October 10, 2003
Sean Caine, 410-576-6357
GENERAL OF 14 STATES DEMAND
PAYMENT BY BIG TOBACCO TO FARMERS
General J. Joseph Curran, Jr., announced today that he and 13 fellow
attorneys general asked cigarette makers that failed to pay into
a fund for tobacco growers and quote holders to make the scheduled
General from Alabama, Florida, Georgia, Indiana, Kentucky, Maryland,
Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee,
Virginia, and West Virginia today wrote to three companies that
missed payments due September 30 to the National Tobacco Grower
Settlement Trust, also known as the Phase II Trust.
a letter to executives
of Brown & Williamson Tobacco of Louisville, KY, Lorillard Tobacco
Company of Greensboro, NC, and RJ Reynolds Tobacco Company of Winston-Salem,
NC, the attorneys general asked that the companies "honor the
Trust terms by making the September 30, 2003 payment with interest
immediately and by continuing to make payments in accordance with
the terms of the Trust Agreement."
a separate letter also dated today, the attorneys general asked
the Trustee "to take any and all appropriate actions to ensure
that these payments with interest as well as all future payments
area made in accordance with the Trust terms." The Trustee
has the power to take legal action to enforce the Trust Agreement.
three companies that withheld payment have indicated that they are
holding their quarterly payments to the Trust in escrow because
of tobacco buyout bills pending in Congress. Under the proposed
legislation, buyout payments to tobacco growers and quota holders
may be funded by additional costs borne by cigarette manufacturers.
writing to the companies, the attorneys general pointed out that,
"there have been numerous proposed tobacco buyout bills for
several years and you have never before used speculation over whether
these bills would become law as a reason to withhold your Phase
II Trust payments."
Phase II Trust Fund was established as part of an agreement between
tobacco growing states and the four major cigarette manufacturers
to compensate quota owners and growers. According to the Trust Agreement,
cigarette makers must pay 25 percent of each annual payment on or
before September 30 of each payment year.
the Trust Agreement, manufacturers may offset payments only if changes
in laws or regulations lead to a new or increased cigarette tax
designed to provide direct payments to growers or quota owners.
There is no provision in the Trust Agreement for placing the required
payments in escrow.