Senate Bill 2446c2

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    Florida Senate - 2000                    CS for CS for SB 2446

    By the Committees on Comprehensive Planning, Local and
    Military Affairs; Agriculture and Consumer Services; and
    Senator Mitchell



    316-2024-00

  1                      A bill to be entitled

  2         An act relating to tobacco production relief;

  3         providing legislative intent; providing for use

  4         of state funds to assist persons and

  5         communities adversely affected by the

  6         settlement; providing for periodic

  7         appropriation and distribution of those funds;

  8         specifying what funds will be used for and

  9         specifying entities to receive funds; providing

10         for appointment of trustees to administer the

11         distribution of the funds and specifying their

12         duties; authorizing reimbursement for per diem

13         and travel; providing for public meetings and

14         records; providing an effective date.

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16         WHEREAS, tobacco was one of the first export

17  commodities in this country, becoming established as a staple

18  crop as early as 1703 when over 23 million pounds were

19  exported, and was the major export commodity to raise funds to

20  finance the American Revolution, and

21         WHEREAS, from its beginnings the production of tobacco

22  was, and continues to be, a legal enterprise in this state and

23  nation, and

24         WHEREAS, tobacco has been produced by growers in this

25  state every year since a federally controlled quota system was

26  established in 1938, and

27         WHEREAS, tobacco has been one of the most stable and

28  predictable crops for Florida farmers due to the federal quota

29  system, which regulates the volume of production, and the

30  producer-owned-and-operated Flue-Cured Stabilization

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    Florida Senate - 2000                    CS for CS for SB 2446
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  1  Corporation, which provides market stability at no net cost to

  2  any taxpayer or governmental entity, and

  3         WHEREAS, the production of tobacco, as compared to

  4  other agricultural commodities, requires a proportionally

  5  larger investment of capital per unit of production due to

  6  quotas and the infrastructure needed for production, which

  7  requires sufficient agricultural land and specialized barns

  8  and production equipment, and

  9         WHEREAS, the necessarily large production costs to

10  tobacco producers causes such producers to have very large

11  asset investments and debt service requirements, which

12  constitute a disproportionally large component of the local

13  economies of tobacco-growing counties in this state, and

14         WHEREAS, in 1994 the Legislature passed, and the

15  Governor subsequently signed into law, Committee Substitute

16  for Committee Substitute for Senate Bill 2110, which became

17  chapter 94-251, Laws of Florida, and which amended the

18  "Medicaid Third-Party Liability Act" to effectively remove

19  defenses in tortious litigation by the state against tobacco

20  companies, and

21         WHEREAS, the state and the tobacco companies reached a

22  settlement on August 25, 1997, in The State of Florida et al.

23  v. American Tobacco Company et al., with the tobacco companies

24  agreeing to pay the state $11.3 billion over 25 years, and

25         WHEREAS, based on the "Most Favored Nation Status"

26  section of the settlement, the state has increased its

27  settlement amount to $13 billion, an increase of $1.7 billion,

28  and

29         WHEREAS, as a direct result of this litigation and

30  other governmental actions, in the 1998, 1999, and 2000

31  production years a total quota reduction of 18 percent, 17

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    Florida Senate - 2000                    CS for CS for SB 2446
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  1  percent, and 18.5 percent, respectively, occurred, leaving

  2  many tobacco producers in serious financial peril from such a

  3  substantial loss of production, and additional reduction is

  4  anticipated in the 2001 production year, and

  5         WHEREAS, while the tobacco quota holders in this state

  6  still possess sufficient infrastructure and equipment to

  7  produce the quota volume allocated in 1997, the loss of quota

  8  since then has severely affected the value of their

  9  investment, and

10         WHEREAS, other tobacco-producing states have either

11  passed or are currently considering legislation to assist

12  their tobacco quota holders with costs such as asset loss,

13  stranded investment, and income and employment opportunities,

14  and

15         WHEREAS, since the settlement agreement in The State of

16  Florida et al. v. American Tobacco Company et al., the state

17  has neglected to consider any method of assistance for tobacco

18  quota holders, and such assistance is warranted because the

19  decline in both consumption and the farmgate price of tobacco

20  is a direct result of the state's tobacco litigation, and

21         WHEREAS, the assistance to tobacco quota holders

22  provided by this act will help to ensure the stability of the

23  economies of 20 Florida counties by assisting the family farms

24  in this state which have been adversely affected by Florida's

25  participation in the tobacco litigation, and

26         WHEREAS, this will entail efforts to diversify and

27  retool farms that have for generations depended on tobacco for

28  their primary source of income, and

29         WHEREAS, there are precedents to the types of action

30  taken by this legislation, NOW, THEREFORE,

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    Florida Senate - 2000                    CS for CS for SB 2446
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  1  Be It Enacted by the Legislature of the State of Florida:

