Tobacco Ruling Shocks Growers

Source from:  By: Michael Smith 01/13/2005

Horry County tobacco producers and quota holders received some bad news recently when an N.C. judge ruled that tobacco companies don't have to make Phase II tobacco payments for 2004. The ruling came this past Wednesday, just two days after a contingent of 70 local producers and quota holders traveled to Greensboro, N.C., to state their case before Business Court Judge Bill Tennille. The companies placed an injunction on the 2004 payments after President George W. Bush signed the tobacco buyout bill in November. The companies had been making payments for several years as part of a master settlement agreement with 14 tobacco-producing states, including South Carolina. "I was real surprised," said Johnny Shelley, past president of the S.C. Tobacco Growers Association and Green Sea grower. "We came out of there feeling fairly comfortable." Tennille's decision will be appealed to the N.C. Supreme Court. The Master Settlement Agreement, reached in 1999, required the tobacco companies to make $5.15 billion in Phase II payments to compensate growers and quota holders for lost income suffered as a result of the agreement. The payments would have been for 12 years had a tobacco buyout not taken place, and producers and quota holders feel they are entitled to this year's payments because the buyout isn't effective until next year. Cigarette companies contend they shouldn't be obligated to make the payment because Congress passed the $10.1 billion tobacco buyout this fall. In a statement released by Phillip Morris USA, the cigarette producer said the trust was created with an understanding by all parties that the payments would cease if a tobacco quota buyout funded by the companies was passed. Tennille agreed with the companies and also ruled that they should get a refund on payments made earlier this year. An appeal will likely delay a final decision for several months. "If the decision is appealed, it could be two or three months before it even comes up," Shelley said. "If we go to the Supreme Court and win, it would be at least April. It could be put off even longer." According to Shelley, many producers and quota holders received letters several months ago saying they would receive the payments and included the money in their budgets. "I really hate it for the allotment holders and producers who need it to survive," he said. "Some of these people are on a fixed income, and they need it for food or medicine. A lot of people were going to use this to pay debts." Enditem