Give tobacco farmers what's due, pair of AGs argue

John O'Brien Jan. 26, 2009, 6:11pm


HARRISBURG, Pa. (Legal Newsline) - Pennsylvania Attorney General Tom Corbett and Maryland Attorney General Doug Gansler are appealing a North Carolina court decision that allowed three major tobacco companies to stop making annual payments to farmers in their states.

The appeal was filed Tuesday with the North Carolina Supreme Court, more than a month after the state's Court of Appeals overturned a lower court ruling and allowed Philip Morris, R.J. Reynolds and Lorillard to cease paying tobacco growers in Maryland and Pennsylvania.

The Court of Appeals said the companies no longer needed to make the payments after Congress passed the Fair and Equitable Tobacco Reform Act in 2004, which provided payments to farmers in other states but not Maryland and Pennsylvania.

"Considering the agreement as a whole, FETRA payments are a 'Governmental Obligation,' which fit squarely under the plain and unambiguous terms of the (Tax Offset Adjustment provision contained in Schedule A of the Trust Agreement," the Court of Appeals' decision said.

The Trust agreement provided more than $5 billion to be spent in annual payments by participating tobacco companies for economic assistance to tobacco farmers in Alabama, Florida, Georgia, Indiana, Kentucky, Maryland, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia.

"We feel it is important to pursue this case on behalf of our farmers," Corbett said. "We are asking the North Carolina Supreme Court to force tobacco companies to live up to their original agreement."

Corbett and Gansler say the three companies owe about $9 million to Pennsylvania farmers through 2010 and $13 million for Maryland farmers.

The Tobacco Master Settlement Agreement of 1998 allows tobacco companies to do business in the participating 46 states and six territories. It has an estimated worth of $246 billion over its first 25 years.

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