The North Carolina Supreme Court has ruled that tobacco companies must make $424 million in Phase II payments to 300,000 tobacco farmers and quota owners in 14 states, including some 163,000 in Kentucky.
"This ruling reaffirmed what I have believed all along," Commissioner Farmer said. "Unless it is successfully appealed, it will replace agriculture development funds that went to tobacco farmers to make up for the lost Phase II payments to which they were entitled. These funds will help Kentucky farmers diversify their farming operations."
The cigarette manufacturers withheld the 2004 Phase II payments after legislation created a tobacco quota buyout last October. A lower court ruled in favor of the companies in December.
The Kentucky General Assembly earlier this year passed a bill appropriating $114 million to tobacco farmers and quota owners to replace the Phase II payments.
Of that amount, $16 million was to come from the master tobacco settlement fund (Phase I), which in past years was used for agricultural diversification projects, and the rest was to be generated by state bond issues.
Under the legislation, if the tobacco companies distributed the 2004 Phase II funds as a result of an appeal in the North Carolina suit, any eligible Kentuckian who has received payment under the state legislation would assign his right to funds from the distribution to the state.
The Phase II program is part of the 1998 settlement of lawsuits filed by 46 states against the tobacco companies.
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