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  3         Section 1.  It is the intent of the Legislature that

  4  Florida's tobacco quota holders, warehouse operators, and

  5  their respective workforces and communities be given

  6  assistance due to the adverse economic effects of the loss of

  7  tobacco quota occurring since the tobacco settlement

  8  agreements, beginning in 1997. The assistance is intended to

  9  be provided for losses incurred by persons involved in tobacco

10  production because of actions brought against tobacco

11  companies by the state, beginning in 1995 with the amendment

12  of the "Medicaid Third-Party Liability Act," so that the

13  persons incurring those losses may begin the process of

14  seeking out, experimenting with, and developing diverse

15  profitable enterprises and may also retain control of the

16  ownership of their land and thereby ensure that farms can

17  remain productive agricultural entities and provide ancillary

18  environmental benefits. The assistance is also intended to

19  reduce encumbered debt on stranded investment in specialized

20  equipment and assist recipients in maintaining adequate cash

21  flow in line with that projected for tobacco production before

22  the litigation and subsequent settlements of 1997 and 1998. It

23  is also intended to offer opportunities to quota holders and

24  other qualified recipients who may desire additional training

25  as a means of helping employees and communities make the

26  transition to alternative crops or other economic development

27  opportunities. It is also the intent of this act to provide

28  economic development assistance for the six counties (Alachua,

29  Columbia, Hamilton, Lafayette, Madison, and Suwannee) impacted

30  most by the state's tobacco litigation.

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    Florida Senate - 2000                    CS for CS for SB 2446
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  1         Section 2.  (1)  A portion of the proceeds paid to the

  2  State of Florida as a result of litigation entitled The State

  3  of Florida et al. v. American Tobacco Company et al., Case

  4  #95-1466AH, in the Circuit Court of the 15th Judicial Circuit,

  5  in and for Palm Beach County, totaling $66,957,249, shall be

  6  appropriated in equal amounts by January 10 each calendar year

  7  for 5 years, beginning in 2001, to the Florida Indemnification

  8  and Community Revitalization Trust Fund, if created by law.

  9         (2)  The Trustees of the Florida Indemnification and

10  Community Revitalization Trust Fund shall distribute all funds

11  deposited into the trust fund under subsection (1) in equal

12  amounts on March 1 each calendar year for 10 years, beginning

13  in 2001, for the purposes of and in accordance with the

14  distribution percentages set forth in subsection (3).

15         (3)  The Trustees of the Florida Indemnification and

16  Community Revitalization Trust Fund shall distribute each

17  annual appropriation under subsection (2) as follows:

18         (a)  $500,000 per year for 10 years to the Institute of

19  Food and Agricultural Sciences of the University of Florida to

20  provide on-farm direct assistance to growers in the counties

21  identified in section 1.

22         (b)  $1 million per year for 10 years to an economic

23  development agency such as the North Central Florida Regional

24  Planning Council, with proviso that these funds be used in the

25  counties identified in section 1, based on the percentage of

26  basic quota in each county using a base year of 1997. These

27  funds will be used to develop alternative industries,

28  employment opportunities, and other economic development

29  initiatives in the designated counties.  Fifty percent of the

30  assistance must be used to enhance area agricultural

31  opportunities and any other agricultural ventures considered

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    Florida Senate - 2000                    CS for CS for SB 2446
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  1  appropriate by the trustees, and 50 percent must be used for

  2  general economic development projects to enhance jobs and the

  3  local tax base through an entity such as the North Central

  4  Florida Regional Planning Council and local economic

  5  development agencies.

  6         (c)  A one-time, nonrecurring appropriation of $50,000

  7  to the Florida Department of Agriculture and Consumer Services

  8  to determine the feasibility of marketing stranded tobacco

  9  equipment to other tobacco producing countries.  The Florida

10  Department of Agriculture and Consumer Services shall make

11  special efforts to expand markets and develop new marketing

12  opportunities for tobacco producers making a transition.

13         (d)  An appropriation of $150,000 per year for 3 years

14  to the North Central Florida Regional Planning Council to

15  assist tobacco warehouse marketing firms in making the

16  transition from traditional tobacco marketing to alternative

17  ventures.

