
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, February 23, 1994                   TAG: 9402230100
SECTION: BUSINESS                    PAGE: B-7   EDITION: METRO 
SOURCE: By MICHAEL STOWE staff writer
DATELINE:                                 LENGTH: Medium

FEDERAL PERMITS CALLED A MISTAKE

U.S. Secretary of Agriculture Mike Espy was out of line when he granted federal licenses to six Southwest Virginia burley tobacco warehouse firms, an assistant state attorney general said Tuesday.

"The secretary has abused his discretion," Greg Lucyk said. "He is attempting to do something he cannot do."

Lucyk's comments came in Roanoke's federal court, where the burley tobacco firms continued their battle against a 47-year-old Virginia law that limits the fees warehouse operators can charge farmers.

The operators say the state law, which restricts their commission to 3 percent of the tobacco's selling price, is slowly running them out of business.

They have defied the law since October, when they obtained permits under the federal Warehouse Act. Unlike state licenses, the federal permits let the warehouses charge a storage fee based on weight, rather than a commission based on the selling price.

The warehouses - in Scott, Lee and Washington counties - filed suit, saying federal law preempts the state code.

State officials don't argue that point, Lucyk said.

"We have stipulated that if the [federal licenses] are valid, then our laws don't apply," he said.

He contended, however, that the warehouses never should have been given the federal permits because their primary purpose is selling tobacco, not storing it.

The Agriculture Department "has made a mistake and now they aren't willing to own up to it," he said. "It's the court's job to correct it."

William B. Poff, a Roanoke lawyer representing the warehouses, said the state shouldn't ask Judge James Turk to overrule the federal government.

If state officials are unhappy with the warehouse permits, they should use the U.S. Agriculture Department's appeals process, he argued. "Let them do it properly," Poff said.

Using the federal permit, the warehouse operators charge farmers $7 per hundred pounds of tobacco. A bill that would have been $411 under the state restrictions is $510 using the federally approved charges.

The increase in fees cut farmers profits about $372,000 this year, Lucyk said.

Companies involved in the suit are Cozart Tobacco Warehouse, Banner Star Farmers Warehouses, Farmer's Big Star Warehouses, Cozart Tri-State Tobacco Warehouses, SouthWest Tobacco Warehouses and Shelburne Three S Tobacco Warehouses.

Turk said he will decide in the next two weeks whether to rule in favor of the warehouses or set a date to hear more evidence.

by CNB