HARRISBURG – Pennsylvania and its tobacco farmers have achieved a significant victory in their efforts to hold the nation’s largest tobacco companies accountable under a 1999 trust agreement.
Attorney General Tom Corbett announced that a recent North Carolina court ruling requires Philip Morris, USA Inc., R.J. Reynolds Tobacco Co., and Lorillard Tobacco Co. to make payments through 2010 totaling about $11 million for the benefit of Pennsylvania farmers and $13 million for Maryland farmers.
Corbett explained that the Court resolved a controversy regarding payments under the Tobacco Growers Trust Agreement signed in 1999 as a result of the Master Settlement Agreement. Under the Trust Agreement, tobacco farmers in Pennsylvania and 13 other states were to receive payments from the major tobacco companies to compensate for reduced demand for tobacco leaf as cigarette consumption declines.
After Congress passed the Fair and Equitable Tobacco Reform Act in 2004, which provides for payments to tobacco farmers in all the grower states except Pennsylvania and Maryland, the tobacco companies asserted that they no longer had to make Trust payments to Pennsylvania and Maryland farmers. Pennsylvania and Maryland went to court to force the companies to honor their commitments.
A North Carolina court ruled that FETRA did not affect the tobacco companies’ obligation under the 1999 trust agreement and that they must make payments for Pennsylvania and Maryland farmers.
“I am very pleased with the outcome of this court ruling,” Corbett said. “The decision gives Pennsylvania farmers the same safety net as other tobacco-grower states and makes sure they receive the benefits negotiated for in the original trust agreement.”
Corbett noted that the court’s ruling could be appealed.