18         (e)  An appropriation of $50 million to the Department

19  of Agriculture and Consumer Services to be used as refinancing

20  loans to tobacco farmers and quota holders.  Each grower or

21  quota holder shall be entitled to obtain an amount equal to no

22  more than $4 per pound of tobacco quota as received in the

23  1997 crop year as identified by the Florida Trustees of the

24  Phase II Tobacco Growers Settlement.  Such loans shall be at 3

25  percent simple interest and shall become due December 31,

26  2010.

27         (f)  For those farmers with tobacco quota for the 2000

28  crop year, 13 cents per pound for a total of $1,457,249, shall

29  be paid to growers owning tobacco barns for the purpose of

30  upgrading and improving those barns to meet the standards for

31  nitrosamine removal set by tobacco-buying companies.

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    Florida Senate - 2000                    CS for CS for SB 2446
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  1         (g)  It is the intent of the Legislature to hold

  2  harmless Florida's share of the Phase II National Tobacco

  3  Growers Settlement through the remaining 12-year schedule

  4  adopted at the time of the signing of the agreement. The state

  5  shall deposit $53,901,000 in the Florida Indemnification and

  6  Community Revitalization Trust Fund upon the effective date of

  7  this act.  Annually, funds equal to the amount paid to the

  8  Phase II trustees shall be reimbursed to the state from the

  9  Florida Indemnification and Community Revitalization Trust

10  Fund upon receipt of annual payment from the tobacco companies

11  to Florida's Phase II Trustees.

12         (4)  Any costs incurred by the trust and other

13  administrative costs must be paid from the funds available for

14  distribution under this section.

15         Section 3.  (1)  The Trustees of the Florida

16  Indemnification and Community Revitalization Trust Fund shall

17  be the Florida Trustees for the Phase II National Settlement

18  Fund and four additional individuals appointed as follows: one

19  by the President of the Senate, one by the Speaker of the

20  House of Representatives, one by the Commissioner of

21  Agriculture, and one by the Executive Director of the North

22  Central Florida Regional Planning Council.

23         (2)(a)  The trustees shall meet, organize, and

24  establish administrative guidelines as soon as possible after

25  the effective date of this act. In accordance with their

26  adopted procedures, the trustees shall provide for

27  certification of eligible participants and recipients under

28  this act and, for that purpose, shall verify the amount of

29  quota reduction on an individual basis from the 1997 basic

30  quota amounts to the effective date of this act. All

31  distributions of funds under this act must be authorized by

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    Florida Senate - 2000                    CS for CS for SB 2446
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  1  the trustees, and only recipients certified by the trustees as

  2  eligible for compensation under this act may receive

  3  compensation.

  4         (b)  All meetings of the trustees are public meetings

  5  within the meaning of chapter 286, Florida Statutes, and all

  6  records made or received by the trustees in connection with

  7  their duties under this act are public records within the

  8  meaning of chapter 119, Florida Statutes.

  9         (c)  The trustees shall serve without compensation, but

10  shall be entitled to reimbursement for per diem and travel

11  expenses incurred in the performance of their official duties,

12  in accordance with section 112.061, Florida Statutes.

13         (3)  State agencies shall provide the trustees with any

14  information necessary to fulfill their duties under this act.

15  The trustees may also request the assistance of the Farm

16  Service Agency of the United States Department of Agriculture.

17  Trustees shall ensure that the funds appropriated by the

18  Legislature for distribution under this act are used in

19  accordance with the intent and purposes established by this

20  act.  The trustees may use any outside sources, consultants,

21  methods, or means they consider necessary to accomplish the

22  intent and goals established by this act. The trustees shall

23  prepare and submit an annual report to the Auditor General,

24  the Office of Program Policy Analysis and Government

25  Accountability, the Commissioner of Agriculture, the President

26  of the Senate, and the Speaker of the House of

27  Representatives, detailing Florida Indemnification and

28  Community Revitalization Trust Fund activities for the

29  just-completed fiscal year.  All costs for assistance by the

30  Farm Service Agency or outside sources are considered

31  administrative costs under this act.

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    Florida Senate - 2000                    CS for CS for SB 2446
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  1         Section 4.  This act shall take effect July 1, 2000.

  2

  3          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
  4                            CS/SB 2446

  5

  6  The CS specifies that the Auditor General, the Office of
    Program Policy Analysis and Government Accountability,
  7  Commissioner of Agriculture, President of the Senate, and
    Speaker of the House of Representatives, are to receive the
  8  annual report detailing the Florida Indemnification and
    Community Revitalization Trust Fund activities.
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