ANNAPOLIS (Jan. 23, 2009) – Attorney General Douglas F. Gansler and Agriculture Secretary Roger Richardson announced that the State of Maryland filed an appeal on Tuesday, Jan. 20, with the Supreme Court of North Carolina to hold the nation’s largest tobacco companies accountable to a 1999 Trust Agreement. Maryland, along with Pennsylvania, is appealing a Dec. 16, 2008 decision by the North Carolina Court of Appeals that overturned a previous (Aug. 2007) decision by a lower court that would have required Philip Morris, USA, Inc., R.J. Reynolds Tobacco Company, and Lorillard Tobacco Company to make payments through 2010 totaling about $13 million for the benefit of Maryland farmers, and $9 million for Pennsylvania farmers.
“Through this appeal, we hope to once and for all see that our tobacco farmers get what they are due,” said Douglas Gansler. “We feel it is important to pursue this case on behalf of our farmers who have been short changed and are hopeful that the North Carolina Supreme Court will agree with us that the Trust Agreement was intended to provide a safety net to Maryland farmers and that our farmers must continue to receive these benefits.”
“We are optimistic that the Supreme Court will decide in favor of our farmers and will force the tobacco companies to live up to their agreement with Maryland tobacco growers,” said Maryland Agriculture Secretary Roger Richardson. “This appeal is necessary if we are to see that Maryland farmers receive payments under the National Tobacco Grower Settlement Trust.”
The 1999 Trust Agreement between the tobacco companies and tobacco-grower states was intended to address the economic consequences of the 1998 Master Settlement Agreement (MSA). The controversy centers on a provision in the Agreement that states that the payments to the farmers could end in the event of federal legislation benefiting farmers. The tobacco companies contended they no longer needed to make payments to Maryland and Pennsylvania farmers after Congress passed the Fair and Equitable Tobacco Reform Act (FETRA) in 2004. The legislation provided payments to tobacco farmers from other tobacco-growing states, but no payments for Maryland and Pennsylvania farmers. When the tobacco companies stopped paying, Maryland and Pennsylvania pursued action in North Carolina court.
Despite the fact that farmers in other tobacco growing states benefited from FETRA because they participate in the tobacco quota system, the tobacco companies asserted that they no longer had to make Trust payments for the benefit of Maryland and Pennsylvania farmers. The North Carolina lower court ruled that FETRA did not affect the tobacco companies’ obligation under the 1999 agreement and must still make payments to Maryland and Pennsylvania.
Source: Maryland Dept. of Agriculture