Governor's Office of Agricultural Policy
North Carolina Judge Issues Ruling on Tobacco Payment

North Carolina Special Superior Court Judge Ben F. Tennille ordered the tobacco companies to make the fourth quarter 2004 Phase II tobacco payment. 

Judge Tennille ruled that the tobacco companies must make the 2004 fourth quarter payment within 10 business days.  The order also stated that the companies are required to pay 8% interest from the December 15, 2004 until the payment is made. 

“Judge Tennille’s ruling today affirms our position from the very beginning that the entire 2004 payment should have been made by the tobacco companies regardless of when the tobacco buyout was passed,” Governor Fletcher remarked.

The issue at hand results from the withholding of 2004 Phase II payments by the tobacco companies.  The companies argued that they were not obligated to pay the Phase II payments because they are funding the Federal Tobacco Buyout program signed by President Bush in October 2004.

In August, the North Carolina Supreme Court ruled that the Phase II Trust Agreement did not allow the companies to avoid their obligation to pay the tobacco farmers.  However, the companies further argued that they were not obligated to fund the last quarter 2004 payment because the Supreme Court ruling would make them pay in the same year a payment for the Tobacco Buyout was made.

The order and supporting documents may be found at www.ncbusinesscourt.net. The case number is NO. 98 CvS 14377.