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North Carolina Court Enforces Grower Settlement Trust Amendment
RICHMOND, VA (December 23, 2004) - A North Carolina court ruled yesterday that, as a result of passage of the quota buyout legislation, the cigarette manufacturers participating in the National Tobacco Grower Settlement Trust are not required to make Trust payments for 2004, and are also entitled to a refund of 2004 payments already made to the Trust. The court’s decision also effectively confirms that the quota buyout eliminated future trust payments for 2005 and beyond. The decision is subject to appeal.
The Grower Settlement Trust was created in 1999 and since then Philip Morris USA has made payments totaling hundreds of millions of dollars. The trust was created with an understanding by all parties that the companies’ payments would cease if a tobacco quota buyout funded by the companies was passed.
Soon after the buyout was approved, Philip Morris USA and other tobacco companies notified the trustee they would not be making any future payments into the trust and were entitled to a refund of other payments made in 2004. The companies’ notification stemmed from the provisions of the trust agreement and an amendment signed in 2004 that clarified the rights and obligations of all parties in light of the pending buyout legislation.
The companies agreed that they would not reduce their payments into the Grower Settlement Trust prior to the actual enactment of legislation, such as the tobacco buyout. In exchange, government officials from tobacco growing states agreed the companies would be entitled to a refund of payments previously made into the trust in the year in which such legislation was enacted.
“The buyout legislation provides approximately $10 billion of payments to growers and quota holders, funded entirely by manufacturers and importers of tobacco products,” said Henry Long, Philip Morris USA vice president, leaf. “The buyout legislation obligates Philip Morris USA and other companies to fund payments to growers and quota holders that are as much as three times the future amounts they would have received under the trust.”
Philip Morris USA expects tobacco quota buyout payments to growers and quota holders to begin next year.
“We congratulate the tobacco growing community for securing enactment of such important legislation. American tobacco farmers are critically important to our business – we couldn’t produce the highest quality cigarettes in the world without them,” said Long.
While Philip Morris USA believes the bill provides a reasonable framework for providing economic assistance to tobacco quota holders and active tobacco farmers, the Company is disappointed that the legislation does not include FDA regulation of tobacco products. We believe taking a leadership role in calling for FDA regulation of tobacco products is the right thing to do and remain committed to working with Members of Congress and all other interested parties in search of policy solutions that impact the manufacture, marketing and sale of tobacco products.
Philip Morris USA is an operating company of Altria Group, Inc. For more information about Philip Morris USA, our products, programs and positions on tobacco-related issues, please visit us at
www.philipmorrisusa.com.
