Senate Bill No. 420

(By Senator Dittmar, Anderson, Ross and Hunter)

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[Introduced February 7, 2000; referred to the Committee on Agriculture; and then to the Committee on Finance.]
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A BILL to amend and reenact section one, article nine-b, chapter sixteen of the code of West Virginia, one thousand nine hundred thirty-one, as amended; to further amend said article by adding thereto a new section, designated section five; and to amend article one, chapter nineteen of said code by adding thereto a new section, designated section four-d, all relating to providing that a compelling state interest exists in providing tobacco farmers with financial assistance to make the transformation from raising tobacco to raising other cash crops; renaming the West Virginia rural rehabilitation fund the agribusiness development loan fund; and earmarking five million dollars to be loaned to tobacco farmers at a loan rate of three percent per annum to be used to convert to other crops.

Be it enacted by the Legislature of West Virginia:
That section one, article nine-b, chapter sixteen of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted; that said article be further amended by adding thereto a new section, designated section five; and that article one, chapter nineteen of said code be amended by adding thereto a new section, designated section four-d, all to read as follows:
CHAPTER 16. PUBLIC HEALTH.

ARTICLE 9B. IMPLEMENTING TOBACCO MASTER SETTLEMENT AGREEMENT.
§16-9B-1. Findings and purpose.
(a) Cigarette smoking presents serious public health concerns to the state and to the citizens of the state. The surgeon general has determined that smoking causes lung cancer, heart disease and other serious diseases, and that there are hundreds of thousands of tobacco-related deaths in the United States each year. These diseases most often do not appear until many years after the person in question begins smoking.
(b) Cigarette smoking also presents serious financial concerns for the state. Under certain health-care programs, the state may have a legal obligation to provide medical assistance to eligible persons for health conditions associated with cigarette smoking, and those persons may have a legal entitlement to receive such medical assistance.
(c) Under these programs, the state pays millions of dollars each year to provide medical assistance for these persons for health conditions associated with cigarette smoking.
(d) It is the policy of the state that financial burdens imposed on the state by cigarette smoking be borne by tobacco product manufacturers rather than by the state to the extent that such manufacturers either determine to enter into a settlement with the state or are found culpable by the courts.
(e) On the twenty-third day of November, one thousand nine hundred ninety-eight, leading United States tobacco product manufacturers entered into a settlement agreement, entitled the "master settlement agreement", with the state. The master settlement agreement obligates these manufacturers, in return for a release of past, present and certain future claims against them as described therein, to pay substantial sums to the state (tied in part to their volume of sales); to fund a national foundation devoted to the interests of public health; and to make substantial changes in their advertising and marketing practices and corporate culture, with the intention of reducing underage smoking.
(f) It would be contrary to the policy of the state if tobacco product manufacturers who determine not to enter into such a settlement could use a resulting cost advantage to derive large, short-term profits in the years before liability may arise without ensuring that the state will have an eventual source of recovery from them if they are proven to have acted culpably. It is thus in the interest of the state to require that such manufacturers establish a reserve fund to guarantee a source of compensation and to prevent such manufacturers from deriving large, short-term profits and then becoming judgment-proof before liability may arise.
(g) In view of the injurious properties of tobacco to the public health, a compelling public interest exists in providing financial assistance to tobacco farmers operating in this state to ease their transition from raising tobacco to raising other cash crops that present a comparable opportunity for financial reward without presenting those enormous societal costs associated with tobacco.
§16-9B-5. Dedication of funds to agribusiness loan fund.
Five million dollars of the funds received from the tobacco master settlement agreement are hereby dedicated to the agribusiness loan fund, renamed and continued under section four-d, article one, chapter nineteen of this code.
CHAPTER 19. AGRICULTURE.

ARTICLE 1. DEPARTMENT OF AGRICULTURE.
§19-1-4d. Rural rehabilitation fund to be continued and renamed agribusiness development fund; dedication of loan funds; authority of commissioner to make loans to tobacco farmers;

(a) The revolving fund heretofore existing in the state treasury and designated fund number one thousand four hundred eight, known as the West Virginia rural rehabilitation fund, is hereby continued and renamed the "agribusiness development loan fund." The five million dollars dedicated pursuant to the provisions of section five, article nine-b, chapter sixteen, in addition to the funds heretofore existing in the West Virginia rural rehabilitation fund, shall be preserved in trust and designated for use by the commissioner to enable tobacco farmers to make the transition from raising tobacco to establish an agribusiness or to convert from one type of agribusiness to another type of agribusiness.
(b) The commissioner is hereby authorized to make loans at a rate of three percent per annum to farmers holding or leasing tobacco allotments in order to afford those farmers an opportunity to convert the tobacco allotment to a suitable and economically acceptable substitute agricultural allotment.




NOTE: The purpose of this bill is to provide for loans to tobacco farmers to convert to other cash crops. The bill provides that a compelling state interest exists in providing tobacco farmers with financial assistance to make the transformation from raising tobacco to raising other cash crops. It also renames the West Virginia Rural Rehabilitation Fund the "Agribusiness Development Loan Fund" and earmarks five million dollars from that fund to be loaned to tobacco farmers at a loan rate of three percent per annum to be used to convert to other crops.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.

Section five, article nine-b, article sixteen and section four-d in article one, chapter nineteen are new; therefore, strike-throughs and underscoring have been omitted.