the boards in the 14 states, as well as the trustees at JP Morgan Chase, argue that the companies aren't relieved of the Phase II payments until they actually make payments for the buyout to the U.S. Department of Agriculture. That won't happen until early 2005. Kentucky Agriculture Commissioner Richie Farmer issued the following statement regarding the ruling, "We are disappointed with the ruling. It is clear, from the statements of the very legislators who wrote the buyout law that Congress did not intend to relieve the companies of their obligation to make the final Phase II payments. We are confident that this decision will be reversed upon appeal. "Given the importance of this issue to growers and to the people of the Commonwealth, we will continue to do what we can to ensure that the interests of our rural communities are represented, and we are confident that ultimately, our arguments will prevail." Enditem