Pennsylvania and Maryland are going to North Carolina's high court to get tobacco trust payments denied to the states' tobacco growers. The states filed an appellate brief in the Supreme Court of North Carolina seeking to hold the nation's largest tobacco companies accountable to the 1999 National Tobacco Growers Trust Agreement.
The 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). But citing an offset provision, the 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 in 2004. And they stopped making payments.
The reason? The states weren't part of the federal tobacco quota system.
And the legal battle began
In August 2008, a North Carolina trial court agreed with Maryland and Pennsylvania, ruling that FETRA didn't 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's now up to the Supreme Court of North Carolina to resolve the matter. Oral arguments are expected to be scheduled for this fall.
"Maryland is not giving up on the $13 million payment due to its tobacco farmers," says State Ag Secretary Buddy Hance. "We believe that tobacco farmers in Maryland and Pennsylvania are owed payments from tobacco companies. We continue to pursue them on behalf of our farmers."