Vance County’s tobacco farmers are in the early days of their first buyout-era sales season, but a court decision Friday ensures a needed payoff for the growers.
The North Carolina Supreme Court ruled that the cigarette companies should have made their 2004 Phase II payments to growers in full, even though an industry-financed buyout of the quota system became law last fall.
The Phase II payments, totaling more than $5 billion over 12 years, were initiated under the 1998 Master Settlement Agreement between the cigarette makers and the states as a way to provide some relief to leaf growers, who were certain to face less demand for their crops under that court settlement.
The $10.1 billion quota buyout brought an end to the Phase II payments under a provision that protected the companies from essentially being taxed twice for farmer relief. When the buyout legislation failed to specify the exact cutoff date for the Phase II payments, the tobacco companies claimed not only that they didn’t have to make the final $106 million in payments for 2004, due after the buyout bill was signed Oct. 22, but that they deserved a refund of the $318 million in payments already made in 2004.
Judge Ben Tennille of the North Carolina Business Court ruled in the companies’ favor in December. The North Carolina court had jurisdiction because the agreement initiated Phase II payments was entered in the state.
The bottom line is that nearly 400,000 tobacco growers and quota holders in 14 states should split $424 million in a final series of Phase II payments.
Rep. Bob Etheridge, D-Lillington, the part-time tobacco grower who represents southern Vance County in Congress, said the ruling will bring $189 million to nearly 80,000 North Carolina farmers and quota holders.
“Today’s ruling will bring much needed financial relief and a measure of stability to many North Carolina families,” Etheridge said in a news release Friday. “Farm families have been struggling all year to make ends meet, and especially with the recent record-high gas prices, the bills can pile up. Today’s ruling removes much of the uncertainty our farmers have been operating under since the cigarette companies went to court. I hope that the tobacco companies will not appeal the rulings and will move quickly to deliver the payments and promises that are due. It is time for the entire tobacco family to move forward and to begin to plan for the new future that the tobacco buyout will bring.”