USDA’s Farm Service Agency Administrator Bruce Nelson says his agency is making available a determination document regarding tobacco payment funding. The document addresses the current methods used to calculate manufacturer and importer assessments that fund the Tobacco Transition Payment Program. The document is in reply to two law suits questioning the definition of a “share of gross domestic volume” within the meaning of the Fair and Equitable Tobacco Reform Act of 2004. The outcomes of these two lawsuits have the potential to affect not only the plaintiffs, but also all other importers and manufacturers.
The Tobacco Transition Payment Program was established in the wake of the termination of the longstanding tobacco price support program. The 10-year TTPP makes annual payments through 2014 of about one-billion dollars to those who held tobacco quota and produced tobacco at the time of FETRA passage. These payments are funded via assessments that are collected from domestic tobacco manufacturers and importers.
USDA uses a two-step process for calculating these assessments for each manufacturer and importer. For both steps, gross domestic volume, defined as the amount of product removed into domestic commerce and not exempt from federal excise tax, is a key element. How this term is interpreted and what a party’s or class’s share is of that volume, are key elements in both disputes.
NAFB News Service