Md. Continues Fight for Tobacco Farmer Payments under 1999 Trust Agreement

ANNAPOLIS (June 21, 2009) – Maryland Agriculture Secretary Buddy Hance and Attorney General Douglas F. Gansler say they are continuing the fight on behalf of Maryland tobacco growers to hold the nation’s largest tobacco companies accountable to the 1999 National Tobacco Growers Trust Agreement. On May 20, Maryland, along with Pennsylvania, filed an appellate brief in the Supreme Court of North Carolina seeking to reverse a decision by the State’s Court of Appeals that would deny tobacco farmers from Maryland and Pennsylvania payments claimed under the Trust.

“Maryland is not giving up on the $13 million payment due to its tobacco farmers through the 1999 agreement,” said Secretary Hance. “We believe that tobacco farmers in Maryland and Pennsylvania are owed payments from tobacco companies and we continue to pursue them on behalf of our farmers.”

The 1999 Trust Agreement between the tobacco companies and 14 tobacco-grower states was intended to address the economic consequences of decreased tobacco consumption from the 1998 Tobacco Litigation Master Settlement Agreement (MSA). Citing an offset provision in the Trust, the tobacco companies contended they were no longer obligated to make payments for Maryland and Pennsylvania farmers following enactment of the federal Fair and Equitable Tobacco Reform Act (FETRA) in 2004. Although FETRA provided payments to tobacco growers in the twelve other states that were signatories to the Trust, the legislation provided no payments to Maryland and Pennsylvania farmers because they did not participate in the federal tobacco quota system. When the tobacco companies stopped paying the Trust, Maryland and Pennsylvania took action in the North Carolina courts.

In August 2008, a North Carolina trial court agreed with Maryland and Pennsylvania and ruled that FETRA did not relieve the tobacco companies of their obligation to pay approximately $13 million and $11 million to the Trust for the farmers of Maryland and Pennsylvania, respectively. The tobacco companies appealed the ruling.

In December 2008, in a split decision, the North Carolina Court of Appeals reversed the trial court. It is now up to the Supreme Court of North Carolina to resolve the matter. Oral argument is expected to be scheduled for autumn 2009.

Source: Md. Dept. of Agriculture

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