Governor Ernie Fletcher’s Communication Office
North Carolina Supreme Court rules in favor of tobacco grower states

Press Release Date:  Friday, August 19, 2005  
Contact Information:  Carla Blanton
Michael Goins
Jodi Whitaker

FRANKFORT, Ky. – The North Carolina Supreme Court issued a unanimous ruling today in favor of Kentucky and the other Tobacco Grower States, requiring tobacco companies to pay the 2004 Phase II payment to producers.

“We are excited to see the Supreme Court ruled in favor of our farmers,” said Governor Fletcher. “It was clearly the intent of the Congress to keep the Phase II Program in place for 2004 when they passed the buyout last year.”

The Supreme Court Disposition states, “The trial court erroneously held the enactment of FETRA entitled Settlors to a Tax Offset Adjustment for 2004.  The decision of that court is therefore reversed and this case is hereby remanded for additional proceedings not inconsistent with the opinion.”

On November 2, 2004 the tobacco companies sent notification to all 14 Grower States, including Kentucky, requesting a full refund of the three 2004 Phase II quarterly payments currently held in by the National Trust. The companies claimed that their financial obligation ended with the signing of the buyout into law. On December 22, 2004 Judge Ben Tennille, in a North Carolina Business Court, released his opinion in favor of tobacco companies, releasing them from the obligation to make the 2004 Phase II payment to tobacco farmers.

Today's North Carolina Supreme Court decision overturns the lower court ruling and directs the Phase II payments to be made and distributed.

The complete ruling can be found at or by going to the North Carolina Courts site at